The following is a condensed version of an article I have had published in Quadrant on-line
The Australian broke a story about dissension in the Coalition ranks regarding the “in principle” decision, announced by Energy Minister Josh Frydenberg, to allow Australian firms to acquit their carbon dioxide emission obligations by buying overseas credits.
Mr Frydenberg said this merely advanced a decision to “consider” these measures taken when Tony Abbott was at the helm. And when Mr Abbott and others denounced the option of overseas emissions purchases, which will, of course, be either totally bogus or downright fraudulent, Minister Frydenberg made a smart-alec comment: “It is worth noting that Mr Abbott’s position on international permits is closer to the Greens than that of Australia’s big employers.”
Perhaps Minister Frydenberg was simply trying to claim a continuity of support for what he saw as the least-worst option available to him, but bagging his former leader made him appear to be undermining a rival to his likely and widely mooted ambition of becoming the next leader of the Liberal Party.
Faced by the reverence of Mr Turnbull, and his departmental head, Martin Parkinson, for wind and solar energy, the Frydenberg strategy has been to ensure the costs of the policy are fully understood, including requiring the inherent unreliability of “renewable” plant is recognised by forcing those contracting to buy it also to buy a “firming” contract as insurance for when it is unavailable. This feeds into the National Energy Guarantee, which will allegedly provide us reliable energy at $110-115 per MWh (a little over twice the price that would be available under the coal-based system now being deliberately destroyed). It will also provide a pathway to meeting Australia’s targets under the Paris Climate Change Agreement which specify emission reductions of 26%-28% (50-52 per cent per capita) on 2005 levels by 2030.
The progress on that path — how each year’s target will be set and what disciplines will enforce it — are all left unexplained.
These matters take on an ethereal nature when set against the reality of international developments. Now that Trump has taken the US out of the Paris Agreement, countries having agreed to abatement measures account for only one quarter of global emissions. Even their one-quarter share of emissions overstates their importance since any carbon taxing actions they take will ensure their energy-intensive industries shift to developed countries with no carbon taxes. Australia is already seeing this with the departure of aluminium smelters, previously the nations’ paramount manufacturing sector (Kurri Kurri in NSW and Point Henry in Victoria have already closed).
Compounding this is the actions of President Trump in making the US more business friendly. Not only has the president rejected the Paris Agreement, reversing the Obama Era restraints on coal and gas, but his taxation reforms and deregulatory agendas are proving extremely attractive. The Pratt organisation, the Visy group of companies, has committed to a $2 billion expansion of its US pulp and paper business. Australia is too uncompetitive for the Pratts to make such an investment at home.
The search is on for palliatives to the damage from wind and solar. The Prime Minister’s favoured Snowy 2 pumped-hydro plan was initially costed at $2 billion. But the feasibility study puts this at $4 billion, with one observer estimating an outcome price at over $8 billion for a largely worthless investment.
Australia seems a long distance from adopting the novel Trump solution of allowing the market to operate freely and without subsidies, a system that at the turn of the present century gave us the cheapest electricity on earth.