Government needs to get on board the energy transition

When world leaders gather in Paris in December for the UN Climate Change Conference the main topic will be how to most effectively reduce carbon emissions and to ensure the opportunities in the clean economy continue to be encouraged. Meanwhile, in Australia, a live debate is underway that will dramatically alter Australia’s environmental and economic future.

Jerry Maycock, Chairman of AGL Energy recently called for a “coherent national plan” to manage the transition to a low carbon economy in his opening remarks to AGL’s annual general meeting. Mr Maycock also used his speech at the AGM to highlight that the company supported global action to “progressively” transition away from fossil fuel generation with a national plan and supportive government policies.

Then just last week Origin Energy endorsed a price on carbon and science based emission reduction targets. While our methods and timelines may be different, the take home message is that some of our nation’s largest polluters and Australia’s environment movement are in broad agreement about the need for an energy transition plan.

In late August, the Australian Conservation Foundation (ACF) held a forum that brought together the investment and energy sector to discuss the future of electricity in a world where we limit global warming to 2 degrees to avoid the worst impacts of catastrophic climate change. Participants were presented with compelling evidence about the current and predicted future of the electricity sector. Following the forum, ACF has released a paper titled Leadership required: the case for an Australian coal transition plan.

The papers major recommendations are that the Government should initially remove the uncertainty around the CEFC and ARENA and they should establish an Energy Transition Advisory Group to help them develop an energy transition plan by mid next year.

These recommendations reflect the one thing that the investment, energy and environmental sector are all in broad agreement about, there is a major role for the Federal Government to play in seizing the opportunities and ensuring the required transition from coal to clean energy is properly managed.

The Australian electricity sector is already undergoing a fundamental shift.

According to Australia’s Clean Energy Regulator (CER) over one and a half million households now generate their own renewable power. That means many households no longer need to buy the same amount of electricity generated by the major energy companies as they did previously. The introduction of household battery storage is another element that once more widely introduced promises to be a further disrupting factor.

The rise of decentralised renewable generation and the increase in energy efficiency means Australia has a surplus of large scale electricity generation. Simultaneously, the need to address climate change has spurned the growth of the renewable electricity sector and shone a spotlight on Australia’s coal fired power stations. Australia’s fleet of coal fired power stations is ageing and dirty.  In fact Australia has some of the dirtiest power plants in the world.

At the same time the market is rapidly shifting under the old way of generation, distributing and selling electricity to make way for the growth in Australia’s burgeoning renewables sector. The combination of these issues does not allow for a straightforward neat path forward to a clean, efficient, consumer focused electricity sector that takes into account the circumstances of those who work in the sector.

Unfortunately the complexities of energy transition in a fast changing market won’t be solved by just bringing the various energy, investment, environmental, union and community stakeholders together. The government must be part of the conversation.

In fact, the government needs to lead to ensure opportunities can be seized. For as long as the government neglects to take responsibility for our aging fleet of dirty coal power stations, they will continue to shudder along with ongoing negative effects on the environment. Meanwhile, growth in renewables will continue be stymied and some power stations will be closed at short notice with negative community impacts.

Under this scenario, Australia will not be actively transforming its electricity sector to meet the challenges and take advantage of opportunities we face in addressing climate change. Instead of embracing the opportunity to shape the future through being innovators in renewable energy and energy efficiency – Australia will watch from the side-lines as others embrace new opportunities.

Some of Australia’s biggest polluter and its leading national environment organisation agree on the need for a national transition plan. Now the government needs to get on with the job.

Matthew Rose is an economist for the Australian Conservation Foundation