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How carbon pricing and a clear renewable energy policy were solving the trilemma – until Abbott came along

Turnbull has often shown poor judgement in politics, but his decision, or the decision that is being thrust upon him, to attack Labor over energy policy and renewables is downright crazy.

According to the Coalition, our looming energy crisis is the fault of Blackout Bill, No Coal Joel, Labor state governments, gas companies, electricity retailers, the decision to close dirty old coal-fired power stations, and, of course, those evil renewables – anyone but them.

Tony Abbott told us we have to get over “Labor’s climate obsessions” saying, after he had saved us from the carbon tax, it would be “unconscionable to go further down this renewable path.”

But an examination of the future energy outlook just before the coal lovers took over the reins of government was very different.

Australian Energy Market Operator (AEMO) Electricity Statement of Opportunities (ESOO) – August 2013:

“Reduced growth in energy use across the National Electricity Market (NEM) compared to 2012, rising domestic rooftop photovoltaic (PV) generation, increasing consumer response to recent growth in electricity prices, and the development of new large-scale renewable generation is expected to defer new thermal electricity generation investment. These changes result in all regions except Queensland having adequate generation capacity over the 10-year outlook period.

The NEM generation fleet continues to evolve in response to government renewable energy policies. For example, the Large-scale Renewable Energy Target (LRET) continues to drive the entry of renewable generation capacity.  Currently, almost 30,000 MW of publicly-announced new generation capacity is on the investment horizon

They did, however, ring a small warning bell:

“Any changes resulting from the forthcoming 2013 Federal Government election may also impact current energy policy settings and investment drivers. Potential changes may impact the future mix of generation projects, either through changed incentives for withdrawing existing plant, or a reassessment of the timing and/or technology of proposed future projects.”

The Energy Update from AEMO a year later in August 2014, after two years of carbon pricing, was still optimistic.

For the first time in the history of the NEM, no new generation capacity is needed over the next decade to maintain supply reliability, due to the continuing decline in electricity consumption.

The ESOO estimates there may be up to 8,950 MW of surplus generation capacity in the NEM in 2014-15, with around 90% located in New South Wales, Queensland, and Victoria.

The oversupply of generation capacity in the NEM follows continuing reductions in electricity consumption driven by a decline in energy-intensive industries, including the closure of Victoria’s Point Henry aluminium smelter, and strong growth in energy efficiency savings and rooftop PV generation in Queensland and Victoria.

“The magnitude of the oversupply is such that even if we saw 10 consecutive years of consumption growth, by 2023-24 more than 4,500 MW of generation capacity could still be withdrawn from the NEM without affecting supply adequacy,” said AEMO Group Manager Planning Louis Tirpcou.”

And then Tony Abbott “axed the tax”, abandoned the bipartisan support for the RET and the solar roofs program that he took to the election, started his jihad on wind power, and told us that coal was the future.

And, in so doing, sent the NEM to hell in a handbasket.

AEMO’s 2017 Electricity Statement of Opportunities (ESOO) modelling shows reserves have reduced to the extent that there is a heightened risk of significant unserved energy (USE) over the next 10 years, compared with recent levels.  The projected USE risks increase if maximum demands are higher than forecast (for example due to higher usage and/or lower than projected uptake of energy efficiency measures or rooftop PV).  The projected USE risk decreases if the modelling assumes increased investment in renewable generation.”

Whilst the early closure of Hazelwood in March this year did have an impact, it only had a 1,600 MW capacity which, according to the market report in 2014, we should have been easily able to absorb.  The station was listed as the least carbon efficient power station in the OECD in a 2005 report by WWF Australia, making it one of the most polluting power stations in the world, and, according to its owner, no longer economic to operate.

“Engie in Australia would need to invest many hundreds of millions of dollars to ensure viable and, most importantly, continued safe operation,” said Engie Australia chief executive Alex Keiss.  “Given current and forecast market conditions, that level of investment cannot be justified.”

“The closure of Hazelwood is in line with ENGIE’s strategy to gradually end its coal activities,” the company said in a statement.  “This is laid out in the Group’s transformation plan that aims at concentrating solely on low-carbon projects for power generation, renewable energy and natural gas.”

As for energy prices, the Australian Energy Market Commission’s (AEMC) 2016 Residential Electricity Price Trends report said, over the next two years, Victorians are anticipated to receive the cheapest electricity bills and South Australia can expect decreases as more wind power comes on line.

Customers in the Northern Territory, where 90% of energy is currently supplied by natural gas, are expected to face average bills $670 higher than those paid by Victorians and $176 higher than South Australians.

In the NT, prices are set by the territory government and are “less than the cost of supply” but still second highest in the country.  One of their big problems is the very low take-up of solar energy.  Only 11 per cent of NT homes have solar cells on their roofs, probably due to the high number of renters, and the large proportion of public housing in the jurisdiction.

Last week, head of BHP’s Australian operations, Mike Henry, used an address to an Australia-Israel Chamber of Commerce lunch in Melbourne to renew its call for a Clean Energy Target.

The evidence supporting renewables is overwhelming.  As is the evidence of the positive effect that carbon pricing and a clear renewable policy had on affordability, reliability and sustainability.

Tony Abbott has been using climate and energy policy for his own cynical political opportunism for a decade and his selfish wrecking must be stopped.

But unfortunately, Paul Keating’s assessment of Malcolm Turnbull when he first put his hand up (unsuccessfully) for the party leadership in 2007 has proven astute:

“I fancy Malcolm is like the big red bunger. You light him up, there’s a bit of a fizz, but then nothing, nothing.”


12 comments

  1. Steve Laing

    There is no point looking for any logic in this debate from the LNP. It is, and always was, simply a point of differentiation from Labor. If Labor wanted a Carbon Tax, the simplest way to achieve that would be to say that they never wanted one. Quick smart the Libs would declare it their policy.

    For the Coalition it is always about politics, and never about policy (unless it can be turned into politics). They STILL have no policies, on pretty much anything.

  2. Jaquix

    Thanks Kaye Lee. Turnbulls complete inertia on energy policy is so frustrating and apart from anything else, thats going to be his legacy. Yesterdays Turnbull thunderings blaming lack of domestic gas for rising electricity prices, which he was determined to “fix” followed by lame, very lame, Im going to talk t the gas chiefs again, and if they dont …… Really and truly. Surely he cant hide behind the Barnaby Joyce is the responsible minister and any decision made in this area is like to be challenged. Cant the Prime Minister of this country over-ride a junior coalition partner Minister and make his own decision? This weeks Newspoll back to 54-46% to Labor, is well deserved. In fact it should be lower, How 46% of Australians intend to vote for this mob, is unbelievable. They cant be really listening! Not a great look when theyve been behind Labor every single Newspoll/Essential poll held since the July 2016 election. Which seems a long, long time ago.

  3. Michael

    Malcolm is dizzy because he does not realise he is in the energy barrel (of self deluded, blind, neo-con ideology designed to favour masters of concentrations of capital) looking for the renewables and Labor corners to piss in/on – when the lid gets blown off (Mal is not a quick learner, neither does he stand for us between elections) will be the time when Australia will de-abbottise itself and fly.

  4. Kaye Lee

    I sometimes wonder if the government reads its own reports. This is from the Department of Industry, Innovation and Science

    Australian Energy Update 2016 – Office of the Chief Economist

    Australian energy consumption rose by 1 per cent in 2014–15 to around 5,920 petajoules, following two years of consecutive decline. (One petajoule, or 278 gigawatt hours, is the heat energy content of about 43 000 tonnes of black coal or 29 million litres of petrol.)

    Most of the growth in energy use was for electricity generation, reflecting increased demand for electricity and a switch in the generation mix towards coal (which has a lower efficiency than renewables).

    After five years of decline, coal use rose by 3 per cent in 2014–15, although consumption is still around 20 per cent lower than its peak in 2008–09.

    Electricity generation in Australia rose by 2 per cent in 2014–15 to 252 terawatt hours (908 petajoules), following three years of decline. This reflects increased electricity demand in the National Electricity Market, and continued growth in off-grid use.

    Renewable generation fell by 7 per cent in 2014–15, comprising 14 per cent of total generation in Australia. (I bet we are the only country in the industrialised world where renewable generation fell)

    Almost all of this fall was hydro, which fell by 27 per cent reflecting lower water availability. The contribution of hydro in 2014–15 was at its lowest since the mid-2000s drought. (Doesn’t auger well for Snowy-Hydro 2.0)

    Energy exports grew by 5 per cent in 2014–15 to 13,088 petajoules. Black coal and liquefied natural gas (LNG) exports rose as additional capacity came on line.

    Australia remains a net energy exporter, with net exports equal to around two-thirds of domestic energy production.

    In 2014–15, energy productivity, as defined by the ratio of gross domestic product to energy consumption, rose by 1 per cent. Between 2000–01 and 2014–15, energy productivity rose by 28 per cent. Gross domestic product increased by 51 per cent over the same period, compared with growth in energy consumption of 18 per cent and growth in population of 23 per cent.

    https://www.industry.gov.au/Office-of-the-Chief-Economist/Publications/Documents/aes/2016-australian-energy-statistics.pdf

  5. Frank Smith

    So, Mal is going to wag his little finger at the “Gas Chiefs” again. His New Zealand mate Barnaby was on Radio National this morning bemoaning the fact that he may have to stand up for “The National Interest” whilst also denying that his National Party farming mates in NSW and Victoria protested against gas exploration and fracking in those States. This whole energy crisis can’t end well unless this useless mob of Coalition pollies get thrown out – unfortunately time is not on the Nation’s side.

    There is no doubt that the three export gas plants and terminals in Gladstone have completely destroyed Labor’s previous plans to use gas peaking electricity generation to transition the nation to a reliable, affordable and environmentally acceptable future based on renewable energy. On this topic I posted the following yesterday in another forum, but it is very relevant to the issues you raise Kaye Lee:

    “What a crazy situation Australian Governments have got us into. In response to Mal and Josh’s bullying a couple of weeks ago, AGL Chief Andy Vesey released AGL’s plans for energy security whilst phasing out the Liddell power station by 2022. That plan included a $200 million investment in a gas IMPORT terminal. Further details of those plans and the rationale behind them are included in this article from November 2016. Crazy, crazy, crazy – it is far cheaper to IMPORT gas from the Middle East, Europe, Africa or Asia than use Australian Gas. Go figure!!”

    http://www.theaustralian.com.au/business/mining-energy/agl-mulls-300m-gas-terminal-to-import-lng-as-prices-rise/news-story/53768003c4721fd23545bebbd34f3987

  6. Harquebus

    One for:

    The truth about soaring power prices: wind and solar not to blame
    http://www.abc.net.au/news/2017-09-25/the-truth-about-soaring-power-prices/8979860?section=business

    One against:

    “In a series of papers published since 2010 (e.g., a 2016 paper in Energy Policy), Patrick Moriarty and Damon Honnery of Monash University in Australia have identified several crucial factors that will limit the total global output of renewable electricity.”
    http://climateandcapitalism.com/2017/09/15/the-green-energy-cornucopia-is-100-percent-wishful-thinking/

    And I won’t mention the pollution caused nor the consumption of precious finite resources needed to build and maintain a renewable energy future. How’s that?

  7. Maeve Carney

    I personally believe that the foundation of our current energy problems is the privatisation forced on us by previous state and federal LNP governments.

  8. Frank Smith

    I think you are quite correct Maeve. And whilst privatising public assets those Governments jacked up their value at our expense and entered into agreements with the purchasers that enabed them to get the best sale price, but left us consumers footing the long-term bill. The deal done to gold-plate the poles and wires is a classic example of that. Even the ACCC acknowledges that these were bad deals for consumers. Essential services that, by their very nature, are monopolies should remain State owned. Let none of us forget that in 2013/14 Abbott and Hockey set about providing incentives for States to sell such public assets and penalise them if they did not. It all started with Kennett in Victoria and now look where we are with a “market driven” energy sector so complex that it is impossible to manage in the interests of its users.

  9. jimhaz

    Privatisation

    “The conventional wisdom has been that when three big exporters opened six big liquification plants at Gladstone in Queensland and locked themselves into long-term supply contracts with Japan that they couldn’t fulfil they had to commandeer gas that the rest of us would have used.

    That did happen, but it’s not the main reason we’re about to run short of gas. It’s that the exporters also shipped a lot of extra gas overseas, in addition to the gas they were contractually obliged to export.”

    http://www.smh.com.au/business/energy/gas/no-easy-answers-as-the-worlds-second-biggest-gas-exporter-prepares-to-run-short-20170925-gyo70s.html

    In other words it was 100% avoidable

    The Gas companies and politicians have no excuses – but this sort of play always happens when you privatise as privatisation comes with massive deregulation to enable price gouging.

  10. Michael

    I wonder what the ROD (Return on Donations) ROL (Return on Lobbying) are – we are at the bottom of the ladder and are being played again.

  11. iggy648

    One of the comments from Harquebus’ against paper: “Jacobson et al. (2017) indicate, by 2050 target date, the land footprint plus spacing area required (in addition to existing installations as of 2015) is 1.2% of these 139 countries’ land area, with most devoted to onshore wind power. This system would generate 11.84 trillion watts of end use power. Global consumption would likely need about twice this level to meet the full challenges of energy poverty and additional energy for climate mitigation and adaptation. This area is less than that of ecosystems already degraded by the fossil fuel and nuclear power industries, prime targets for restoration in a 100% renewable energy transition. More on solar power: if 15 percent of present world rooftop area were to be used to site photovoltaics with an assumed conversion efficiency of 20%, the current global electricity power capacity would be created. (This calculation assumes a conservative solar radiation flux corresponding to the United Kingdom and an estimate of global rooftop area of 3.8 × 1011 m2 from Akbari et al., 2009). The photovoltaic industry is already taking seriously the challenge of creating terawatt scale infrastructure (Weber et al., 2017). In the real world we face climate catastrophe from the burning of fossil fuels. Cited: Akbari, H., et al. (2009). Global Cooling: Increasing World-wide Urban Albedos to Offset CO2, Climatic Change, 94, 275-286; Weber, G.W., et al. (2017). Terawatt-scale photovoltaics: Trajectories and challenges, Science, 356, 141-143.

    That is 3.8 x 10 to the 11th power square meters.”

    Rooftop solar is going to be most important.

  12. Johno

    @Steve Laing.. Perfect sum up.

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