Malcolm Turnbull’s Coalition government appears ready to throw the medium and long-term future of Australia’s large-scale renewable energy market under a bus, as the price to be paid for a back-flip on a carbon price for the electricity sector.
Turnbull joined with The Australian and right-wing climate denying bloggers Andrew Bolt and Jo Nova on Friday in somehow connecting last week’s network fault in Victoria with the growth of renewable energy. Turnbull told a local radio station that the outage was the “fault” of the South Australian government.
On Monday, a clearer picture of what the Coalition is up to emerged with the release of the terms of reference for the climate policy review in 2017. Importantly, this review is no longer a “sit rep” – situation report – flagged by energy minister Josh Frydenberg when he first took office.
It will, in fact, consider a range of new policy mechanisms, such as an emissions intensity baseline and credit scheme for the electricity sector (effectively a carbon price), a sure sign that the Coalition now realises what Turnbull knew all along – that Direct Action is a fraud and a fig leaf for serious action on climate change.
But to try to dance its way through internal politics, the demands of the fossil fuel lobby and comparisons with Labor’s own proposals, Turnbull and Frydenberg appear to have concluded that the best way to appease the far-right rump of the Coalition is to abandon direct support for renewables, help open up the Galilee Basin coal resource and push for more coal seam gas.
Reports emerged on the weekend that the Coalition is considering offering a $1 billion concessional loan to help build a rail link between the Galilee Basin coal projects and the port at Abbot’s Point. The idea has appalled environment groups.
It also comes as emergency talks are held in Melbourne about the “gas supply crisis”, and as the Coalition readies to receive the Finkel review of the National Electricity Market and prepares to again badger the states on the individual renewable targets at the COAG conference this Friday.
The conflicting strategies comes as yet another report highlights the parlous state of the country’s climate efforts, noting that Australia is on track to use up its entire “carbon budget” under the Paris agreement in little more than a decade.
The federal government is seeking to project its problems on to state-based renewable and emissions targets, but it is a situation entirely of its own making.
The states have been forced to step up because the federal government has no climate policy, it has no renewable energy policy that looks beyond 2020, and it has tried to scupper the schemes that encourage new technologies.
Its long-term energy policy framework, the energy white paper, is based on the assumption that climate goals are not met. It’s a reference still being used by its most prominent climate sceptic minister, Matt Canavan, who is pushing for the entire Galilee Basin coal province to be dug up on the basis that India will need the coal.
Again, that is an assumption made on the basis of no action being taken on climate change – an assumption that was deemed risky even by the International Energy Agency in its World Energy Outlook issued last month.
The large-scale renewable energy sector in Australia can look forward to a busy three or four years, as a rapid build up is conducted to make up for three years of policy uncertainty and a capital strike by the major retailers, and complete disinterest from the corporate sector.
The industry is hopeful that the Coalition will finally put in place a longer-term signal for large-scale renewables, but they shouldn’t get too hopeful.
Turnbull’s continued attack on wind and solar is extraordinary. He used the failure of a network conductor in Victoria to resume his attack on the renewable energy policies of South Australia and other Labor states.
He was joined by The Weekend Australian, which described renewables as “ruinous;” climate denial propaganda website Jo Nova, which decided that wind energy was at fault (when a major transmission line fails, things happen); and, of course, Andrew Blot from the Herald Sun, who had another go at blaming wind energy.
“Australia is on the brink of an electricity disaster thanks to its global warming madness,” Bolt wrote. “In South Australia, the wind farms failed again and helped to cause huge blackouts.” Bolt reckoned that the cause was “too little wind”.
In a fact-free world of hysterical right-wing bloggers, it matters not that South Australia has always relied on the interconnector – Victorian coal has long been cheaper than gas – and the outage would have occurred whatever the mix.
But any thoughts that Turnbull would lift the tone of the conversation were dashed on Friday, when he ignored the advice of the grid owner and the market operator, and used the same line as Bolt and Nova, saying of the latest outage “there is not enough back up power in South Australia to cope with that contingency.”
Actually, there is more than enough back up power in South Australia. About three times more than is needed to meet that demand last Wednesday morning. It is just too slow to respond to the loss of the link without forcing some load losses to balance supply and demand.
But Turnbull wasn’t done yet. “The clear responsibility for this is the government of South Australia,” Turnbull said of a conductor that fell off a transmission line in western Victoria.
Turnbull described Labor’s pursuit of 50 per cent renewable energy targets at state and federal level as “ideological,” and then pretended: “I am totally non-ideological about renewables versus fossil fuels.” But he does have to jump through hoops to satisfy the ideologues in his own party.
On Monday, Frydenberg was making it clear that any change to the renewable energy target – lifting the target or making it longer dated – was not on the agenda. He described it on ABC’s AM program as an expensive way to change the energy mix and cut emissions. “It’s not at the top of our list,” he said.
That makes it clear that the only mechanism for large-scale renewables will be state-based targets, and even these are likely to be heavily dependent on Labor states remaining in power. The federal scheme effectively comes to a halt in 2020, requiring no new projects if the target is met by that time. But at least it has bipartisan support.
The fossil fuel industry will want to support a baseline and credit scheme, because its structure will favour gas over wind and solar – at least until the rapid price fall in those technologies force a redesign of the energy markets.
BHP Billiton issued a statement last week saying that the solution to clean energy had to be “more than renewables.” RenewEconomy sought clarification on what this meant; if BHP was favouring carbon capture and storage, or nuclear energy, as the Institute of Public Affairs suggested last week.
We didn’t get much of a reply. We were referred to the company’s sustainability report and some recent blogs by its economist Huw McKay. When we pointed out that we had already seen them, and noted that, like the federal government, they rely on the assumption that climate targets are not met, we got short shrift.
RE was then told that BHP “expects that the contribution of renewable energy will increase over time”, including as stand-alone opportunities for its own operations, but that “we need to ensure that this transition is well managed” and balanced by price, security of supply and emissions intensity. Almost exactly the answer of Frydenberg and Turnbull.