En route to a kaboom

The dilemma in producing this blog is never that there isn’t anything about which to write, always that there is an over-supply of news and views on which to focus.

Today, for example, the Web and the media continue to throw up more claims about renewable energy while the ongoing New South Wales coal seam gas imbroglio demands yet more attention – and merely putting “coal” in to Google News delivers a veritable deluge of material on international assertions and counter-assertions about its place and prospects.

A half century ago, when I was a lowly sub-editor on the morning newspaper in my South African home town, the “chief sub,” a cranky Yorkshireman, could be relied on to complain at least once a night about the problems of “fitting a gallon in to a pint pot” as the telex machines delivered the local, national and world news to the horseshoe-shaped table around which we worked to produce the next day’s edition.

Telex machines have gone to join other museum pieces of a bygone age, but the distillation problem remains ever-present in assessing the news flow.

For those with ideologies to purvey, of course, modern communications are a boon: rant away and press “send.”

For those trying a bit harder to grapple with the complexities, it is not so easy.

I am struck today by these paragraphs in the Australian Industry Group submission to the federal RET review: “While the large majority of our members (numbering 60,000 businesses employing a million people) have no firm views on the RET, some are strongly opposed to it. They view it as an unnecessarily expensive and ineffective policy and would like to see it abolished or significantly scaled back.

“Others argue that the RET plays an important role in helping to transform our electricity generation mix to cleaner and more diverse sources in addition to supporting growth and employment in the sector.

“Despite the disparity of positions in our membership regarding the RET, (they) are nearly always underpinned by the same over-arching concerns: that future energy is affordable and secure – and that climate and energy policy is stable, predictable and credible, minimizing the potential for sovereign risk.

“These concerns should be essential components of any consideration of policy.”

How sensible is that?

A pity, therefore, that the mass media readers/viewers/listeners don’t get it put before them.

It is a perspective that can be applied with equal force to the NSW gas supply situation – where the State’s Independent Pricing & Regulatory Tribunal is pointing out that escalating cost (with prices set to rise 17.6 per cent from 1 July, only the start of the upward ride under present circumstances) is eroding the fuel’s local advantage over electricity where they compete.

And a policy situation, I’d add, where the events of the past 12-18 months are well on their way to making this State a graveyard for resources investment with consequences that can only be a matter for speculation today but are very likely to deliver considerable community pain before we are much older.

The IPART gas price determination means typical bills for householders in the State will be $150 to $225 higher in 2014-15 and, of course, signals a great deal more budget stress for business.

IPART says “there is still considerable uncertainty about how fast wholesale gas prices will rise and at what level they will peak.”

It should be blindingly obvious that a greater supply of gas on the east coast will help to alleviate this uncertainty and to mitigate cost and reliability issues in NSW – but the combined efforts of a radical minority opposed to fossil fuels, farmers unconvinced about environmental safety, media feasting on the drama and a State government all too clearly out of its depth in formulating an efficient policy approach are working towards delivering the worst outcomes for the “sensible middle” of the community.

The Australian Industry Group, in its RET submission, expresses “strong concerns about the lack of certainty surrounding climate and energy policy and the impacts (of this) on investment.”

The lobby group points to (1) a sustained period of particularly difficult trading conditions for many in business, in part the consequence of rising energy costs, (2) the policy uncertainty factor, (3) the east coast wholesale electricity market conditions that are unlikely to drive substantial investment in large-scale generation over the next decade, and (4) slower than expected investment in large-scale renewable energy generation.

To all of which can be added the gas supply issues, contributing to what the Grattan Institute calls “a very messy story.”

I have referred here before to the good advice for a small Orchison of my dear and long-departed grandmother that there are consequences for everything we do and don’t do.

The point is not made less potent by repetition and it is going to be driven home in spades in the energy space in Australia, and perhaps especially NSW, in the months and years ahead.

Just how tangled the policy web can become is illustrated by AiG in its RET submission. “We consider the costs of either increasing the target or completely abolishing it to be unacceptably high,” the association says. “An about-turn would have major implications for international investment due to perceptions of increased sovereign risk.”

However, it adds, “no-one benefits from having a target that cannot be practically achieved, not the renewables sector, not energy users, not the community, not government.”

Extrapolate these thoughts to the broader energy scene, and especially to the CSG saga, and they hold good as a warning that “messy” can turn to hurtful for most concerned in relatively short order.

The Grattan Institute has titled a policy forum it is holding n Brisbane next week “Energy in 2014: more mines than field.”

That is clever – and right – and we are all standing in this minefield.

As Marvin the Martian, a cartoon character of my childhood, used to say “Where’s the kaboom?”

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