Theatre of the absurd

Some might say that our energy debate, with the resurrection of l’affaire Liddell, the ongoing ruckus over the “national energy guarantee”and the emergence of the “Monash group”, all of it tied in with the fuss about Malcolm Turnbull’s tenure as Prime Minister, is descending in to a theatre of the absurd, which, as erudite readers know, is a form of drama that employs disjointed, repetitious dialogue and purposeless developments.

The state of the debate will be highlighted today when Environment & Energy Minister Josh Frydenberg speaks at the National Press Club in Canberra. As is the modern fashion, his talk has been published in advance in major newspapers this morning. He says energy policy is now a cultural issue in Australia, something that has been obvious for some time, and argues that “it is high time for a balanced, enduring, market-based and broadly-accepted course of action.”

His and the Prime Minister’s problem, of course, is that this admonition is as much directed to members of their own Coalition as it is to Labor and others.

Frydenberg’s pursuit of a rational approach to end 10 years of brawling about energy policy takes place in an environment where, as a nation, we can set a social premium on pursuing carbon abatement and frequently vilify coal while being the only one of the world’s top 30 economies to legally ban carbon-free nuclear power, be no more than lukewarm on carbon capture and storage and positively antagonist in quite a few places to development of new sources of lower-emitting natural gas – and yet be anxious about security of supply and also electricity costs.

It’s one where the more than eight in 10 of the populace, as evinced by opinion polls, can support the regulation of power prices and simultaneously want all the benefits of a competitive market.

It’s an environment where “our” ABC (at the weekend) can give prominence (as a pointer to what we should be doing here) to a story that the UK’s Conservatives are pushing for closure of Britain’s remaining coal-fired power stations but not report that a prominent international consultancy, Wood Mackenzie, has warned this step could cause power supply failures, pointing to the recent “Beast from the East” storms requiring these plants to run flat out to keep the lights on amid issues with (imported) gas supplies.

It’s one where this country can have a furious row over whether Australia should build one or more high-efficiency, low-emissions coal-burning power plants in a world where (as reported by CoalSwarm, an activist organization) 575,625 megawatts of new coal capacity have been commissioned since 2011 – 109,218 MW of it outside China and India – and an estimated 220,000 megawatts are currently under construction.

Over the weekend I read an interesting essay by members of The Boston Consulting Group, one of a series the consultants are publishing on “the future of energy in an increasingly uncertain world.”  The authors say: “For decades, utilities and other energy-related businesses have been accustomed to predictable, steady demand growth, a stable technology landscape and a relatively slow pace of regulatory change. But this is morphing in to something more dynamic and less predictable.” They add: “The pace of change, and the disruption it brings, is set to accelerate before we reach a new equilibrium – and no-one knows precisely what this may look like.” The emphasis is mine because we see and hear so much certainty on the part of the boosters of variable renewable energy plus battery storage.

A paragraph in the essay that particularly caught my attention, given the Australian environment, is: “Industry players and governments must develop the capability to examine the assumptions behind differing scenarios and projections, assess the impact of various disruptions, individually and in combination, and prepare for a range of possible outcomes in the energy market.”

In this context, it is interesting to learn Frydenberg has commissioned the Australian Energy Market Operator to report next month on the 20 coal-fired power stations with an average age of 27 years with a view, he says, to encouraging further investment in them to avert their early closure.

And then there is an Australian Financial Review editorial about the Liddell imbroglio averring (I paraphrase) the core problem is that bad policy leads to more bad policy and that the Turnbull government is further souring the energy investment climate with political meddling when it should focus on using its “guarantee” to enable the market to work properly.

One of the subsidiary problems, however, is that many stakeholders have issues with the NEG. (The April issue of my Coolibah newsletter on this website canvasses a swag of these concerns.) In about 10 days we will see how this plays out via the CoAG Energy Council but the portents are hardly encouraging.

Perhaps the really substantial problem is wider than energy and relates to a national malaise – this thought was encapsulated in the latest The Weekend Australian by the doyen of political commentators, Paul Kelly, as “an Australian polity convulsed by the ineptitude of elites, the failure of governments, the arrogance of business and the disillusionment of the public.” To which one might add information overload, perhaps.

Whatever, we are where we are – and we know we have a severe problem with energy policy and planning (a “dog’s breakfast,” says The Australianin an editorial this week).  The newspaper’s discouraging prognosis is that the Turnbull government is “months away from putting (the NEG) in place, years away from seeing its effect on investment patterns and light years away from convincing mainstream voters it will make their electricity more affordable and reliable.” It adds in another editorial today that the “depressing reality” is that, in the absence of genuine political courage, “a workable plan remains as far away as ever.”

It also needs to be emphasized that, notwithstanding the media focus on household budgets, the real crisis this situation presents is for Australia’s international competitiveness. Frydenberg will reportedly tell the Press Club today that the alternative to a practical solution to the “energy crisis” is going to be further policy paralysis, more expensive short-term government interventions and higher community costs either in energy bills or taxpayer outlays.

All of this, and much more, goes to underscore a point made in an op-ed in The Australian this week by Adelaide University professor Paul Kerin: “Governments should focus on getting first-best policies in place and avoid kneejerk decisions that violate the basic principles of evidence-based policymaking.”

Of course they should but we in Australia have seen too much evidence to the contrary with respect to energy to be comfortable that they can and will in our near future, not to mention that we can’t be sure, given the prevailing political atmosphere, which parties will be governing Victoria, New South Wales and Australia by this time next year.

By the way: the most recent Essential Report opinion poll finds that 37 per cent of its respondents believe renewable energy should be prioritized over coal-based generation, 13 per cent believe the opposite, 35 per cent think both sectors should be treated equally – and 15 per cent “don’t know.” This outcome varies from a 2015 poll in which 50 per cent favoured renewables.

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