Issue 73, May 2011
Welcome to this year’s fifth issue of the newsletter. You are among 4,600 people a month reading it. This issue continues our recent focus on power price rises, consumer concerns and the related problems of the federal government’s pursuit of a carbon tax. It also highlights new government projections of where national electricity-related emissions are heading – well beyond a 2020 outcome that is five per cent below 2000 greenhouse gas levels. And it calls for a national solar PV inquiry.
Publication of the fifth edition of the Powering Australia yearbook will be accompanied in 2011 by the “Powering Australia Conference: Starting the Decade of the New.”
Yearbook editor and conference leader Keith Orchison and organisers Hallmark Editions will present the event in Melbourne on 27-28 September, enlisting the views of some of Australia’s most influential energy industry managers and best-informed analysts.
The Federal Resources & Energy Minister Martin Ferguson has been invited to again launch the yearbook. In launching the 2010 edition in Parliament House, Canberra, late last year, he described the publication as “again providing a catalyst for the kind of robust dialogue between industry and policymakers that is critical to ensuring Australia’s future energy security.”
Details of the conference can be found at http://www.halledit.com.au/poweraust2011.
The Council of Australian Governments should set up an independent inquiry in to the costs and benefits of rooftop solar power schemes in the wake of the debacle in New South Wales, consultancy Coolibah says.
Writing in the “This is Power” blog, Keith Orchison, former managing director of the Electricity Supply Association of Australia, says the three Liberal premiers from Western Australia, Victoria and NSW should propose an inquiry to CoAG, pointing to forecasts by Bloomberg New Energy Finance that $8 billion could be spent installing rooftop arrays by households and businesses this decade.
He quotes the federal Department of Climate Change as warning repeatedly that, even if capital costs were halved from their 2009-10 levels, placing 1.5kW of solar panels on every residential rooftop in Australia would cost $100 billion and deliver only 16 million tonnes of annual emissions abatement by 2020 – versus a national target of 160Mt at the decade’s end.
The “This is Power” blog post headlined “Losing its shine” is to be found at www.coolibahconsulting.com.au/TiP by readers not already viewing this on the Coolibah website.
Martin Ferguson says the government will deliver a second national energy security assessment this year ahead of a draft energy white paper, aiming for the policy report to be finalised next year.
Speaking to the Committee for the Economic Development of Australia in Sydney in early May, the energy minister said the government would set up a white paper reference group to aid the process and would “fully test” specific proposals with stakeholders as well as with the new CoAG Ministerial standing council on energy and resources.
However, he warned that the white paper would not embrace big new funding initiatives. “I want to make one thing absolutely clear,” he said. “The white paper will not spawn a raft of new spending. Instead, it will provide a long-term strategic framework intended to give investors, consumers and planners a clear sense of direction and confidence in our energy future.”
Ferguson said the white paper would include a response to the recommendations of the Prime Minister’s task group on energy efficiency – which reported in 2010.
It would also look at the management and regulation of energy networks “to ensure that we are developing and operating these assets efficiently to strike the right balance between reliability and cost.”
Ferguson told CEDA that investment in the electricity supply chain could exceed $220 billion over two decades. “The Australian Energy Market Operator last year forecast that between $72 billion and $82 billion will be needed for new electricity generation and transmission by 2030. Investment on distribution networks, gas pipelines and associated infrastructure could exceed $140 billion to 2030.”
Brian Tamberlin QC, an acting judge of appeal of the New South Wales Supreme Court and former Federal Court judge, will preside over the O’Farrell government’s inquiry in to the sale of the State’s electricity assets last year. He is scheduled to provide a draft report within four months and a final report in six months.
Barry O’Farrell says Tamberlin’s findings will “form the basis for our electricity plans for the future.”
The special commission is not only charged with looking at whether the asset sales complied with applicable laws, policies and practices, but also considering “the value for money achieved for the State and the benefits and costs, including potential risks and liabilities, of the transactions.”
O’Farrell says the inquiry is also being asked to provide advice on “ways to promote competitive electricity prices and guarantee reliability of supply.”
Meanwhile O’Farrell has also sacked the four directors appointed to the boards of Delta Electricity and Eraring Energy in the dying days of the Keneally government after the original boards declined to sign off on the gen-trader sales.
Although historically it has enjoyed cheaper electricity than other Australian jurisdictions, sharp rises over the past three years mean that customer prices in New South Wales are now higher than the national average.
The State contains 30 per cent of all the household customers in Australia.
This is one of the findings of the Duffy/Parry review of electricity networks set up by the now-defeated Keneally government and hidden by it for the duration of the NSW election campaign, but now released by the O’Farrell government.
The report says electricity prices in NSW have increased 43 per cent over three years and are expected to rise by this much again over the next three years. “The size of the electricity bills is increasing much faster than average wages and paying these bills is taking up an increasing proportion of average household income,” it adds.
(However, if the power price rises predicted for Western Australia go ahead, the State’s electricity bills will have increased 52 per cent in three years after being frozen by ALP governments for most of the past decade.)
The Duffy/Parry report was made public just as the State’s Independent Pricing & Regulatory Tribunal produced its draft proposal to increase prices by 17.9 per cent for EnergyAustralia customers (a rise of $230 on the average annual bill), 16.4 per cent for Integral Energy customers ($228) and 18.1 per cent for Country Energy customers ($316).
IPART chairman Rod Sims, who has been nominated by the federal government to chair the Australian Competition & Consumer Commission, says the tribunal is “particularly concerned” that the new prices will affect households with large consumption levels and low incomes and is calling for targeted assistance for them.
A typical NSW household spends between $25 and $34 a week on electricity, IPART says, but some homes on low incomes with large families are outlaying more than 10 per cent of their disposable income on power supplies.
Sims attributes the latest round of increases to higher network charges (10 per cent) and the federal renewable energy target (six per cent).
IPART is holding public hearings in May on its proposals, which are due to take effect in July.
Early next year it will embark on drafting prices for 2012-13 and says making projections for the next round is difficult without knowing the level of the proposed federal carbon price.
The NSW pricing regulator has called for the Australian Energy Market Commission to initiate a review of the national electricity rules to address concerns that they may bias the Australian Energy Regulator’s decisions on capex and opex in favour of higher prices and inefficient outcomes.
IPART has also told the NSW government to satisfy itself that network licence requirements for reliability and security “align with customers’ willingness to pay” and to take steps to ensure that future changes are subject to rigorous cost benefit analysis.
IPART has also called for future green schemes to be judged on their cost-effectiveness and for the existing ones to be reviewed. Both the federal and the Keneally government schemes promoting rooftop solar generation are “high-cost abatement,” it says. Keneally’s solar bonus scheme was “poorly designed and not subject to adequate cost-benefit analysis.”
In a comment that has implications for other State solar schemes around Australia, IPART points out that the long-run marginal cost of a 1.5kW solar system over a 25-year life is $422 per megawatt hour compared with $120 for wind and $135 for biomass. Under the current hand-out arrangements, 300,000 households have taken up PV power, equal to about two per cent of the residential market.
The federal government has wound back its solar credits scheme from 1 July, the second move to do so in five months.
Climate Change Minister Greg Combet, announcing that the subsidy would be reduced faster than previously planned, acknowledged that demand for the overly-generous scheme was pushing up consumer power prices and reducing the take-up of solar hot water systems. Water heating is the largest household source of greenhouse gases from electricity use, accounting for almost a quarter of residential emissions.
The NSW Business Chamber warns that firms are set to be “battered by the perfect storm” in electricity supply over the next two years.
It echoes a comment made in the Duffy/Parry report to the State government: “Customers are facing substantial known increases in electricity prices over the next few years and there are several potential additional factors that could add further to the upward pressure on electricity prices. It is hard to avoid the conclusion that all these factors create a perfect storm.”
Business Chamber CEO Stephen Cartwright says the latest IPART report foreshadows power price increases of 29.7 per cent over the next two years to which has to be added the impact of the Gillard government’s federal carbon tax. “This is a crippling bow for every energy-reliant business in NSW,” he adds, “and a savage blow to local exporters who have yet to come to terms with the impacts of the very high Australian dollar.”
Cartwright says NSW small businesses will be paying an extra $369 to $846 on their power bills in the next two years just from the IPART decisions. “Many will pay a great deal more.”
The Energy Users Association, representing large corporate consumers, has accused the Australian Energy Regulator of “not applying best practice regulation” to the power networks.
EUAA says that there is also “strong evidence” that ownership of networks does matter, claiming that the government-owned businesses in NSW and Queensland are “the worst performers.”
The association also complains that network operations have been “used as de facto State revenue offices,” pointing out that the NSW government has received $15.3 billion in dividends and tax-equivalent payments from them over 15 years.
Power price rises, the association complains, represent “a combination of ossification of past reform processes, poor policy approaches and poor regulation.” It says most governments have been “detached and disinterested” in the electricity cost issue until recently.
The problems in applying a carbon tax across Australia have been highlighted by evidence Verve Energy, the Western Australian government-owned generator and the eleventh largest electricity-related greenhouse gas emitter in the country, has given to a Senate select committee looking at the issue.
Verve CEO Shirley In’t Veld says that a federal carbon price set at $25 per tonne will add more than $200 million a year to the generator’s costs – and Premier Colin Barnett has followed this up by ruling out any State subsidy to compensate the debt-ridden generator for the extra burden.
In’t Veld also says that a carbon price would need to reach $70 per tonne to drive Verve from burning coal in to using more gas in a State market where gas prices stand at $8 per gigajoule. “In WA, there is no environmental gain (from a $20 per tonne charge), but considerable financial pain,” she told the Senate committee.
A further problem for the State-owned generator is whether it can pass on all the extra costs to its customers because of business contracts. Any burden that could not be passed on would add to the corporation’s problems in covering routine maintenance and upgrade costs and, in turn, this would flow to the reliability of its operations.
Verve has five major power stations in the West and dominates the State’s power supply with 2,967MW of capacity.
WA, riding the impact of the mining boom, expects power demand to grow by 3.7 per cent a year this decade.
Verve is almost $1 billion in debt as a result of the previous Labor government’s approach to under-charging consumers for power and passing the losses through to the generator.
In’t Veld says the corporation has spent $150 million upgrading its coal-fired power stations in order to reduce their emissions intensity.
Alcoa, the State’s largest user of electricity, has reacted to the Verve comments by pointing out that any extra costs passed on to it could result in premature closure of operations in the West.
The federal government has commissioned engineering consultants Evans & Peck to undertake an assessment of the potential for renewable energy generation in Western Australia’s Mid-West and Pilbara regions.
Federal Resources & Energy Minister Martin ferguson says renewable energy may offer a solution to bringing power to remote farms, mines and communities.
Meanwhile Perth media report that State-owned Horizon Power is urging the WA government to agree to construction of a $400 million power station to ensure supply to Karratha and Port Hedland post-2013, by which stage at least 100MW of new capacity will be needed. According to Horizon, peak demand in the huge region is set to rise from 10MW this year to 158MW in 2015-16.
The situation is difficult because BHP Billiton and Rio Tinto now need most of the power they generate for their own mining operations.
According to media reports, the State Treasury opposes the development by Horizon because it does not want to add to government debt and would prefer private sector investment.
The Australian Energy Market Commission, in its priorities discussion paper on which stakeholder submissions are due mid-May, says just over 10,000MW of generation capacity has been added to the east coast market since it was launched in 1998, but policy uncertainty is currently affecting incentives to new investment to meet the expected increase in demand.
AEMC estimates that up to $1.5 billion will need to be spent annually over the next five years to deliver the required generation. Uncertainty about how and when a price will be placed on carbon, it adds, is making financing baseload and possibly mid-merit power capacity “very difficult” and appears likely to drive development of gas-fired peaking generation. Peaking gas plants and wind farms, encouraged by the renewable energy target, “seem unlikely to be the long-term least cost combination to meet future demand.”
The commission notes that the Australian Energy Market Operator’s forward projections see annual growth in power consumption running at 2.1 per cent this decade with summer peak demand increasing 2.7 per cent a year.
AEMC says that about half the generating capacity in the east coast market is still owned by State governments and they have generally indicated that they will not build any more power stations. The current trend, it adds, is for vertically-integrated gentailers to finance new generation investment.
AEMC says that raising capital for the large levels of investment needed may prove “challenging” for investors in a post-GFC environment in which risk is priced more keenly. “While access to capital is unlikely to be an absolute barrier to investment, it may increase costs and make it more difficult for independent generators to finance investments.”
The role of leading the federal government’s attempts to win support for its carbon tax require Climate Change Minister Greg Combet to be in constant spin mode, driven in part by the need to keep the Greens onside in a hung parliament and also to shore up community support, which has been waning since the announcement earlier this year that, despite promises at the last federal election, the policy is to be pursued.
The Greens leader, Senator Bob Brown, has called on the government to “hold its nerve” in the face of opinion polls that show public opposition to the measure lying around 59 per cent versus 34 per cent who support it and the government lagging well behind the Coalition in overall support.
In recent comments, Combet has promised the 10 million national households that they will receive “more than 50 per cent” of whatever revenue the government gleans from the tax.
Meanwhile 19 food and grocery manufacturers have co-signed a letter to Prime Minister Julia Gillard warning that the measure must avoid making them less competitive against overseas factories. The sector is the largest portion of Australian manufacturing, accounting for nine per cent of international trade.
In a National Press Club speech, Combet claimed that “millions” of people will be better off as a result of the government’s carbon compensation plans but in subsequent interviews he also has conceded that the measure needed to be “budget neutral” because of the tough fiscal circumstances.
He claims that the escalator for the carbon price, which will start with a fixed period of “between three and five years”, will be “modest.”
The government, he promised on the ABC Radio PM program, is “not going to hit companies with the back of an axe.”
Defending what the government is doing on Adelaide radio, Combet said: “We are trying to play our part internationally to tackle climate change. The facts are that Australia is the highest per person carbon polluter among all the advanced economies and one of the 20 largest polluters at an absolute level.”
In another interview he said the policy objective is to change the power generation mix, to bring more renewables in to the system and “much more efficient coal-fired electricity in the earlier years,” to bring on natural gas-fired electricity.”
Combet said the government is waiting on detailed modelling to finalise its understanding of the impact of the tax on the average cost of living.
Asked if what he and the Prime Minister have been saying about compensation implies that millions of Australians will be worse off, Combet responded: “Well, I don’t know that that’s a safe inference. There’ll be very special emphasis on low and middle income earners, pensioners, social welfare recipients and the like. (We will also) be using the revenue to support jobs in the most affected industries (and) we will also do what we can to support other climate change programs and initiatives.”
The Climate Institute has conceded that a 2020 carbon price of more than $60 per tonne is needed if Australia pursues a substantial change in economic emissions intensity.
The environmental lobbyists are frequent interveners in the current debate, most recently arguing that a $25 carbon charge will cost an average household less than $4 a week on its power bill compared with $7.80 a week flowing from higher infrastructure charges.
Earlier, in responding to debate in Federal Parliament over its claims on jobs created by clean energy developments, the institute said that “a starting pollution price” of $25, combined with the renewable energy target and energy efficiency policies, is needed to drive a switch to new low-pollution technologies.
It said its employment modelling had used the Garnaut 25 per cent reduction target (which required a $45 carbon price in 2012) and the federal government’s “CPRS-15” scenario (which required a $36 charge in 2012). “That said, our research shows that a 2020 price of greater than $60 is needed if we are to be seriously switching to a cleaner economy.”
The institute, along with the ACTU, the Australian Conservation Foundation and the Council of Social Service, under the banner of the “Southern Cross Climate Coalition,” said at the start of May that a carbon price alone will not ensure a transition to a lower-emissions economy. The coalition wants a cap set on carbon emissions, performance standards for new generators and government support for carbon farming.
Meanwhile ACOSS released a position paper in April warning that even “modest” carbon charges will be sufficiently significant to “bring further adversity to families and individuals living on low, fixed or unreliable incomes.”
The council wants compensation to be in the form of both cash payments through the income support system and changes to taxation along with a “significant and sustained investment in improving energy use efficiency in low-income households.”
In proposing compensation levels, ACOSS says modelling of a $25 carbon price will have an impact on the cost of living of an average household of about $10 per week.
Energy hardship, ACOSS says, is a significant looming issue in Australia, with power prices nearly doubling over the past 10 years and possibly doubling again over the next five years, and has the potential to further disadvantage low-income households.
In discussing issues that may impact on power prices, the council notes that a range of factors, including the carbon price, may lead to higher gas costs on the east cost.
It calls on the federal government to guarantee that no group of people on low incomes will be financially worse off under a carbon price regime.
The latest national greenhouse gas inventory published by the federal government says that electricity generation was responsible for emissions of 206.7 million tonnes in 2009, equal to 37.9 per cent of Australia’s total. This was a rise of 3.6 million tonnes over 2008. The rise between the two years was greater than the increase in electricity production because of growth in brown coal generation and a decline in hydro-electric output as a result of the drought still prevailing at that time.
The inventory says that the entire energy sector was the source of 417.4 million tonnes of emissions in 2009, of which stationary energy contributed 294.1Mt, transport 83.6Mt and fugitive emissions from mining 39.7Mt.
The report, published by the Department of Climate Change, says the largest drivers in the 59.7 per cent increase in electricity-related emissions over two decades have been the manufacturing (up 20.7Mt), residential (up15.4Mt) and services construction and transport (up 22.3Mt) sectors.
The report breaks down emissions from purchased electricity as 13.5Mt for mining, 63Mt for manufacturing, 44.4Mt for commercial services and construction, 49.3Mt for households and 2.4Mt for transport and storage.
The department’s review of stationary energy emissions says that gases from power generation were 175 million tonnes in 2000 and it projects they will reach 213Mt in 2020. To deliver its share of the 2020 target set by the government – five per cent below 2000 – this indicates that there needs to be a cut in power emissions of 47 million tonnes this decade.
This figure would be much higher if it were not for the renewable energy target, which the government claims will reduce the growth of emissions by 30 million tonnes a year by 2020.
In reviewing the electricity sector, the department notes that growth in generation since 2007 has been markedly slower than in the previous decade, and was negative in 2008-09, although it has started to rise again. An increase in emissions has been constrained by greater availability of hydro-electric power following the drought breaking and because black coal generation has fallen back as a result of the renewable energy target and the mandatory Queensland gas scheme.
The department predicts that annual electricity consumption will increase by 42,000 GWh between 2009 and 2020 as the economy expands. More than three-quarters of the fossil-fuelled generation installed to meet this higher demand over the decade will be gas-fired, it says, with investment mostly in open-cycle systems. Without present policies, it claims, the higher demand would have increased emissions by 39 million tonnes a year instead of the 7Mt it projects.
The department projects that almost 20,000 MW of thermal capacity will be added to national generation between 2010 and 2030, most of it in the decade after 2020. After 2020, when development driven by the RET expires, it adds, investment in generation will switch back to gas and high-efficiency black coal.
It forecasts that electricity emissions will reach 259 million tonnes a year in 2020, with black coal generation contributing 162Mt and brown coal 71Mt. The 2000 figure was 175Mt.
“Without further policy intervention,” it says, “black coal is expected to remain the largest source of electricity generation in 2030.”
One in three Labor voters polled by Essential Media in April thought that Australia should delay imposing a carbon tax until the US has established an equal or stronger system.
The survey shows that 45 per cent of respondents overall want to see an Australian carbon price scheme delayed versus 33 per cent who want it to go ahead. Sixty-two per cent of Coalition voters and 13 per cent of Greens supporters favour a delay. “Don’t know” responses came to 21 per cent.
Answering a question as to whether they would support the carbon tax if the federal government compensated households by cutting income tax and increasing welfare payments, 35 per cent of the respondents said it would make no difference to their views and 16 per cent said it would be less likely while 38 per cent said it would improve their attitude towards the measure.
A submission from environmental lobbyists Environment Victoria to the federal government’s multi-party climate committee – which the Coalition is boycotting – has warned that there will be a “perverse outcome” if brown coal generators are offered large amounts of compensation.
The submission says that a repeat of the $7.3 billion in compensation offered by the Rudd government in 2009 could result in the closure of some black coal power stations in New South Wales and Queensland while the brown coal generators at Hazelwood and Yallourn in Victoria stay in operation.
The 2009 compensation package was based on carbon intensity rather than generators’ financial situations. The submission claims that a carbon price of $20 to $30 per tonne could see some black coal generators shutting early and being replaced by gas plant.
Environment Victoria, which opposes compensation for generators, says a tender scheme – where companies bid to be paid to close plants – would be better if the government did embrace financial assistance.
The NSW Greens, who have called on the O’Farrell government to act arbitrarily to reverse the Keneally government’s gentrader sales and not wait on the outcome of the Tamberlin inquiry, have criticised the suspension of the State’s solar power scheme, arguing that some households may have a case for a class action because the move was not published in the Government Gazette.
Greens MLC John Kaye, who argues that the government should legislate immediately to reverse the gentrader sales, complains that O’Farrell has “acted outside the law to kill off the solar bonus scheme.”
A “solar summit” meeting convened by the government reportedly concluded that the scheme should be closed to new connections, but no official decision has been announced.
The government claims that the costs of the Keneally scheme have reached $1.9 billion and it has indicated it will meet them from the State budget rather than impose them on power bills. The scheme has been temporarily suspended for two months while the government works through its options.
Rod Sims, chairman of the Independent Pricing & Regulatory Tribunal and nominated chairman of the ACCC, is reported to have told the “solar summit” that the scheme has probably put back the cause of action on curbing greenhouse gases.
Australian Associated Press reports Mark Duffy, deputy director-general of the State Trade & Investment Department, saying “There’s no doubt this is an enormously expensive way to abate carbon.”
One of the problems facing the new government is that Keneally allowed applications to be lodged after the scheme was severely cut back and, as a result, thousands were received, pushing the total capacity required to more than 350MW, well over the announced cap of 300MW.
The Clean Energy Council claims that NSW solar panel companies have about $200 million in unused stock as a result of the scheme’s abrupt closure.
A second “solar summit” meeting is to be held in Newcastle on 7 June.
These are trying times for policymakers, and there are some, striving to come up with a sensible energy strategy to see Australia through the next two decades and to deliver secure, reliable and affordable electricity with a smaller environmental footprint than it has today.
In far too many areas of the debate the spinning spoon has run off with the idealistic (not to mention ideological) dish, leaving both investors in the industry and energy consumers increasingly wondering what comes next apart from inexorably-rising power prices.
It is quite bad enough to have many in the media, new technology boosters and hucksters for an environmental nirvana deluging us with views divorced from reality of what should or shouldn’t happen, but having political leaders with actual responsibility for delivering sound policies playing similar games is a matter for grave concern.
There is, of course, no level playing field available to us in pursuing the twin goals of energy security and a reduction in the emissions intensity of the supply chain. As the long era of cheap energy ends for Australia, some will be more hurt than others.
I once had the privilege of sharing a speaking spot at an overseas conference with the famed economist Alfred E. Kahn – an expert in regulation and deregulation, the man who drove the deregulation of the US airline industry and as a result saved the world’s travelling public scores of billions of dollars – and hearing him put down an audience member harping on this.
“The only level playing field is in the grave,” he intoned.
Kahn, who died last year at 93, was also famous for his insistence on the use of plain English.
In a celebrated memo when he was made chairman of the US Civil Aeronautics Board by Jimmy Carter, he wrote: “If you can’t explain what you are doing in plain English, you’re probably doing something wrong.”
Julia Gillard, Greg Combet and all the rest on the carbon cart, please take note.
Kahn said that the first impulse of far too many in economics (and policymaking, I suggest) is to ask themselves: “Isn’t there some way to make this idea more complicated?”
If he could see what we are doing with decarbonisation in this country, he would say it again.
Kahn’s commitment to clear language was not just a matter of style.
He was also one of the economics profession’s clearest thinkers.
Amongst other things, from his time as chairman of the New York Public Service Commission in the 1970s, he came up with the idea of charging peak and off-peak tariffs for power to help deal with the soaring costs of meeting maximum demand, now standard practice.
It would take far too long here to set out the myriad examples of members of the present federal government saying things about their carbon intentions while reports their bureaucrats produce tell us something completely different or while other available information contradicts them.
This newsletter contains one such.
Greg Combet’s own department has produced a new report forecasting that, far from falling back below 2000 levels by 2020, electricity generation emissions in 2030 will be 56 per cent above the target and 27 per cent above where they are now.
This forecast is actually for a higher emissions outcome for electricity than is contained in the national energy resource assessment the government issued in 2010.
In the assessment ABARES and Geoscience Australia predict that electricity consumption in 2030 will be 366 gigawatt hours a yea, with coal generators delivering 43 per cent and gas-fired plant providing 37 per cent.
When you do the emissions-intensity math, the assessment scenario would see greenhouse gases from electricity production in 2030 standing at about 220 million tonnes a year.
Either way, this is well above the 166Mt emissions output generators need to attain to deliver the electricity industry’s share of the national target.
However, the Prime Minister and her ministers never – literally never – refer to these numbers.
Gillard harps endlessly on Australia moving to a “low carbon pollution future.” She talks of the government “taking action to curb climate change.”
Combet talks of the carbon price “stimulating investment in low emission technologies.”
The RET indeed is doing this at a cost of $20 billion to $25 billion this decade, but, on the data released by Combet’s own department, the imposition of many more billions of dollars of carbon costs will be accompanied by electricity emissions rising to record levels over 20 years.
The obvious retort is that, without a carbon tax, these emissions would be very much higher.
To which the obvious response is that, for example, passing a law requiring all new power plants to be under an emissions intensity achievable only by the most modern coal technology would have the same outcome as the government foresees in its official assessments.
Extending the Queensland mandatory gas requirement to generation nation-wide, a concept floated by Opposition spokesman Ian Macfarlane last month, would have a similar impact, too.
Increasing the RET to, say, 25 per cent of consumption by 2025 would deliver more renewable generation by 2030 than is envisaged in the report from ABARES and Geoscience Australia.
Increasing it to a third of consumption by 2030, following and extending the current glide path, would still be billions of dollars less expensive than firing the shotgun of a carbon tax at the economy.
In this debate, the government has comprehensively failed the Kahn test of explaining the strategy in plain English.
In fact, it seeks to disguise the situation in spin and shamelessly wrapping itself in the flag of “saving the world from climate change.”
At the highest level it eschews thoughts about turning to nuclear power.
Many in the nation may console themselves with the thought that, come the next federal election, they can “do a Keneally” on Gillard.
The current opinion polls suggest this is just what many voters have in mind -- but this outcome will be too late if bad policy is already enshrined in law and the make-up of the Senate prevents it being changed.
We are not in a good place here and too many in the media are doing a shoddy job of holding the federal government to proper public account.
9 May 2011
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