What is the NEG Policy Now?

AEMO Report & Possible Implications

The editorial in today’s Australian contains an important follow-up to yesterday’s Newspoll showing that only 24% opt for the Turnbull policy of obtaining a 26-28 % reduction in carbon emissions by 2030 rather than keeping energy prices down and that 48% now favour Australia pulling out of Paris, which is up 3 percentage points (see OZ Favours Coal Instead of NEG). It also draws attention to the report by the Australian Energy Market Operator (AEMO) and its call ”for Australia’s fleet of coal-fired power plants to be operated for as long as possible to prevent a ­future price shock in the transition to renewables, claiming the ageing plants will still deliver the cheapest electricity for the next 20 years”.

The extract below is important in suggesting that The Australian may have become more open questioning of the dangerous warming theory:

“In many respects this recognition that coal is cheap and reliable and therefore underpins the integrity of the energy system is a statement of the obvious, but it runs counter to the policy zeitgeist and comes at a critical time in the national debate. It provides yet another opportunity for Malcolm Turnbull and the Liberals to intervene in favour of dispatchable electricity supplies. Yet they seem determined to stick only to their NEG proposal. Their Coalition partners, the Nationals, are urging stronger action and former prime minister Tony Abbott promotes withdrawing from the Paris climate agreement.

Yesterday’s Newspoll showed almost half (48 per cent) of all voters are in favour of rejecting Paris compared with 38 per cent opposed. More encouraging for the Prime Minister and his NEG plan is how the Coalition has opened a lead (40 per cent to 34 per cent) on which side of politics voters believe will keep electricity prices lower. Still, the AEMO report and last week’s Australian Competition & Consumer Commission findings show the power crisis is far from over and that more than the NEG will be required to deliver certainty”.

Unusually, all the letters also seem to be from skeptics (see OZ Letters on Coal) and an article starting on the front page reports opposition to NEG from some big users of power and (remarkably) the ACTU also draws attention to NEG’s likely adverse effects on employment of power workers (what does Shorten say about this?) (see Opposition to NEG Because Costs). Even the BCA weighs in by rejecting the NEG provision that big energy users be responsible for ensuring reliability. In short, businesses and others are discovering serious deficiencies that require remedies.

When we get to Turnbull’s reaction to the AEMO claim that “the ageing plants will still deliver the cheapest electricity for the next 20 years”, we find that him welcoming the report and telling radio 3AW listeners that “there’s no question that getting more megawatt hours out of an existing coal-fired power station is cheaper than the megawatt hours that’d come out of a new one. No question about that at all” (see Turnbull Supports (?) Coal Analysis in AEO).

So, if the Turnbull government accepts the AEMO advice that Australia should keep going for 20 years the existing coal-fired generators, those generators should surely be kept producing at least until 2030. But that is the year when carbon emissions are supposed to have been reduced by 26-28 per cent compared with 2005 (the base year). How then would it be possible to keep the coal fired generators going and yet further reduce carbon emissions?

The answer is that it can’t be done. Gas makes some carbon emissions but it provides fuel equal to 21% of total Gigawatt hours produced in Australia (in 2017). Would any government dare try to restrict its usage? If the cuts in carbon emissions were to come from further reducing coal-fired generators, how would this reduction in cheap power be done?

The reality is that  at present generators using coal have nearly half of total installed generator capacity (47.4%) and they provide over 60 per cent of the total Gigawatt hours produced, by far the major source of power. By comparison,  wind turbines provide about 9 per cent of capacity and about 5 per cent of Gigawatt hours and there would have to be a major investment in wind to replace the reduced usage of coal.

I have suggested before that the Turnbull/Frydenberg clique is close to panic mode in trying to emphasize the importance of reducing power prices but facing the prospect of rising prices if usage of coal is reduced. Why didn’t they (and other “experts”) realize that before now?

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