Some Realities Not Faced Under Proposed NEG
Recipients of my Commentary (who include Environment Minister Frydenberg and PM Turnbull) know that recent Newspolls show only 24% support for reducing carbon emissions by 26% (cf 2005) by 2030 and 48% favour pulling out of the Paris accord (14% Uncommitted). They are also aware that the CEO of the Australian Energy Market Operator has advocated continuing to use existing coal-fired generators for the next 20 years because electricity prices will be lower than using other fuel sources. And that Turnbull has acknowledged this view as correct.
NEG Must Be Abandonned
In previous Commentary I have drawn attention to the apparent strengthening in The Australian’s critique of the Turnbull government’s NEG. Two days ago the paper published a 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. Yesterday it gave publicity to the report by the Australian Energy Market Operator (AEMO) and the CEO’s 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” (see CEO AEMO). It also referred to Turnbull’s welcoming of the report and his telling to 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”.
What is the NEG Policy Now?
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”.
Frydenberg Gets Help with NEG O’Seas
Today’s AFR reports it had an exclusive interview with the executive director of the International Energy Agency, Faith Birol, about the Turnbull/Frydenberg NEG policy (I have highlighted the major points made). This appears to follow Frydenberg’s private meeting with Birol purporting to explain NEG and a speech to diplomats and energy policy makers at IEA’s Paris HQ. He also claims to have briefed “key” Trump officials and chairs of US energy committees in Washington.
ACCC Report on Electricity Prices
The ACCC report on electricity prices, and the associated address by Turnbull at the Queensland Press Club, were not available on either’s webites at the time of writing this at 9.00pm and after. However copies of the report were available to the media, which also had an oral version of Turnbull’s 15 minute to the Press Club. These articles from The Australian include references to what appear to be the main points or the main emissions made orally by both Turnbull and Sims. It appears that the prices issue will again be a major item tomorrow in The Australian.
More Questioning of Turnbull Energy Policy
The public address on 3 July by Tony Abbott advocating withdrawal from the Paris agreement has produced favourable reactions from several quarters but a response from Turnbull and some of his ministers which is largely dismissive and an attempt by much of the media to suggest Abbott’s analysis is outdated and should be ignored. That is what might be expected from people who have locked themselves into a fixed position that we face dangerous warming unless carbon emissions are reduced. My commentary below concentrates on those who have challenged that position.
Electricity Policy
As Parliament left for the six week winter break, major divisions remained within the Coalition on electricity policy, the outcome on which basically depends on what view is taken on climate change. If the view is taken that Australia must significantly reduce emissions of CO2, we will continue to reduce the use of coal to power electricity and instead use the more expensive sources of power which have already caused major increases in electricity prices even though they involve lower or nil emissions. It would also mean an acceptance of a much bigger role of government in the economy, which many see as the real objective.
Tax Cuts & Rises in Electricity Prices
The Turnbull government has succeeded in obtaining a welcome reduction in personal income taxes. But the estimated reduction in total tax levels is less than might be imagined from the media exchanges. This is important because, as stated in Budget Paper No.1 for 2018-19, “it is important that the personal income tax system does not act as a disincentive for those taking on additional work or seeking advancement”. Also that the “cap on the overall tax burden… “is consistent with the long term average of 23.9 per cent of GDP” which the government has set.
Turnbull’s Questionable Energy Policy
The debate on energy policy between the Coalition and Labor has seen both up to now adopting the same policy of reducing emissions of CO2 but with Labor supporting a much larger reduction. But we now we see an open split within the Coalition, with Abbott warning that a number may cross the floor and vote against the National Energy Guarantee (NEG). In Abbott on NEG he argues that the Turnbull government has conducted a “fundamental failure of process” that has been “stifling the proper debate that we should be able to have inside our party room”. He argues that the government has spent an “enormous amount of time” negotiating with the crossbench, but warned the backbench was being ignored. “I reckon the government needs to spend a bit more time talking to the backbench. “Yes, the crossbench in the Senate is important. Don’t forget the backbench, because you are only in government because you’ve got a backbench that’s prepared to support your legislation”.
Coalition Facing Almost Certain Electoral Defeat
Although the Newspoll published on 5 March showed no change between the Coalition and Labor on a TPP basis (47/53), Turnbull’s Dissatisfaction rate fell from 54 to 57 and is now worse than Shorten’s (56). As to who is a Better Prime Minister, Turnbull’s rate fell from 40 t0 37 while Shorten’s rose from 33 to 35.