TiP

Dear David Cameron, I read in the Fairfax media that you have written to “Dear Julia” in a letter “penned from the desk of 10 Downing Street” to congratulate her on pursuing a carbon tax.

This was kind of you.

She needs all the support she can get because “down here” her carbon policy is much disliked, in particular by the conservative side of politics.

The latest Essential Report, a weekly opinion poll, finds that half of those polled support your fellow conservative party leader, Tony Abbott, in his pledge to overturn the carbon tax if (on the latest numbers that should be when) he wins the next election.

Only two out of three of Prime Minister Gillard’s own Labor supporters are opposed to the tax being ditched at the first opportunity and less than half of them strongly oppose this step.

Your “Dear Julia” letter is especially interesting because your government is heavily reliant on nuclear power to pursue the abatement target you embrace.

Is it possible that your Sir Humphreys forgot to tell you that Ms Gillard and her government are viscerally opposed to nuclear?

You are being described by the Fairfax media and others who support the local policy as a “visionary on climate change.”

I wonder if “visionary” is the word being used by your own factory owners, who, according to a new report by your Energy & Climate Change department, are confronted by a 58 per cent increase in power bills, with the energy intensive users group accusing your government of massaging the data to make the flow-through impact of the tax and renewable energy subsidy costs look less severe.

I note also that your energy regulator, Ofgem, is estimating that consumers will be required to fork out an extra $600 million a year, in our money, just to enable the British electricity system to balance the load from intermittent supply when your renewables plan is in place.

Of course, your biggest problem is not abatement but replacing a quarter of the British generating capacity, which is judged to be obsolete, at a cost of around $166 billion (our money) over the next 10 years.

This doesn’t include a bill for nuclear, I understand, which produces one in six of your megawatt hours of power, with reactors also now nearing the replacement stage.

As in your country, the past couple of decades have been relatively easy for Australian energy policymakers.

Most of your power comes from coal (34 per cent), gas (38 per cent) and nuclear (18 per cent).

Most of ours (almost 90 per cent) comes from coal and gas.

In each case, consumers costs have been relatively low for a long time.

Your greenhouse gas emissions have gone down, too, because, since the days of your revered predecessor, Margaret Thatcher, Britain has shifted away from coal to gas, helping en passant to break the back of the coal mines unions.

As it happens, I have been reading a new KPMG report on your energy policy.

It sums up your “green transition” plan – Ms Gillard calls her’s “clean energy future,” a product of the ALP focus groups – as requiring the equivalent in capital outlays of funding 21 London Olympic Games or building 33 new Queen Elizabeth aircraft carriers.

KPMG says your policy may seem to be admirable, but it is conflicted – trying at the same time to meet an emission reduction target of 34 per cent (against a 1990 baseline), ensure security of supply and eradicate fuel poverty (which will be hard because household electricity prices are forecast to quadruple this decade).

KPMG make a point about your program that should resonate here.

Looking at your 2020 peak demand outlook and adding and subtracting new capacity and those plants that will shut, they conclude you can probably keep the lights on.

Then they add this: “The UK’s net population is set to rise, electricity cars will likely proliferate and domestic technology use increase. The (peak) prediction can only be reconciled on the basis of a massive assumption that planned energy efficiency measures will be effective.”

Like you, the Gillard government is basing its plans on a global agreement being reached by 2020 on climate change, dragging trade rivals in to imposing a carbon tax.

Good luck on that.

KPMG makes another point in an aside that resonates here: “Ask a dozen energy analysts about the costs and you are sure to get a dozen different forecasts, based on a variety of different assumptions (and in some cases big omissions).”

Here, Ms Gillard is relying on some big assumptions by Federal Treasury, about which the rest of us know much less than we would like to – but a central tenet of its advice is that we will be able to rely on a global emissions trading system.

The consultants sum up the situation at your end like this: “Power prices are almost certain to rise. The question is by how much and can we afford it?”

Ditto here.

KPMG also say: “Energy intensive industries are already seeing increasing pressures associated with energy prices and any further rises could seriously impact the ability for this fragile market to maintain and grow its position.”

Ditto here.

They end their review like this: “With a renewable roll-out on the scale the government has committed to, the risks are sizeable and costly. So we are paying a premium to massively increase our reliance on a risky and costly method of achieving our emissions targets. If asked, would consumers value the same priorities as those driving the current energy policy?”

Opinion polls here suggest the answer to this question for Australia is a resounding No.

They suggest that under “Dear Julia” the ALP is heading for an election train wreck almost as big as the one encountered by the party in New South Wales (our second largest economy, the one your forebears chose as a penal colony a couple of centuries ago) earlier this year.

Still, it was kind of you to write to her.

She obviously values your support – that’s why your letter has been leaked to the local media.

Your sentiments just need to be seen here in better context – hence this letter back to you.

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