Frydenberg takes the low road: It’s a weak NEG or nothing

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Frydenberg calls for an end to ideology and culture wars on energy, while presenting – with breathtaking cynicism – a policy that panders to right wing ideology and culture wars. It’s the NEG or nothing, he warns. Many might suggest that nothing is more attractive.

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The Coalition government is ramping up the pressure on the Labor states, seeking to paint the National Energy Guarantee as the middle path and the one and only policy option, despite its desperate attempts to shift the discussion to meet the demands of its own right wing.

Energy minister Josh Frydenberg used a National Press Club appearance on Wednesday to try and force the states to agree on the as yet ill-defined NEG, arguing that economics and engineering should triumph over ideology, and there was a need for a market based solution.

Nice words, but the cynicism is breathtaking.

Ideology? This, from a man who has spent much of the past 18 months demonising renewables, arguing in the face of all evidence to the contrary from the CSIRO and the network owners that high levels of renewables is reckless.

Markets? This from a man who has spent much of the last week trying to bully AGL into extending the life of the Liddell coal fired power station – against the company’s own economic and engineering analysis which finds that replacing it with renewables and dispatchable options such as storage is cheaper and cleaner.

Frydenberg now even laments the fact that consumers had suffered from the policy disaster zone that now afflicts Australia.

As well he might. It was the Coalition government – in an attempt to appease climate deniers and technology luddites – that tore up the carbon price and tried to do the same with the renewable energy target, the Clean Energy Finance Corp and the Australian Renewable Energy Agency.

It is the Coalition that has ignored the Climate Change Authority and its call for an emissions reduction target that is twice as strong as its own, and that has dumped talk of policy compromise options such as the Emissions Intensity Scheme, and ignored the major part of the Finkel Review.

Frydenberg also complained that energy had become a cultural battle, insisting that the “answer lies neither in war on coal nor the nationalisation of our assets.”

This from a minister in a government that has just paid $6 billion to nationalise Snowy Hydro, so it can go ahead with a $6 billion project for Snowy 2.0 which has yet to establish its economic, environmental or engineering credentials.

This, from a minister who continues to promise – at the insistence of the party’s all powerful dissenters – that coal will be protected and reinforced by the NEG, regardless of the country’s commitment and duties to the Paris climate treaty.

Frydenberg’s political play is to bully the states to accept the NEG because is the only option on the table, and the “last chance for bipartisanship”,

It is this or nothing, he says, but the tragedy is that most independent analysis suggests that nothing would be better than this.

Even without having seen any modifications to the highly criticised mechanisms within the NEG, it is clear that without a more ambitious climate target, this or any policy will be useless.

This is the shocking situation the country finds itself in. The attempted positioning of Frydenberg in the middle path could have been well predicted following the crazy proposals from the Monash Forum for a series of government funded coal fired generators.

The latest version of the NEG that will be distributed to COAG energy ministers before a meeting next Friday (April 20).

The NEG has all sorts of concerns. Its proposal for contractural arrangements to meet emissions and reliability guarantees is seen by virtually every industry participant and observer as a recipe to lock in the power of the big energy incumbents, a result that will push up prices rather than lower them.

The reliability guarantee is ill-defined, and risks enforcing a heavy hand for a problem that barely exists. The emissions target is manifestly inadequate.

Analyst after analyst, even big utilities, say Australia can and should do better, and to lock in current targets would actually be worse than usual, impose a framework that prevents investment, and would end up being an economic, environmental and engineering disaster.

Yet Frydenberg insists that this is the middle ground.

All the engineering analysis – from the Australian Energy Market Operator, from the CSIRO, the network owners, individual utilities and any number of analysts insist that a high renewable energy grid – even 100 per cent – is not just feasible, it would be smarter and cheaper and more reliable.

All the analysis, with the exception of the fossil fuel lobby, points out that wind and solar are substantially cheaper than fossil fuels, and even with storage costs to fall substantially still offer a cheaper option for “dispatch ability” than business as usual, and particularly coal.

More fundamentally, all the analysis shows that it is hopelessly short of the Paris climate targets that the Australian government signed up for, and which the Coalition hardliners want to tear up.

Oliver Yates, the former head of the Clean Energy Finance Corporation, and now head of UPC Renewables, compared to the NEG as a medication with significant and unwanted side effects – namely the failure to reduce emissions enough, and the locking in of coal generation.

“We need a policy …. but just because there is an internal fight in the Liberal party, doesn’t mean you need bad policy,” Yates told the ABC.

He pointed out the NEG would not just stall the renewable energy market – as illustrated by Bloomberg New Energy Finance and numerous other analysis – but would result in increased market concentration and the destruction of the forward market.

“If the Liberal Party wanted a bipartisan approach to energy policy, it would have adopted the Clean Energy Target, which came out of the comprehensive Finkel Review process,” said John Grimes, the head of the Smart Energy Council, which is holding its annual conference in Sydney.
“Or it would have supported an Emissions Intensity Scheme, or an emissions trading scheme. And it wind support realistic emissions reduction targets. Or it would not misrepresent the cost of the Renewable Energy Target.
 
“It is time to tell some home truths. The Liberal Party is completely out of step with the Australian public and the energy market when it comes to energy and climate change policy.”

The Climate Council issued a briefing note on Wednesday highlighting the myriad failures and questions over the NEG. Apart from the issues over climate ambition, and the ill-defined nature of the reliability guarantee, there were fundamental concerns over the design of the scheme.

  • 61 stakeholders raised concerns about the unwarranted cost and complexity of the NEG’s approach.
  • 64 stakeholders raised concerns about the impact of the NEG on competition in the national electricity market.

This is basic stuff, and demonstrates that the NEG is so far from being an acceptable policy mechanism, regardless of the current government’s refusal to act on climate change.

It was ironic that at the same time as Frydenberg was presenting to the National Press Club, a motion was being put to the ACT legislative assembly that stated that addressing and mitigating global warming is both an environmental imperative and an economic necessity.

It noted that irenewable energy is critical in transitioning Australia to a low-carbon economy in the cheapest and most efficient way; that energy management, which includes both energy efficiency and demand response is the cheapest form of reliable capacity in the electricity sector, and that Australia must meet its Paris targets, which aims to limit the limit temperature increases etc 1.5°C.

The economics, the engineering, and the environmental arguments are quite clear. They point to a modern, smarter, faster, cleaner and cheaper grid that is based around renewables, storage, smart software, distributed energy and dispatchable power.

As Labor’s federal spokesman on climate change, Mark Butler, noted:

“Anyone paying attention understands that cutting carbon pollution in the electricity sector is the cheapest and easiest action that needs to be taken to meet even the Turnbull Government’s weak pollution reduction targets.

“Deep cuts in electricity pollution are made even more achievable because heavily polluting, ageing, and increasingly unreliable coal-fired power stations will need to be replaced in coming years, regardless of the need to tackle climate change, and the cheapest replacement options are low pollution renewables and storage.”

It just seems all too obvious. But only ideology, and a lack of respect of engineering and economics, will get in the way.

Read Frydenberg’s latest speech here.

 

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49 Comments
  1. Robert Comerford 7 months ago

    I could not watch it through very far. The blather of lies, half truths and obfuscation coming from his lips was just too hard to watch.
    I see this as another cynical means of using the press club address to try to pressure AGL to sell Liddell.
    I’ll bet there was not one educated question to put paid to his lies.

  2. Roger Franklin 7 months ago

    Gills – a well written piece. I think all here, share and agree with your comments and frustration. The overall lack of respect and disregard for all of the engineering, economic and overall business advice given by both the public and private sectors is breath-taking. I think we may have started down the road of #PEAKSTUPIDITY

    Time to sit down, fasten your seat belts and return your seat to the upright position – its going to get interesting!

    • Mike Westerman 7 months ago

      No point writing to Frydenberg but if you are in Qld or Vic, write to your energy minister and get them to support the ACT.

  3. Joe 7 months ago

    I watched the Joshie and the sentiment expressed by Robert Comerford ( below me as I write this ) is 100% spot on. I watched it all. Every sentence he spoke I didn’t know whether to laugh or cry. The hypocrisy of the man as he blurted out his spin and twaddle. I love it how Joshie still can’t let it go…giving South Australia under Premier Jay’s stewardship another public smackdown. From Joshie its The NEG of bust. ‘Little ACT / Shane Rattenbury’ has no right to effectively veto The NEG…why not? – The Senate does similar stuff with Govt Legislation all the time. Then there was Joshie’s gem about Australia ‘overshooting’ its emissions reductions commitments – how pray tell when our emissions are going up and up and up each year the last three years – and his rejoiner that emissions reductions will not be compromising ‘Jobs & GDP Growth’ – as if the two are somehow mutually exclusive

    • Mike Westerman 7 months ago

      Cry all you like but if you are in Qld or Vic, write to your energy minister and get them to support the ACT.

    • Glynn Palmer 7 months ago

      Total emissions have come down over the last 3 years. June 2014 – 563.6mtpa. September 2015 – 549.6mtpa. June 2016- 536.5mtpa. September 2017 – 531.9mtpa.

      The main contributors to this reduction are Land use Land use change and Forestry down by 43mtpa since June 2014. Agriculture down by 15.9mtpa since June 2014.

      Electricity dropped by 5.7mtpa over the September 2017 quarter. Probably the effect of Hazelwood closure starting to show up. But it is still 5.4mtpa higher than at June 2014 when the price on carbon pollution was repealed.

  4. johnnewton 7 months ago

    Thanks as usual Giles. I couldn’t watch the weasel.

  5. david_fta 7 months ago

    If the NEG is the only option for bipartisanship, then there should be no bipartisanship. Frydenberg can fight for coal if he likes, but it’s his opponents who’ll be fighting for the sake of his own children.

    • Joe 7 months ago

      The NEG, whatever its form, has to firstly be agreed by ALL states and territories – The ACT looks to be holding out at this stage. Even if they did all agree, The NEG has to be legislated and The Senate has the final say so. The NEG has still a few hurdles to go.

      • Alastair Leith 7 months ago

        How can VIctoria and SA agree and not be heavily penalised for their RE and climate action ambition? It boggles the mind that Frydenberg would even pretend to think they will, though SA could be bought off now it’s a Liberal govt there.

        This federal govt isn’t trying to save the furniture at the next election, they’re burning it to stay warm one more night and trying to do long term damage in the interests of their donors on the way out. The desperation and cynicism of this government increases each and every week we get closer to the next election.

        We defeat desperation with confidence, we defeat cynisms by acting in good faith towards the climate, environment and energy consumers.

        • john 7 months ago

          SA will agree

      • Eb 7 months ago

        My understanding is that the legislation that is to be drafted will be for the SA Parliament to pass with mirror legislation in the other NEM jurisdictions, this is how the NEM is set-up. Unfortunately, the Federal Senate appears to have no role in negotiating the NEG.

        • Joe 7 months ago

          If it got this ‘legislation hurdle’ wrong then I stand corrected.

        • Mike Westerman 7 months ago

          Quite right – it has to be killed at state level. If you are in Qld or Vic, write to your energy minister and get them to support the ACT.

          • Glynn Palmer 7 months ago

            Even though the Qld Labor government has a 50% renewables target, we have a very low infiltration of renewables. So if the NEG crowns coal as king of the reliable dispatchables, we will continue to export our excess coal power into NSW and reap the rewards for our state revenue.

  6. Patrick Comerford 7 months ago

    Ok enough of this crap. Giles I detected a distinct sense of crossing the rubicon in your piece and who could blame you. We have been subjected to this lying toad of a minister for far to long. The gloves come off now and there will be no turning back until this deceitfull lying mob get thrown out big time on their arses. That governance in this country has come to this is an utter disgrace and I will be doing my utmost to ensure we never have to endure such stupidity again in my lifetime.

    • Joe 7 months ago

      The COALition with Rupert and his newsrags will be ‘campaigning’ it all the way, The Radio schlock jocks will be barracking for it and the non thinking punters ( at least 48% of them last Newspoll ) will be fodder for this crap, as you rightly call it, once again.

    • Chris Fraser 7 months ago

      2019, the Year of Voting Carefully.

    • Mike Westerman 7 months ago

      No point writing to Frydenberg but if you are in Qld or Vic, write to your energy minister and get them to support the ACT.

    • Gregory J. OLSEN Esq 7 months ago

      Hear, hear, Patrick! I’m with ya! 🙂

  7. howardpatr 7 months ago

    Why has it come to this – because Australia has a Prime Minister without a backbone.

    Hypocrite Turnbull said in 2009 he would not lead a party as committed as he said he was to climate change.

    Since Mad Monk Abbott was deservedly dumped Turnbull knew his party really had no alternative to him BUT he did not have the moral fortitude to stand up to the luddites, especially those in the Nationals, led by Joyce, who insisted upon a secret agreement in return for their support.

    Shame, shame upon you Hypocrite Turnbull.

    • Joe 7 months ago

      Blame the punters that voted for this lot at the 2016 election…ya gets what ya vote for.

      • Alastair Leith 7 months ago

        And MT stupid enough to think a DD would give him a commanding lead of seats in both houses to marginalise the right-wing rump (which apparently is up to 50% of MPs according to the rights own PR) within his party.

        • Joe 7 months ago

          Yeah, he thought he was so smart, put on the DD to cleanout The Senate of those minor party dudes…HUUUUUGE success, NOT.

  8. john 7 months ago

    As I see it the NEG is going to be put up as the savior for mum’s and dads power bill.
    That is the political part of it.
    The aspect it does nothing towards a realistic goal of mitigating the increasing cost of building new coal generators or fixing up ones about to end their life is over looked.
    That is the detail part and sorry we do not do detail rather like science no idea about that.
    What is needed is a level headed approach, as AGL is taking to build a mix of solar perhaps Wind Storage both Battery Gas and PHES, when its Liddell station is closed.
    However this is the sad part, the advertising will say how brilliant this plan is and how bad all that RE stuff is because SA had a blackout and you do not want that do you when you want to watch MKR or Flumball or what ever other rubbish you watch.

  9. Alastair Leith 7 months ago

    This from a minister in a government that has just paid $6 billion to nationalise Snowy Hydro, so it can go ahead with a $6 billion project for Snowy 2.0 which has yet to establish its economic, environmental or engineering credentials.

    Quite.

    • Joe 7 months ago

      …but it passed ‘The Feasibility Study’….that’s all it takes these days to build Two Tongue Turnbull’s wet dream.

      • Alastair Leith 7 months ago

        Hey nobody suggested it wasn’t feasible, so is Australia landing a woman on the moon, right?

        • Joe 7 months ago

          Another Moon landing…isn’t Mars the go to Planet nowadays?

          • Paul Surguy 7 months ago

            Great comment Joe

  10. Alastair Leith 7 months ago

    Imagine if Leigh Sales started reading RenewEconomy with genuine interest and even posed 10% of the points here as questions to MT, Frydenberg, Joyce etc etc. She’d have to take the kid gloves off first and I don’t see that happening any time soon going by the recent Barnaby Joyce puff piece interview where baby due dates and chats with PM are more important to ask about than actual policy implications.

    • john 7 months ago

      Leigh Sales is a journalist which means they ask questions.
      They have not idea.
      How many times have you heard them ask the same question because they did not understand the answer?

  11. Ren Stimpy 7 months ago

    It’s just a shirking of responsibility, plain and simple. The grid needs more supply, both generation and storage on a steady curve to meet the inevitable milestone drops in supply when the coal power stations start going offline starting from 2022. And these clowns dream that new coal “might” meet that. They’re dreamers and clowns, raising the false hopes of the dreamers and clowns who are their rusted on voters.

    • Greg Hudson 7 months ago

      ”when the coal power stations start going offline starting from 2022”
      No need to wait until 2022, the old coalers are starting to drop like flies already… aka Hazelwood Vic, the one at Port Pirie SA etc.
      AGL should nuke Liddell ASAP and start planting PV/wind in its place. Don’t give anyone else the opportunity to buy it and keep it running (Alinta for example)…

      • Ren Stimpy 7 months ago

        AGL has locked in supply contracts to fulfill. They need Liddell for a few more years even if it is far below full capacity due to age and large repair costs.

        They won’t continue with this ‘income versus massive repair bill’ model after 2022 when their big supply contracts expire and they re-negotiate them. They will move to modern energy solutions.

        The Abbott dingbats will have all been voted out of federal parliament by then.

  12. Alastair Leith 7 months ago

    Climate Council:
    “It is time to tell some home truths. The Liberal Party is completely out of step with the Australian public and the energy market when it comes to energy and climate change policy.”

    What took so long?

    • john 7 months ago

      NO the public only gets news and information from Murdock and they are in lock step with him.

  13. Ralph Buttigieg 7 months ago

    Well ok. If the legislation needs the approval of the state governments then surely it needs to meet the targets set by Queensland and Victoria. Am i missing something?

    • john 7 months ago

      No you are not missing anything.
      My take is this the NEG is a political exercise.
      It does not matter which way it goes in fact if put down then the LNP can say the states and the opposition has given you higher power prices.
      The fact that is a total furphy does not matter it all about the message.

      • Ren Stimpy 7 months ago

        There’s a series of new large scale renewable and storage projects that are going to come online within the next year to 18 months. That added supply and competition from those projects when they are online will bring prices down (after years of Abbott’s ‘uncertainty freeze’). Frydenberg wants to jimmy his NEG into existence now so he can claim that it was the thing responsible for the prices reduction. He’s wearing his sneaky sneakers.

        What the public need to know is that the NEG could stop this pipeline of reinvigorated supply and competition stone cold in its tracks, by creating uncertainty around further investment in large scale renewables and storage. These guys are no longer about real solutions, only political ones.

    • Mike Westerman 7 months ago

      If you are a banana-bender write to Tony Lynham, if Mexican write to Lily D’Ambrosio. Tell them they would be idiots to listen to Frydenberg.

  14. Sally Noel Triggell 7 months ago

    Why are we even talking to this corrupt regime. We have had no energy policy for years why now rush to sign up for one that we know will take us back another 50 yrs. The only reason they want this signed now is they know they are gone come the next election, and as they did in Victoria want to make it as hard as possible for a new government to unravel their policies.

    • john 7 months ago

      Sally Noel it is because they have a message.
      If you do not vote for this States then the LNP can say this is the reason your power price is going up.
      Idiots will vote for that.
      To hard to explain the details it will work.

    • Mike Westerman 7 months ago

      So write to Lily D’Ambrosio and tell her absolutely don’t give this pretence a single breath of life

  15. Phil NSW 7 months ago

    I have a big problem with anyone let alone a public figure in a parliamentary ruling party saying there is only one option available. This is a total distortion of the truth. Step back and ask some basic questions;
    Is the NEG the only option? Answer – No
    Is the NEG a good option? Answer – No
    Will there be another option put forward? Answer – Yes (after the next election)
    What should we focus on? – The next election where the Turnbull government will be committed to the annals of history.
    Supplementary question;
    Should we be trying to get the next parliamentary party to articulate what will replace the NEG? Answer – Yes
    Only 13 months at the most before the NEG will cease to be an issue along with Josh Frydenberg any his many of his inept colleagues.

  16. Glynn Palmer 7 months ago

    I heard Josh indicate that storage could be classified as dispatchable. This was in a reply to a question from Mark Kenny in the 59 th minute of the Iview video.

    This is what Josh said.
    “That would be a decision for AEMO as to what they would understand and categorise as dispatchable power, because this is a technical decision by the Energy Market Operator to ensure reliability of supply regardless of whether it is windy or it is sunny on a particular day. Now dispatchable power can take the form of batteries, it can take the form of pumped hydro, it can take the form of coal, gas or even bio mass or hydro power. So its not the simple definition of a particular generation type that equals dispatchable power. that would be a matter for AEMO.

    But to your point that technology change in renewables is very significant. We have recently invested for example in an ARENA project which is seeking to develop what are called FCAS Frequency Control and Ancillary Services which are needed to secure the system as opposed to stabilise the system which is now being generated by wind farms and we’ve done the project down in Tasmania.”

    So maybe the Monash group will be a little disappointed in this statement considering the number of times Barnaby Joyce said the word “coal” in a non-answer to a question in question time just after the NEG was announced.

  17. Peter G 7 months ago

    Thanks Giles

  18. Gregory J. OLSEN Esq 7 months ago

    I agree 100%, Giles!! Well written!! 🙂

  19. Ben Dixon 7 months ago

    I watched the press club speech and saw the media lap it up. I am now an extremist because I believe in a low carbon future. I came close to vomiting seeing the smiles on many of the press.

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