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Powering a social licence failure: The National Energy Guarantee

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Minister for Energy Josh Frydenberg and Prime Minister Malcolm Turnbull during a press conference at Parliament House in Canberra, Tuesday, October 17, 2017. (AAP Image/Mick Tsikas) NO ARCHIVING

Minister for Energy Josh Frydenberg and Prime Minister Malcolm Turnbull during a press conference at Parliament House in Canberra, Tuesday, October 17, 2017. (AAP Image/Mick Tsikas) NO ARCHIVING

The Federal Government’s announcement of a National Energy Guarantee (NEG) last Tuesday – based on hastily prepared advice and zero engagement with the community – shows they have learnt nothing from the social licence issues that have plagued the fossil fuel industry over the past decade.

Social licence, refers to gaining the community’s ongoing acceptance through genuine engagement and past behaviour. Just like relationships between people, building trust requires open communication and shared understanding.

For a recent example of failing to build social license, we need only look to the gas companies that have pushed their relationship with Australian households and businesses to the brink by shipping the majority of our gas offshore sending gas prices skyrocketing.

Contrast the exhaustive community engagement process that Chief Scientist, Alan Finkel and his eminent panel went through over nine months to hear and account for the full spectrum of views on the future of Australia’s electricity; with the latest top-down, secretive, back-of-the-envelope approach of the Federal Government.

The Finkel Review, through thoughtful process and engagement built trust and as a result, built broad spread community, industry, and political support for a Clean Energy Target.

Had the Prime Minister and Energy and Climate Minister proposed to accept Finkel’s recommendation of a Clean Energy Target they could have expected good will from all quarters.

But, because a cabal of climate sceptics and conservatives, ideologically opposed to anything that might conceivably foster renewables, the Clean Energy Target was rendered “unacceptable” and thus the NEG was crafted behind closed doors.

Let’s be clear. The NEG is a top down political solution to a Federally created political problem. There has been no consultation and likely limited modelling on the NEG. It has little to do with the realities of the electricity industry or the global transition underway.

The NEG ignores the clear aspirations of Australians for more renewable energy, and to urgently address climate change, as measured year after year by poll after poll. What is it that self-centred politicians and sheltered bureaucrats don’t get about due process and gaining community support?

The NEG fails to protect Australians, our economy, infrastructure and natural ecosystems from worsening climate impacts.

The Energy and Environment Minister proudly proclaimed in Parliament on Tuesday “We’ll have more coal and gas under the Coalition!”

And indeed, on the rubbery “modelling” results we have been presented with so far, for the NEG, that is exactly right. More coal and gas burnt for power in 2030 even than under Finkel’s “business as usual”, do nothing case.

The NEG will fall far short of the 26-28%  minimum required for the power sector by 2030. No wonder the NEG provides for purchases of domestic and international emissions permits – because you can’t have more coal and gas and reduce pollution at the same time.

The NEG also fails to deliver on reliability and affordability by doubling down on old obsolete technology coal clunkers and expensive gas power, and entrenching by its very design, the market power of the existing dominant three retailers.

The NEG will cost more and risk reliability by keeping old dirty clunker power stations running, even though they are at the end of their lives. The NEG will cost more by continuing to burn expensive gas power, which now sets high prices most of the time across the National Electricity Marker.

The NEG will cost more because it cements the market power of the big retailers, something the Australian Competition and Consumer Commission called out with much Federal Government fanfare barely a week ago.

The NEG delivers less of what Australians want. Less large-scale renewable investment in solar and wind. It will deliver less jobs and less investment in new clean power stations.

The billions of dollars being spent now on new renewable power supplies will likely stall, and the thousands employed in this growing industry will be let go. Industry capability will be lost.

The NEG’s very premise of more coal and gas, means we will be living with a false sense of reliability. Old coal so called “base loaders” are incapable of responding to the flexible demands of modern 21st century society. Under severe heatwaves fuelled by climate change, these coal power stations are already falling short, or falling over.

The NEG will fail to ensure sufficient new renewables, like large scale solar PV, are brought online over the decade to 2030 to be there ready to take up the heavy lifting when coal and gas fail to deliver. Why, because the very scheme design penalises new renewables, but rewards old coal.

We know what happens to industries that lose their social licence to operate. It hurts all of us. We have seen what an economic disaster for community, industry and company shareholders the coal seam gas industry created because it didn’t bring community along, or think through the impacts of development.

Electricity is an essential service, critical for households, hospitals and industry. It is imperative that the electricity sector does not lose its social licence, for all of our sakes. But the Federal Government’s centrist top down NEG shows some very real signs of doing just this, ending in tears.

Andrew Stock is a senior Climate Councillor with the Climate Council, an energy expert and a former senior executive at a major Australian energy utility.  

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  • trackdaze

    Its another way of stalling from the LNP. Which it had done since abbott came to power.

    After abbott spooked billions of dollars of investement away early on in his short but destructive term.

    To Turnbull trying to keep Liddell going that would have been part of many forward plans for new generation…of all types.

    Its deliberate that their is no detail. That would provide certainy.

    Investment and jobs will tank.

    Prices will go ever higher.

    Get solar and storage homeowners before it too is attacked.

  • Jo

    Thank you. This article is an eye opener.
    But I did not expect anything else from the coalition. If progress is on the way and they cannot stop it, at lest delay it and grab as much money as you can. – could we have a non binding postal ‘vote ‘ next please. That should gain another year.

  • Joe

    The COALition’s wet dream, THE NEG..Never Ever Green energy…it is already working!

  • Robert Westinghouse

    Today I wrote to all the States and Territories asking them to DUMP the Commonwealth and go it alone. The only thing the Commonwealth has done is stall, stall and stall…. what are they doing?? There is obviously a grand plan to screw the little man…. Write to all the States and voice our need for reliable affordable energy NOW, without big business. Still I maintain the only consistent, scalable and deliverable solution is: 1. Increase the subsidiaries on PV; 2. Increase the subsidiaries on Batteries; Increase the
    Feed-In tariffs; and 3. Allow coal to die a natural death….