Attacks on wind and solar policies turn to state initiatives

The assault on climate policies and renewable energy initiatives has taken a new form: having obliterated almost all of the effective policies at federal level, the focus is now switching to state-based targets, using the old arguments of higher costs and little abatement as the basis for the attack.

The new stance is being led by conservative institutions such as the Grattan Institute – with the enthusiastic support of the lobby groups that represent the coal and gas-fired generators, and the federal government, which shows no inclination to move on from Abbott-era policies.

The Grattan Institute over the weekend released another major report analysing events in South Australia in recent months. Parts of it were immediately seized upon by those seeking to place renewables, and wind and solar in particular, in a poor light and promote the interests of the gas industry.

The report is one of many that have highlighted the complexities of the situation in Australia, and the poor policy framework.

But rather than focus on the rules that allow the market to be exploited by fossil fuel generators, the focus is instead put on state-based renewable energy policies. And the mainstream media needed little encouragement to take up the Grattan Institute’s invitation.

“Unilateral action by states or territories is likely to distort the implementations of national policies and increase costs with no environmental benefit,” The Australian newspaper was delighted to quote from the Grattan report on its front page.

Balderdash and poppycock. The ACT, which has led the way on state-based targets with its 100 per cent renewable energy target by 2020, has been remarkably successful in achieving its own emission reductions.

The ACT’s system of reverse auctions kept the renewable energy industry from disappearing altogether during the Abbott years – in the same way that the Victorian government kept the industry going in the mid 2000s when the Howard government pulled the plug on renewables. And the fossil fuel industry is not happy.

South Australia has also achieved a significant reduction in its emissions by targeting renewables. In effect, it merely sought a higher share of the national target, and economic investment in its own state, which wasn’t that hard because Coalition governments in other states were too focused on protecting the interests of coal-fired generators.

Indeed, South Australia’s 50 per cent by 2025 target was not so much a policy as a piece of rhetoric; it was pretty much already achieved at the time of the announcement in 2014, and the only major projects to commence construction in that state since that date been the result of the ACT’s own renewables program.

Similarly, the targets in Victoria, Queensland and (more recently) the Northern Territory, have yet to take shape. Queensland has still not outlined the mechanisms of its 50 per cent by 2030 target, but it did agree to write some power purchase agreements with some solar farms in the recent ARENA large scale solar tender.

That allowed Queensland – like South Australia before it – to seize the lion’s share of a national policy. And like the ACT, which has also written 20-year contracts with large-scale renewable projects, Queensland will likely save money from doing so.

Let’s put all these attacks on state-based policy initiatives into some context. The national renewable energy target is basically the last policy standing in Australia, the only tool we have to reduce emissions and/or increase the uptake of renewables.

But even this policy is much diminished, because the Abbott government spent most of its first year in government trying to get rid of it all together. And it effectively expires in four years.

That explains why the states have acted, just as they did a decade ago when Abbott’s Coalition predecessor and mentor, John Howard, took a similar course of action.

In frustration, the states – as the dominoes toppled and one-term Coalition governments were shoved out the door and replaced by Labor – have adopted higher targets because the national government is sitting on its hands.

It is a story repeated throughout the world, where the actions of sub-national governments – councils, cities and states – is often far superior to national policies.

The pretext for this latest attack on state-based policies is the recent price spikes in South Australia, and the role played by wind and solar – or the lack of it, on certain occasions – in the jump in prices.

The Grattan report goes through this in detail, and we republish a contribution it made to The Conversation here. But as you can see from this summary, there is little mention of the fact that such price spikes used to be common just five years ago, when South Australia relied only on coal and gas.

It also downplays the impact of record high gas prices – they were four times the long-term average for parts of July and twice the long-term average for much of the month. And it virtually ignores the role of the few remaining gas generators in setting the high prices.

Those gas generators have been cleared of any illegal activity, but the fact that they exploited their market dominance to maximise their profits is in no doubt. They were even congratulated for doing so by the Australian Competition and Consumer Commission, although some analysts have questioned whether this was entirely fair play.

In the end, a unique set of circumstances exploited by the fossil fuel industry is now being used as a battering ram to soften other renewable energy initiatives, and the state-based policies are the prime target.

Even more ironically, coal-fired power station are now being painted as victims, “forced” by the dastardly renewable energies with their near zero marginal cost of generation to pack up their smoke stacks and leave their coal in the ground.

Mostly, we are talking about generators that have been running for decades and never called to account – either morally or financially – for the pollution and the impacts on climate and health.

Here’s the reality. Most of Australia’s coal-fired power stations will reach the end of their natural life within the next two decades. Australia does need to plan ahead, but not by lowering its renewables targets and putting all its eggs into the gas basket – as institutions such as Grattan and others appear to want us to do.

As David Leitch argues in his column here, the Abbott-era policies brought a stop to investment in renewable energy and there is now little extra capacity as 50 year-old power stations in South Australia and Victoria are closed or are about to close.

The answer is not to put a further cap on investment in renewables, but to quicken it, and to accelerate the rule changes that could encourage battery storage and other technologies, and new business models, and replace an archaic system created by and for a fossil fuel system being made redundant by new technologies and environmental concerns.

The Grattan Institute’s Tony Wood is right about one thing – the country needs a coherent policy on energy and climate change. It could start by inserting “environment” into the National Electricity Objective (NEO), upon which its rules are based.

The lack of this focus has been crux used by regulatory and policy makers as an excuse to do nothing or delay initiatives that could hasten the inevitable transition.

The lack of planning, as Leitch says, is a “complete disgrace”, but the answer now is not to aim for the lowest possible target, but to go for the most ambitious target and to accelerate and co-ordinate that energy transition.

The states know that their economic and environmental futures depend on it. As Bruce Mountain writes, they also know that the costs of this transition are not going to be anywhere near as high as the doomsayers claim. They never are.

This situation can’t be solved by reigning in the states, but by putting a rocket under the federal government and the other Coalition states dragging their heels because of their refusal to embrace the science.