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In his first major interview since passing a landmark energy package, NSW Environment Minister Matt Kean outlines his philosophy for a new kind of politics. By Mike Seccombe.

The Liberal minister forcing action on climate change

NSW Energy and Environment Minister Matt Kean.
Credit: AAP Image / Dean Lewins

When Matt Kean was made minister for Energy and Environment in the New South Wales government last April, he says, his first thought was: “I must have upset the premier. What have I done?”

He was only half joking. While he was “excited” at the opportunity to make his mark in the new portfolios – he has had a lifelong concern for the environment and his father worked for decades in the energy sector – Kean was also “filled with trepidation”.

“You know,” he tells The Saturday Paper, “this is a contested space in Australian politics. It has brought down three prime ministers, it’s torn down governments.”

Kean had good reason to fear the people who had torn down those leaders and governments – fellow Liberals and Nationals, the vested interests in the fossil fuel sector and reactionary media. They have come after him, and are still coming.

Nonetheless, he took the role determined to “fly the flag for the brand of liberalism that I believed in and that I felt that my community supported”. He says, “That’s exactly what I’ve been trying to do.”

At the end of last month, Kean saw through the state parliament legislation to support a plan to build 12 gigawatts of large-scale renewable energy generation – about as much as currently exists in all of the country – along with two gigawatts of storage, largely pumped hydro, over the next decade. It is anticipated it will attract $32 billion in private investment, create 6300 construction jobs and 2800 operational jobs, mostly in regional areas, and cut power bills by an average $130 per household and $440 per small business, per year.

It took a while to get through the parliament: more than 30 continuous hours of debate in the state’s upper house, largely due to the spoiling tactics of One Nation’s Mark Latham, who put up 249 amendments. But while Latham’s nitpicking made the process protracted, it made no dent in the multipartisan backing Kean had brought together in support of his package. The Greens voted for it. So did the Christian Democrats’ Fred Nile, the left-leaning minor parties and independents, and Labor.

Most significantly, all the Liberals and Nationals endorsed the ambitious plan. In so doing, they endorsed Kean’s view that there is nothing radical about taking strong action in response to climate change, that it is not just an environmental imperative but also an economic one, and not at all in conflict with the tenets of political conservatism.

Quite the opposite, in fact.

“For me,” says Kean, “it was always confusing as to why there were elements of the Liberal Party that were sort of anti-environmental or anti taking action on climate change.

“I mean, conservatism is about conserving those things that are important … and I can’t think of anything more important than our environment.

“So, you know, I’m looking to take action on climate change, not in spite of the fact I’m a conservative, but because I’m a conservative. I’m looking to protect our environment, because I believe that conservatives have an obligation to hand our planet to our kids better than we found it.”

Kean points to conservative governments elsewhere in the world, such as in Britain, where Boris Johnson’s Tories have committed to cutting greenhouse gas emissions by 68 per cent by 2030, and Germany, where Angela Merkel’s Christian Democratic Union is pushing a cut of 50-55 per cent by 2030, not just for her country but for the whole European Union.

He continues to reel off examples: “Just recently, we’ve seen a new conservative prime minister of Japan commit to net zero emissions by 2050. So these guys are not doing it in spite of the fact they’re conservatives, they’re doing it because they are conservatives.”

Simple prudence, an important conservative value, would dictate serious action to cut greenhouse emissions.

“Seventy per cent of our two-way [trade] is now with countries that have committed to achieving net zero emissions by mid-century. So if we don’t get ahead of the curve, then our ability to continue to export products into those international markets is going to be massively curtailed,” Kean says.

“We’ve already seen some moves towards trade barriers. For example, in the EU, they’re looking to put tariffs in place for goods that are carbon intense.”

But Kean would rather focus less on these threats than on the opportunities presented by de-carbonisation.

“We’ve got to bust the myth that being good custodians of our planet comes at the expense of our prosperity. It doesn’t,” he says.

The economics of energy have shifted in the past 10 years, and shifted even more in the past five, he says. The cost of generating and storing renewable energy has plunged.

“Today the cheapest way to generate electricity is not coal, gas or nuclear; it’s a combination of wind, solar, pumped hydro and batteries.

“And that’s not me saying that. It’s the CSIRO saying it. It’s AEMO [the Australian Energy Market Operator, set up by the Council of Australian Governments to plan our energy future] saying it. It’s the market saying that.

“There is now an economically rational argument, which is what the Liberal Party has traditionally been focused on: the economics of free markets.

“And that’s provided a bridge for a lot of those conservatives that previously campaigned against taking action on climate change to walk across.”

To those concerned about climate change, this observation from a Liberal Party insider is encouraging. But when Kean expressed that same view almost a year ago, it caused him considerable grief.

The circumstances were these: with the fires of what was to become known as Australia’s Black Summer burning out of control, some people stated the scientifically obvious reality, subsequently restated in the findings of the royal commission into the fires, that climate change was a major factor.

Kean was one of those people. Speaking at an energy conference on December 10 last year, he said what was happening was “exactly what the scientists have warned us would happen”, which was “longer drier periods, resulting in more drought and bushfire”.

“If this is not a catalyst for change, then I don’t know what is,” he said.

A number of senior conservative politicians, most notably Scott Morrison, responded by saying it was “not the time” for such things. The prime minister suggested offering prayers instead.

But Kean did not stop repeating the unpalatable truth, and on January 19 he went further, saying some members of the Morrison cabinet favoured a stronger policy response to the climate crisis.

Morrison came down on him like a ton of bricks.

“Matt Kean doesn’t know what he’s talking about,” the prime minister said. “He doesn’t know what’s going on in the federal cabinet and most of the federal cabinet wouldn’t even know who Matt Kean was.”

This response prompts two observations.

First, Kean didn’t say he knew what was going on inside cabinet, only that some cabinet ministers wanted the government to do more, which was correct. One of them, Josh Frydenberg, had actually proposed doing more when he was previously Environment minister, before pressure from the government’s climate sceptics forced a backdown, and shortly thereafter the removal of Malcolm Turnbull from the prime ministership.

Second, it is quite implausible that most cabinet ministers did not know of Kean, a leader of the moderates in NSW.

In any case, Morrison’s response and the wide reporting it prompted of the Coalition’s divisions served to raise Kean’s profile as a climate realist. And now, almost a year down the track, there is no doubt at all that everyone in the federal Coalition, not just in cabinet, knows who Matt Kean is. He and his plan to massively expand renewable generation and storage were major issues of debate within the Coalition party room at its two most recent meetings.

The federal government’s internal fossil fuel lobby, led by Queensland Nationals senator and former Resources minister Matt Canavan, attacked Kean’s clean energy road map, urging Morrison to pull out of a $2 billion energy agreement struck earlier this year between the federal and NSW governments, and calling for a new coal-fired power station in the Hunter Valley.

Three weeks ago, Angus Taylor, the federal minister for Energy and Emissions Reduction, also defended coal generators, this time at an energy and climate summit sponsored by The Australian Financial Review.

“I’m concerned about models and analysis including unrealistic assumptions that don’t translate into the real world,” he said. “… We shouldn’t see models that assume large coal generators stay in the market despite policy changes that seriously undermine profitability and commercial sustainability. If policymakers want to force out coal generators prematurely, they should say that upfront.”

And at the same conference, Kean fired back: “I’m on the side of the public, I’m not on the side of the vested interests who want to drive up prices and make the mums and dads of NSW pay for it.”

He said he was confident of the modelling, and that his plan would not force the early closure of coal-fired generators. Rather, it was intended to cope with the imminent closure of elderly, unreliable stations.

Speaking to The Saturday Paper this week, Kean was animated, sitting in front of a portrait of his political hero, United States Democrat president John F. Kennedy. He elaborated further on why NSW had been forced into unilateral action to address the climate and energy crisis.

Of course, he says, it would have been better had there been a clear national framework to give the private sector the certainty it needed to invest in the inevitable transition away from fossil fuels.

“But there’s been several attempts to achieve that and they’ve fallen over,” he says. “Now, I can’t sit on my hands and wait for them to find a pathway forward in Canberra. I’ve got a responsibility to the citizens and businesses in NSW.”

Four of the state’s big coal-fired power stations are slated to close between 2028 and 2035, says Kean, “and my job as the minister for Energy in NSW is to make sure that when they close, that there’s something there to replace that capacity”.

Otherwise, there will be blackouts and price spikes. He points to what happened when Victoria’s Hazelwood Power Station shut with little warning in mid-2016: “Consumers in NSW saw 60 per cent increases on their bills.”

The lead times for building the replacement infrastructure are long and the costs are high. The first step to getting the necessary investment, he says, “is to make sure that the market signals and settings are right” and that the rules won’t change “every time there’s a change in government or change of leader within a government”.

This is exactly what has happened in Australian federal politics: there was a good policy under Labor, which was dismantled by the Abbott government, which Malcolm Turnbull, whom Kean greatly admires, tried and failed to restore, and which the Morrison government has done little about, because of internal resistance.

“I’ve been watching this car crash of public policy for over a decade,” says Kean. “And the key learning for me was that we need to find areas of common ground, we need to find the things that unite us if we’re going to move forward.”

Hence his assiduous efforts in putting together the grand coalition that passed his bill last month. “I went out and tried to understand what the different constituencies, what the different parties were concerned about.”

For the Nationals, he says, there was the promise of $58 billion worth of investment and thousands of jobs by 2042, plus an expected $1.5 billion in rent for landholders for hosting new infrastructure in the three earmarked regional “renewable energy zones”.

For Labor and its union constituency, the plan was amended to include another REZ, in the Hunter region, where coal is now a big employer. Plus, Kean says, “we mandated local content … a priority to build our energy system using Australian manufacturing, done by Australian workers”.

And for the Greens: “We supported their amendments to provide money for the hydrogen industry.

“It was about building the coalition as broad as possible, so it couldn’t be attacked by the vested interests and the political opportunists that have held our country back for so long,” he says.

“When you’ve got Mark Latham and the big energy companies lining up to protect their super-profits, you know you’re on the right side of the debate.”

But it’s not just Latham, of course. It’s also a significant cohort of Coalition members in Canberra. The irony is that even as Taylor and Morrison complain about Kean’s plan, they need it to work.

The prime minister has lately flagged a move away from his government’s previous, dodgy plan to use so-called carryover credits to meet Australia’s very modest commitment to a 26-28 per cent reduction in greenhouse emissions by 2030, made under the Paris Agreement. That shift has been made feasible because of the skyrocketing installations of rooftop solar panels by businesses and households, and by a reduction in energy demand – and thus emissions – due to the Covid-19 recession.

But if Australia is to make any improvement on its target in the next round of greenhouse reduction negotiations, it will rely on the states, all of which now have set more ambitious targets. In the case of NSW, the target is 35 per cent by 2030. All states and territories are now committed to net zero by 2050.

Talking to Matt Kean, you wouldn’t credit that he took his portfolio “filled with trepidation”. His confidence in a future powered by wind, solar, pumped hydro, hydrogen, batteries and, maybe short-term, a little gas, is infectious. As is his belief in Australia becoming a “renewable energy and economic superpower”.

He is a self-described “evangelist”, not only for the new technology but also for a new politics not dominated by “fear and division”.

If only his federal counterparts would catch the fire.

This article was first published in the print edition of The Saturday Paper on Dec 12, 2020 as "The Liberal minister forcing action on climate change".

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Mike Seccombe is The Saturday Paper’s national correspondent.