Energy policy: Finkel Twinkle Little Star

Predictably, the Finkel report came out with a concealed attack on coal – a new tax which Finkel falsely described as “all carrot and no stick”.  This is to cut in at a politically specified level of emissions with those power stations emitting more CO2 per unit of energy than this paying for credits and the subsidy going to the ones emitting less.  Sounds like a carbon tax and it is one.

The papers took their predictable stances, ones that totally disregard the facts that coal is easily the cheapest form of electricity generation.  The AFR said “it is time to finally lay down a durable policy platform”.

Code for let’s accept Finkel and get on with it.  Its deep green commentator, Ben Potter, repeated publishing the same spurious data that his sources keep peddling him: New coal power costs $125-$169 per MWh (three to four times the cost of that from the last station built in Australia and using capital costs that are twice those of overseas coal power stations); he has gas plant at $109 per MWh and wind power at present at $90 and trending to $50 per MWh.  The same over-the-horizon nirvana that has been pushed for decades.  Such advocates never even bother to ask themselves: If wind is so competitive, why do we subsidise it?”

Meanwhile here is one picture of the energy price that perverted policies have already created

The government, led by a climate fanatic, is seeking an accord with the ALP and the latter will probably agree since they’d be aware they already lost one election on promoting dearer energy.  If Turnbull prevails with his policy-driven enforcement of an electricity price at three times its 2015 level, the nation is set for a gradual, unstoppable decline in living standards as all industry competitiveness is reduced and the firms with the highest productivity shut their doors.

Here is my take on the issue from the Herald Sun this morning.

With the 2015 Paris Agreement to reduce carbon dioxide emissions, Australia and other countries followed a course pursued since the 1990s.  This involves forcing and bribing electricity consumers to substitute wind and solar power for coal.

Malcolm Turnbull has made abandoning coal-based energy a signature policy.  He made a key green entrepreneur, Alan Finkel, his Chief Scientist and tasked him with reviewing the electricity market.

The Finkel review is out today and will canvass additional measures to expand the share of wind and solar energy.  Though camouflaged, these will mean more costs to consumers and coal based electricity generators and regulations to shore-up an electricity system made increasingly insecure by the forced displacement of coal by wind and solar.

Under existing policy measures subsidised wind and solar must comprise 15 per cent of supply by 2020.  That’s up from the current 9 per cent, a level that has already forced the closure of low cost coal generators.  One outcome has been a trebling of the wholesale price of electricity.  This is turn is causing the progressive closure of the energy-intensive businesses including smelters which were previously the jewels in Australia’s industrial crown.

The renewable energy story since the mid-1980s has mythologised an inevitability of carbon-free renewables becoming cheaper than coal as an electricity source.  This, so the story goes, will painlessly allow lower emissions of carbon dioxide, which are said to be bringing global warming accompanied by more extreme weather incidents, drought and the disappearance of the Arctic ice.

None of these scary climatic events are occurring but the fable continues.

And, notwithstanding ever-promised technology breakthroughs, wind and solar costs remain over twice those of coal, and their unreliability and dispersed nature impose additional penalties on consumers.  Advocates make shrill claims that wind and solar are now competitive with coal.  These can be taken with a pinch of salt because the advocates never support the cessation of renewable subsidies which would be unnecessary if the claims were true.

Under the Paris Agreement, developed nations, which emit a declining 40 per cent of global greenhouse gases, agreed to reduce their emissions by at least 26 per cent.  Third world countries only agreed to take action after 2030 and, in return, countries like Australia were to provide them increased assistance of $100 billion a year.

Along came Donald Trump who called this a terrible deal and rejected it.

Trump’s decision totally demolishes any credibility that the Paris Agreement ever had.  Countries like Australia that adopt abatement measures are now responsible for only one quarter of global carbon dioxide emissions.  Those countries handicapping fossil fuel generated electricity are therefore engaging in pointless self-harm.

Australian energy policies by penalising our abundant low cost coal have transformed the nation from having the world’s cheapest electricity into one of the world’s most expensive.

The US is now unwinding its Obama-era restraints on coal and gas.  This is reducing energy costs and attracting energy intensive business from across the world.

Australia’s move in the opposite direction is not only bringing a contraction of energy-intensive industry but is contributing to the general economic stagnation that this week’s National Accounts foreshadow.  Unless our harmful energy policies are reversed lower living standards are inevitable.

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50 Responses to Energy policy: Finkel Twinkle Little Star

  1. Nerblnob

    Green entrepreneur?

    Please explain.

  2. Sparkx

    And from the Australian today –

    EnergyAustralia has boosted relief funding for customers unable to pay their power bills

    And the bastards are only going to make things worse.

  3. duncanm

    Green entrepreneur?

    Entrepreneurial government rent-seeker.

    green = cashish in this context.

  4. duncanm

    If Turnbull follows through with this idiocy (which I fully expect him to do), we can expect lots of the energy intensive manufacturers (Tomago Aluminium, Brickworks, CSR, Boral etc) to accelerate the moving of their manufacturing o/s, or substitution of imported goods.

    We.Are.Fucked

  5. Roger

    If Turnbull prevails with his policy-driven enforcement of an electricity price at three times its 2015 level, the nation is set for a gradual, unstoppable decline in living standards as all industry competitiveness is reduced and the firms with the highest productivity shut their doors.

    Maladroitness the country will never recover from.

    Once the welfare runs out expect internecine conflict in the streets and then a big brother government promising to restore security.

    Yesterday was the anniversary of the publishing of 1984, btw.

  6. Deplorable

    Once the welfare runs out expect internecine conflict in the streets and then a big brother government promising to restore security.

    Which big brother? Chinese, Islam, Indonesia,Russia.

  7. mareeS

    Gosh these people need the cat out of the bag and a good whipping. Anyone from the sea calls this for the bullshit it is, especially anyone who has sailed the Pacific and lost wind in the tropics when the trades don’t blow.

    Which might explain why there are no windmills in the tropical latitudes.

  8. Roger

    Which big brother? Chinese, Islam, Indonesia,Russia.

    If China still needs our resources at that stage, one could imagine them stepping in to ensure security of supply.

    However, they are not as stupid as us and are investing heavily in resource rich Africa.

  9. jupes

    The only party calling bullshit on this scam is PHON.

    They are also the party with the most sensible Muslim policies.

    These are the two most important policies affecting Australia today. People need to think about next election.

  10. Minderbinder of QLD

    What a surprise, Twinkle Finkel the Malevolent appointee has come up with the self same policy ideas that the fairyland fearless leader of warming beliefs wanted. Oh, you do not think that this bozo clown was under instructions, well I have a Harbour bridge going cheap that I will sell you, where you get to keep the paid tolls.
    These political lying bastards need their tongues excised and banishment to the stoney desert to count pebbles.

  11. struth

    We have not always, but for many years now, been a lazy , dumb nation.

    We think we are a “lucky nation”.

    It wasn’t the sheep’s back we have been riding on , but our cheap power and abundant resources that kept our lazy arses from sinking beneath the waves.
    We have nothing else.

    Once this sabotage of Australia’s wealth and prosperity by U.N. operatives like our P.M. truly bites, as it is now starting to do, then it won’t be just a “fall of living standards” that sounds like we will all wait another year to buy the new car, it will be Veneztralia real quick.
    We had nothing but cheap power saving our lazy buts for years.

  12. cui bono

    jupes – Bernardi’s Conservatives are talking a big game on these issues.

    Whatever.

    Decline under the Libs. Rapid decline under GreenLabor.

  13. John Michelmore

    Jupes, I concure with the above, the the Australian Conservatives under Cory also call out the BS

  14. Tim Neilson

    and using capital costs that are twice those of overseas coal power stations

    To be fair, with the CFMEU in on the act that may even be optimistic.

  15. NewChum

    I don’t care anymore. Think I might bail on youse all and go find greener pastures.

    Eventually it will all fall in a heap. The countryside will be littered with rusting windmills and dirty solar panels, disconnected.

    They are paving the way for an entirely new political philosophy. The same way the nationalisers and protectionists paved the way for the reforms and privatisations of the eighties.

    But first the crash must come. That will be the multi-state power blackout couple with trebled or higher bills. Throw in a few random incidents of no particular religion and the morn for change will be unstoppable. The only question is how radical the politician leading the charge will be.

    Still no answer why we have to close our factories and china gets to do nothing.

  16. Speedbox

    “We have not always, but for many years now, been a lazy , dumb nation. It wasn’t the sheep’s back we have been riding on , but our cheap power and abundant resources that kept our lazy arses from sinking beneath the waves”.

    Can’t disagree with a word of it. Trumble and his merry band will pander to the Left and once again, the country will suffer. Not that most will know/care until it is way too late. The lack of awareness by most of the population is astonishing.

  17. Habib

    Fixing this is easy. Obtain heads. Insert stick. Display on parapet. Repeat for effect.

  18. Senile Old Guy

    Lord Waffle is busily implementing his Green-Left agenda before he gets turfed…for someone even more Green-Left. Agile and innovative!

  19. incoherent rambler

    The only question is how radical the politician leading the charge will be.

    +1

    Very extreme, I suspect.

    “I have declared a temporary period of martial law and we have the army supervising the generation of gas and electricity to heat and cool your homes, so you can cook food for your children, so you can travel to work, …
    This situation is temporary until order is restored.
    Failure to co-operate with ADF will result in your immediate arrest in these difficult times.”

  20. Habib

    Actually I’d say we lack a supply of sustainably harvested pikes. Better to apply fork, this dump is done. And then some. I don’t think I’ll bother renewing upcoming contracts.

  21. closeapproximation

    wind power at present at $90

    Alan, do you know where this touted figure comes from ? Presumably it is post-subsidies ?

    If so, are there any reliable sources for unsubsidized cost ?

  22. Habib

    IR, the ADF (ir at least “leadership”) make the Greens look pussy in PC over-reach. No salvation there, the long march has formed ranks, and advancd in file.

  23. Diogenes

    This weekend would be a great opportunity for all the coal generators to call the governments’ respective bluffs and announce ” We will be good corporate citizens and shut down all coal fired plants today, and as of now will stop supplying to the grid”. Given the forecast weather conditions the green scam should be over within hours

  24. Bruce of Newcastle

    How curious that if coal energy is so expensive we have this story in the AFR today:

    Electricity price hikes to hit households

    Households across the eastern states are about to be hit directly by the closure of the giant Hazelwood power station in Victoria and soaring gas prices, with sharp hikes in retail electricity prices from July 1 coming on top of the hefty increases in recent years.

    Homes across NSW, the ACT and South Australia could see bill increases of up to 30 per cent, sources say, with some Victorian households about to see their second sharp hike this year as smaller retailers seek to offset the pain of soaring wholesale prices.

    The ACT is the first to confirm the price hikes, advising on Thursday of an 18.95 per cent jump in standing offer power tariffs and a 17.3 per cent hike in gas prices.

    So close a big coal fired power station and retail electricity prices go up by 19-30 percent.

    I think that immediately falsifies Prof Finkel’s report.

  25. Rayvic

    Malcolm’s adoption of Finkels’ ideological policy of enforcing the replacement of reliable, stable, low-cost coal power with intermittent, unreliable, uncontrollable, high-cost renewables, would guarantee Australia’s demise from developed to under-developed status. This is particularly galling given our vast quality coal reserves, and the fact that countries such as Germany, Japan, Southeast Asian and African, are installing new lower-emission coal-fired stations in droves.

    It is fanciful of Finkel to think that all the disadvantages of renewables can be overcome by complementing them with energy storage, e.g. by way of batteries and hydro.

    Furthermore, Finkel’s recommendation that new coal-fired power stations be fitted with carbon capture and storage technology makes them highly impractical — it is the plumbing that plumbers dream of.

  26. incoherent rambler

    Mick Trumble a.k.a. Chief Lemming

  27. Tim Neilson

    If wind is so competitive, why do we subsidise it?

    Alan, if a wind/solar rent-seeker is ever forced to address that question, the bullshit they come up with is “sunk cost”.

    The spin is that because the capital cost of coal/gas has already been spent, they can now survive making only a minute margin over operating costs, thus undercutting the noble wind/solar pioneers who are supposedly paying the capital costs of their brave new projects.

    Anyone who has ever been involved in power generation transactions know that it’s utterly dishonest.

    Even assuming that the past “capital cost” of equity investments in coal or gas construction or refurbishment should just be totally trashed (“paging Mr Sovereign Risk”), that still leaves the bank debt, which typically gets paid down over the expected life of the project. I.e. coal and gas are usually still repaying chunks of capital cost out of their operating revenues.

    Gearing of such projects varies, but bank debt of about 50% or 60% of capital cost would be nothing unusual.

    By contrast, wind and solar tend to get 40% or 50% taxpayer funded grants from ARENA or similar wealth dissipation agencies. That is, they could operate with zero real equity investment and exactly the same kind of debt profile as coal or gas.

    And yet, far from being able to compete on price their $80 subsidies aren’t enough to endure that they can outperform coal or gas at about $0 unsubsidised.

  28. Tim Neilson

    Sorry, that last should be:

    And yet, far from being able to compete on price their $80 subsidies aren’t enough to ensure that they can outperform coal or gas at about $40 unsubsidised.

  29. Dr Faustus

    Mr Turnbull is sweating on Dr Finkel’s report offering a bipartisan way forward.

    “The important objective we have is to take the ideology and politics out of this issue,” he said ahead of the meeting.

    “As I have said for a long time now, my approach to energy policy, my government approach to energy policy, is grounded in economics and engineering, not in ideology, not in politics, not in partisanship.

    We can rest assured that this will happen: on a sniping, semi-bipartisan basis, with the Greens providing the Greek Chorus about the need for the complete elimination of carbon-based life.

    This is likely to be an economic and social tipping point.
    Lucky for us that Turnbull is ‘grounded in economics and engineering’.

  30. Bruce of Newcastle

    While I’m on the topic, here is what stupid renewable energy does to poor people. Yesterday:

    EnergyAustralia expands hardship program as retailers prepare price hikes (SMH)

    EnergyAustralia has committed to a one-off $10 million injection into its hardship program, which usually runs at $1.5 million each year, saying that prices won’t be easing and it needed to be prepared to help customers through the “difficult times” ahead.

    While she couldn’t talk specifics about the upcoming price hikes, managing director Catherine Tanna said it had to pass on the ballooning wholesale electricity costs.

    St Vincent de Paul’s Gavin Dufty warned families should “hold onto their seats and get ready for a bumpy ride” because, based on wholesale futures, “there doesn’t seem to be much relief for at least 1.5 to 2 years”.

    “EnergyAustralia’s announcement indicates to me that it’s forecasting poorer cash flow, meaning people will be paying later because they’re struggling, and forecasting a greater number of people being in severe energy distress and needing intense support,” he said.

    “Ultimately, this means there will be more disconnections and people will be going without this essential service.”

    Greens don’t seem to care that they are hurting poor people like pensioners who die of cold and disease because they can’t afford criminally expensive ideologically driven electricity.

  31. OldOzzie

    Tony Abbot is the only one fighting for Liberals and capable of taking the fight to Shorten – and nails Short Pants Shorten perfectly with “Electricity” Bill

    Abbott gives thinly veiled warning over climate change policy shift

    Tony Abbott has delivered a thinly veiled warning on climate change policy to Prime Minister Malcolm Turnbull, arguing a new low emissions target should deliver cheaper power and not “clobber” Australia’s economy.

    The former prime minister took the job of opposition leader from Mr Turnbull back in 2009 because of a civil war in the Liberal Party over climate policy and on Wednesday, he said a new low emissions target (LET) should not stop the creation of new, more efficient coal-fired power stations.

    While Labor has indicated it could take a bipartisan approach on the LET, Environment and Energy Minister Josh Frydenberg has had to hit the phones to calm conservative Coalition MPs concerned that a LET could, for example, force up power prices by increasing the use of renewable energy.

    Mr Abbott said the nation’s power system should be run to provide “affordable, reliable energy, not primarily to reduce emissions”.

    “My anxiety, based on the reports we have seen, is that the scenario which the Finkel report is recommending gives us not 50 per cent, but 70 per cent renewable energy by 2030 and coal, which is by far the cheapest source of base load power, and in most years is our biggest single export, coal goes from currently 65 per cent to 25 per cent of total energy generation,” he said.

    “Anything that makes it impossible for us to bank new, efficient coal-fired power stations I think is a big mistake.

    “The Liberal Party has to be the party that you can rely on to bring power prices down, let the Labor party be the people who send prices up. I’ve spent a lot of time talking about Electricity Bill Shorten, the last thing we want to do is let Electricity Bill off the hook.”

  32. Rafe Champion

    Jo Nova on the Finkel report.
    Are we allowed to make jokes about his name as well as the report?

  33. jonesy

    If I must buy green power, I want a guarantee that ONLY green power will be supplied to me at the price and quantity I require on the days I am forced to buy it. None of this concealed name plate generation in the middle of the night from some obscure site in South Australia. If my power fails I will sue for breach of contract plus damages.

    I particularly like the idea that coal fired generators should turn off supply until such time as the filth that run this country realise they have built a house of cards. Have as much green solar/wind/gas/ battery as you can….just do not expect this country to run for any time longer than a bee takes to fart.

  34. Bela Bartok

    Interesting article – but perhaps we’re missing the long-term play here.
    Sure, Donald Trump trashed the Paris Accord, and the greenfilth are unhappy.
    But as Turnbull knows – given he’s a green psychopath – Trump will be gone sooner rather than later; whether it’s through impeachment, continued leaking and destabilisation, or outright violence by leftist thugs, his tenure will *have* to come to an end, as the green-left filth further entrench themselves, never to be removed.
    So the long-term play for Turnbull and the other of his ilk is to ride out the Trump-storm, like just Turnbull is doing, by simply ignoring anything Trump does, and then, when he’s replaced by Chelsea Clinton or some other swamp-dweller, it will be snout-in-trough business as usual.

  35. Tony Abbot is the only one fighting for Liberals and capable of taking the fight to Shorten – and nails Short Pants Shorten perfectly with “Electricity” Bill

    Tony Abbott?

    Would that be the Tony Abbott who got elected with the second-biggest landslide majority in Australia’s political history, specifically to address these kinds of issues?

    The same Tony Abbott who, once elected, did SFA for five months, then gave us a “fairness tax”, presided over the death of free speech, strangled a major fishing enterprise and a billion dollar coal mine with green tape, laid the legislative groundwork for our current ETS, set in motion the groundwork to steal more of our super, and wanted to raise the retiring age to 70?

    That Tony Abbott? Now he’s going to “save the day”?
    Yeah. Right.

  36. So the long-term play for Turnbull and the other of his ilk is to ride out the Trump-storm

    We don’t have a “Trump-storm” problem. We have an electrical supply problem. Pretty soon demand is going to outstrip supply and we will have rolling blackouts and brownouts. The electricity you do get, when you can get it, will be so hideously expensive, many households will have to self-ration, and all energy intensive businesses will disappear offshore.

    This is now inevitable, and would remain the case whether Trump was ever elected, or not, or whether he remains, or not. This is all our own work. The legislative groundwork for our current dilemma was laid under Howard, continued under KRudd and Gillard, then Abbott, and now Turdball. And it will continue unabated under whoever follows Turdball.

    The name of the architect of our doom is Martin Parkinson.
    Don’t forget it.

  37. OldOzzie

    memoryvault
    #2406919, posted on June 9, 2017 at 11:30 am

    The name of the architect of our doom is Martin Parkinson.
    Don’t forget it.

    Sacked by Tony Abbott, reinstated by Malcolm Turnbull

  38. Art Vandelay

    The same Tony Abbott who, once elected, did SFA for five months, then gave us a “fairness tax”, presided over the death of free speech, strangled a major fishing enterprise and a billion dollar coal mine with green tape, laid the legislative groundwork for our current ETS, set in motion the groundwork to steal more of our super, and wanted to raise the retiring age to 70?

    Not to mention the Tony Abbott who is responsible for the current version of the Renewable Energy Target which is busily screwing consumers to pay subsidies to green rent-seekers.

  39. RobK

    MV,
    To further illustrate your point: the conventional grid is supported in an economic sense by large consumers especially of business and commerce. Repelling these consumers may reduce the “carbon footprint” but it also renders the energy grid an economic luxury we likely won’t be able to afford, at least not in the manner we are familiar with.

  40. Greg Byrne

    What’s the fuss about? Didn’t the Centre of Independent Studies publish a paper by John Humphreys that a carbon tax would “have little or no economic cost”? Not only that, the paper favoured a policy of encouraging a “transition from a carbon-intensive energy to alternative energy”.

  41. Sacked by Tony Abbott, reinstated by Malcolm Turnbull

    Yeah. Abbott replaced Parkinson with Parkinson’s wife, Heather Smith.
    Turdball replaced Smith with her husband, Martin Parkinson.
    Bread and circus theatrics for the proles.

    That would also be the Parkinson/Smith combo partly responsible for Gonski, NDIS, NBN, the Murray Review, and changes to tax on our super, to name just a few little pies.

    Tell me again who really runs Australia.

  42. RobK

    It is a marvelous coincidence that during the GFC there was much criticism of the “gold plating” of the grid due to lucrative pricing incentives from the regulator causing excessive price increases.
    Fast forward a decade and it’s apparent that to accommodate low energy density distributed feeds, the gold plating was not sufficient to carry such a feeds. All the focus was on the reduced demand because of renewballs whilst in fact it turned out to be an enabling expenditure for future commercial renewballs attempts. Exquisitely duded.

  43. duncanm

    Meanwhile — the reports in the MSM are ‘finkel review promises lower power bills’.

    The devil’s in the details, of course — lower than the current ETS based system. Not lower than abandoning the whole crapshoot and going back to good old coal fired stations – that option is not explored, because ‘funds a reluctant to finance coal-fired power’. Geeze, I wonder why they’re reluctant? Why could that possibly be?

    It makes you weep.

  44. NewChum

    The gold plating is a myth. A line of misdirecting BS.

    The totals show an increase in transmission coast.

    This was called gold plating.

    In truth it is running lines everywhere to connect up dinky little intermittent generation units.

    The dinky little generators don’t have to pay for the lines to connect.

    They get paid more for their power.

    It’s wind power. That is the problem. It has always been the problem.

    Ask your local line worker if your local infrastructure is gold plated. In fact, go check it out. Youll see rotting poles and cracking insulators everywhere.

  45. Marcus Classis

    report from my old neighbours in Canberra:

    Land tax up 7%
    Electricity prices up 19% (correct!)
    gas prices up 17% (Also correct!)

    They had been looking at a block of land at Bredbo, selling in Canberra and moving there. Called today to seal their deal – they’ve been gazumped.

    He reckons that over the last 2 weeks, nearly every block of land and house on the market within about 30-40km of the ACT border has been purchased by ACT government employees who got the early word about this budget!

    Dunno if he’s right (he’s seriously ticked off about this) and maybe some of the ACT Cats can confirm these figures and the land sales thing?

    He also said that on the radio, the ACT government blamed the energy price hikes on ‘the failure of the national electricity market due to the opposition of the coal industry to fixing global warming’.

    Again, it’s what he said, maybe Canberra Cats can confirm.

  46. RobK

    NC,
    Yes, that was my point.

  47. The gold plating is a myth. A line of misdirecting BS.

    Julia Gillard’s “gold plating” was, in fact, the cost of accommodating both wind and solar power into the distribution grid. Wind required building new infrastructure to connect the usually remote, intermittent wind generation to the grid, and solar meant modifying the existing grid to, in effect, run backwards, redistributing domestic solar energy back into the grid.

    Far from “gold plating” anything, it has left the grid far more vulnerable to disruption from power surges, lightning strikes etc.

  48. .

    “Gold plating” was the ultimate leftist reversal.

  49. greggg

    Why do they never add the cost of new peaking plant onto the cost of intermittent wind turbines?
    Real figures are approximately coal=wind on its own, and wind+peaking plant=1.7*coal.

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