I carry a tiny notebook so that I can scribble memory-joggers.
This is not only to ward off the frailties of encroaching old age, but because, like the readers of this blog, I find there are just too many things going on in the energy space to enable me to keep track of them all.
Thus on Friday night, esconced in the comfort of Government House, Sydney, a guest of that most admirable person, Professor Marie Bashir, Governor of New South Wales, I made a quick note: “Read CEFC Hansard.”
The occasion was a reception given by the Governor for the Australian Institute for International Affairs with a talk by Jillian Broadbent, who, among her numerous top jobs, is the incoming chairperson of the federal government’s Clean Energy Finance Corporation.
The note was to remind me that I had not read the House of Representatives’ debate on the CEFC-related legislation, which passed through the lower assembly at the end of May.
So today, yet another rain-soaked Saturday in what used to be known as “sunny Sydney,” I ploughed through the relevant Hansard reports.
My particular focus in doing so was on the Coalition’s perspective because I have found in recent forays in to forums involving energy company people from around the country that there is a lack of clarity, and therefore heightened concern, about its policies after the anticipated massacre of Labor at the next federal election.
That the Coalition will seek to rescind the carbon tax legislation – and the CEFC, too – is well known. It’s what else is on its agenda that tends to be a bit obscure.
One thing immediately leaps out from the Hansard reports: the Coalition has made a rock-solid commitment to continuing to support two important carbon-related targets: (1) the national abatement goal of driving emissions five per cent below 2000 levels by 2020 and (2) the 2020 renewable energy target.
This is clear from speeches in the CEFC debate from the opposition spokesman on the environment, Greg Hunt, and from the shadow Treasurer, Joe Hockey.
As Hockey put it: “Where we differ from the government (on pursuit of the abatement target) is the mechanism used. We do not believe (in) increasing taxes and increasing government debt. We certainly do not believe that a $10 billion slush fund is the solution to economic and environmental sustainability. It is economically irresponsible, fiscally irresponsible and environmentally suspect.”
While the legislation commits the CEFC to spending about half the $10 billion – to be given to it in five equal annual payments from 2013-14 – on renewable technologies and no more than 50 per cent on low-emissions technologies and energy efficiency developments, specifically excluding carbon capture and storage at the Greens’ insistence, it is clear from the House debate that the Coalition will aim its election fire on the renewables aspect.
Hunt, Hockey, finance spokesman Andrew Robb and a number of other Coalition MPs hammered the point that any renewable project funded by the CEFC will not add to the RET.
“It beggars belief,” Hunt thundered, “that any renewable energy generated as a consequence of CEFC investments will simply displace other renewable energy which would otherwise come on line between now and 2020.”
Not one watt of extra zero-emissions energy would be created, he said. “This is an extra-ordinary example of conceptual failure.”
As well, he argued, the fund will have an impact on existing projects.
“It changes the financing regimes, the competitive regimes, the merit order (and) it has a sovereign risk impact on (such) investments because, if they are displaced by subsidised projects, it has an impact on their ability to compete in the renewables space.”
Robb wanted to drive home that the CEFC is a “product of grubby politics” – of “a desperate last-minute deal, a political bribe, to win the support of the Greens for a carbon tax.”
The CEFC funds, he added, “will be invested in projects banks would not touch with a barge pole.”
It all adds up to the Coalition going to the polls with as big an attack on the “slush fund” as on the carbon tax to ensure that, after victory, it can claim a mandate to kill off the corporation.
Whether any of this agenda this can be achieved soon after the election by the Coalition gaining enough Senate seats to support the changes is something that is exercising corporate minds more and more.
Many businesses foresee a long-drawn-out process, necessitating a return to the polls in a double dissolution election, that will leave them in the shadowlands of investment uncertainty until as late as 2015.
Reading the government’s contributions in the parliamentary CEFC debate, I thought it had given little attention to rebutting the Coalition attacks – perhaps because it has the parliamentary numbers and couldn’t be bothered to do so or perhaps because it simply does not have the means to do so.
Cabinet Secretary Mark Dreyfus, who is also parliamentary secretary for Greg Combet’s portfolios, for example, argued the bills are important “because they take Australia closer to a low-carbon future.”
“They will help unlock our national potential by securing a strong and sustainable renewable energy industry.”
Establishing the CEFC, Dreyfus asserted, “means we have taken a very large step towards reducing our carbon emissions.”
This is the stuff of “Fawlty Towers” where the combination of Basil’s incompetence and hubris ensured that trouble was never very far away.
In this metaphor, the CEFC, it seems to me, resembles the tree branch Fawlty used to beat his non-performing car in one memorable skit.
Not surprisingly, the Coalition was happy to ensure that the debate included a quote from the Australia Institute, hardly a friend of its positions, pointing out that, in theory, policies such as the one introducing the CEFC should do one of two things: realise cheap abatement that won’t be picked up by the carbon price scheme or accelerate a decline in the cost of low and zero-emission technologies.
“If,” said the institute, “the policy isn’t achieving one of these two objectives, it is wasting money -–and the CEFC doesn’t seem to have been designed with (either) clearly in mind.”
What else comes out of the parliamentary debate is that the RET is safe under the Coalition, regardless of the campaigning against it by manufacturers and others in business.
(Combet, by the way, is quoted in an environmental magazine this month as conceding that the CEFC will not add to the RET and saying the government has no plan to increase the target – “although the (new) Climate Change Authority may make make recommendations along these lines” when it reviews the program later this year. The Coalition commitment, obviously, is to the existing RET.)
The other renewed commitment – to the five per cent below 2000 target by 2020 – raises significant questions about how the Opposition proposes to get there.
Nothing that it has said to date inspires confidence that it has a fully worked-through strategy waiting to be unveiled.
While the Coalition wanting to keep its powder dry until the election is politically understandable, its doing so is adding to the environment of uncertainty now shrouding energy investment.
One way and another, the body politic is constructing an energy Fawlty Towers for Australia – and it is no laughing matter.