Ben Potter, who as a useful idiot, was leaked a copy of the National Energy Guarantee (NEG) report by the Victorian Government, reports today that the states are likely to sign off on the NEG at their meeting tomorrow. Potter is excoriated by Terry McCrann in today’s Herald Sun for his pandering to green energy myths.
NEG has twin features of reducing greenhouse gas emissions from the energy sector together with a measure that ensures wind supply has a firming contract to compensate for its inherent unreliability.
Former Senator Ron Boswell entered the fray with a piece in today’s Australian calling for Liddell to be replaced saying,
“Some have likened the option to socialism. Rubbish. The energy market was socialised by intervention a long time ago. A $45bn subsidy and guaranteed market share for renewables is not socialism? Would the car market be a real market if the government said 23 per cent of cars sold had to be a Tesla and that Tesla would receive a subsidy of $30,000 for every car sold?”
Boswell also argues that under the amended section 44 of the trade practices act AGL could be forced to sell since its closure would be “substantially lessening competition in a substantial market”. And the Acting NSW Premier, John Barilaro, today came out in favour of a forcible acquisition of the Liddell plant.
Hardly any MPs – Craig Kelly being a notable exception – have undertaken the laborious research necessary to understand the energy market and its many faceted regulations; most accept the bromides that demonise coal and promote the need to reduce emissions to save the world. But politicians do recognise the fact that prices have risen and voters are not pleased. Moreover, voters have no allegiance to private property rights that are not their own as this recent Yougov survey illustrates.
The NEG, and the disastrous government intervention into electricity generally, is ostensibly actuated by a need to reduce greenhouse gas emissions. But the focus on renewables galvanises a vast network of vested interests whose product is utterly uncompetitive without subsidies.
In fact, only 34 per cent of Australian greenhouse gas emissions are from electricity. And there are (thankfully) no plans to do anything much in the sectors responsible for the other 66 per cent of emissions. Here are the emissions and the projections to 2030.
The Kyoto target was met only because of regulations developed, while the Nats were sleeping, under the Howard Government. These regulations were devised by then Environment Minister, David Kemp, and put in place by the Beattie and Carr ALP governments in Queensland and NSW prevented land clearing for agricultural expansion, without compensating the farmers concerned for the loss of value in their land. That infamous trick, as the table above illustrates, cannot be repeated.
To reduce the 2030 emissions from electricity by 26 per cent from 2005 levels, the government’s stated goal, would require those emissions to be 152 million tonnes.
The Energy Security Board’s consultants, Frontier Economics, under business-as-usual, taking into account the amount of wind and solar now committed and the planned Liddell closure, estimate 2030 emissions from the sector at 140 million tonnes. With NEG providing additional incentives to wind (aka an additional carbon tax on coal) this would fall further to 130 million tonnes. (Frontier, being Frontier, also has a fantasy of electricity prices – even including RET certificate costs – halving and returning to 2015 levels in 2021!)
Other developments would have an additional effect. Replacement of existing power stations by newer ones would entail savings – even those built 15 years ago produce 5-13 per cent fewer emissions than the older ones and the Minerals Council argues that modern HELE plant produces 38 per cent fewer emissions per unit of energy than the Yallourn brown coal plant and 23 per cent less than Liddell and Vales Point.
What the energy ministers are likely to agree tomorrow is a compromise that leaves options open. For sensible people, who recognise the damage being done to the economy, there is the prospect that not much, if anything need be done if the NEG is put in place. For the states, activist governments have an option of going further but only Victoria has meaningful plans for this and that Government may not last long. For the Prime Minister, the ALP and The Greens the NEG as proposed offers the prospect of bringing in additional interventions over the course of the next decade. Anyone who thinks this is going to give the particular ‘certainty’ they crave think again!