It all came so suddenly.
Over the Easter break a ginger group of Coalition backbenchers, the Monash Forum, was announced. Chaired by Craig Kelly, one of the few MPs who has really studied the economic disaster that greenhouse policies are causing, it counts at least 20 MPs as members including Tony Abbott, George Christensen, Eric Abetz and Kevin Andrews.
The forum’s manifesto states opposition to all subsidies and argues that no private company will now invest in coal given the risk that government policies have imposed. It proposes a new government owned 2000 MW Victorian brown coal power station (about the size of Loy Yang A).
If nothing else, at one stroke the Forum has changed the agenda. The PM has joined Energy Minister Frydenberg in calling for a neutral technology policy which he says the National Energy Guarantee (NEG) provides. Maybe it does if you forget about
- the on-going wind/solar subsidies that give small scale roof top facilities a subsidy of $40 per MWh (the full commercial cost of coal in those far off days of 2015) and wind farms $85 per MWh; plus in both cases state government support and direct support from the budget – in all over $5 billion a year.
- the $4 billion plus that is to be spent by the Commonwealth in Snowy2
- increased coal royalties especially in Victoria
- a gaggle of groups financed by governments who decry fossil fuel power as archaic and maintain- as they have for the past 30 years – that renewable power will in any event soon be cheaper.
Moreover the NEG itself is just a gossamer thin veil for a carbon tax. It comprises two components. The first is to ensure Australia meets its Paris Agreements commitments, ratified by Turnbull the day after Trump’s victory so he could argue we have a commitment and Australian keeps to its commitments, hence there can be no turning back. This component requires a continuing and growing level of renewable energy and an increasing level of the de facto carbon tax favouring renewables which has destroyed the industry so comprehensively.
The second component is a bone thrown to the commercial suppliers. To counter the intrinsic unreliability of wind and solar by requiring technologies that are not dispatchable – and wind systems can guarantee to be available only five per cent of the time – they must have firming contracts.
Turnbull, while a green energy warrior, is not entirely stupid and recognises that the poisonous policies he has championed are causing soaring power prices. He backgrounded the Australian’s Geoff Chambers to say that he has always sought the sale by AGL of its 2000 MW Liddell power station rather than the firm closing it to boost its profits from other generation assets. And Alinta, the recent buyer of Victoria’s 1000 MW Loy Yang B, has come out with a tentative purchase proposal.
Paul Kelly, suddenly finding his inner support for “market based” government non-intervention in energy markets, railed against the group’s proposal for a government power station, while maintaining support for renewable subsidies, adding that a new brown coal station would be useless as it would take 4-6 years to build. “There are no perfect answers anymore”, he says. Judith Sloan totally debunks his and others’ confused statements drawing attention to the other subsidies, the international popularity of coal power and the disingenuous statements about the alleged neutrality of the NEG.
Over at the AFR, Ben Potter continues his campaign for renewables, selectively cited those supporting his view. Unaware of the Alinta developments, he quotes an unnamed EA spokesperson, the AGL CEO Vesey, now a supposed climate expert (“It is very simple: We are overloading the atmosphere with heat-trapping gas and the rest is details,”), and the Grattan Institute. Elsewhere the AFR sees the Monash Forum as another topple-Malcolm push (as does Paul Kelly).
A challenge to the PM may well be the outcome though his love of the job is already seeing him compromise with reality. The political elite, egged on by media praetors and vested interests, have created a situation where pursuit of a fashionable anti-fossil fuel agenda has destroyed the world leadership that Australia formally enjoyed in energy competitiveness. The rebound on general living standards is unavoidable.
The way forward is to scrap all renewable energy subsidies – not just those to future facilities. In addition, as governments have demonised and threatened coal so convincingly, there may now be no alternative to a government built or at least formally guaranteed power station development regime. In this respect at least Paul Kelly may be right in saying “There are no perfect answers anymore”.