The Turnbull Coalition government has effectively dumped the emissions component from the proposed National Energy Guarantee, in what could be prime minister Malcolm Turnbull’s final act of capitulation to the far right forces within the government parties.
Turnbull’s decisions on emissions, and to adopt various price controls proposed by the ACCC, are a desperate act to ward off a potential challenge to his 3-year leadership of the Liberals, with home affairs minister Peter Dutton (as we predicted in last week’s podcast) said to be waiting in the wings, and with the numbers, according to Fairfax.
The removal of a legislated emissions target makes a mockery of what the NEG was supposed to be about – a first-ever combination of climate and energy policy, of emissions and reliability. It was supposed to be a policy that crossed party lines; instead, it could not even be agreed on by the Liberals.
No emissions target in the NEG: So much then for integrating climate and energy policy. And the hope for a bipartisan approach dashed in Coalition party room (like 2009).
A future govt could legislate an emissions intensity scheme or ETS. Which will then be politically contested— Frank Jotzo (@frankjotzo) August 20, 2018
ANU’s Frank Jotzo summed it up neatly in this tweet above.
To compound the issue, the Turnbull government now appears committed to underwriting a new coal generator. Proposing to stop renewables in their tracks was not enough. In effect, it is choosing what technology now enters the market.
“Coal, coal coal,” screamed the national deputy leader Bridget McKenzie at a media conference called about the drought.
It remains to be seen if Turnbull gets to keep his job. But it certainly sees the end of any credibility that he would take climate change seriously. He is even calling the renewable energy target the “worst policy” ever.
Instead, the Coalition says it will choose to focus on reliability – even though there is no “reliability issue” because AEMO doesn’t not expect the obligation to be triggered any time in the next 10 years on current measures.
“Now, the absence – if that remains the case – of federal legislation on emissions intensity does not prevent the states from pressing on with the reliability guarantee,” Turnbull told a media conference on Monday. “That in itself is also a very important tool to get power prices down.”
Energy reliability stats for the NEM (eastern Australia, including SA):
-97.2% of blackouts are caused by local poles and wires.
-0.24% (around 10 seconds per year, per household) are from insufficient generation.
-Reducing either of these figures would cost consumers big $$$. pic.twitter.com/rJQc6YoKUS— Craig Memery (@craigmemery) January 29, 2018
The Coalition will also focus on prices, and it will do this through an extraordinary level of government intervention in the market. At least on installing a price cap, it is on the same page as the Labor Party.
The bitter irony is that it won’t likely work – as numerous analysts have said, reducing the standing offer simply means that the big utilities will recoup their money by offering smaller discounts elsewhere.
That means that while 1.2 million consumers may get a reduction in their bills, others will see a rise in their bills. And by imposing a price cap, that will reduce competition, because, as ITK analyst David Leitch points out in this week’s podcast, smaller competitors rely on high prices by the incumbents to carve out a market share.
Leitch expands on his thoughts on this in this analysis.
The other key component of the Coalition’s policy is to adopt the ACCC proposal of having the government underwrite the financing of new “dispatchable” generation.
The need for this new dispatchable generation is not clear, and while the majority of the Coalition is now deciding that this should be new “base-load” coal, renewable energy developers like UK billionaire Sanjeev Gupta suggests it ought to help dramatically reduce the cost of solar and storage in the country, to half the price of current wholesale prices.
The Coalition right wing has now made it clear that this will not happen. They will be sure to want to choose the technology of their choice.
It’s unlikely a Turnbull or a Dutton government would endorse a huge solar and storage project as a result of such a tender, even though Treasurer Scott Morrison, who now appears to be in control of this policy, says the tender will be “technology neutral”.
On top of this, the Coalition is looking to force some energy utilities to divest any assets that it may want to close. Think AGL with Liddell. In effect, this is the government intervening to stop coal exiting the market, in effect seeking to stop the clean energy transition. It is appalling.
All in all, Australia’s climate and energy policy remains in a sorry state. The NEG – like the carbon price, the emissions intensity scheme, and the clean energy target before it, is effectively dumped in favour of a series of policy measures cherry-picked from a report from the competition regulator. It’s extraordinary.
Turnbull blames his bare one seat majority for his predicament, but at no time has he shown any leadership or an attachment to his principals, at least as we understood them before he came PM.
It was interesting to hear the Guardian asking Turnbull at Monday’s media conference if he agreed that the latest shift in policy was simply adopting Tony Abbott’s policies.
The reality is that Turnbull has always adopted Abbott’s policies. In three years, he has achieved nothing, the NEG was a hopeless compromise of his own principles, and Abbott merely shifted even further to the right to watch in fascination as  right wing shot into the ground around the PM’s shoes and Turnbull danced ever higher.
The lack of leadership is transparent, but Turnbull is not the only one to blame. That blame should be shared by the principal players in the Energy Security Board and the representatives of the big business lobbies who were behind the NEG.
From the start, they sought to pretend this was something it was not. In the end, that deceipt also became transparent, and the lack of goodwill, and the deliberate doctoring of the modelling that was used to justify it, is quite possibly one of the most shameful episodes in Australian climate and energy policy.
So, if Turnbull goes, he shouldn’t be the only one. The chair and vice-chair of the ESB should also quit, and the big business lobbies – those who campaigned against the carbon price and the renewable energy target before leaping in support of the NEG – should be hang their head in shame. They won’t.
The horror of the unravelling of the NEG has just dawned on The Australian Industry Group, which helped create this monster – first by urging Tony Abbott way back in 2013 to kill a perfectly decent policy, the carbon price, and then propagating the series of lies and misleading statements designed to get the NEG through the Coalition.
Ai’s chief executive Innes Willox recoiled at the hint of intervention, and the subjugation of emissions policy. But what exactly did they expect? Turnbull to stand up for his principles when the Ai would not stand up for its own?
Even the claim of “certainty” – the buzzword used by the ESB and others to justify this hashtag of a policy, is now shattered, as Willox regretfully admitted.
As Emma Herd, the head of the Investor Group on Climate Change, representing $2 trillion in assets, said:
“Today’s decision to shelve the implementation of emissions reduction targets under the National Energy Guarantee has serious repercussions for investment in the energy sector in Australia ….for the National Energy Guarantee to deliver investment certainty it must include an obligation to reduce emissions.”
On this basis alone, the members of the ESB should quit forthwith.
The contrast with the states – whose agreement is needed to sign off on what is left in the NEG – is marked. Victoria’s Labor government has announced an extraordinary scheme to fast-track some 2.6GW of rooftop solar through a combination of rebates and zero interest loans.
This is a gift for the federal Labor Party, and if that translates to votes at the next election that will be a relief for all concerned about climate and energy policy, and the need to embrace rather than fiercely resist, or even deny, the clean energy transition before us.
Appearing with climate change spokesman Mark Butler, at a solar farm in Canberra, Opposition leader Bill Shorten pointed out that Turnbull’s decisions were “just about appeasing the right wing in the Liberal Party, just so he can keep his job.”
He said: “Real leadership is about fighting for the principles you believe in. Real leadership could be about putting lower pollution and lower prices at the forest of energy policy …. from Day 1 of his leadership, we have seen Turnbull is a “white flag” prime minister.”
True words indeed. The test, of course, will be for Shorten should he be in a position to lead the country, is to follow those words and prove he is not made of the same weak stuff.
