Can’t join the dots

The introduction to Graeme Bethune’s latestEnergyQuarterlypublication strikes a chord with me.

Bethune, CEO of EnergyQuest, hails the successful seven-year journey of the INPEX LNG development in the Northern Territory, pointing out that it is not only pushing Australian gas exports close to 80 million tonnes a year but the growth it is contributing in production of condensate and LPG is also helping to offset the national fall in oil production.

And, he says, tongue in cheek, no doubt, “you would have thought this would be a call for national celebration, perhaps even a public holiday to rival Melbourne Cup day” adding “alas not, it’s all taken for granted or is even a cause for complaint: why are these foreigners taking our gas – I bet they are paying less than we are.”

Hopefully, says Bethune, these are not the views of the majority but it is “unfortunate that every silver lining appears to have a cloud.” That’s the point at which I nodded.

The problem domestically, as Bethune says, is that the east coast gas market – which will be the focus of the next Australian Domestic Gas Outlook conference in March at which he will be a keynote speaker – is experiencing ongoing volatility in price, demand, supply options and government policy. 
This, along with the politics of climate change policy, tends to hog the attention of the mainstream media and the commentariat because, as it was said of the late Gerald Ford, so many seem unable to walk and chew gum simultaneously – or more pertinently to join the dots across the energy canvas.

(By the way, around now this country should be hitting the billion barrel annual production mark – in oil equivalent terms – for its petroleum output in all forms, a notable achievement; will it get any political or media attention, I wonder, reflecting on the huge effort in investment and in engineering and technical skills required to bring this about with its major impacts on the national economy and on employment?)

The big picture here is that the inter-connectedness of energy supply factors needs the clearest attention in the public debate from the top down as Australia wrestles with the inevitable and necessary shift in electricity supply and with questions about how to reduce its overall carbon emissions. This just isn’t happening.

As an important example, the tightness of the gas market plays in to the problems of the NEM. With a reduction in east coast supply and the consequent elevated level of gas prices, use of the fuel for power generation is falling back – and this is a factor in Australian Stock Exchange electricity futures for 2019 and 2020 along with lower mainland hydro storage levels, concerns about the speed of connection for new renewable projects and forecasts for hot and dry conditions in the long days of summer now upon us.

Looking in the rear-view mirror via Bethune’s excellent quarterly report, it is notable that the 12 months to September this year have seen gas generation’s share of the NEM subside (from 19,160 gigawatt hours to 17,949 GWh) while there have been rises in hydro power (up 889 GWh to 15,736 GWh), wind power (up 2,331 GWh to 13,627 GWh) and large-scale solar (up 429 GWh to 949 GWh).

All of them, of course, are still far out-weighed by coal-burning power plants – which contributed 146,304 GWh in this period, down 2,304 GWh against 2016-17 outcomes because of the closure of Victoria’s Hazelwood but with the New South Wales and Queensland black coal generators pushing up their production by 2,866 GWh (to 110,140 GWh).

In passing, I find it striking that the NSW energy minister seems to have his public focus wholly on renewables when, as Bethune’s data shows, in the 12 months to September (which includes last summer) fossil-fuelled energy – black coal generation, gas generation and imports from Queensland – was the backbone of meeting the State’s needs, delivering 58,975 GWh (90.6 per cent) within its borders.  Plus, you can toss in another net 5,080 GWh arriving over the QNI interconnector.

Neither the politician nor the populist media seem to feel the need to talk about this (except as a problem with respect to emissions). The C&I sector, users of most of NSW electricity, don’t need telling and will not be comforted as we go to Christmas by suggestions that the State could be heading towards significant supply hassles in the new decade as the drive to wind and solar undermines coal-fired generation in particular.

East of us (speaking as a NSW resident), fossil fuels in Bethune’s reporting period provided 98.3 per cent of Queensland electricity – and the two States combined accounted for 64 per cent of the NEM’s power demand and supply.

This is a significant backdrop to the seemingly endless argy-bargy about changing the NEM mix and it gets two-fifths of three-quarters of nowt attention in the green-drenched shouting going on.

The more weather-affected electricity there is in the NEM mix (and this, to an extent, includes hydro because of the impact of drought), the greater the issue becomes of gas-fired generation as a balancing tool – which brings us back to inter-connectedness because of the role of politics, investment and fickle geology in ensuring an adequate east coast gas supply. You can throw in geopolitics here, too, because what happens to the oil price flows back to our domestic scene.

To all of which, for eastern Australia, one must now add the impact of importing LNG to the region – there are four projects in various stages of planning. How green activism and politics will play a hand in the implementation of this development is no minor matter.

The ACCC’s Rod Sims (another speaker at the next ADGO) rightly says that the matters surrounding energy – its production, its environmental impact and the associated market issues – are some of Australia’s defining challenges for this century. Which just leaves one continuing to wonder (year after year) why our national leaders can’t elevate themselves above the political swamp to guide us towards a safer landing?

Re ADGO – you can find the conference program on the Web at https://www.adgoconference.com.au.

Also, I get muttered at by acquaintances in the West from time to time because I focus so much of this blog’s attention on the east coast. Fair cop. It’s worth including here, therefore, that Bethune’s quarterly report shows electricity supply in WA’s South West Integrated System in the 12 months to September was made up of 8,749 GWh of coal-fuelled generation, 7,506 GWh of gas-based plant and 1,631 GWh of variable renewables (including 1,610 GWh wind power).  Rooftop solar use was estimated to be 1,348 GWh (compared with 7,659 GWh in the NEM). This means that fossil-fuelled electricity accounted for 90.6 per cent of the grid-connected mix over there.

Credible plan needs truth, not spin

I had a personal interest in the past week’s “schools’ strike” to demand more action on climate change: two of my grandchildren were among the thousands of kids who crowded in to Sydney’s Martin Place.

Happenings like this inevitably polarize opinion. Perhaps it is not surprising our Prime Minister and Resources Minister Matt Canavan were on the deploring side, but perhaps also they might have fared better in public opinion if their reaction had not been guided by their knees and their tone had been far less patronizing towards our young citizens.

Bombarded as they are by media material on climate change, is it surprizing that kids of 12 and 15 are concerned about this issue? Do they have a right to express their concern loudly and as effectively as they can? Of course they do (and some of their banners were expressive, including “I’ve seen smarter cabinets at Ikea,” which would have resonated with more than a few of their elders.)

What was missing on the streets (and in ensuing media comment) was any appreciation of the complexity, just in our own national case, never mind the global scene (which will dictate climate outcomes), of pursuing radical paths towards lowering carbon emissions without undermining the economy.

As it happened, the “schools’ strike” coincided with the publication of a commentary by one of the best thinkers about energy management on the planet, Oxford University’s Dieter Helm. You can find it on the London Financial Times website. Its punchline is “a credible climate action plan needs the truth, not spin, about costs.”

Helm, who recently undertook a Finkel-like task for the British government, makes the point that, since the 1990s – when climate change started gaining traction as an issue and well before the protesting children of the past week were born – “lots of money has been spent, vested interests have profited, but we remain well on course for exceeding two degrees warming.”

It is time for a rethink, he declares (and isn’t that, in essence, the point our kids were seeking to make at their rallies?).

“The claim that global decarbonization can be done at little or no cost is nonsense. On the contrary, switching from an overwhelmingly carbon to a non-carbon-based economy in just two or three decades is really expensive.”

Helm points to “staggering” expense imposed to date – such as the 25 billions euros a year Germans are now bearing as a result of the Energiewende or the 20 per cent premium loaded on to British household power bills – and also to the fact that voters don’t like this cost (a significant political issue here) despite climate concerns, something being demonstrated currently on the streets of France by often-violent protests over the rising cost of diesel (not least because of a carbon tax), which makes great TV news-time “copy” in Australia without any reference to the abatement aspect.

A credible climate action plan, argues Helm, needs to recognize that top-down approaches (like the Paris agreement) aren’t working. Most of all, he says, such a plan needs to make sure that “the very limited amount of money current customers and voters are actually prepared to spend is spent wisely.”

(One of the things that really struck me about the recent International Energy Agency world outlook publication was the agency’s insouciant references to more than $US60 trillion in capex needing to be spent between now and 2040 on climate mitigation efforts.)

In Helm’s book, none of the existing renewable technologies are going to do the required mitigation job. He wants to see a much larger expense on research and development targeting the longer term.

Taking the Helm approach here could, for example, mean a significant focus on pursuing small modular nuclear reactors and a renewed focus on carbon capture technology (two steps currently on the Canadian agenda, to cite a similar economy).

As it also happens, the Energy Policy Institute of Australia is releasing a new commentary on Monday urging that this country has much to gain by joining the international nuclear innovation effort and “pursuing industrial-scale, fit-for-purpose, low carbon energy solutions.”

There’s a line in the EPIA paper that I would like to have seen on placards at the “schools’ strike” rallies around the country: “The climate doesn’t mind how you clean up energy systems so long as you do.”  In other words, that technology neutrality should be the over-arching principle of energy policy – something that, despite some of the political rhetoric, it certainly isn’t in Australia.

EPIA points out that, apart from renewable energy and nuclear power, there are new and more efficient processes and systems for reduction of consumption, energy storage, carbon capture, use and storage, hydrogen, bio-engineering and more besides. And, the institute says, there is “unrealized scope” – now, that’s an understatement – for collaboration among hitherto competing technologies and industry sub-sectors.

A start here could be the Morrison government adding Australia to the 15 countries signed up for the “NICE Future Initiative” – the acronym standing for “nuclear innovation clean energy.” Which, of course, would require abandonment of the legislative ban on nuclear energy in Australia, a relic of another kneejerk action that is long past its use-by date.

Part of the EPIA commentary, written by its executive director, Robert Pritchard, just returned from a conference in Tokyo ahead of the 2019 G20 meeting to be held in Japan, relates squarely to what I see as the trap being dug for us by the policies Labor is pursuing (and, on present indications, has a very high chance of implementing as the next federal government).

Referring to renewable energy as the fastest-growing form of low-carbon power supply, Pritchard writes: “(our existing) power systems were never designed for renewable energy; intermittency poses a challenge to power systems that is growing faster than the share of renewables.” He notes that massively increased deployment of wind and solar power has enabled their direct costs to fall substantially, “reinforcing the hope of advocates that power systems can eventually run on 100 per cent renewables.” And he adds: “If only it were that straightforward. Apart from being weather-dependent, the level of VRE that can be absorbed within a particular power system depends on the availability of other resources, storage solutions, grid interconnections and other system characteristics. As a result, VRE tends to increase total system costs.”

This is the point that has passed by our kids with their banners – quite understandably because 99 per cent of the media they follow ignores or dismisses the problem while it certainly doesn’t figure in schoolroom discussions about the wonders of wind and solar – and, so far as I can see, also the Labor party (not least because of its need to out-green the Greens in the forthcoming federal election and in State elections). Lamentably, it has mostly also passed by our mainstream media and, as a result, the voting public.

All of which brings me back (not for the first time nor the last) to sage advice to the body politic provided by royal commissioner Kevin Scarce: “In developing Australia’s future electricity system there is a need to analyse the elements and operation of that system as a whole and not any single element in isolation. (There is a need for) the development of a comprehensive national energy policy that enables all technologies, including nuclear, to contribute to a reliable, low-carbon electricity network at the lowest possible system cost.”

That was said in mid-2016 and still we seem incapable of taking it up at a national policy level. In my view, we owe it to our kids to do so because, if we don’t, by 2040 they will be in the front line of footing the cost (including damage to the economy).

Finally, there is a line in a newspaper op-ed this weekend written by Jennifer Westacott, the Business Council CEO: “Bad policy created this mess and ill-conceived and rushed policy won’t solve it.”  That could go on rally banners or on walls in our halls of political power right under the one that says: “The economy, stupid.”

 

Field of dreams

When I wrote earlier about the International Energy Agency’s 2018 world energy outlook (running to 661 pages) I focused on modelling contained in its “new policies” scenario – which one of my professorial friends defines as “aiming to provide a sense of where today’s policy ambitions seem likely to take the energy sector, incorporating not just the policies and measures that governments around the world have already put in place but also the likely effects of announced policies,” including those from the Paris agreement.

On the other hand, what has tended to capture the attention of green-boosting writers here and overseas is the IEA’s “sustainable development” scenario – modelling what energy supply might look like in 2025 and 2040 (it is not a prediction, something quite frequently ignored by the aforesaid scribblers) through pursuing concerted, world-wide action to meet long-term climate goals of the Paris agreement as well as to ensure universal energy access and reduce air pollution.

The agency self-advertises this scenario as a strategy to achieve these goals (a field of dreams, if you like) but, given the multitude of variables posed by potential technology changes as well as geo-political gyrations, it is surely fair to say that what will eventuate over two decades is pretty certain to be different.

In this respect, standing in 2000 and looking to the present, would one have foreseen a 47-fold rise in global electricity supply from wind and solar photovoltaics (32 terawatt hours to 1,519 TWh in calendar 2017) or the effective stagnation of nuclear supply (2,591 TWh then and now 2,637 TWh) or the more than doubling of gas-fuelled generation (from 2,747 TWh to 5,855 TWh)?

Is it likely, as the “sustainable development” scenario projects, that the contribution to global supply from wind and solar PV will treble between now and 2025 (reaching 4,647 TWh) while coal-fired generation slumps 27 per cent (falling from 9,858 TWh in 2017 to 7,193 TWh)? We’ll have to get there to find out, won’t we?

(Not without interest in this regard, given Australia’s strong role in LNG trade, the IEA modelling suggests gas-fired generation will hit 6,810 TWh in 2025 and then fall back to 5,358 TWh in 2040, a contrast with its “new policies” projection that global demand for the fuel will rise 40 per cent between now and 2040.)

The green boosters who rejoice as they focus just on the agency “ sustainable development” scenario, especially its 2040 outlook, seem reluctant, judging by what I see published, to acknowledge that the longer term is not just all about wind, solar, batteries and so forth.

The IEA modelling for the scenario does envisage a major decline in coal-based generation by 2040 (down to less than 2,000 TWh, a third of what it was in 2000 and a fifth of where the agency’s “new policies” perspective sees it going) but it also suggests that gas-fired power supply will be roughly the same then as today and there will be a near-doubling of nuclear power (rising to almost 5,000 TWh).

This version of the 2040 outlook, in fact, sees almost 12,500 TWh coming from fossil fuels and nuclear, the sources the activists love to hate, versus just over 14,000 TWh for wind and solar PV in a global supply that would be a smidgeon over 37,000 TWh. The balance would be made up of almost 7,000 TWh of hydro power (mostly from large dam systems, not a favorite of the greens) and almost 3,500 TWh from such other renewables as biomass (also not a favorite when in the form of woodchips).

Just getting to the desired level of less-emitting supply on this trajectory would require an average annual capital outlay of $US2 trillion between now and 2040, says the IEA, assuming the best path for wind and solar development. Racing beyond it towards 100 per cent renewables, as the radicals insist we should, would cost what?

Parochially, one can also ask what getting to 50 per cent renewables in Australia by 2030 and chasing well beyond that in the following decade would cost in terms of consumer bills, taking in to account all the system costs involved and not forgetting that the activists oppose a rising role for gas? We still have no independent analysis of this, something that becomes more important as federal Labor presents its climate and energy policies ahead of what it anticipates will be an election triumph.

(As a slight digression, I see an ABC report on the IEA publication, quoting the agency’s chief economist, Lazlo Varro: “If you ask the question ‘can you power 100 per cent of the Australian economy on wind and solar?’ with the current state of this technology, the answer is no.Rephrase the question as ‘can you increase the share of wind and solar if you do your homework in improving the system?’ and the answer is definitely yes.” Has it crossed the broadcaster’s mind to go off and get local independent, expert commentary on Varro’s second point, especially in the context of power affordability? Apparently not.)

More broadly, it needs to be borne in mind that what the rest of the world does is beyond just vaguely interesting from our perspective in Australia – it will impact on our exports of uranium, gas and coal plus imports of oil and refined petroleum products, vital components of this economy.

All in all, the IEA “sustainable development” scenario has a raft of implications for this country, both to 2025 and out to 2040, that at least deserve sober reflection.

Time poor, running hard

As a summation of a bad situation, it seems pretty good: “Eastern Australia is presently experiencing very high prices for electricity and gas, there are greater threats to reliability over time and we are falling short of our economy-wide emissions reduction goals. In other words, we are failing on all elements of the ‘energy trilemma’ identified by the Finkel Review, despite the considerable progress underway on energy market and policy reforms in recent years.”

Thus the Australian Industry Group in a new submission to the federal government on energy policy (reacting to the “underwriting new generation” thrust currently on the table). AiG adds: “Our strongly preferred solution to this uncertainty is for all sides of politics across the Commonwealth and the States to agree an efficient, pro-competitive, stable and scalable framework for integrating climate and energy policy. Even following the collapse of the national energy guarantee and several previous efforts towards an agreed outcome, the logic of a durable and effective national policy framework remains compelling.”

For the Minerals Council of Australia, the core issue comes down to “repeated pivots and a lack of consensus in energy and climate change policy by successive governments for well over a decade”. (And MCA reminds the politicians that 70 per cent of total national energy consumption is by business, including 12 per cent by mining and resources, as it points out that “irrespective of what projects come forward – whether upgrades to existing thermal plants, new thermal facilities or renewables combined with firm capacity – the policy should aim to deliver low cost power which meets the needs of Australian industry.”)

The miners see the NEM facing “serious challenges from the erosion of baseload power generation capacity, with this tightening of supply/demand balances driving price outcomes which are adversely impacting Australia’s industrial sector and households,” a reflection, it says, of “unmanageable policy risk for investors in long life assets in the power generation sector.”

The Australian Energy Council, representing gentailers, adds the accusation that “any apparent lack of competitiveness in the wholesale electricity market is directly due to repeated governmental policy failure over the past decade,” repeating its long-held view that “government intervention in the investment process distorts the wholesale electricity market”.

And the Clean Energy Council asserts “the current political environment is complicating any effective program development,” claiming that the collapse of the NEG and the political reality that Australia has had a recent leadership change, with a federal election impending, represents too much risk to investors in the energy sector.

These views need to be seen against the background of the declaration by the Australian Competition & Consumer Commission earlier this year that “it critical for there to be a stable energy policy which incorporates the need for Australia to meet its climate policy obligations but at the same time does not distort the way in which new generation capacity enters the market.”

The current point at issue, really, is one of timing. Politics dictate that the Morrison government must pursue change targeting affordability and reliability of electricity supply helter-skelter, still hoping for a miraculous resurrection of its fortunes in mere months or at least sufficient traction to save it from the level of seat losses (or worse) that befell the Labor regime in 2013 . Politics also dictate that Labor fends off its opponent’s plans until after an election it expects to win handsomely, enabling it to pursue its own energy agenda (although there is always the issue of the make-up of the Senate).

AiG focuses hard on the time factor, warning that “the implementation timeframe envisaged in the paper is too aggressive.”  Given the complexity of the issue and the potential risks inherent in what Morrison & Co are proposing, “we strongly recommend that the government slow down,” it says.

Looking at the situation from a non-partisan position, the Energy Policy Institute gives a tick to provision of financial support for investment in new NEM generation providing that the measure is technology-neutral and funds are made available on a competitive basis.

EPIA suggests that, to reduce the potential burden on taxpayers, the mechanism should be a special-purpose statutory vehicle with the federal government providing credit enhancement as required – and that it be designed to “have enduring value not only to proponents of present-day projects but also to those that are some years short of feasibility and where critical decisions such as siting have yet to be made”.

Now there is an obvious over-arching risk in what the government is currently proposing – as Engineers Australia observes: “It would not be an ideal scenario to end up with an over-supply of capacity in the system.”

The engineers also point to another aspect of the government proposal that should be heavily flagged “handle with care.” This is the suggestion that the measure could include capacity payments for the availability of firm or firmed generation. Engineers Australia points to the advice of the Finkel task force: “A capacity market is a significant market reform, which would require a long-term and costly departure from the existing market framework. Such a reform should only be considered in circumstances of irresolvable failure of the energy-only market to bring forward sufficient new capacity to ensure reliability.”

Meanwhile, ousted prime minister Malcolm Turnbull, in a supposedly behind-closed-doors talk to an Australian Bar Association event, is reported as saying that the Coalition at present is “not capable of dealing with climate change as an issue,” a statement of the bleeding obvious if ever there was one.

Finally, there is an interesting contribution to this debate in the latest Essential Report opinion poll. Respondents were asked whether they “approve or disapprove of the government giving support to new coal-fired power stations, including indemnifying them against the future risk of a carbon price?”  The “approve” vote was 39 per cent versus 35 per cent for “disapprove” with 26 per cent opting for “don’t know.” One in three of respondents professing to support Labor went for “approve” versus four out of 10 of them being strong disapprovers — and with 27 per cent of them in the “don’t know” category.

IEA’s outlook for energy

The International Energy Agency’s annual world energy outlook is fertile ground for those with agendas or, in the case of more than a few in the media, those playing the click bait game.

Thus “our” ABC chose to tell its viewers and listeners this week that the 2018 edition of the outlook, just published, shows that “renewable energy has surpassed fossil fuels worldwide as the main source of new electricity generation.”

Others use the agency’s work to push their point that global coal use has peaked, with one local website asserting “coal dumped as IEA turns to wind and solar to solve climate challenge.”

Now the IEA modelling – not predictions – at its core does three things: (a) extrapolate from today’s energy use, (b) try to figure what the supply situation will be if the world’s governments adhere to their promised decarbonizing programs (the “Paris agreement”) and (c) present the agency’s view of how energy can be provided to achieve the long-term (century’s end) global warming mitigation ambitions. The horizon for the models is 2040.

Only the middle scenario, from my perspective, is worth immediate attention – it will take another version of the “Paris agreement” (Paris 2.0, eh?) to produce government commitments for a larger abatement effort.

Just for electricity supply, the IEA says coal dominated in 2017 with 9,858 terawatt hours (38 per cent) followed by gas (5,855 TWh, 22 per cent), then hydro power (4,109 TWh, 16 per cent) and nuclear (2,637 TWh, 10 per cent). The darlings of the green brigade trailed by a long way – wind farms 1,085 TWh (four per cent) and all forms of solar power 446 TWh (just over two per cent).

Extrapolating from the policies governments now embrace, the IEA sees coal-burning power going up in terms of output at 2040 (to 10,355 TWh) but down in terms of share (26 per cent), gas-fuelled supply soaring (to 9,071 TWh, representing 24 per cent), hydro power at 6,179 TWh (15 per cent) and nuclear at 3,728 TWh (nine per cent).

It certainly sees wind and solar power rising strongly: to 4,690 TWh (12 per cent) in 2040 for the former and 4,061 TWh (10 per cent) for all forms of solar.

This outlook has all forms of fossil fuels (coal, gas and oil) meeting 50 per cent of 2040 generation production (versus 64 per cent now) and all forms of renewables meeting 41 per cent of output (versus 25 per cent now). Throw in nuclear and hydro power and this modelling has conventional generation delivering just under three-quarters of the world’s electricity needs two decades from now versus 90 per cent at present.

The renewables breakdown in this IEA scenario is 15 per cent hydro (from lots of new large dams with some questionable environmental effects), 14 per cent from bio-energy (mainly woodchips, a form of supply that has a fair few environmentalists less than chuffed), 12 per cent from wind turbines, nine per cent from solar photovoltaics and one per cent from geothermal.

The commentariat will point vigorously to foreshadowed new generation capacity development, activists because this data suits the public impression they strive to create and not a few in the media because they understand next to nothing about capacity factors.

What this particular scenario shows is that:

  • There will need to be almost 1,200 gigawatts of wind farm development between 2017 and 2040 to deliver an extra 3,605 TWh of supply
  • There will need to be investment in some 2,140 GW of solar photovoltaics to deliver an extra 3,404 TWh of electricity.

By comparison an additional 1,045 GW of gas plant will need to be built to provide an extra 3,216 TWh of power.

As well, the agency calculates that 2,238 GW of coal plant will provide 10,355 TWh of electricity in 2040 – a large portion of which, it seems safe to say, will be using new-ish technology.

Where the activist and media attention is mostly falling, naturally, is on the IEA’s “sustainable development scenario,” what’s needed, it says, to deliver a power supply mix attuned to high emissions abatement ambitions – “high” being a relative term; green radicals want to see fossil fuels cast in to the dustbin of history by 2040.

There’s another set of numbers in the IEA material that shouldn’t be ignored in this context. Looking at overall global energy demand in millions of tonnes of oil equivalent under current government policies, it sees coal use in 2040 at 3,809 mtoe (3,750 mtoe in 2017), oil at 4,894 mtoe (4,435 mtoe in 2017 – this would be the effect of electric cars and so forth), gas at 4,436 mtoe (up from 3,107 mtoe), nuclear at 971 mtoe (up from 688 mtoe) and all forms of renewables at 3,605 mtoe (compared with 1,992 mtoe last year).

The “death of coal” this is not, still less the demise of fossil fuels.

And, for reference, in its sustainable development scenario, the agency puts the 2040 overall energy mix at 1,597 mtoe for coal, 3,156 mtoe for oil and 3,433 mtoe for gas versus 1,293 mtoe for nuclear and 4,237 mtoe for all forms of renewables (of which more than a third would be bio-energy). Now, if your solar-powered calculator is on the blink, this represents a 56.5 per cent global market share for fossil fuels under the IEA’s sunniest scenario. You can read the Web coverage about the outlook until your eyes burn and you won’t find this point highlighted.

I’m also struck by the extra-ordinary investment required for pursuing the scenario horizons. The agency sees a path set by existing global government policies as costing a cumulative 60 trillion US dollars between 2018 and 2040 – and the more ambitious agenda as requiring “only” another $US8 trillion, 15 per cent higher.

Having written more than a few media statements in my 30-odd years at the public relations and issues management coalface, I find it a bit odd that this latter aspect wasn’t highlighted in the IEA’s statement this week.

Finally, buried in this avalanche of data, is at least one more salient point – the IEA’s modelling under its “best and fairest” scenario is for just over 36,800 terawatts hours of generation in 2040 compared with 40,430 TWh under the current government policies outlook; that represents the potential gain from a major, worldwide energy efficiency effort.

Running out of time

Two years ago this month Josh Frydenberg (then Environment & Energy Minister) defined the challenge like this: “It is a big job to ensure stability, security and reliability in the energy system while at the same time balancing the costs to industry and consumers and the need for a transition to a low carbon, low-emissions economy.”

This November, as the government in which he is now Treasurer limps towards what most in the media commentariat are portraying as inevitable election defeat, the “big job” remains nowhere near done. Labor is presenting itself as in far better shape to deliver on it and the government appears to be running out of time.

Writing in The Australian, Frydenberg’s opposite number, Chris Bowen, declares: “Labor is the only party capable of delivering a coherent and consistent energy policy. In all my meetings with business — big and small, Australian and multinational — there is one theme to my discussions: the biggest challenge facing business is energy prices and the lack of a national energy policy to engender the investment in generation necessary to put downward pressure on prices.

“Of all the negative consequences of the revolving door in personnel of the government and the policy dysfunction we have seen, the lack of a national energy policy is probably the most significant. It is clear the Liberal government is pathologically incapable of delivering an energy policy for Australia. It will be left to a Labor government to deliver one.”

His colleague Mark Butler, Labor’s climate and energy spokesman, has added a call for the Coalition and the Opposition to “negotiate a bipartisan policy to start to expand renewable energy, bring down carbon emissions and bring down electricity prices as well,” clearly a mantra for the federal poll.

For the beleaguered Morrison government, 18 December is now an important date for its energy policy standing. This is when the last CoAG Energy Council meeting of 2018 will be held – on the other side of the Victorian State election presently under way – and when the Australian Energy Market Commission will deliver a report on the retailers’ “standing offer” for the mass power market, labelled a “loyalty tax” by the Coalition.

The AEMC was directed by the October Energy Council meeting to report on the alternative “default offer” approach recommended by the Australian Competition & Consumer Commission.

Morrison and his Energy Minister, Angus Taylor, say the “default offer” approach will mean substantial savings for the “ripped off” mass market — and it seemed for a little while at the end of last week that the government had muted the “big stick” approach, threatening retailer divestment to get their way before the election.

After having had a lot to say in the run-up to last Wednesday’s “summit” meetings in Sydney with the electricity supply leadership, Taylor and the government had been somewhat coy about the outcomes of the discussions. But the divestment row has returned to the headlines overnight with, as The Guardian puts it, the retailers foreshadowing a potential lawyers’ picnic if the government pushes on down this road.

(An interesting quote from a “summit” participant was published in the Sydney Morning Herald,  AGL Energy’s Brett Redman telling the paper that “the elephant in the room was the one thing we couldn’t talk about, pricing.” This, of course, is because a collective move by the retailers to lower bills on 1 January, as demanded by the government, could amount to illegal collusion under competition laws.)

Essentially, leaving aside the “big stick” row now re-emerging, where the federal government is left today is with needing to use next month’s CoAG meeting to enlist State and Territory government support for the “default offer,” requiring a change to the NEM’s electricity law, or, failing this, going it alone and seeking parliamentary approval in Canberra for legislation to put in place a price cap.

Overnight, reacting to energy industry criticism of the legality of what is being proposed, Taylor told journalists: “The government is preparing a comprehensive legislative package to hold the big energy companies to account and stop the ripoffs. The ‘big stick’ legislative package will be introduced to parliament in coming weeks.”

Earlier, the Australian Energy Council, representing gentailers, had summed up the situation’s politics in a website commentary: “Unless the federal government can find a legislative pathway to implement the ‘default offer’ prior to receipt of the AER advice due by 30 April 2018 (and assuming COAG doesn’t agree to implement it in December), then there will be no implementation prior to the federal election.  Although the Labor opposition supports the ‘default offer’ in principle, it is not clear whether they would be keen to assist the government to legislate it prior to a likely May election.  The Greens (who would prefer much more aggressive price regulation) have already labelled the policy a con.”

The suppliers’ solution is for a “reference rate” to be implemented, something the AEC claims has “almost unanimous support” in the sector.

“A reference rate,” argues the AEC, “would deliver the same benefits of simpler comparison of offers that the ‘default offer’ would and encourage customers to get on the cheapest deal possible. Discounts would all be calculated off the same base rate, so you would know quickly and simply whether your deal was the best for you.

“The reference price,” it adds, “still allows retailers of all sizes to recover their costs, and structure their offers in ways that suit their customers’ needs. In a way, you get all the benefits of the default offer for 90 per cent of the customer base without the negative long term consequences that undoubtedly come from price regulation.”

And it asks: “Should we really be implementing a change that results in a few customers paying a little less at the expense of all those who have shopped around and found a better deal?”

In a media statement after Wednesday’s “summit,” Angus Taylor said he welcomed “the initiative by energy retailers to establish a voluntary comparison rate for power prices” as “an outcome” of a “constructive” meeting.

This, he added, is “an important first step.”

He said retailers would establish a working group to implement the voluntary comparison rate, with the assistance of the Department of Environment and Energy.

So far, so good, it seemed — and then the “big stick” issue re-emerged on Monday.

Where all this is going in terms of convincing voters that power price relief is on the way can only be guesswork but it still seems fair to say that the 18 December meeting will offer the Morrison government one of its last remaining stepping stones towards something it can portray as a win.

With respect to which, I see a letter in the Australian Financial Review asserting that “energy management in Australia is nowhere near a situation where certainty of supply and affordability to business and other consumers is in sight.” It’s hard to argue with that.

Matter of opinion

As we go in to another week in which the Morrison government is dragging energy industry leaders to a “summit” meeting in search of political kudos for being seen to be busy despite what the Grattan Institute labels a major policy failure, it is pretty well pointless to speculate where things may stand by next Sunday, not least because (as the institute points out) a large chunk of remedial action relating to both gas and electricity needs to be addressed by the State and Territory governments.

If you are looking for something to while away the time until the “summit” is held (in Sydney on Wednesday), I recommend reading a commentary on the NEM just published by the Oxford Institute for Energy Studies – which describes it as “an important test case of the impacts of electricity sector transition in a large-scale, liberalized, energy-only market.”  (See www.oxfordenergy.org)

While the study was written before Malcolm Turnbull and then Scott Morrison did their Guy Fawkes impression with the “national energy guarantee,” there is much in it to warrant contemplation – and it comes without all the baggage borne by players in the local debate.

The Oxford authors sum up their review like this: “We argue that an efficient and transparent real-time energy market must reflect the comprehensive operational requirements of electricity dispatch. This necessitates an extension of energy-only design to an ‘energy+services’ model in which efficient price signals are provided for the ‘missing products’ necessary for operational security. Clear service specifications provide transparent signals that enable clear price discovery and facilitate competition from new providers and technologies.“

(Oz consumers might be pardoned for thinking that being academically interesting is fine but, as the South Australians have learned, a laboratory rat’s lot is not a happy one.)

One can’t expect MPs to wade through such a report, more’s the pity, but there’s a point in it that should give a moment’s pause to the more thoughtful ones in Labor ranks, where they are currently living the dream that government is theirs for the taking in the near future. It says: “Increased renewable capacity in the NEM has changed the pricing dynamics in the market. As variable renewables have very low short-run marginal costs, system prices are likely to be low when renewables are generating, but higher and more volatile otherwise, especially in the situation where variable renewable generation is subsidized (such as under the RET). The remaining dispatchable generation in the market is thus forced to recover more of its revenue through a reducing number of high price events which adversely affects the economics of existing dispatchable generators.”

Bill Shorten et al should think about this in the context of reliability and affordability, traps lying across their proposed path of much-expanded wind and solar energy just as they did for the Weatherill of unhappy memory.

What the events of the past 10 years illustrate, it seems to me, is that the trajectory of the NEM, to the cost of consumers, is far too much at the mercy of opinions rather than careful analysis and structuring (which were dominant at its birth in the 1990s).

Such local analysis in recent times by Finkel’s task force and the Energy Security Board has been undermined by opinion within the Coalition’s parliamentary ranks – and all the noises made by Labor indicate their plans are a product of what they believe will be popular in social engineering circles and especially in marginal seats.

In this respect, I also found it interesting in the past week to look at the latest Essential Report polling – as part of my work on the November Coolibah monthly newsletter, now published on this site.

Specifically, I focused on what respondents who say they will vote Labor at the next federal election told the pollsters.

First, in answer to a question about how they rank issues to be given top-three government priority in the next 12 months, the Labor supporters (a) put cost of living first by a long way and (b) put promoting renewable energy way down the list (but ahead of promoting national economic growth, which strikes me as weird for what is supposedly the workers’ party). The cost of living vote was 60 per cent versus 21 per cent for boosting wind and solar.

Second, Labor leaners are more strongly of the view that Australia is not doing enough to address climate change (69 per cent) but they are way behind the Greens (88 per cent) – and their ranks include the highest level of “don’t knows” across the political segments.

How you view such information depends on where you are standing.

As an example, the media have recently run the line that “climate change has emerged as a top concern for company directors” in reaction to the Institute of Company Directors latest testing of sentiment amongst its members.

What the review actually shows is that, in the here and now (and not surprisingly) directors rate energy policy as one of the three biggest challenges facing Australian business – a little behind the growth of global protectionism and rising global economic uncertainty – and they rate energy prices along with reforming the tax system as the next two. The share of respondents concerned about energy bills is 21 per cent – and those fussed about climate change come in at 15 per cent (just ahead of the drought).

Eighteen per cent of directors polled rated energy policy the most important short-term priority for the federal government versus 11 per cent for climate change (and 13 per cent for tax reform).

The respondents also rate climate change top of the list for federal government attention in the long term – hence the media fuss – with a 17 per cent vote, ahead of tax reform (nine per cent), ageing population and infrastructure (each eight per cent) and energy policy (seven per cent). If you add up directors’ choices, climate change gets 39 per cent, ageing population 38 per cent, then energy policy and tax reform (each 35 per cent), then infrastructure (34 per cent) – with international competitiveness (which, personally, I would rate as the country’s top issue both short and long term because so much else flows from it, including having funds for all the services we desire and having jobs for our burgeoning population) getting 33 per cent.

Context, eh? So necessary for real appreciation of the issues on our plate and so little on show in public debate and media coverage.

Wrong place, wrong time

It must have been obvious to Australia’s energy retailers for at least the past year, and perhaps rather longer, that the game is up with “standing offers” for households in an environment where power prices are rising towards the top of the political agenda.

The companies’ position has been that the remedy is in the hands of the customers remaining on these “offers” when all they have to do is find a market deal that will save them money. But suddenly, confronted by a desperate federal government in the wake of the Wentworth by-election, the retailers are right under “big stick” politics with, in some cases, their very structures under threat if they do not accept fast-tracking destruction of what the Morrison government is labeling their “loyalty tax.”

The industry’s leadership is summoned to a November “roundtable” meeting with Energy Minister Angus Taylor where it will be pressured to implement reductions in “standing offers” by New Year’s Day rather than waiting for the “default tariff” decisions of the Australian Energy Regulator which the government has now also set in train – and which are intended, if pursued, to take effect on 1 July.

It is reported in the media today that the retailers are “frustrated” they are being singled out for attention when the focus should also be falling on rooftop PV subsidies and network costs. Well, that’s politics, folks.

Taylor has signaled that a move to abolish solar subsidies – raised by the Australian Competition & Consumer Commission – is not going to be pursued. In an interview with The Guardian newspaper, he says the government has “no plan” to change the small-scale renewable energy scheme (or the RET for that matter), a tacit acknowledgement that any such step is in the “too hard” basket ahead of a federal election the bookies and the pundits say Scott Morrison can’t win.

(In passing, the bookies and the pundits are probably right, but a glance at the history of federal politics since 1993 should remind all concerned that no election is in the bag until the votes are counted. In a box in a cupboard somewhere I still have The Bulletin’s infamous cover asking “Why does this man bother?” some time before the 1996 poll delivered John Howard to the prime ministership for 11 years – in marked contrast to John Hewson, seen by the pundits as a shoe-in in 1993, or Mark Latham in the run-up to the 2004 election.)

Meanwhile one retailer source, who declined to be named in the newspaper interview, has declared overnight “They are demonizing the retailers because we are an easy target.”  That’s exactly right but surely this was foreseeable?

The underlying point is well illustrated by comments from Rosemary Sinclair, CEO of Energy Consumers Australia, who was on radio on Tuesday accusing the retailers of creating a “confusopoly” of offers and discounts that has left customers who, for whatever reason, don’t choose to play in the market “worse off for too long.”

She added: “Over the past three or four years, the standing offer has just risen and risen to the point where it is no longer providing the safety net it should be providing.”

The 3AW radio station promptly labeled the interview in its web publicity “Confusopoly of energy markets leaving Australian households in the dark.”

And the ACCC chair, Rod Sims, was also right on hand to tell media that the Morrison government’s proposal will save small businesses “at least $1,000 a year” and households on “standing offers” between $200 and $300 annually. That small business point is not trivial when you consider where the Coalition must pitch its pleas for re-election.

“Consumers are completely confused now,” Sims added, echoed by Angus Taylor declaring “We need to get the energy companies under control to stop the rip-offs; for too long consumers have been getting a raw deal.”

Here’s Sinclair again on the ABC: “It will be very, very worthwhile because the consumers affected most by this are those most vulnerable to energy prices.”

Of course the Australian Energy Council is out and about saying on behalf of the gentailers that price re-regulation “is not the answer” and casting doubt on how many householders will benefit and how much they will save. (It uses ACCC data to suggest $105 to $165 annually, far below the $832 figure waved around by the Prime Minister – which is at the top end of the scale in one State only). But this horse has bolted for the retailers and, however grumpily, they will have to accept political reality.

The lesson here for the supply business is that it is better to do these things yourself rather than having them done unto you by politicians; the “national energy guarantee” was seemingly seen as an umbrella to avoid too much rain on this profitable patch but once Turnbull collapsed under pressure (taking Wentworth with him) there was nowhere left to hide. And the pain is now being reflected on the stock market, too.

All of the above is not to deny that the Business Council has it right when it warns that “ad hoc intervention in the energy market, such as underwriting generation investment or forced divestment, is sending a signal to the world that investing in Australia comes with considerable risks.”

International energy investors hardly need to be told this – it has been apparent now for quite a while –  and the ensuing risks for our economy are real, but they still keep investing here where they can see the potential for gains (eg in renewables thanks to the RET and other State and Territory interventions to boost wind and solar) and the “big stick” of divestment is mostly (right now) a threat to the “big three” retailers.

Of course, the bigger picture will still be there when Morrison, Frydenberg and Taylor have wrung whatever they can get out of the retailers in the days and weeks ahead. In this context, I recommend going on to the EnergyAustralia website and reading CEO Catherine Tanna’s address to the Financial Review’s energy conference earlier this month. I think she did a pretty good job of talking about the overall issue in plain language.

Her comments include this: “Remember the trilemma? Affordable, reliable and cleaner energy….. it’s like a three-legged stool. Balance on just one of those legs for too long and eventually the stool topples over. The energy system breaks and it breaks badly.”

The talk needs to be read as a whole but in it Tanna acknowledges that “the entire electricity chain, including retailers, is culpable in a failure to provide affordable, reliable and cleaner energy – we’ve let down families and businesses across the country.”

She naturally gives the body politic a tongue-lashing for a collective failure to come up with a workable policy and she then adds: “No one’s hands are clean. There is more than enough blame to go round.”

The problem for her company and other retailers is that right here and now the federal government needs a scapegoat for the populist barbecue – and, by not resolving the “standing offer” shambles long since, the suppliers find themselves today in the wrong place at the wrong time.

Many decades ago my granny used to tell me “you remember, there are always consequences – not only for what you do but for what you don’t do.” Retailers today are confronted by the truth of this.

It’s time for rational debate on nuclear

Prime Minister Scott Morrison started a hare running a week ago with his comment that he has “no issue” with nuclear power for Australia – but, in the same breath, he tripped it up by adding that the technology “doesn’t stack up” as an investment compared with Hydro Tasmania’s “battery of the nation” concept.

Morrison, in effect, says that the test for nuclear generation here is “will it lower household bills,” begging a heap of questions, not the least of which is that neither he nor anyone else can predict consumer power prices a decade from now. Too many moving parts. However, an important aspect of nuclear power is that it is capital-intensive to build but relatively low-cost to operate.

Most of the ensuing noise flowing from his comments (including a particularly inane contribution from Bill Shorten, dragging in Chernobyl) was just that – noise – but Ziggy Switkowski, who chaired a 2006-7 nuclear inquiry for John Howard, provided the proper framework: the answers, he said, to what technologies can meet Australia’s future power needs should be pursued in terms of cost, reliability and market resilience (ie economics and risk), not on the basis of ideology.

To which an op-ed this week in the Australian Financial Review by Coalition senator Amanda Stoker has rightly added that “For too long we have allowed nuclear energy to remain off-limits in the discussion about the security of Australia’s energy supply. What we need is an informed and rational debate that isn’t driven by fear.”

Stoker is a fan of small modular reactors (SMRs), emerging technology with capacity between 50 and 300 megawatts compared with 1,000 MW or more for conventional nuclear plants – its proponents argue it will be far cheaper and safer and capable of competing with wind and solar farms when all issues (including capacity factors and the costs of network support, storage and other “firming” needs and land use charges) are taken in to account.

Even more than in other technology areas, much of the nuclear debate is powered by opinion but this a poor substitute for expert, whole-of-system analysis.

The challenge for Morrison and his cabinet is not to pick generation winners for the decade ahead (which is essentially what Labor, with the Greens breathing down their neck in marginal seats, want to do with their renewables approach) but to ensure that the public interest is served by efficient investment.

This goal can in part be achieved by proposing to lift the legislative ban on use of nuclear energy and initiating an expert inquiry in to the costs, risks and benefits of the technology, taking the scaremongers head on with the argument that this is acting in the best, long-term interests of the country without committing to guessing how investors, confronted eventually with a sensible, stable and all-embracing policy, will choose to spend their funds – or, worse, by trying to buy their investment with subsidies of one sort or another.

Of course, this approach comes with political risk – but, let’s face it, getting out of bed each morning comes with risk for the federal Coalition in the present environment and the looming Wentworth by-election may add to, or marginally ease, the pressure.

Being seen by supporters and potential supporters living in the “sensible middle” of the national electorate as seeking to act in an adult fashion in two areas of public concern – energy affordability and reliability as well as underpinning on-going carbon abatement – may actually be a plus.

Leaving aside political hysteria on the nuclear issue, what is the downside to proposing to change the law to overthrow this ban?

It can be presented – honestly – as an enabling action to allow Australia to take advantage of important technology innovation, specifically via SMRs if they fulfil their promise. After all, if this technology does achieve a breakthrough, it’s a pretty good bet it will be adopted in many other countries, including our trade competitors.

PS: Many of the “pathways” in the latest IPCC climate change report – about which there has been so much media fuss in recent days – allow for an increased role for nuclear power (while, of course, talking up solar and wind power big time). One of these “pathways” actually sees global nuclear power production five times above its 2010 level in 2050 (where, in turn, electricity use is expected to be far higher than now).  Of course, the report also includes a ritual nod to the claimed risks of nuclear energy with respect to proliferation and health – but the anti-nuke brigade (who have leapt on this) can’t escape the fact that in the past decade the IPCC has gone from minimizing the abatement role of nuclear power to including it as a key element in climate change mitigation.

One of the perennial problems with these reports is that the activists wave the bits they like as proof “top scientists” want us to adopt their eco-socialist agenda while ignoring anything that doesn’t suit their propaganda. This is happening again now when, in fact, the 2018 document strongly talks to private investment and innovation, including non-trivial spending on nuclear generation. In this context, I rather like a comment in Canada’s Globe & Mail newspaper in the past week that “good climate policy pleases no crowds; there are no raucous rallies in its name.” Worth remembering in Canberra.

PPS: Former Pancontinental Mining chief Tony Grey has an op-ed on the nuclear issue worth reading in today’s The Australian.

Round & round the carousel goes

Technically, I guess the Prime Minister is right. He reportedly differs strongly with Kerry Schott, chair of the Energy Security Board, over whether energy planning has descended in to “anarchy.”

Scott Morrison has told a radio station “I don’t agree with that at all. I think it is rubbish.”

Now the definition of anarchy is “a state of disorder due to absence or non-recognition of authority or other controlling systems” and, on this basis, Morrison is correct. But, when you consider that synonyms for anarchy include disorder, disorganization, chaos, tumult and pandemonium, it may be that Schott has a point.

Morrison insists the federal government is still engaged in pursuing a NEM reliability guarantee with the market’s other governments – which is true; the next discussion is scheduled for late this month. Energy Minister Angus Taylor says NEM governments will be asked on 26 October to have a market reliability obligation in place by the end of 2018.

Morrison also rejects the idea that “anarchy” could be applied to his government’s emissions abatement plan – which is also true; there is a lot of noise about Australia pursuing a larger target but one certainly exists.

Schott, on the other hand, is entitled to be angry, as she says she is, that the Liberals’ inability to manage themselves has undermined a year’s careful work on the “national energy guarantee” which included wide-ranging consultation and a series of CoAG Energy Council meetings. (Schott will be participating in this month’s CoAG meeting.)

Quibbling about the use of a word really isn’t the point. As EnergyAustralia’s Catherine Tanna said this week, we have now had “years of policy paralysis interspersed with intense bursts of market intervention.” She rightly argues that the stakes (for consumers and the economy) are too high for these political games.

And Origin Energy’s Frank Calabria says that investors have had to cope not just with years of an absence of policy certainty but also an absence of policy consistency. Whatever you choose to label this situation, acceptable it certainly isn’t.

The Australian Financial Review, in an editorial set against the background of its conference on energy, avers that “everybody has some energy policy explaining to do.” I am inclined to the view that we have heard more than enough noise masquerading as explaining in the first nine months of this year – what we need right now is the federal government and the CoAG members collectively to settle on key policy and regulatory steps.

That said, it also needs to be accepted that we are going to have to wait on the next federal election to deliver an administration able to pursue an abatement approach investors will (or will try to) regard as settled rather than (to quote the Financial Review) just “piling more half-baked interventions on top of the others.”

And this is not only about generation, despite the fact that most of the debate focuses there.

Andrew Dillon, the Energy Networks Australia CEO, told the Financial Review conference: “we can’t sit around and wait for carbon and energy policy to be integrated on the generation side before we turn our attention to transmission: we will simply be too slow and that will cause significant upheaval.” To which I’d add that, without expert advice on total system costs, decisions made on new infrastructure (whether pushing for more variable renewable generation or for investment in fossil-fuelled plant or to continue banning the use of nuclear) in the present environment all bear the risk of unintended consequences in terms of consumer bills.

The ignorance constantly being displayed – eg Morrison opining that nuclear power costs too much or Shorten claiming that lots more wind and solar will push down prices – flows from a wilful avoidance of advice about the importance and urgency of seeking total system cost estimates almost four years after a royal commissioner (Kevin Scarce) told us that they were a crucial part of future power market planning.

(This week the Financial Review pointed an editorial finger at Labor spokesman Mark Butler, who, it said, could not convincingly explain how an already-stressed network could deal with Labor’s extra emissions requirement while also reducing prices.)

If there is one lesson to be learned from the NEM experience since the South Australian debacle delivered a wake-up call in September three years ago, it is that energy supply should not be an ideological plaything – but who, apart from some of the political players when it suits them, can argue this learning is now an inherent part of our national approach to this sector?

Apparently, business leaders are now sufficiently teed off about the situation that, via the Business Council of Australia’s energy and climate committee, they are examining creation of a self-regulating system to reduce greenhouse gas emissions, restore energy reliability and improve the environment for investors.

This has drawn a retort from federal Resources Minister Matt Canavan – who was asked from the floor of the Financial Reviewconference if the BCA move “will shame the government in to action” – that business heads need to exercise humility. Consensus, claims Canavan, is not a guarantee of correctness.

And he adds: “We have a way of resolving fraught political dispute in Australia – it’s called democracy and I don’t think the corporate sector is a replacement for democracy. I don’t think some kind of corporatocracy or technocracy is a better outcome than democracy.”

Neither do I, minister, but how can you claim that “democracy” as it has been practised at the federal level since 2010 is delivering a “clear, co-ordinated, consistent signal” – which is what Shell’s Zoe Yujnovich says energy investors have to have?

Needless to say, Labor’s Butler (representing a party that trampled on energy-intensive industry interests in 2010-11) has leapt on Canavan’s comments, which he describes as “unhinged.”

Round and round the carousel goes; where (and when) it will stop nobody knows.

PS: A week such as this would not be complete without the Greens hurling themselves towards the headlines, this time in the shape of MP Adam Bandt, who told the AFR conference that, if his party found itself in a governing coalition in Victoria after next month’s State election, a not-impossible outlook, it would push for closure of the Latrobe Valley brown coal generators as part of any political deal. This drew an editorial rebuke from the Financial Review that “for the past decade, the Greens have terrorized attempts by Australia’s political system to come up with a stable, market-based policy framework that would reduce carbon emissions, maintain the reliability of power supplies and keep a lid on energy costs.”  In the 2014 Victorian election, the Greens picked up 385,240 votes (11.48 per cent of the primary poll) versus 1.27 million for Labor (38.1 per cent) and 1.4 million for the Liberals and Nationals (42 per cent). It was preference votes that carried the Andrew government in to office without needing to be in a coalition. What will 24 November bring? And what would a Greens/Labor government in Victoria mean for the management of the NEM?