Smoke and mirrors: Taylor to meet states as global expert laments Australian “tragedy”

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Energy ministers head to Perth for the first COAG energy council meeting in almost a year, with frustrations amongst State and Territory ministers high.

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Federal, State and Territory energy ministers are set to convene for a meeting of the COAG Energy Council for the first time in almost a year on Friday, as the Federal government continues to be called out for its lack of meaningful climate policy.

Federal minister Angus Taylor is taking the meeting to Perth, relatively neutral ground given Western Australia is not a participant within the National Electricity Market and where it will at least be far from the smoke from the unprecedented bushfires that have brought new attention to Australia’s failure to act on climate.

Michael Liebreich, one of the world’s leading energy analysts, and co-founder of Bloomberg New Energy Finance, is in Australia for a series of talks and this week lamented the “tragedy” of Australia’s failure to seize its natural advantage of enormous wind and solar resources.

On Thursday morning, Liebreich woke up in Sydney to a city choked by smoke and some of the worst air pollution levels on the planet; “Where is your leadership?” he tweeted.

Taylor will convene the first COAG Energy Council meeting in a year, depriving the states of their main forum where policies and actions can be discussed and co-ordinated. Discussion of crucial issues such Alan Finkel’s hydrogen strategy and AEMO’s Integrated System Plan have been delayed as a result.

Unsurprisingly, there is a lot on the agenda for COAG Energy Council. The energy council hasn’t met since December last year, and there has been a mountain of work being undertaken by various energy bodies to reshape the Australian energy market.

State and territory ministers have repeatedly complained of the growing backlog of work that now faces the energy council, and Taylor’s long refusal to convene the meeting of minsters.

The backlog includes consideration of the ongoing development of the ISP, the controversial COGATI proposal from the AEMC and the preparation of a post-2025 National Electricity Market design being undertaken by the Energy Security Board.

All of these reports are still being prepared, and progress updates will be provided to Ministers, but a lack of meetings has meant some of the States have felt compelled to pursue their own agenda for energy market reform.

The most prominent example is Victoria, with energy minister Lily D’Ambrosio making repeated criticisms, particularly of the AEMC and Angus Taylor, for their slow progress on electricity reliability actions. D’Ambrosio has said the slow progress had forced the Victorian Government to take matters into their own hands, and will ‘go it alone‘ on securing additional electricity supplies.

Ahead of the energy council meeting, D’Ambrosio wrote to Angus Taylor, in a letter seen by RenewEconomy, seeking three core outcomes form the Perth COAG meeting; a commitment to greater cooperation between the Federal and State governments, progress on the implementation of AEMO’s last Integrated System Plan and a commitment to reform Australia’s electricity reliability standards.

“As it currently stands, our nation’s reliability standard fails to recognise changes in climate, our energy network, the way Australians consumer power and ageing and less reliable coal generators,” D’Ambrosio said in the letter.

“It’s why at the upcoming meeting, Victoria will be seeking the support of all jurisdictions to task the Energy Security Board to develop a new reliability standard which accurately – and actually – reflects our current energy needs.”

The proposal has already attracted a rebuke from the Australian Industry Group, which said government “are in grave danger of over-reacting to short term reliability concerns.” Tristan Edis of Green Energy Trading has penned a piece for RenewEconomy making similar arguments.

Instead, Taylor is set to ask State ministers to endorse plans to redirect the $2 billion in funding originally committed to purchasing emissions reductions under the Climate Solutions Fund, to co-fund new energy infrastructure investments.

Taylor is effectively seeking a way to split the States, with the ministers opting to play by the Federal government’s rules being rewarded by the prospect of new infrastructure spending.

An early example of this is the agreement between New South Wales’s Liberal government and Federal government to co-underwrite the completion of a new transmission network interconnector between New South Wales and Queensland.

What the COAG Energy Council will definitely see is the delivery of the National Hydrogen Strategy, developed by chief scientist, Dr Alan Finkel, and which has already been delivered to Ministers ahead of the meeting.

Finkel flagged some of the possible recommendations of this strategy in a speech to the Clean Energy Summit in July, that suggested Australia should start producing hydrogen from coal and gas, combined with carbon capture and storage.

This can be seen as an attempt to develop a proposal for a future Australian hydrogen industry that is likely to be politically palatable, especially for a federal government so enthusiastically supportive of coal.

In a proposed motion to the COAG Energy Council, also seen by RenewEconomy, the ACT energy minister Shane Rattenbury will seek to shortcut potential moves to use the National Hydrogen Strategy to promote the production of hydrogen from gas and coal.

Rattenbury will propose a motion to the COAG Energy Council seeking a commitment from State and Federal ministers to “only support ‘green’ hydrogen produced from renewable electricity” and will define ‘clean hydrogen’ as excluding hydrogen produced from fossil fuels.

Alternatively, if energy ministers do not approve the initial motion, the ACT energy minister will seek to have the COAG energy council undertake further work to assess the energy and emissions impacts of hydrogen produced using carbon capture and storage and to develop distinct labelling to identify the emissions intensity of hydrogen being produced.

The motion will request that “the Energy Council will undertake analysis on the Energy Return on Investment, lifecycle greenhouse gas emissions and risk of stranded assets associated with generating hydrogen from fossil fuels with carbon capture and storage.”

The motions may win the support of ‘renewables friendly’ ministers in Victoria, Queensland and South Australia. Tasmania might also be a backer, following the recent publication from Hydro Tasmania highlighting the enormous contribution renewable hydrogen could make to the Tasmanian economy.

However, Taylor will almost certainly seek to squash the proposal and will keep a tight reign on both the agenda and the subsequent communique released after the meeting.

Amongst these smoke and bushfires, prime minister Scott Morrison tweeted that he hopes a ‘great summer of cricket’,  to provide a distraction from the bushfires and give those affected something to cheer about. “I have no words,” Liebreich said in response to this in another Tweet.

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