Archive for January, 2017

The adventure continues

Popular media commentator Annabel Crabb no doubt struck a chord with a few people by providing in the Fairfax papers this epitaph for the Old Year: “careening to a conclusion with all the elegance of a golf buggy captained by a sleep-deprived ice freak in a Santa suit.”

As for the energy sector, it ended 2016 with South Australia’s Eyre Peninsula suffering its fourth prolonged power failure in a few months, 155,000 households and businesses in the State more generally (about 20 per cent of the SA market) being blacked out by storm impacts for up to another two days, the media nationally in a froth over predictable NEM electricity price rises, politicians trying to muscle AGL in to giving the Portland aluminium smelter in Victoria cheap supply as it apparently teeters on the brink of closure – and manufacturers across the east coast warning that 2017 is likely to see a “crunch point” in gas supply with a number of major users struggling to obtain long-term contracts. (About 225,000 people work in Australian manufacturing businesses reliant on gas.)

The year also ended with the upstream petroleum lobby trying yet again to get across the point (to quote Malcolm Roberts, CEO of the Australian Petroleum Production & Exploration Association) that the national pursuit of a transition to cleaner energy is at risk because of a shortage of a fossil fuel, natural gas – that gas-fired generation is “the only technology capable of delivering balance” in a market adding large amounts of variable renewable power.

And 2017 has begun with federal Resources Minister, Matt Canavan, “going on the offensive against conservationists who want to end the use of coal in power supply” (to quote “The Australian” newspaper) by arguing for a focus on ultra-supercritical coal-burning generation here and for ongoing exports of the mineral to Asia – and being shouted at by the Australian Conservation Foundation.

Meanwhile, ABC Rural radio has presented a report – you can find it by putting “Government accused of policy paralysis while uncertainty reigns over renewable energy targets” in to Google – in which David Blowers of the Grattan Institute asserts that “investors, utilities, industry and householders are in the dark about what to expect in 2017,” adding that “the only certainty is electricity prices will rise for everyone.”

In this, Blowers tells the ABC’s Babs McHugh that tackling a new energy system makes power price rises “inevitable” because “replacing a lot of generation stock and infrastructure with a whole lot of new stuff is expensive.”

Blowers adds: “What we’ll see, if there is no agreement around Australia’s climate change policy, is that – for the foreseeable future price increases – will be greater than they need to be.” This, he says, may be unpalatable but it is what you get when, at the federal level, the Coalition and Labor continue battling over policy and, at State level, jurisdictions go their own way on renewable energy.

Blowers touches on a point that I think gets far too little attention in the carbon debate. There’s too much focus on electricity, he says, when it only accounts for a third of Australia’s emissions. “It’s the biggest, but we’ve still got (another) two-thirds of our emissions to (also) deal with.”

McHugh’s report also includes the CSIRO’s chief energy economist, Paul Graham, declaring policy certainty, with a price on carbon emissions, is needed urgently. Meeting the national abatement target for 2030, Graham says, “means shifting to using a lot of low emissions electricity – but (it) costs more (and) electricity bills will rise because of the deep decarbonization trend and we want to make sure we don’t spend more than we have to.”

Can the Prime Minister, I wonder, feel the political ground shifting under his feet when his attention is drawn (as it surely must be) to stuff like this about prices? In the broader context,

APPEA’s Roberts argues that “there is a compelling environmental case” as well as a reliability argument for gas-fired generation. “In August the Climate Change Authority firmly supported fuel switching as the most efficient way to cut emissions from generation (and) rejected higher renewable energy targets and other regulatory interventions as costly and risky.”

Some State governments, Roberts adds, “seem to have missed this advice.”

The arithmetic here is that, on the CCA perspective, output from gas generation would have to at least double and perhaps triple to help attainment of the national abatement target for 2030 – it accounts for 10.5 per cent of supply today.

Another relevant report, delivered in December to energy ministers but already lost to view publicly in the whirligig of media coverage of energy matters, is from the Australian Energy Market Commission, which has told CoAG that its analysis shows “an emissions intensity target delivers the best outcomes for (electricity) consumers in terms of price, power system security and certainty of meeting the emissions target.”

As a summary of the overall situation facing us in 2017, this comment from Roberts needs emphasis, I think: “The stakes for Australia could hardly be greater – a least-cost transition to cleaner energy and energy security for local industry or continuing inconsistent policies that destroy jobs, push up prices and perpetuate higher emissions.”

To which one could append a point from a year-end op-ed in “The Australian” by energy lawyer Chris Flynn: “Energy security is not a buzzword, trend or meme. It is the comfort of knowing that energy consumers have reliable access to affordable and quality energy from diverse sources. As such, it goes to the very heart of our economic and political bottom line.”

Standing back, any objective observer can see that there is little about our continuing political adventure with energy to make stakeholders comfortable about the journey – and said observer surely must recall the biblical admonition that we reap what we sow.