Baby steps

How to assess where we now stand on a national (actually east coast) energy policy?

The beleaguered federal government, with fresh bruises after the Queensland State election, is claiming a win from Friday’s CoAG Energy Council meeting in Hobart – but it would say that, wouldn’t it.

Labor has sort of made it clear that the Finkel-designed clean energy target is still on the table – and its chances of being in government before 2018 is over can’t be ruled out.

Almost the only thing settled in Hobart was that the motley ministerial crew agreed that in future the Energy Security Board would take its instructions from the collective rather than Messrs Turnbull and Frydenberg.

Lurking somewhere in the wings is a federal government statement on climate change policy, promised for this year but I would have thought unlikely to materialize before the Bennelong by-election.

Should Annastacia Palaszczuk emerge from the Queensland election with a clear parliamentary majority (and there are 800,000 postal votes still to be counted), we will have two of the three dominant NEM regions (her State and Victoria) pursuing renewable energy targets of 40 to 50 per cent by 2030 – with New South Wales to go to the polls in March 2019 and Bill Shorten still seemingly holding to a national 50 per cent RET. (Labor’s political line is that “the Turnbull government’s NEG will strangle renewable energy.”)

We also have the the Coalition federally continuing to support feasibility work on “Snowy 2.0” pumped storage, Basslink 2 and a West/East gas pipeline – with AGL supposed to tell us relatively soon what it has decided about a LNG terminal on the south coast.

And, in the run-up to the current RET deadline of 2020, we have investors large and small en route to adding about 3,000 megawatts a year to the NEM, mostly wind and solar PVs.

As agreed in Hobart, the ESB is now embarking on further “national energy guarantee” design – with South Australia and the ACT declaring they will commission their own research on modeling the NEG against the Finkel CET and an emissions intensity scheme, having been thwarted in this aim at the Energy Council by Victoria’s Labor government voting against the idea

The CoAG communiqué from Hobart tells us as the main take-away message in the communique that what they did all agree on is that their top priority is “ensuring reliable and affordable electricity supply whilst working towards a lower emissions future.”  Fine words.

Where all this leaves consumers, mass market, small business, industrial and large commercial, right now is also relatively clear: they remain piggy in the middle, dependent in the near term on their own capacity to chase lower costs either through new contracts or reducing their demand for power, or both.

How many in the community understand the implications of the NEG is debatable but it will not be a high number. How many trust the body politic to deliver lower energy prices is not really debatable – polling suggests less than a third. (By the way, on the numbers available to date, little more than 60 per cent of Queensland voters gave their primary support to Labor on the Coalition on Saturday………)

On the eve of the CoAG meeting, 16 bodies representing business, farmers, NGOs, environmental groups, energy associations and the ACTU published a plea for governments in the federation to work “in a spirit of compromise” to make further development of the NEG a priority. It appears, they declared, “there are no alternatives at present that are both potentially functional and potentially acceptable to all sides of politics.”

Collectively, the 16 bodies called for the political focus to be on:

  • Competitive, transparent and liquid electricity markets and efficient investment to deliver the lowest sustainable costs to energy users
  • A credible, scalable and enduring settlement of climate policy for the electricity sector
  • Confidence to support investment in the full range of energy services as old generators retire
  • Comfort that any impacts on industry and the community are understood, equitable and well managed.

They want to see a “fully-fledged” NEG design ready “as soon as possible” for agreement and implementation. Without timely progress, they add, “Australia will see energy costs and emissions increase.”

The Hobart meeting won’t have given them even a half full cup and then only if they are feeling especially optimistic. After the ministerial get-together, one of the industry association CEOs opined that “”We’re taking baby steps forward, but that’s far better than giant steps backwards.”

Before the meeting, David Blowers of the Grattan Institute wrote: “Our politicians need to focus on the substance of this debate, rather than the headlines. Hitting each other over the head because there are too many – or too few – renewables in the policy basket is pointless and will ultimately prove self-defeating. Instead, how about finding an actual policy solution?”

After Hobart, this still holds good. Whether the meeting outcome is really positive is in the lap of the political gods.

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