Oh dear. This could be worse than we thought.
Over the past year, RenewEconomy has been highly skeptical about the Coalition’s approach to clean energy and climate change policies. In July last year we wrote of “the scary vision of the right” regarding future energy policies. Two months ago, we caught Opposition leader Tony Abbott dog-whistling to climate change deniers. In August we warned people not to be fooled by bipartisan targets.
That was just a small sample of our reservations. This week came the proof in the pudding: The Direct Action policy is not designed to meet any emission reduction at all, and Abbott confirmed he still thought the science was crap, despite the various leaks coming from the IPCC. Renewables do not even get a single positive mention in the Coalition’s newly released energy policy.
Were we being too pessimistic, as many people suggested? Depressingly, we don’t think so.
The bitter frustration is that – with a very few exceptions – none of this was investigated or probed by the mainstream media, which has retained a myopic obsession over forward estimates, the outlying budget forecasts that surely must rank as the most irrelevant and unreliable metric that has ever been centre stage of an election campaign.
In the end, some of the main policies were indistinguishable between the major parties, to the point where Tony Abbott is now longer promising to stop the boats, just to slow them down (and to keep them off Sydney’s freeways). The budget savings outlined by Joe Hockey are so insignificant it makes a mockery of the budget scare campaign that obsessed the media, and provided cover for Abbott’s empty rhetoric. The only real difference came in climate and clean energy, and Labor was so terrified of playing that card that nobody noticed.
This myopia was reflected in the editorial endorsements published today. Extraordinarily, the Australian Financial Review, the Sydney Morning Herald, and The Australian (along with every other Murdoch tabloid) endorsed Abbott without making a single mention of climate change or clean energy policies. So much for it being a referendum on the carbon price. Only The Age made mention of it, noting the Coalition’s disgraceful “back-tracking” on climate. It endorsed Labor.
Are we obsessed with niche interests? Maybe. But the cost of carbon and electricity were central to the cost-of-living scare campaign that will contribute to the Coalition’s victory. Climate change and the transition to a low carbon economy will be central to Australia’s future economic performance.
Yet the Australian blithely hoorays Abbott for “inspiring hope” and “securing Australia’s future prosperity” without mentioning he will trash the very policies that will deliver it. The AFR hails Abbott as the “visionary” who can lead the country through a “post resources” transition. Either editorial would be worthy of an opinion piece from the ultra-right wing Institute of Public Affairs. (As it is, the AFR’s sits side by side with that of the IPA’s John Roskam).
As John Quiggin, from the School of Economics at University of Queensland, said: “It’s unsurprising that the Coalition costings have been concealed until the last possible moment. It would not stand to more than a day or two of scrutiny, but it doesn’t have to.
“Among the obvious problems are the failure to cost key policies, the effective abandonment of the 5% emissions reduction target and bogus assumptions about an economic dividend from the removal of the carbon price. The endorsement of this deeply flawed process by Peter Shergold, Geoff Carmody and Len Scanlan is a disgrace.”
So now we find ourselves at the eve of an election victory and the introduction of a policy that remains a mystery. Does anyone know what Direct Action is? No. Has it been costed? No. Will it be able to meet more ambitious climate policies? Of course not. Was it ever designed to? Don’t be silly.
Of more immediate concern is the future of the large scale renewables industry, which could be worth more than $20 billion in the next few years, but which is now surely in limbo.
In July, we itemised five ways that Abbott could kill renewables in Australia. And he’s just about there. Repeal the carbon price? Tick. Review the renewable energy target with a view to diluting it or delaying it? Tick. Dissolve the Climate Change Authority? Tick. Dissolve the Clean Energy Finance Corporation? Tick. Slash funding for the Australian Renewable Energy Agency? Tick.
Abbott may not get to be able to achieve all those things immediately, but his intentions are clear. The energy document produced this week made no mention of renewables apart from a desire to do something about wind energy. Its focus was entirely on extractive fossil fuels – coal, gas, oil, LNG, and thorium. Dig, baby, dig. Burn, baby burn. And it wanted to make the coal-fired generators profitable again.
The energy policy document makes no mention at all of the major themes that are and will impact most on the energy industry (particularly the coal generators). They are: reduced demand, the push for efficiency, and the proliferation of rooftop solar and other forms of distributed generation. These will, as surely as night follows day, challenge the centralized business model so treasured by the incumbents and their conservative mouthpieces.
The entire power base of the Coalition seems wedded to a utopian dream from the 1960s. It seems the only thing that can deny them is their access to capital that the centralized generation and vast networks require. Residential-scale solar and distributed energy happens in increments that are, at most, a couple of tens of thousands of dollars. Australian households have already put $8 billion, and are prepared to invest billions more.
These bets are 100,000 times smaller, and it brings millions of competitors into the electricity game. This is where the issue of costs and equity will be fought in coming years. The fact that the Coalition does not even mention this in its flagship energy document suggests it is completely ill prepared. Or it will simply defend the conservative state owned governments that are trying to sell their impaired assets.
As one former banker, speaking of the revolution in distributed generation that is sweeping Europe, the US, and Australia, told me this week:
“There is no real news in this, but it is easy to forget how the bankers want to make their money. They hate literally betting the whole bank on a few giant positions. Much better to spread their capital among thousands of small positions, every one of which also has disproportionately small risks.
“Having worked on Wall Street for a couple of years this is painfully obvious to me. New York investment bankers want everyone to believe that they are roaring, whoring, coke-snorting wildcatters, but, in actual fact, they are the most risk-averse conformists you could ever hope to meet. And that is what will kill Big Coal.”
At the start of this election campaign, the best that could have been hoped for was another hung parliament. The partnership with the Greens has delivered the best piece of policy making on climate and clean energy that we have seen, and some valuable institutions. For a fleeting moment when the polls were stuck at 50-50, that looked like a real possibility, as horrifying as it may have seemed for the apparatchiks of the mainstream parties.
The best that could be hoped for now is a Coalition minority in the Senate. But who will hold the balance of power? The Greens, obviously, offer the best hope for the development of renewables and for protecting the carbon price. But it could just as easily be a collection of “barmy army” conservative such as Bob Katter, Pauline Hanson and the Shooters and Fishers, or the anti-wind incumbents such as Nick Xenophon and John Madigan.
Or, it could be the Brick with Eyes, the nickname given to Glenn Lazarus, the former rugby league front row forward who is lead candidate in the Senate for Clive Palmer’s United Party, currently polling around 10 per cent in Queensland. Palmer, who has extensive undeveloped coal mining interest, wants to abolish carbon pricing, slash taxed, and wants cars to have 25 per cent ethanol by 2020. But what does the Brick with Eyes think about large scale renewables? We don’t know. In Queensland, they don’t have any.
Giles Parkinson is a journalist of 30 years experience, a former Business Editor and Deputy Editor of the Financial Review, a columnist for The Bulletin magazine and The Australian, and the former editor of Climate Spectator.