Archive for November, 2017

Why they have the irrits

I was unwell at the start of this week and unable to attend the Quest Events NEM Future Forum conference in Sydney or to chair the second day that featured Mark Butler, federal Labor’s spokesman on climate change and energy.

At first impression, he couldn’t have said anything of importance because the mainstream media ignored the talk, but I have now had the chance to read it – Butler has made it available via Twitter – and there are a number of points that deserve wider attention.

Not least, it is an explanation of why there has been a negative reaction from Labor to the federal government’s “national energy guarantee” proposal and why the States are unhappy.

Given that this step really requires endorsement by the Council of Australian Governments’ Energy Council, which is at present scheduled to meet on 24 November, there is value in understanding Labor’s initial response – and in obtaining it outside the prism of the House of Representatives question time, which, whether watched live or seen through Press Gallery coverage, is more a schoolyard biff session than a sober debate between our country’s leaders.

The federal government line is that their opponents have been caught “flatfooted” (says Josh Frydenberg) by the new approach and that the States will see its value (says Malcolm Turnbull) despite what Labor premiers have been saying to the media.

Butler told the NEM Future Forum that there are more questions than answers available from what the Turnbull government has provided, including the eight-page Energy Security Board response to Frydenberg’s request for an alternative to the Finkel task force’s “clean energy target” proposal.

The NEG, Butler argues, is “an incredibly rushed job.”

He compares it with the “emissions intensity scheme” approach that was outlined by the Australian Energy Market Commission in 2015, subjected to “a whole lot of different pieces of work” over some 18 months ahead of the scheduled CoAG leaders meeting in December 2016 (lost when Turnbull called a federal election) and taken to that poll by Labor.

“We had consensus by and large (on the EIS) across the system by last December,” says Butler, “but (the measure) was junked as a result of internal turmoil in the Coalition party room.”

Subsequently, he points out, the CET that emerged from the Finkel task force process had a similar level of across-the-board support and was junked again because of Coalition internal turmoil.

Now, he argues, the NEG “has not been subject to anything like the EIS and CET processes.” And, he adds, “it is quite clear” from evidence given the recent Senate estimates hearings that “the Department of Environment & Energy has done no analysis of the reliability or emissions reduction components of the NEG before it was released as new policy – and it is quite clear that there was no consultation with other departments.”

Nor, he declares, was there consultation with industry – but, most importantly, there was none with the States and Territories.

The Energy Security Board, he notes, is not a creature of the Prime Minister or his government. It was appointed by CoAG, with its chair and deputy chair nominated by State governments.

“The States,” Butler told the NEM Future Forum, “woke up to newspaper headlines, and then a press conference by the Prime Minister and the board, announcing what the States would be expected to implement – because the NEG would be implemented in South Australian legislation, and reflected throughout the other NEM jurisdictions.This process has given the States and Territories the irrits, I think it’s fair to say.”

The real dispute, Butler argues, “that confronts us now is not so much about whether an EIS or a CET, or even a more developed NEG, is the right mechanism to meet the challenge of stability and certainty – it is more fundamentally about where we want to take this system (the NEM). That has not been resolved by the announcement of the NEG. If anything, what little we know about the NEG – or the assumptions that underpin the NEG – deepens the dispute about where we want to take the system.”

The market, in his view, faces two challenges: generation renewal and carbon abatement. Over the next 15 years “we are going to lose a whole lot of our generating infrastructure and we need to build new kit.”

Butler’s perspective is that the big issue is whether Australia embraces a future that “is renewables.” (That sound offstage is the nuclear lobbying grinding its teeth.)

And, he adds, the Queensland election “will be significantly fought on whether the State government should drive the building of a new coal-fired power station in FNQ or whether to continue with the (Palaszczuk) government’s 50 per cent renewable energy target.”

His political argument is that “strangling renewables” is crucial to the Turnbull government’s NEG approach “and if you are looking for certainty and stability, you are not going to get it from a mechanism whose political underpinning is an ambition to strangle (this) investment.”

He asserts that the NEG, as set out, would see only about 250 megawatts of renewable capacity added to the power supply system from 2020 to 2030, including rooftop PVs (currently running at 750 MW a year).

As well, Butler takes up the issue that electricity suppliers should be required to do a heavier share of abatement than generation’s current proportion of national emissions. Its ability to do so, he claims, is “clearly demonstrated” and not requiring this has “extra-ordinary implications” for other sectors of the economy such as agriculture and heavy industry.

Butler’s paper needs to be read in full to get the Labor take on the NEG and the broader NEM implications, but, in keeping with a point I have pushed several times in these posts lately, his comments on the political environment also need attention. (Butler’s other hat is as national president of the Labor party.)

“We are now into State election season,” he told NEM Future Forum. “We have three NEM regions that have State elections over the next five months. That means that there is not any real likelihood of COAG progress here.”

I find it remarkable that this speech has been almost literally ignored by the mainstream media and its political commentariat, given the huge amount of coverage of the “energy crisis” this year. As a dissection of the state of play from the alternative national government, it requires some attention, I’d suggest.

And one thing more: it is also remarkable to me that Butler could deliver this speech without once – not once – addressing the issue of electricity prices and the future affordability of supply. He even went round it in identifying the energy question in the Queensland election stoush – yet the coverage coming out of the State this weekend reinforces the view that power bills (for households, farmers and factory managers) is a major issue.

In this context, let me refer you to a commentary from Energy Networks Australia, published this weekend, that canvasses “how electricity became a headline CPI act.”

The ENA’s acting CEO, Andrew Dillon, rounds it off by writing: “As review after review into the energy sector has found, there’s no silver bullet to fixing rising power prices. However, these reviews also consistently point to a common opportunity – the implementation of nationally consistent energy and climate policy that lasts beyond a single election cycle.”