20 august 2018

Turnbull just showed what happens when 'ideology and idiocy take charge of energy policy'

The PM had seemed to recognise that you can’t have an energy policy without a plan to cut emissions. No longer

Erwin Jackson, The Guardian, Mon 20 Aug 2018

A note to our prime minister: you can’t have an energy policy that assumes that climate change does not exist. By dumping the commitment to take emissions targets to the federal parliament the PM is signalling climate change is not real. This leaves the rest of us paying the price for another political capitulation on cleaning up our power sector.

Some parts of the government don’t believe in climate change. Their ideological ties to the coal-based power systems built 40 to 50 years ago has scuttled every attempt to develop credible climate change energy policy over the past 10 years, leaving us where we are now.

In the real world, climate change continues. We look out our windows or watch our TV screens and see droughts spreading, bushfires raging and heatwaves becoming more and more extreme.

In the boardrooms of power companies, directors see new renewable energy capacity outstripping investments in fossil fuels on a global scale. In 2017 new global capacity in solar photovoltaic (PV) alone exceeded new capacity of coal, gas and nuclear energy combined. These same investors understand that the cost of clean energy is falling dramatically. Even here in Australia, renewable energy is now the cheapest form of new power generation, despite what the coal lobby might say.

Investors are also aware that it is only Trump’s America that has threatened to withdraw from the Paris agreement on climate change. Other major emitters continue to move forward: China, India and the European Union are on track to meet their Paris commitments early and overachieve them by a significant margin.

In short, if you were a private investor in the power sector you would be sacked for spending billions of dollars on new electricity capacity under the assumption that climate change did not exist and that renewable energy was not the cheapest form of new generation.

This is what our prime minister on Monday asked power sector investors to do: to throw out good due diligence and hope that the fantasies being propagated of the hard-right rump of government become reality. Ridiculous.

As a result of Turnbull’s proposal, companies will continue to face higher financing costs for new electricity projects as investors charge them a premium to insure against changes in policy. Old, crumbling power stations will stay open longer, increasing the risk of abrupt closures and equipment malfunctions, making our power system less reliable. Power prices and pollution will be higher than they need to be.

This is not a new story. In 2007 John Howard’s support for an emissions trading scheme was informed by analysis that showed that policy uncertainty would cost consumers $2bn to $4bn due to high power prices. Similar analysis was performed as part of the development of the Gillard government’s clean energy future package. Most recently, the chief scientist’s review of energy policy last year identified that the lack of a plan to deal with climate change was costing consumers and undermining reliable electricity supply. How many times do we need to be told?

With a plan to cut emissions the national energy guarantee might have achieved the holy grail in energy and climate policy. With the right emissions target, it could unlock billions of dollars in clean energy investment. The mechanism would see energy companies forced to favour clean sources of power over dirty ones and allow investors in the power sector to plan and invest in replacing our ageing and inefficient coal fired power stations.

While it is not a perfect policy (none ever are), until Monday, it fundamentally recognised that you can’t have an energy policy without a plan to reduce emissions. No longer. As the prime minister said just a week ago we know “very well what happens when you allow ideology and idiocy to take charge of energy policy.” Well, that is what just happened (again).

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