Big business flies in to sell “hideously complex” NEG to Abbott & Co

Big business usually insists that it hates red tape and green tape, and abhors complexity, unless it can make a dollar out of it.

But big business is coming out in support of what energy analysts describe as the “hideously complex” National Energy Guarantee, as it flies into Canberra to try to convince the Coalition’s right wing to behave, and support the government’s new policy.

The big business delegation reportedly put together by energy minister Josh Frydenberg – including the Minerals Council of Australia, the Business Council, BHP, and Bluescope – will be well known to Tony Abbott, the principal ring-leader of the disenchanted right wing.

Largely, these businesses and lobby groups were the same that supported then prime minister Abbott’s dumping of the carbon price (celebrated by the Coalition in the picture above), and his attack on the renewable energy target.

In the interests of short-term gains, they supported the wilful destruction of what remains the sanest, most obvious and cheapest mechanisms to address emissions.

The business group’s message to Abbott this time? Undoubtedly, it will be couched in terms of reliability, price and certainty, but the private message will be that the NEG is about as useless a policy as can be imagined, so the back-bench might as well get on board. It won’t get any better than this.

The Coalition government is proposing the NEG – with its emissions and reliability “guarantees” – as a final solution to combine climate and energy policy and create a bipartisan platform.

The Labor states, and Labor federally, may or may not sign up to it. If they do, it will be on the basis that it “does no harm,” although that assumption is not yet clear.

The main issue comes around the guarantees. The Coalition’s emissions target is so weak that the emissions guarantee will likely never be triggered, because it is effectively already met – by the RET, the mechanism that Abbott tried to ditch and only succeeded in cutting.

The Coalition is trying to lock its low-ball target in for a decade – meaning no change until after 2030. If you accept climate science, and the need to react, or even Australia’s obligations under the Paris treaty, it beggars belief.

The reliability guarantee, according to its designers, will not likely be triggered in the foreseeable future because there is no reliability problem.

But to achieve all this requires a mechanism that effectively re-writes large tracts of the National Electricity Rules, and which is breathtakingly – some say hideously – complex. And it is being rushed through in a matter of weeks, even though the details of large parts have not been decided.

This, in itself, is a concern because complexity usually means higher prices. The big utilities that send out the bills will readily pass on the costs. It is feared new players will struggle to emerge, and key information, such as the emissions registry, will be largely hidden from view.

To further illustrate the complexity, and the efforts to bury it, another 10 documents were released by the ESB after 5pm on Friday – just as the main document prepared for COAG energy ministers had been released the Friday before.

The latest batch includes more than 200 pages of largely impenetrable technical jargon. All this is to be considered, along with submissions, in the next few weeks and to be written into legislation by early August.

Big business is supporting it because they say it provides investment certainty, and “bipartisan support”, although how that can be is not clear given the huge divide between the Coalition and Labor’s respective emissions targets and trust in renewables.

Abbott and his mates on the backbench (and the ministry if you include Resources Minister Matt Canavan) basically want a new coal-fired power station, no matter what, and despite the fact that no one in the energy industry believes this is actually wise, cost effective or helpful.

Ron Boswell, the former Nationals Senator, made a contribution to the debate in The Australian, suggesting that an auction be held to “prove” that new coal-fired power stations are cheaper than wind and solar, particularly with storage.

Boswell, no doubt, believes what he reads in The Australian about the cost of coal power vs wind and solar, and what is presented by the Monash Forum, whose document Abbott was seen carrying in and out of the House last week.

This graph above, gleaned from New Energy Solar’s purchase of the Manildra solar farm announced on Monday, gives an alternative view of new energy costs, based around data assembled by Bloomberg New Energy Finance).

(For an entertaining and informative pull-apart of some of that document’s major instructions, go to energy commentator Simon Holmes a Court’s Twitter feed).

But Boswell’s push for an auction is a good idea. As it turns out, the ESB has already thought of that, and will be holding auctions for capacity to help meet any future supply shortfalls should the existing coal fleet accelerate its retirement plans.

New coal plants would have a snowflake’s chance in hell of winning a bid against other technologies – particularly with the new emphasis on “demand management”, which is the perfectly reasonable assumption that if it is cheaper to turn something off than build something new, then we should do it.

But demand management is being framed in terms of “enforced blackouts” and the wilful destruction of the manufacturing industry. It’s just another idea, like wind, solar, battery storage and electric vehicles, that looks hideously modern to the technology troglodytes on the back bench.