A matter of perspective

To force or not to force, that is the question – well, actually, a question and probably not the one that really matters at this juncture.

A Senate committee chaired by the Greens’ Peter Whish-Wilson, a Tasmanian, wants the federal government to devise a plan for the “orderly retirement” of coal-fired power stations.

The two Coalition members of the committee, which produced a report just before Easter, retort that forcing the exit of coal power is not the best way to achieve an “effective” – do they mean “efficient”? – transition of the electricity system to a lower carbon footprint.

The two Labor senators on the committee, noting that “coal-fired power generation will continue to play a significant role over coming decades,” point out that achievement of the Queensland government’s 50 per cent renewable energy target for 2030 does not require the early retirement of (State-owned) coal power. They might have added that the last thing their colleagues in government in Victoria want to consider at this point is shutting down the rest of the Latrobe Valley’s generation – or that, if they could have the time over, their colleagues in government in South Australia may well have figured out a way to keep the Northern brown coal plant limping along.

Interestingly (to me), there is no Coalition or Labor dissent from a committee recommendation that the federal government should establish “an energy transition authority with sufficient powers and resources” to plan and co-ordinate a shift in supply sources.

(This was promoted to the committee by the Australian Council of Trade Unions among others. ACTU wants the entity run by a tripartite board representing industry, government and unions.

(The Greens want this, too, and tried a private bill on federal parliament late last year – to create “Renew Australia” with, surprise, surprise, a remit to introduce 90 per cent renewable generation by 2030.)

Meanwhile, not least because the federal government wedged itself in a kneejerk reaction (warding off rumbles from its ultra-conservative members) against a suggestion last year that the Finkel review would opt for an emissions intensity scheme, the majority of the Senate committee (ie Greens plus Labor) wants Turnbull to commit to “fair consideration” of all policy recommendations from the task force, including an EIS, when it reports in the next couple of months.

The committee’s task was to look at the future role of coal power in the NEM and Western Australia’s SWIS market.

Coal generation makes up 78 per cent of the east coast market and half the SWIS supply. In all there are 23 coal plants in operation (Hazelwood having just shut) – of which five are in the West. Ten have shut since mid-2012 and the environmental movement’s contention is that, just to meet the present 2030 national abatement target, “a substantial portion” will need to go by the end of the next decade.

The other plank in the activists’ push is for the national electricity objective to be amended to include a requirement to reduce carbon emissions because – they told the committee – the current NEO is “all about NEM security, supply and cost.”   (The mainstream power supply sector’s response is that activists campaign for this because they see it as a proxy for getting abatement policy “right” at the national level – whereas, it is argued, if you produce a durable, bipartisan climate change, you don’t need to also meddle with the market.)

The Greens’ line, which they have written in to the committee report, is that evidence to its hearings “highlights the need to have coal-fired power retired in the medium term.”  The coal sector’s retort is that, to the contrary, a key aspect of addressing supply security and affordability is to build new high efficiency, low emitting (HELE) plants like those springing up in the rest of Asia.

A core point in all this is (or should be) whether or not to leave investment decisions to investors – whether considering closing existing plant or building new generation. The Greens and fellow travellers naturally want measures to “assist” the process; in other words to force out operating coal generation and “facilitate” more wind and solar power, bolstered by energy storage and more high voltage transmission.

Reading the “committee view” in the report, there are a number of aspects worth noting.

It is hard to disagree with the observation that “ad hoc (recent) pronouncements from both federal and State governments have only added to (public debate) and regulatory confusion without moving the country any closer to a cohesive national plan.”

On the other hand, the report’s declaration that “it is clear the era of coal-fired generation is drawing to a close” – a Green hand obviously at work here – clashes with the real world.

In our south-east Asian neighborhood, for example, there are new coal plants being planned or under construction with a capacity of 125,307 megawatts, part of some 835,000 MW in the pipeline more generally. Whether or not, as one prominent green newsletter put it this month, “it is disturbing that Asia seems to be sheltered from a global drive to less (power) dependence on coal,” pretending this isn’t happening ought to be beneath a federal parliamentary committee.

The question (my emphasis) is not, I think, as posed in the committee view – expressed as “not if coal-fired power stations will close but how quickly and orderly these closures will be and what supporting policies, if any, will be in place to manage the process” – but rather the four issues the Grattan Institute, among others, is urging on the Finkel task force for its “tight focus” —

  • New market rules to manage emerging security challenges and future capacity risks
  • A plan for next summer when (NEM) shortages may arise
  • Requirements for integrating energy and climate policy, and
  • The ability of the NEM to provide the right signals for new investment and what alternative policies may be needed.

Politicians riding their hobby horses are not helping to keep any such “tight focus.”

One of the other Grattan admonitions is also relevant here: “Maintaining flexibility through the transition is critical to ensure we can take advantage of better solutions as they emerge.”

All the fuss of recent months should be underlining the paramount importance of high levels of security and reliability of electricity supply – and the non-stop complaints across the spectrum of consumers about the size of their energy bills should be spurring politicians to elevate this to the top of their consideration, too.

That the Senate committee report has got barely any media coverage – and this dominantly has been about squabbling along party lines among the senators – is no surprise given its tone versus the key issues engaging the mainstream public debate.

Whish-Wilson in a media statement asserts that “the lack of a clear, government-led process to retire coal-fired power stations is fuelling the crisis in the energy system” – which is a pretty one-eyed perspective of what is really going on.

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