Whatever else you can say about Malcolm Turnbull’s new energy policy one thing is clear: Tony Abbott has won, and consumers have lost. Even in the most optimistic scenario presented by the government, energy consumers will see little reduction in their energy bills over the next decade.
That’s outrageous. Australians are paying absurd prices for their electricity – upwards of 40c/kWh and not just in South Australia – and this new scheme can envisage only a slight reduction over the next 12 years.
In an era where renewable energy costs are plunging, where the costs of rooftop solar are about one-sixth the cost of grid power, that spells an abrogation of the government’s duty, and it spells trouble for the future.
To please Abbott and the vast rump of climate deniers and renewable energy nay-sayers in the Coalition and the conservative commentariat, Turnbull has effectively abandoned the Paris climate target and closed the door on new renewable energy projects.
Paris is abandoned because Turnbull is committing only to the Abbott downpayment of a 26-28 per cent cut by 2030, and has co-opted the Energy Security Board to devise a plan that commits the electricity industry to account for just one-third of that target. It should, and could, do a lot more.
Renewable energy is abandoned because there is no obvious incentive to develop new generation. And consumers can rest assured they will be screwed because the power, quite literally, is conferred upon the big retailers and generators and their complicated series of price caps and hedges.
The government would like us to believe that this new plan is the work, solely and uniquely, of the newly established Energy Security Board. Given that this board only met for the first time a month ago, that seems unlikely, despite the fact that the directors were co-opted to attend the Turnbull policy launch.
More likely, this is the work of the vested interests who have controlled debate and policy making in Australia for all but the Gillard years of carbon pricing. The fact the current high levels of wholesale prices are, by the government’s own admissions, locked in for another decade at least, is confirmation of this.
Turnbull says it is about reliability, emissions and affordability. But it appears an own goal on all three counts: Australia simply cannot afford to dump climate targets, wind and solar are clearly cheaper than fossil fuels, and relying on ageing coal generators seems a recipe for disaster
The policy unveiled on Tuesday means he is effectively tearing up Australia’s commitment to the Paris treaty, because there is no path to 2°C.
It throws a wall of protection around the fossil fuel industry – as if it hasn’t benefited from enough political favours – and raises the drawbridge on new large-scale renewable energy investments.
The details of how this scheme will operate are far from clear. There are reliability and emissions standards to meet, but no decision on what these might be. We only know that they vary from state to state, and will be at the discretion of the AEMO and the AEMC.
Turnbull hailed the initiative as a significant breakthrough and a game-changer for the industry. Minutes later he was back in the parliament sprouting complete nonsense about the cost of the renewable energy target, quoting a discredited series of stories in The Australian that claim the cost is $66 billion.
And that’s the point. Renewable don’t need subsidies, and many new projects aren’t getting them. But they do need a target, and an incentive to encourage utilities to move beyond their current coal and gas interests.
They also need leadership. Political leadership in the form of a climate and clean energy vision. And there’s not much chance of that right now.
For Turnbull, the politics haven’t changed at all – and that’s why the renewable energy industry and the consumer should remain suspicious. There is no path to the decarbonised electricity grid that the CSIRO, the networks and any number of energy analysts have said is not just doable, but eminently affordable.
There is no path for falling energy costs, because the system will rely on the very institutions that have been gaming the market for the last decade. Reliability may be maintained, but at the cost of gold plating the coal and gas industry in the same way that regulators encourage and allowed the networks to do.
Most of all, it’s killed the chance of a bipartisan agreement. It’s a sorry tale. And unless something mighty surprising emerges in the next few months, when the policy details are finalised, it will have got us nowhere.
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.