The head of the International Energy Agency has delivered a salutary message to the Prime Minister and to other players in Australia’s roiling electricity debate.
Speaking at the University of Queensland Energy Initiative’s latest “energy breakfast” forum in Brisbane – and attracting 300 people at seven in the morning – Fatih Birol repeated to the audience what he told Malcolm Turnbull in Sydney a day earlier: “Energy policy is not a football match.”
In other words, this is not about barracking for your team (eg the side in green, yellow or red shirts) but about developing a policy that works for investors, consumers and economies – as well as for the concerted effort to reduce the trend of global warming.
It’s about using your head than relying on your heart.
It was a point clearly appreciated by the knowledgeable Brisbane audience – to whom UQ’s professor Chris Grieg pointed out that Birol was making a return visit to the event; he was the first speaker for the “energy breakfast” five years ago when he was IEA chief economist.
Flying back to Sydney afterwards, I spotted a quote in a newspaper from Ken Henry, former senior federal bureaucrat and now National Australia Bank chairman, that dovetails neatly with Birol’s message. In a headline-grabbing address to the Committee for the Economic Development of Australia in Melbourne, Henry declared: “Our politicians have dug themselves in to deep trenches from which they fire insults designed merely to cause political embarrassment. Populism supplies the munitions. And the whole spectacle is broadcast live via multimedia 24/7.” A different analogy, but the thrust is the same.
I also find (unintended) reinforcement of both points in reading a transcript on Bill Shorten’s website of a speech he delivered to a Bloomberg New Energy Finance forum on Thursday.
I’m not going to waste time here parsing it, but it should be read because it highlights exactly what is wrong with the Labor leader’s approach to this issue. In passing, I particularly like Shorten’s claim that his and Labor’s pursuit of a 50 per cent renewable energy target while simultaneously introducing an emissions intensity scheme is “practical not ideological.” What it really is, of course, is populist and designed to fend off the Greens who are treading on Labor’s tail in marginal metropolitan seats.
How pursuing both measures together will deliver a secure east coast electricity system at an affordable cost for consumers – mass market and business, especially manufacturing – when Labor is cutting off access to new gas in Victoria (and the Coalition is doing hardly anything to achieve this in New South Wales with Labor’s tacit support) is for Shorten to explain.
And yet again he has made no effort to reveal the costs for consumers (ie the total system costs) of his 50 per cent renewables plan despite Labor claiming at the last federal election that it had “expert advice.”
Lastly, I’m surprised the 24/7 media hasn’t pounced on Shorten’s BNEF claim that Australia can be “the energy capital of Asia” in the context of driving take-up of renewables.
Really? Right now, we are a major Asian source of energy through coal exports (which his left wing along with the Greens want thwarted), gas (which his Labor colleagues in Victoria want to cut off in terms of future development and he wants curtailed through a domestic gas reservation policy) and uranium. Some millions more rooftops with solar and scores more wind and solar farms would hardly place us at the pinnacle of Asian energy development. South Australia-style blackouts in Victoria and NSW, on the other hand, would certainly bring us Asian media headlines.
Coming back to Birol at the UQ “energy breakfast,” where he sees an opportunity for Australia in international energy leadership is in doing a lot more to promote the commercial development of carbon capture and storage. Australia, he asserts, “is a good candidate to provide momentum” to efforts to bring down CCS costs and make the technology more accessible. This, along with the need for a much stronger focus on electricity efficiency in pursuit of the global warming push, were significant parts of his Brisbane talk.
Environment & Energy Minister Josh Frydenberg, who also met with Birol this week, has told media that the Coalition is “still looking at its options” for supporting new energy development, asserting that the government is “very clear” it wants to be “technologically neutral” when it comes to emissions abatement.
Basically, the Coalition is treading water at the moment, holding up a placard that says “Waiting for Finkel,” and, of course, like Labor and the Greens, playing the football game Birol decries for all its worth. This might be interesting as a circus trick, but it is doing little just now to soothe the frustration of key electricity and gas market stakeholders or the growing (if incoherent) concerns of the public at large.
BlueScope Steel’s CEO, Paul O’Malley, also has been out in the media this week, highlighting large differences in industrial power costs between Australia and the US, and asserting that the Finkel report is “the best hope in a decade” for a better domestic debate on energy policy and “some sensible decisions.”
O’Malley flicked the switch to hyperbole when he told journalists that Australia is “heading for an energy catastrophe.” More prosaically, he argues that, if this country doesn’t address energy security (electricity and gas) today, it will be very difficult for Australian manufacturing to maintain cost competitiveness – and that has big implications for employment. This is not a new thought. It has been pointed out to the body politic in many forums (some of which I have helped organize) and many ways for at least the past five years. Two national energy white papers have recognized the risks.
And still the football games go on.
(By the way, Shorten’s BNEF speech this week appears to argue that a focus on renewables is an employment panacea – as Pauline Hanson was wont to say in a previous incarnation, “please explain.”)
In conclusion, and in context of this post, a comment by Frydenberg in a speech to energy consumers in Sydney on Monday should not be overlooked: “The Finkel review and the review of climate change policies—both of which are under way—will set a clear, long‑term strategy for ensuring that in the transition to a lower emissions economy, we are only paying as much as necessary for safe, reliable and secure energy supply.”