TiP

More front than the QVB is a very Sydney expression.

Apart from egregious cheek, it refers to the wide Queen Victoria Building on George Street.

It will be known to the federal Industry & Climate Change Minister Greg Combet, being a New South Welshman, and his latest foray in to the electricity price debate epitomises it.

Defending the additional cost imposed by the carbon price he is helping to introduce, Combet was asked by a helpful journalist “Do you feel the O’Farrell government is trying to deflect from its own failings in terms of infrastructure and the costs of that by blaming you?”

Combet responded: “Of course they are. The fundamental drivers of electricity price increases in recent years are the poles and wires, the transmission grids, and these are all things within the government’s jurisdiction and that is what they should be attending to.”

Item the first, the O’Farrell government has been in office a little more than a year and the regime that presided over the previous 16 years was from Combet’s side, led for most of by his new colleague, the Minister for Foreign Affairs, previously Premier Bob Carr, and then by Morris Iemma, Nathan Rees and Kristinia Keneally.

The bills currently reaching householders for electricity relate to capital works approved while Labor was in power – and, indeed, boasted about in years gone by.

Item the second, as Combet also well knows, the NSW and Queensland network businesses may be State-owned, but their capital expenditure is overseen and approved by a national regulator, the Australian Energy Regulator, which imposes the charges the distributors may apply.

Item the third, as Combet also knows, the AER has applied for rule changes that are awaiting a decision by the Australian Energy Market Commission.

It is not down to the NSW, or any other State, government to take action.

Finally, as he also must know, the State regulator, the NSW Independent Pricing & Regulatory Tribunal, has found that nine per cent of the 16.4 per cent increase to apply from 1 July comes from the carbon price – and, although the federal government is offering compensation to householders, there will be none for small businesses, including small manufacturers, hit by the cost.

Nor is there any compensation for the costs of the federal renewable energy target, heavily criticised by IPART in its latest determination.

This sort of stuff would be pathetic but for the fact, as Combet well knows and is relying on for effect, all most householders will hear about the issue is a television or radio soundbite in which he accuses the O’Farrell government of blame for the latest price rises.

It is not known in the trade as a “30-second grab” for nothing, but how many members of the community know how much effort goes in to contriving these “grabs” to lead them down the garden path?

In the same spinning vein, Combet, announcing the release of the Clean Energy Finance Corporation review, declaims that “The Gillard government is building a clean energy future.”

In fact, as his own government’s Bureau of Resources & Energy Economics has identified in modelling of electricity production to 2034-35, the Gillard/Combet “clean energy future” plan will involve the burning of a billion tonnes (and more) of black coal in NSW and Queensland in the next quarter century plus a three-fold increase in burning natural gas and coal seam methane.

The fossil-fuelled share of electricity supply in 2008-09 (the high water mark of recent demand because of the impact of the global economic crisis) was 92.6 per cent or 227,000 gigawatt hours.

After 25 years of the Gillard government’s “clean energy future” program, including a mooted rise in the carbon price to $60 per tonne by 2030, on the BREE modelling, fossil-fuelled generation will provide 265,000 gigawatt hours annually or 76 per cent.

Come in, spinner!

As for the CEFC, it is interesting to see Tristan Edis, describe it as “the wrong answer to the right question” in “Climate Spectator” – see www.climatespectator.com.au.

Edis, the “Climate Spectator” editor and previously at the Grattan Institute, argues that the “Brown Bank,” as the Opposition have labelled it, doesn’t address the fundamental problems of delivering affordable energy needs with much-reduced emissions.

He is hardly the “conservative side of Australian politics and fossil fuel lobby” as one renewables company executive has labelled the critics.

“The reason renewable energy projects aren’t being progressed in Australia at the scale required,” Edis says, “has very little to do with the inadequacies of the financial markets or the absence of a carbon price.”

He then dissects the various reasons why wind, solar PV, solar thermal, geothermal and bio-energy projects are not being developed as far and as fast as he and others would prefer. It’s a commentary worth reading.

Just on geothermal, he says that its problem is that there is too much uncertainty around the cost-effectiveness and reliability of the underground heat extraction process.

“Giving geothermal proponents a loan is not going to help them much – because they have no way of knowing when and how much electricity they will generate and therefore their capacity to pay back the loan.”

His point about geothermal is especially apposite because the Gillard/Combet “clean energy future” perspective for 2050 includes modelling asserting that the technology will meet between 13 and 23 per cent of supply mid-century.

In round terms, this is equal, on the basis of the expected system energy levels in 2050, to between all the power produced in Queensland now and all the power produced in NSW and Tasmania combined today – that is, 50,000 to 90,000 GWh.

As various commentators, including the Coalition’s Greg Hunt, are pointing out, the RET before the CEFC was 20 per cent and after the introduction of the bank it remains 20 per cent. $10 billion of taxpayers’ funds is not aimed at increasing renewable energy.

As Edis notes, if the federal government wants projects with electricity prices too high for the market to be brought in to operation,it will need to either gift them capital or buy their power output at a price above what the RET fetches and way above what the wholesale market is delivering – which, of course, will flow back in to consumer costs.

Catch 22.

I recall one of Combet’s predecessors as a prominent Labor minister in a 1980s government saying wryly over a debacle he had initiated: “But it seemed such a good idea at the time.”

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