It appears that Labor’s maverick resources spokesperson, Joel Fitzgibbon, has convinced the federal Labor Party to agree to say nice things about new gas projects and even the ongoing role of coal in the energy system. But what exactly is it going to achieve?
Labor, still reeling from its failure to oust the Morrison government at the federal poll it felt it was destined to win last year, is trying to re-work its position on climate and energy policy.
But this week’s major concession to Fitzgibbon, who has advocated for the Labor party to re-embrace the coal and gas sectors, raises the question of whether Fitzgibbon has effectively forced Labor to adopt a ‘go-slow’ approach to the clean energy transition.
Since Labor’s loss at the 2019 federal election, Fitzgibbon has sought to walk back Labor’s climate and energy policies from those taken to the 2019 election, succeeding in seeing Labor shelve its 45 per cent emissions reduction target for 2030. It now has no interim target, although it insists it will be guided by the science.
According to reports, Fitzgibbon has now succeeded in forcing the Labor Party to openly support the construction of new gas production facilities and even new gas generators. Labor will also reportedly back carbon capture and storage projects, along with supporting cheaper gas supplies for manufacturing industries.
“We support gas,” Joel Fitzgibbon told ABC RN Breakfast program on Friday. “Gas will be important in saving current jobs and jobs over the next considerable period of time. And of course, gas will help us build the jobs of tomorrow.
“Coal will also help us build the jobs of tomorrow. Both of those baseload providers will be important to the stability of the grid and will be important to allowing more renewables into the energy system. We cannot do it without them,” Fitzgibbon added.
This appears to be a self-contradictory view, as allowing new renewables to join the system will naturally come at the expense of the market share of more expensive gas and coal generation. Additionally, with more renewables, it is not baseload generation that is needed, but more flexible sources of supply.
Fitzgibbon’s assessment also appears to contradict the exhaustive work done by the Australian Energy Market Operator, whose newly released Integrated System Plan – its 20 year blueprint to manage the transition – shows that virtually no additional gas generation capacity will be needed out to 2040 under almost every scenario modelled by AEMO based on a least-cost development path.
Under AEMO’s forecasts, gas will soon become an uncompetitive source of firming capacity, as the costs of energy storage technologies continue to fall, and where both batteries and pumped hydro energy storage becoming a cheaper option for dispatchable capacity.
“In the 2030s when significant investment in new dispatchable capacity is needed, this advantage could shift to batteries, especially to provide dispatchable supply during 2- and 4-hour periods,” AEMO’s 2020 Integrated System Plan says, “Based on the cost assumptions in the ISP, new batteries are more cost-effective than [gas powered generation] in the 2030s.”
Only in the ‘slow change’ scenario – where governments deliberately try to slow the pace of change, resulting in a catastrophic increase in average global warming – would a new gas plant be required. Perhaps this might indicate Fitzgibbon’s preferred approach to energy policy.
Fitzgibbon came close to losing his seat at the 2019 election, which is centred around the coal-heavy region of the Hunter, suffering a 14.2 per cent swing as the party’s support for the coal industry became a central issue during the election campaign.
Since the election, Fitzgibbon has sought to force Labor into weakening its climate targets and now looks to have won further concessions in the Labor platform.
It is one thing to agree to say nice things about gas, but it is quite another to try and jam new gas generation into the system. That will either require the government to underwrite new projects, as the Morrison government is looking to do, because the reality of the matter is that it is more expensive than other options. The other option is erecting roadblocks for new renewables.
“Gas will be part of the system for many many decades to come. We can’t possibly run the system on 100 per cent renewables even if we could do it quickly,” Fitzgibbon told ABC RN. “It took us around 20 years to get to 20 per cent renewables, and that’s the sort of pace of change you could expect.”
That is not what AEMO says. Its 20-year blueprint suggests that Australia can reach 94 per cent renewables by 2040. Private analysts, such as eminent economist professor Ross Garnaut, suggest it could be a lot quicker than that.
“We speak a lot about renewable energy and the opportunities there. But we should speak just as often, just as loudly, just as clearly, with just as much pride, about our determination to ensure that fossil fuels, while they need to, continue to play a role in the system. But, more particularly, talking with pride about the people who work in the coal, the gas and the oil industries,” Fitzgibbon added.
Except, Fitzgibbon’s assessment again belies the assessment of AEMO, and just about every other energy institution, that the market share of coal is expected to decrease dramatically, with no new coal plants being build to replace the significant proportion of Australia’s coal power capacity set to exit the market in coming decades.
Only under the ‘slow change’ scenario does the renewables share grow by around Fitzgibbon’s predicted 20 per cent over the next 20-years. It is also the one scenario where AEMO sees the need to build new gas generation capacity.
The coal workers that Fitzgibbon claims to represent might be more re-assured by a policy that grasps the environmental and the economic drivers of the clean energy transition, and focuses on a “just outcome”, which will ensure that communities and workers are looked after properly.
But that requires a political party and a government that believes what it says, and says what it believes.
Which is it for Labor?