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The energy wars are heating up

16 August 2018 131 views No Comment


by Ross Fitzgerald

It’s a brave observer of politics who disagrees with Paul Kelly, who is rightly regarded as the finest Australian political journalist of his generation. In a series of strongly argued pieces for The Australian, Kelly has urged support for the government’s National Energy Guarantee; not because it’s the best policy but because it’s the least bad option on offer, and the only way to end the energy policy wars that Kelly rightly says have bedevilled our politics for over a decade and helped to bring down three prime ministers.

This week, and not without a lot of very vocal dissent, carried the party room to support the NEG and the 26 per cent emissions reduction targets that Australia agreed to at Paris. Turnbull’s position would have been untenable if he had not got his way.

The Prime Minister’s supporters will hail this as a major political victory, a vindication of Turnbull’s political skills, and a sign that the government could be re-elected after all. They may even declare that the energy wars are now over. On the contrary, in my opinion they’re only just beginning.

From the dying days of the Howard government when climate change policy and emissions reduction measures first became politically significant, the battle has mostly been theoretical, even theological: with one side proclaiming the need for urgent action, allegedly to save the planet; and the other urging caution, lest policies be put in place that might do more harm than good.

But over the past couple of years, the battle has become personal. It’s started to impact on the prices people pay, the jobs people have and the industries our country can sustain. We now know that rigid environmental virtue has very high costs indeed and that these will only get worse as we implement more and more of the measures that are already the main driver of power price increases and the main cause of manufacturing jobs going offshore.

The Prime Minister and his Energy Minister Josh Frydenberg can repeat all they like that the modelling says household power bills will come down $550 a year. Soon enough, this bold claim will be tested against reality; and if it fails, as it surely will, because all the previous reassuring modelling has turned out to be utterly false, the energy wars will resume with even greater ferocity between those in favour of ultimately futile green gestures and those in favour of reducing our power bills and saving our jobs.

Turnbull’s ‘win’ is a National Energy Guarantee that the states will likely legislate, but that he will ultimately be blamed for. Indeed he may still be defeated on the floor of federal parliament if Labor decides that the Paris targets are too low and if enough Coalition backbenchers decide that they’re too high; or that there’s no need for these targets to be legislated, as the previous ones weren’t. At least four Coalition MPs “reserved their position” on the legislation and nearly all of them spoke up in favour of supplementing the NEG with guaranteed base load power as recommended recently by the ACCC.

In the short term, Turnbull may have his legacy and the Liberal and National rebels will be branded as wreckers. In the longer term, though, this week’s rebels will be the only ones with any credibility to take on the even more destructive emissions policies that will be put in place by the next federal Labor government.

Throughout the NEG debate, its supporters have claimed that “business as usual is not an option”. They’re right that we can’t have ever-increasing power prices with routine blackouts or rationing. Bizarrely, though, their solution is even more of the same. The increase in renewables from 10 per cent of our power supply a decade ago to 17 per cent now has coincided with a doubling of price. So far, gold plating has been as much to blame as the Renewable Energy Target but doubling the renewable supply to 36 per cent will further undermine the economics of base load coal and increase the overall unreliability of the system.

The unavoidable dilemma is that we need power 24/7 but wind and solar only work when the wind blows and the sun shines. Either we accept that blackouts and rationing are our energy future or we insist that backup “despatchable” power is always available – which essentially means a renewable power system that works when it can, plus a despatchable system of coal, gas or diesel that is on permanent stand-by. But the costs of this double-build of infrastructure would be horrific.

All of this is driven by the Paris emissions reduction targets that we continue to obsess about but that no other country does. When we produce just 1.3 per cent of global emissions and three out of the four biggest emitters now have no Paris targets whatsoever, why do we bother?

This is the question that coalition party room dissidents now pose. And once they’ve worked out the damage that UN-mandated green schemes are doing to their cost of living, employment opportunities and quality of life, voters will ponder it too.

There is an alternative policy that would halt the price spiral, and create a political contest with Labor that the Coalition could yet win. This would involve keeping open the Liddell power station via compulsory acquisition, ending renewables subsidies much sooner, fighting the states’ bans on gas exploration and extraction, and letting emissions take their natural course. It’s probably the Liberals’ only hope of victory but it would be hard to see Malcolm Turnbull leading this campaign!

Professor Ross Fitzgerald AM is the author of 40 books, including the political/sexual satires ‘So Far, So Good: An Entertainment’ (Hybrid) and ‘Going Out Backwards: A Grafton Everest Adventure’ – also published by Hybrid and shortlisted for the 2017 Russell Prize for Humour Writing.

The Spectator Australia, 18 August 2018, p vii.

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