Bob Carr was at pains to point out last week that he hadn’t run out of energy. He might have just been quitting before his state does.

The NSW government is due to deliver a white paper on energy any week. It will need to tackle a serious tightening of the NSW electricity supply – soon. Present peak demand growth in NSW requires an increase of about 350 megawatts a year.

Around 90% of the state’s power comes from coal. It provides some of the cheapest energy in the world for local business, which consumes two-thirds of the power in the state. NSW will export more than 80 million tonnes of coal this year, bringing in around $5 billion in exports.

Energy supply in Australia – particularly the eastern seaboard – is a national issue. The National Energy Market and capacity to transfer power between states means taking a unique state-based approach to energy supply is like building different gauge rail lines all over again.

The Commonwealth, Victorian and Queensland governments have all recognised the need to invest in “clean coal” technologies to supply affordable energy while dealing with greenhouse gas emissions. This investment has not precluded investment in renewable energy and demand management, talking about nuclear power or using gas-fired power in peak load times.

Coal does produce greenhouse gasses. It also has produced cheap, abundant energy that has driven the NSW economy – and the nation. Ironically, it’s this economic strength that will let governments develop solutions to future energy and environmental challenges. Slowing the economy with higher energy costs will only slow our ability to solve these problems.

All of which makes the demonisation of coal that occurred under Bob Carr very dangerous, politically and economically.

The NSW ALP relies increasingly heavily on Green preferences – hence Carr’s “no new coal-fired power stations” position. Punters, however, want cheap power – and the work and wealth it provides.

Premier Iemma has a number of significant infrastructure issues he’ll have to turn his mind to between now and the 2007 state elections. This must be the most delicate of them all.

The “no new coal-fired power stations” line is simply symbolic. It will do little to genuinely address greenhouse gas emissions, given the scale of ongoing coal power in NSW and the state’s role as an exporter of coal to the rest of the world.

It risks unnecessarily raised energy costs in NSW with an obvious flow-on to the state economy.

It transfers income and greenhouse gas emissions to Queensland while creating political theatre in NSW about “getting tough on coal” that risks further demonisation of coal power and coal mining, along with long term trade balance and further economic consequences.

It does, however, help short term politics, as the negative consequences will mostly be felt after 2008 – once the election is out of the way. But will Premier Iemma want to mark his new job with short term agendas?

Renewables simply cannot meet all of NSW’s energy needs. There needs to be a role for coal.

Bob Carr portrayed himself as an environmentally friendly premier. He specifically mentioned his achievements in the field in his resignation press conference.

There’s a difference, however, between following environmentally friendly policies and letting yourself be run ragged by the Greens.

If NSW Labor concedes over coal it will not only sell out a blue collar constituency. It will damage the entire state and the nation and the Greens will only move the goalposts to the next campaign issue – then the next and the next.

Despite the preferences, Iemma may discover it’s a very dangerous way of running a state government.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey