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Election13: Abbott government could be worse than we feared

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Oh dear. This could be worse than we thought.

Over the past year, RenewEconomy has been highly skeptical about the Coalition’s approach to clean energy and climate change policies. In July last year we wrote of “the scary vision of the right” regarding future energy policies. Two months ago, we caught Opposition leader Tony Abbott dog-whistling to climate change deniers. In August we warned people not to be fooled by bipartisan targets.

That was just a small sample of our reservations. This week came the proof in the pudding: The Direct Action policy is not designed to meet any emission reduction at all, and Abbott confirmed he still thought the science was crap, despite the various leaks coming from the IPCC. Renewables do not even get a single positive mention in the Coalition’s newly released energy policy.

Were we being too pessimistic, as many people suggested? Depressingly, we don’t think so.

The bitter frustration is that – with a very few exceptions – none of this was investigated or probed by the mainstream media, which has retained a myopic obsession over forward estimates, the outlying budget forecasts that surely must rank as the most irrelevant and unreliable metric that has ever been centre stage of an election campaign.

In the end, some of the main policies were indistinguishable between the major parties, to the point where Tony Abbott is now longer promising to stop the boats, just to slow them down (and to keep them off Sydney’s freeways). The budget savings outlined by Joe Hockey are so insignificant it makes a mockery of the budget scare campaign that obsessed the media, and provided cover for Abbott’s empty rhetoric. The only real difference came in climate and clean energy, and Labor was so terrified of playing that card that nobody noticed.

This myopia was reflected in the editorial endorsements published today. Extraordinarily, the Australian Financial Review, the Sydney Morning Herald, and The Australian (along with every other Murdoch tabloid) endorsed Abbott without making a single mention of climate change or clean energy policies. So much for it being a referendum on the carbon price. Only The Age made mention of it, noting the Coalition’s disgraceful “back-tracking” on climate. It endorsed Labor.

Are we obsessed with niche interests? Maybe. But the cost of carbon and electricity were central to the cost-of-living scare campaign that will contribute to the Coalition’s victory. Climate change and the transition to a low carbon economy will be central to Australia’s future economic performance.

Yet the Australian blithely hoorays Abbott for “inspiring hope” and “securing Australia’s future prosperity” without mentioning he will trash the very policies that will deliver it. The AFR hails Abbott as the “visionary” who can lead the country through a “post resources” transition. Either editorial would be worthy of an opinion piece from the ultra-right wing Institute of Public Affairs. (As it is, the AFR’s sits side by side with that of the IPA’s John Roskam).

As John Quiggin, from the School of Economics at University of Queensland, said: “It’s unsurprising that the Coalition costings have been concealed until the last possible moment. It would not stand to more than a day or two of scrutiny, but it doesn’t have to.

“Among the obvious problems are the failure to cost key policies, the effective abandonment of the 5% emissions reduction target and bogus assumptions about an economic dividend from the removal of the carbon price. The endorsement of this deeply flawed process by Peter Shergold, Geoff Carmody and Len Scanlan is a disgrace.”

So now we find ourselves at the eve of an election victory and the introduction of a policy that remains a mystery. Does anyone know what Direct Action is? No. Has it been costed? No. Will it be able to meet more ambitious climate policies? Of course not. Was it ever designed to? Don’t be silly.

Of more immediate concern is the future of the large scale renewables industry, which could be worth more than $20 billion in the next few years, but which is now surely in limbo.

In July, we itemised five ways that  Abbott could kill renewables in Australia.  And he’s just about there. Repeal the carbon price? Tick. Review the renewable energy target with a view to diluting it or delaying it? Tick. Dissolve the Climate Change Authority? Tick. Dissolve the Clean Energy Finance Corporation? Tick. Slash funding for the Australian Renewable Energy Agency? Tick.

Abbott may not get to be able to achieve all those things immediately, but his intentions are clear. The energy document produced this week made no mention of renewables apart from a desire to do something about wind energy. Its focus was entirely on extractive fossil fuels – coal, gas, oil, LNG, and thorium. Dig, baby, dig. Burn, baby burn. And it wanted to make the coal-fired generators profitable again.

The energy policy document makes no mention at all of the major themes that are and will impact most on the energy industry (particularly the coal generators). They are:  reduced demand, the push for efficiency, and the proliferation of rooftop solar and other forms of distributed generation. These will, as surely as night follows day, challenge the centralized business model so treasured by the incumbents and their conservative mouthpieces.

The entire power base of the Coalition seems wedded to a utopian dream from the 1960s.  It seems the only thing that can deny them is their access to capital that the centralized generation and vast networks require. Residential-scale solar and distributed energy happens in increments that are, at most, a couple of tens of thousands of dollars. Australian households have already put $8 billion, and are prepared to invest billions more.

These bets are 100,000 times smaller, and it brings millions of competitors into the electricity game. This is where the issue of costs and equity will be fought in coming years. The fact that the Coalition does not even mention this in its flagship energy document suggests it is completely ill prepared. Or it will simply defend the conservative state owned governments that are trying to sell their impaired assets.

As one former banker, speaking of the revolution in distributed generation that is sweeping Europe, the US, and Australia, told me this week:

“There is no real news in this, but it is easy to forget how the bankers want to make their money.  They hate literally betting the whole bank on a few giant positions.  Much better to spread their capital among thousands of small positions, every one of which also has disproportionately small risks.

“Having worked on Wall Street for a couple of years this is painfully obvious to me.  New York investment bankers want everyone to believe that they are roaring, whoring, coke-snorting wildcatters, but, in actual fact, they are the most risk-averse conformists you could ever hope to meet. And that is what will kill Big Coal.”

At the start of this election campaign, the best that could have been hoped for was another hung parliament. The partnership with the Greens has delivered the best piece of policy making on climate and clean energy that we have seen, and some valuable institutions. For a fleeting moment when the polls were stuck at 50-50, that looked like a real possibility, as horrifying as it may have seemed for the apparatchiks of the mainstream parties.

The best that could be hoped for now is a Coalition minority in the Senate. But who will hold the balance of power? The Greens, obviously, offer the best hope for the development of renewables and for protecting the carbon price. But it could just as easily be a collection of “barmy army” conservative such as Bob Katter, Pauline Hanson and the Shooters and Fishers, or the anti-wind incumbents such as Nick Xenophon and John Madigan.

Or, it could be the Brick with Eyes, the nickname given to Glenn Lazarus, the former rugby league front row forward who is lead candidate in the Senate for Clive Palmer’s United Party, currently polling around 10 per cent in Queensland. Palmer, who has extensive undeveloped coal mining interest, wants to abolish carbon pricing, slash taxed, and wants cars to have 25 per cent ethanol by 2020. But what does the Brick with Eyes think about large scale renewables? We don’t know. In Queensland, they don’t have any.  

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  • Rob

    It would have paid to have at Katters climate and environment position before writing this: http://www.kattersaustralianparty.com.au/policies/climate-and-environment.html
    If you read this you’ll prefer KAP over the alternative. Its a sensible position and doesn’t deserve to be lumped in with the barmy army. There is a lot of stake here and its really not cool to scaremonger in preference to doing a basic examination.

    • Ken Fabian

      Rob, this does seem to represent a recent shift in position by Katter; he’s been on record saying he doubts the science on climate but thought the ocean acidification was probably true. Whether all his candidates are on board is a question. Not sure this has or ever will translate into a vote for carbon pricing or support for stronger national or international emissions targets or even clear support for renewables and an end to subsidies for fossil fuel miners and big users. I suspect his party’s support for climate policies will be subject to be whittled away in negotiations of other goals KAP might consider more important.

      It is heartening all the same that Katter appears to be getting better informed – rather than cede that responsibility, as Labor and LNP do, to a party machine that puts obligations to allied organisations, major supporters and backers ahead of an MP’s direct obligations to the community at large.

    • Miles Harding

      That printed policy doesn’t agree very well with the Bob Katter I’ve heard being interviewed. Time will tell…

      • Rob

        That assumes Bob Katter would have tightly controlled all his representatives. Given the result last night I doubt KAP will be a factor again so unfortunately time probably won’t tell us much at all. If they had gotten traction in this election then a standard bearer to take it forward could have emerged. Bob is 68 now, I don’t see the KAP experiment having another crack again at the Federal level. KAP is unfunded and PUP shows what funds can do. However I doubt Clive can keep underwriting PUP indefinitely so I expect in time he will fade as well because he doesn’t have much else going for him. What blows me away is the Greens preferencing anti-carbon tax candidates over Xenophon, weird!

        • wideEyedPupil

          If Clive can build replica Titanics he can continue to bank roll PUP ‘don’t you worry ’bout that’. Especially when they have seats in the Federal Parliament which will be granting him coal mines on prime agricultural land. Make no mistake Clive is all about Clive.

          • Nina

            Having Clive in parliament is just scary… Our governments are so corrupted by the resources sector!

          • wideEyedPupil

            And Clive started out as a white shoe developer in the Sunshine state and working for the Nationals in corrupting the press to cover up their dire political corruption which the Royal Commission unveiled to the QLD public. He has form.

  • patrickg

    Very well said, thanks Giles.

  • Fernando Torres-Moncayo

    “… the outlying budget forecasts that surely must rank as the most
    irrelevant and unreliable metric that has ever been centre stage of an
    election campaign” Completely agreed

  • Sarah

    Yes, Abbott’s Energy and Resources Policy has certainly sent me running to the hills in terror. Just waiting now to see how the seats will fill tomorrow, and looking for some small sign of hope to latch onto.

  • Miles Harding

    Abbott reminds me of the Doctor Who episode “The Sound of Drums” where Dr Who’s nemesis (and possible the most malevolent and insane being in the universe) has been elected the prime minister of Great Britain through a subtle mind control tactic, then embarks on a course of destruction designed to rid the plant of humanity. (something like that)

    The comment about the coal-ition being wedded to the 1960s is completely accurate. (Giles, tick)
    The Abbott policy is attempting to recapture a bygone era, it is in line with that of John Howard a few elections ago (minus, an ETS).

    Even without considering the dangerous path of ignoring what nature and science is telling us, the Abbott ‘return to the 1960s’ policies will also leave Australia exposed to the international oil market. It should be obvious to all, including politicians, that the oil price is stubbornly stuck above $100 per barrel and talk of an impending unconventional oil and gas bonanzas in the USA and other places has not produced any change in the cost of a barrel of society’s hemoglobin. It seems to be poorly recognised that much of oil’s demand is not readily transferred to other energy sources, renewable or non-renewable. From my research, the performance of tight gas and oil wells in the US is so poor that the fiction will soon be exposed, possibly (likely?) pushing oil up to recession inducing prices.Certainly, there is no hint that the price of a barrel of oil is going to decrease any time in the foreseeable future.

    From my point of view, any national policy should be directed at deducing the nation’s dependency on foreign oil (almost all) while developing local industries, again reducing the country’s dependency on key materials.

    Sadly, Abbott has mounted his horse backwards again and mistaken the the view of the past as a vision of the future. (sigh)