Energy Policy, Turnbull Down 3 Points

The debate over energy policy (which is really about climate policy) looks like continuing apace, with today’s AFR reporting a discussion at tomorrow’s joint Party Room on what it describes as “the energy crisis”. The fact that the Nationals are invited certainly suggests that there is a crisis of sorts (as a separate party, they do not normally participate). Deputy PM Joyce  is pictured in the attached digital version practicing with his whip (see Mix of Energies Will Do) and as suggesting that there may be a discussion of a government-owned coal-fired generator. It surely can’t be that such a possibility might be seriously discussed: with an energy policy involving an increase in renewable (under a Finkel 42% by 2030) coal usage would progressively decline and there would be no new investments in coal-fired generators. In such circumstances any government coal-fired generator would lose money and would have to be subsidized. It would not on its own “save” coal.

In similar vein Joyce’s comment about being “completely agnostic” about the mix of energy sources does not stand up: any energy policy involving a large usage of renewable, and a plan to further increase that usage, would spell the end of coal-fired power. Any realistic discussion has to include a serious consideration of allowing Australia to not strictly observe the target of a 26-28% reduction in carbon emissions. I suggest this in my lead letter in today’s Financial Review below.

Emissions target should be reviewed (Letter published in AFR, 19 June 2017)

Phillip Coorey has rightly pointed out that “the energy industry is years ahead of the political process and long ago started following the money trail towards cleaner forms of energy” (“Every galah in the pet shop is now an energy expert”, 17-18 June 2017). He refers in particular to one 2017 forecast for renewable to “take 76 per cent of the $88 billion Australia will invest in new power generating technology over the years to 2040”.

One wonders, however, whether they have used the  right model. Australian energy producers, and the businesses and households who purchase their product, need to recognise that they will face competition from their counterparts in one of the three countries which are the biggest emitters (China, India and the US).  Policies in those countries are not designed to achieve lower targets of emissions before 2030, which means they will have lower costs than Australian businesses which will increasingly rely on energy from the much higher cost renewable. Electricity prices will rise even further.

It seems possible that in due course other countries may follow the three biggest emitters by deciding not to strictly observe the emissions targets which they voluntarily agreed to in Paris (there is no penalty for missing a target). For Australia, our government may need to consider the possibility of following the three largest emitters, viz at least for the time being, drop the target of a 26-28 per cent reduction in emissions by 2030.

Des Moore, South Yarra, Vic

The need for such a major policy change is not simply related to having  a sensible climate policy. The latest Opinion Poll suggests it is needed as a start for the Coalition to save the next election. The fact that the Coalition’s poll has now been well below Labor’s on fourteen successive occasions sends a message that it either has to have a complete reversal of policies or Turnbull has to be replaced – or probably both. Although the TPP of 47/53 has not got worse, Turnbull’s net satisfaction rate did and his performance rate actually went down 3 percentage points to 32 per cent (see Turnbull’s Same TPP Polling but worse Performance). Enough said!