With its pending decision to build a new, wholly unnecessary fossil fuel electricity generation plant in the Hunter Valley, the Morrison government will turn its back on 30 years of economic history and re-embrace a role for the state in power generation — something anathema to the Coalition at state and federal level for decades. In spending — sorry, “investing” — taxpayer money in an emissions-intensive gas-fired plant, the Morrison government will be a modern-dress version of a state government of the 1970s.
Scott Morrison and Angus “insert name of scandal here” Taylor’s threat to intervene in the NSW power market and build their own gas plant may well have scared off private investors who might have invested in new capacity — another chapter in this government’s increasingly long history of deterring private investment. It also illustrates a trend around the world: fossil fuel generation is simply commercially unviable now.
The International Energy Agency — a body closely allied to the interests of global energy companies — demonstrated this in a simple chart last year. Compared to 2015, in 2019 state ownership of energy fell significantly around the world: from 40% to 36% in four years across all sectors, but by proportionately more in renewables where it was already low (18% to 14%), while in more monopoly-prone electricity networks, state ownership fell from 63% to 55% and from 44% to 41% in supply of gas and oil.
But in fossil fuel generation, the role of the state rose: from 43% to 50%. Increasingly, the only people who want to have anything to do with fossil fuel generation are politicians.
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Even indirect state ownership is becoming problematic: the right-wing Polish government plans to take coal-fired power plants out of existing state-owned power companies and hold them itself — a kind of decorporatisation — because those state-owned companies struggle to attract lending from fossil fuel-wary investors and financial institutions. Fossil fuel power generation taints anything financially connected to it — an apt metaphor for the deadly pollution coal plants inflict on local communities.
The trend also means it’s taxpayers, not investors, who are on the hook for uncommercial fossil fuel generation investment. And it will be taxpayers who pay for Morrison’s fossil fuel folly in the Hunter Valley — now and in the years ahead, when its non-viability becomes too much of a burden for a future government.