Jay Weatherill’s energy showdown
When you are having a quiet drink with Malcolm Turnbull he can get easily distracted. He has the habit of going to his smartphone and checking how much electricity the huge solar array on his Point Piper mansion is generating and if his back-up battery is fully charged. Which is to say, when it comes to renewable energy and battery storage, Turnbull gets it.
Here is no climate change-denying zealot who has no faith in renewable energy as a safer future for him and his family, or indeed the nation. So to find an explanation for his high-voltage attack on South Australia’s renewable energy commitments after a catastrophic storm knocked over power pylons and blacked out the entire state last year, you have to look no further than politics – the politics of survival at the head of a government held hostage by the powerful coal lobby and its cheer squad led by his dumped predecessor, Tony Abbott. The team arrayed against him also includes his deputy prime minister and Nationals leader Barnaby Joyce.
Rather than stare them down and maintain his own credibility, Turnbull has capitulated to their agenda and not in a deft way. So ferocious was the attack on South Australia’s Labor premier, Jay Weatherill, that it torpedoed any goodwill and made other premiers wary of Canberra’s real intentions in this crucial space. It also exposed the nation’s energy policies and arrangements to much closer scrutiny, and the answers found weren’t what Turnbull’s side hoped for. The scrutiny revealed the Abbott-like simplicity, which reduces all discussion on energy to electricity bills rising if you in any way price carbon pollution, is well wide of the mark. Work by the Grattan Institute released this week showed electricity prices have more than doubled in a decade – and that scrapping the “carbon tax” produced not even a blip in the trend.
The idea that the path to electoral recovery and success was to replicate Tony Abbott’s “great big carbon tax” scare was always half-baked. For one thing, Julia Gillard is no longer prime minister and her “there will be no carbon tax under a government I lead” is dead, buried and cremated, to borrow an Abbott phrase. Moreover, it was always unsafe to rerun a scare that its authors knew was based on a lie. Peta Credlin, Abbott’s chief of staff and svengali in opposition, fessed up last month. She told Sky News that Labor’s climate change policy was never a carbon tax but a label for brutal retail politics. “It took Abbott six months to cut through,” she said of the lie, “and when he did cut through, Gillard was gone.”
Turnbull and his government would do well to remember the words of the late Robert F. Kennedy as he ran for the Democratic presidential nomination in 1968: “In such a fantastic and dangerous world we will not find answers in old dogmas by repeating outworn slogans, or fighting on ancient battlegrounds against fading enemies long after the real struggle has moved on.”
But the fact is Turnbull and his energy minister, Josh Frydenberg, caved in to pressure rather than heed this lesson. There is every indication they are not game enough to try their hand with an emissions intensity scheme for fear their critics on the right would blow up the government – an ever-present threat.
Premier Weatherill accused Frydenberg of being a hypocrite on RN Breakfast for criticising SA for going it alone. He said he had tried for reform at a national level. “Josh Frydenberg was humiliated back in December. We were working with him to introduce an emissions intensity scheme. He knows that. It was well advanced. It was about to happen. Coal interests in the federal Coalition government basically cut him down before he even had a couple of hours explaining it.”
Ten years of brutal, opportunistic politics has left this nation with no credible energy policy. We are now seeing climate change denialism preventing any rational path to achieve the goal of net zero emissions by 2050. That’s a bipartisan target that Australia – under the Turnbull government – signed up to in Paris. It’s just 33 years away. Investors get it, and they are unwilling to put their money into coal-fired power stations that have a 40-year horizon to turn a profitable dollar.
Resources Minister Matt Canavan, a Queensland National, is pushing hard in the opposite direction. He is arguing for taxpayers’ funds to build a new “high-intensity low-emissions” coal-fired power station. And he is not talking about carbon capture and storage, but championing the oxymoron of “clean coal” – basically a technology that delivers 70 per cent dirty emissions rather than 100 per cent. Gas delivers 50 per cent and renewables zero.
Apart from his friends in the coalmines, the energy generators are far from enthusiastic. EnergyAustralia, AGL Energy and BHP Billiton are backing an emissions intensity scheme for the electricity sector. In submissions to the Finkel review of the market, they say such a scheme, which puts a tradeable price on carbon pollution, would provide stability and certainty, as well as reduce the nation’s emissions. Without it, EnergyAustralia’s managing director, Catherine Tanna, told The Australian Financial Review, the industry lacks confidence. And without it, the system is on life support. Nine old and dirty privately owned coal-fired power stations have closed down or are about to, with no replacements planned.
According to an Australian Energy Market Commission report, sat on by the government but which found its way into the Fairfax papers, an emission intensity scheme would save businesses and households up to $15 billion in electricity bills over a decade. But that is an inconvenient truth for those who haven’t caught up with the changing realities of the market, who still claim, with the evidence against them, that baseload coal-fired power is the cheapest option going forward. An example of what Turnbull is up against was Liberal right-winger Craig Kelly going on Sky to peddle this delusion and decry battery storage as a joke.
MPs such as Kelly – either through wilful ignorance or simply being on another planet – haven’t caught up with the changing economic and political narrative surrounding the energy crisis. Since last September’s storm in SA, the facts of the broken national energy market have become much clearer. The blackouts in February were absolutely the last straw. That’s when the national market operator left the gas-fired power station at Pelican Point idle despite the fact a record heatwave was forecast. In answer to Frydenberg’s criticism that he shouldn’t have gone it alone with his state energy security package, Weatherill shot back: “What am I meant to do? Sit here and be at the mercy of a national energy market operator that will black out South Australia but move heaven and earth to keep the lights on in the north shore of Sydney? I’m just not interested in that.”
Frydenberg is well ahead of his more obdurate colleagues on this, which is saying something. He says the rules of the market do need to change and they do need reform. He says there are “lots of changes under way, including how do we lower the threshold for the Australian Energy Market Operator to intervene to protect a state like South Australia when they’re left vulnerable when the wind doesn’t blow and the sun doesn’t shine”.
But it’s too late. South Australia is unwilling to have its energy security left in the hands of privatised profiteers. The Turnbull government’s reforms, due to be announced before the May budget, will need to be just as sensitive to the needs of consumers.
Midweek, the prime minister made a play at being a national leader determined to avert a looming gas supply crisis along the eastern seaboard. He summoned eight of the nation’s biggest exporters to Canberra. He demanded that they guarantee domestic gas supply with the scarcely veiled threat their export licences could be in jeopardy or at least they might have a national gas reservation policy imposed. With Labor foreshadowing that it is close to its preferred policy, the industry agreed, giving the prime minister a much-needed win. Just how much of a win is still to play out.
Along the way, Turnbull blamed the states for banning gas exploration. He said there is “an enormous amount of gas on shore that can be accessed by conventional means without fracking”. This is an argument he might have to win against his deputy prime minster, and the Nationals for whom gas extraction is a hot-button issue. Ironically, Jay Weatherill may prove more of an ally here. His plan to cede 10 per cent of gas royalties to farmers who allow exploration and extraction of gas on their land is seen as a game changer. Frydenberg welcomes it, and it is not hard to imagine many of Barnaby’s farmers would as well.
The other game changer was the intervention of American tech billionaire Elon Musk. His promise on Twitter to build 100-megawatt battery storage in 100 days for South Australia, or it would be free, caught the national imagination. Turnbull took to his smartphone again to tweet his excitement.
This article was first published in the print edition of The Saturday Paper on Mar 18, 2017 as "Time for new tricks, not old dogma". Subscribe here.