Given the enormous investment in renewable energy taking place in the US and in Europe, other national governments must be determined to drive up the price of their electricity.
[First published by the Australian Financial Review – here]
Either that, or everything Malcolm Turnbull has been saying about the need to keep a 50-year-old power station going until it turns 55 is complete nonsense.
Indeed, so desperate is Turnbull to make a political mountain out of the policy molehill of the planned closure of a small, old and unreliable power station that the idea of nationalising the electricity sector and splitting up AGL are being seriously discussed.
But despite the fact that the federal government is doing more to cause investment uncertainty than it is to reducing energy costs, some of the most vocal business voices have largely left AGL to defend itself from Turnbull’s new-found anti-corporate populism.
Australian households and businesses are paying a high price for the government’s desire to play politics with energy. While criticism can be made of previous governments’ handling of energy policy, every prime minister since 2006 has at least had some plan to drive investment in renewables or to lower energy prices.
While he may have been wrong, at least Tony Abbott believed that scrapping the carbon price would lower electricity prices. And while it may have been through gritted teeth, it was Abbott who gave us the 33,000 Gwh renewable energy target by 2020. Ineffective though they were, at least Abbott had plans for our energy sector.
But Turnbull has simply become the man with a plan for more plans. Last year he rejected the plan developed by Abbott’s appointees to the Climate Change Authority for an Emission Intensity Scheme. Last week he rejected the Finkel Inquiry’s plan for a Clean Energy Target, so now he has sent AGL off to come up with a plan for replacing Liddell. No doubt in 90 days’ time he will reject that plan as well. But that’s another 90 days in which he can keep playing politics with the issue.
After decades of climate change denial and faltering steps towards a national energy policy that takes greenhouse gas emissions into account, Australia now lags the world in both delivering cheap energy and in driving greenhouse gas emissions down. It is quite a failure. If we are to turn the ship around, and it’s clear that some have no intention of doing so, we are going to need some straight talk.
So as energy politics reaches “peak populist” and the federal government attacks the Opposition for being too close to “big business” – where are the pro-market business voices urging against government intervention and reminding everyone about the chilling impact of sovereign risk and uncertainty? They are nowhere near as loud as the business voices that once told us a carbon price would make energy unaffordable.
The Business Council of Australia has long accepted the science of climate change, the need to reduce greenhouse gas emissions from fossil fuels, and the economic benefits of relying on carbon pricing rather than regulation. While I don’t agree with the BCA on everything, I do agree with it on this. And as last week’s parliamentary debate showed, Australia needs the BCA’s voice in the energy debate now more than ever.
A few weeks back the BCA CEO Jennifer Westacott took me to task for criticisms I made of her chair, Grant King’s performance at the helm of Origin. While I disagree with her conclusion, there was much wisdom in her arguments. I agree with Westacott that our energy policy needs to be based on stronger evidence and I agree with her that policy shouldn’t be designed on the back of an envelope. Indeed, I also agree with her observation that the “Australian economy is not an ideological laboratory”. If only the Turnbull government did.
But despite the fact that groups as diverse as The Australia Institute and the Business Council of Australia are in such furious agreement on energy policy, the Turnbull government continues to ignore the science, the economics, and perhaps most remarkably, the opinion polling that suggests now is the time to put clear policies in place to help speed the transition away from emission intensive energies sources and towards renewable ones.
If the business community is looking for a way to show the Australian public that it is interested in more than short-term profits, there hasn’t been an easier opportunity to do so since the Coalition made a mess of the equal marriage debate.
Richard Denniss is the chief economist for The Australia Institute.