The COAG Energy Council meeting last Friday was about as a pressured an event in Australia’s electricity policy world as I have yet experienced.
All of Australia’s large power companies, the Prime Minister and Energy Minister, all but a small handful of Australia’s peak business associations, some customer groups and the editors of most broad sheets were screaming for the states to sign on to the Federal Governments’ proposed National Energy Guarantee.
Here was the golden opportunity to escape a decade of energy and climate policy failure, they insisted.
Against this wall of pressure, two State energy ministers and one Territory minister, led by the quietly resolute Minister for Energy, the Environment and Climate Change from Victoria said they would not be pressured to hastily sign on to a policy that simply did not seem to add up.
Faced with this possibility, some in the commentariat thought they would get their oar in first, and they blamed GetUp, The Greens and Melbourne marginal seat politics.
Other establishment commentators dismissed as “radicals” those who had had the temerity to question the policy and point to its internal inconsistencies. The federal Energy Minister likewise dismissed data requests from Australia’s energy academy since many in the academy had questioned the policy from the start.
But the policy so obviously does not add up. The ESB shows that the emission reductions it “guarantees” will be achieved anyway, and pretty much before the policy even takes effect.
The ESB’s modellers also found the policy would not stimulate any additional investment in generation over the life of the policy.
In fact, except for 1,000 MW that the ESB insisted should be added – before the NEG would be implemented – the NEG would not deliver any more investment relative to business-as-usual. In both cases, NEG and no NEG, there would be no new non-distributed generation.
And yet, without the NEG, the ESB insisted wholesale electricity prices would be 30% higher, households would forego $1,500 over 10 years and reliability would be seriously jeopardised.
Behind closed doors, the proponents of this policy suggested the modelling was all for show, and that showing no new investment in renewables would keep the intransigent Coalition back bench on-side.
Don’t worry your pretty little heads about this it was suggested.
One of those insiders, with no hint of irony, cited the Hitchhikers Guide to the Galaxy to justify the lack of transparency:
“Meanwhile, the poor Babel fish, by effectively removing all barriers to communication between different races and cultures, has caused more and bloodier wars than anything else in the history of creation.”
Another establishment advisor wrote of the “genius” of the NEG, a mechanism so complex, he said, that no more than a handful of people understood it. All would be good if the politicians hadn’t mucked it up.
Ah yes, the “father knows best” school of public policy. And the hospitals would work so much better if it wasn’t for the patients.
At the end of the momentous week, I found myself in Sky News’ Melbourne studio having been asked to pitch the proposition that the NEG should be ditched.
Stephen Conroy and Campbell Newman then debated it with me and the host, Nicholas Reece. Sky also arranged a Twitter poll to ask viewers whether they agreed the NEG should be ditched.
I failed to convince my interlocutors: they all agreed the NEG had big wrinkles that should be fixed but something was nevertheless better than nothing.
I checked the Twitter poll straight after the interview at which point 800 votes had been cast. I expected much the same response from the public as from my interlocutors. But to the contrary, 76% wanted to ditch the NEG, 10% were undecided and 14 % wanted to keep it.
By the time the poll closed, a further 500 had voted and the final result showed 10% undecided, 12% supported the NEG and 78% wanted it dropped.
Political analysts will have much to say about such an unequivocal result. For mine, as it stands the NEG is not credible and the claims made of it by its proponents are plainly incoherent.
Evidently the people are not buying it either. As so often, they are right.
For as long as I have known it, Australia’s energy industry has wrapped most energy ministers, state and federal, around its little fingers. Ministers have often been willing victims – submission promised prestige and a quiet life, albeit at customers’ expense.
But it has left those ministers with tin ears. The people seem rather angry about it.
Bruce Mountain is director, Victoria Energy Policy Centre.