Coalition digs deeper into coal and climate denial

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In a staggering mix of ideology and incompetence, Morrison and Taylor are back “at work” on energy. Just don’t expect a good outcome for consumers. Or emissions.

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If the Wentworth and Wagga Wagga by-elections were supposed to send a message to Coalition governments about the need to act on carbon emissions and embrace renewables, it hasn’t worked.

If anything, it seems the federal government has lurched even further to the hard right, deepened its attachment to coal, and declared its outright hostility to making any moves to increase its emissions reduction targets. It has vowed to do all it can to stop Labor from doing just that, should it win power in the next federal poll.

This shouldn’t be a surprise from a government led by the coal-swinging prime minister Scott Morrison, an anti-renewable energy minister in Angus Taylor, and an environment minister in Melissa Price who doesn’t seem to understand that emissions reductions should be a high priority.

Morrison turned a tin ear to the public when the extent of the Wentworth wipe-out became apparent on Saturday night.

And by Tuesday he and Taylor were “back at work”, doing whatever they could to encourage the proliferation of their fabled new energy source – fair dinkum power – and to take some wild, interventionist shots at big energy that could end up killing competition, rather than boosting it.

It’s a staggering and dangerous mix of ideology and incompetence – broken only by the welcome news that the Coalition will not embrace ACCC boss Rod Sims’ long campaign against rooftop solar subsidies, and will allow them to wind down as planned over the next decade.

Elsewhere, though, alarm bells are ringing.

The move to put an effective cap on electricity prices sounds like a good idea, but unless handled thoughtfully could end up being a long-term disaster for consumers, because it will effectively reduce competition, force smaller retailers out of the market and reinforce the dominance of the vertically integrated gen-tailers.

The government’s headline claims of $800 a year savings should be disregarded. Along with its claims of a $550 saving from scrapping the carbon tax and another $550 from the National Energy Guarantee. If they had all come true, electricity would be just about free.

But it’s one random sample – taken from South Australia – and the average reductions are more likely to be in the order of $160 a year, and this only for a minority of consumers who have been unmotivated, unable or ill-informed to find a better offer, and have stayed on elevated default offers.

In some companies, like AGL, the share of default customers amounts to less than 4 per cent of customers.

If the default price is moved too low, it will simply mean other consumers will end up paying more, while reducing and possibly eliminating the ability to compete of smaller players, who are trying to break down the dominance of the big four gen-tailers (the government-owned Snowy Hydro included).

If the big gen-tailers are affected on retail margins, they will look to make up the difference in the wholesale markets they dominate. That will be another deadly blow to the new retailers trying to fashion a 21st century energy model in a quagmire of 20th century rules and attitudes.

The government also wants to underwrite new, dispatchable capacity. Again, at a brief glance, that could be a good idea – if it was truly, in the favoured vocabulary of the Coalition, “technology neutral”.

Sadly, “technology neutral” generation, like “fair dinkum” power, can be readily translated as coal. The government is looking to rush through a consultation period, an expression of interest and a full tender in less than five months – so desperate is it to deliver something to its backers before being forced to the polls in May.

The consultation paper released by Taylor contains few hard details, but looks for all the world like a recipe for either new coal generation, or more likely, extending the life of existing generators.

The obvious choice – as perfectly outlined by the government’s own utility, Snowy Hydro, on Monday, or by the likes of Sanjeev Gupta, Origin Energy and AGL Energy before them – is a mix of renewables and firm, dispatchable power, which could be batteries, hydro or other.

Snowy, fresh from its own tender, says the prices it is seeing beat current baseload coal power, and are significantly cheaper than current wholesale prices. What’s not to like about that? It delivers cheaper power and brings the added benefit of reduced emissions as well.

But in a revealing interview with The Guardian published on Wednesday, Taylor underlined to what extent the government seems intent on preventing the country going down the path of cheaper and cleaner energy, by preventing companies doing the obvious thing and closing ageing coal generators.

It is prepared, Taylor suggests, to indemnify coal-fired power stations against any carbon liabilities in the future. Asked specifically about indemnities against carbon prices, Taylor said:

“What we are saying is the risks that government needs to absorb to get investment in reliable generation, we will look at absorbing. We need the investment.”

And what sort of power does the government want? “We need reliable baseload power,” Taylor said, with not a single mention of the need for flexible and dispatchable generation, even as he acknowledged that the share of renewables will surge above 20 per cent as a result of the renewable energy target and corporate demand.

He confirmed that his plan could support retrofits of existing coal generators – such as Vales Point, in NSW, owned by Brian Flannery and Trevor St Baker, who have already made a fortune from the bargain-basement price negotiated by former NSW advisor Kerry Schott.

The chaos and confusion created by this package of measures dictated by sound bites will likely get sorted out – to some extent – when the big energy companies sit down with the government in the coming weeks.

A little bit of this, and a little bit of that, and they will likely come to an agreeable outcome. But don’t bet that will be a good outcome for consumers – it almost never is. Notice there is no mention, by the government or the big utilities, of smarter technologies like energy efficiency.

And what’s the bottom line on emissions?

Do. Nothing.

“Labor want a higher target. We are not going to facilitate that in any shape or form,” Taylor said, in total denial of the findings and recommendations of the IPCC report delivered just a week or two ago.

“We’ve committed to 26 per cent. We think that’s a fair share for Australia. Australia has a very good track record on meeting our targets. Twenty-six per cent is achievable and we are not interested in upping that, because all Australians will pay a lot, particularly in sectors like agriculture and transport. We are not going to load the gun for Labor to have a much higher target.”

And this is the mind-numbing stupidity of it all. If the government could just do the obvious – listen to the scientists, big business people like Sanjeev Gupta, or even its own utility, and support cheaper renewables, adopt sensible blueprints like AWEMO’s Integrated System Plan, it could cut prices and reduce emissions.

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