While everyone has assumed the Prime Minister wants to get a Clean Energy Target through his partyroom, what if his goal is actually to demonise Labor instead?
Earlier this week, I wondered if the government’s recent strange behaviour presaged that, no matter how much Labor offered to compromise on energy and climate policy, the government will never agree to bipartisanship.
After all, Malcolm Turnbull had decided to use reports from the Australian Energy Market Operator to demand that the Liddell coal-fired power station be kept open, even though those reports explicitly and clearly showed that the risk of unserved power demand in NSW — following this long-forecast closure of Liddell — would be kept to a negligible level if there were greater investment in renewable power. The owner of Liddell, AGL, was repeatedly verballed by the Prime Minister and others and then, when it objected to being lied about, attacked by the government and by News Corp, which in league with the government has now begun one of its periodic culture wars against the company. And it’s a campaign that uses the sort of language that if Labor used it about major corporate players would be condemned with froth-mouthed fury as “class warfare” by the Coalition and the Murdoch press. Now, hilariously, the Coalition and The Australian have combined to demand that Labor “state its position” on Liddell, which will remain operational for another five years.
Since energy policy is one of the few areas where, at least in the government’s own eyes, it has an edge over Labor, Malcolm Turnbull seems to have made a decision that he wants to keep the issue running for as long as possible in order to damage Labor. Concluding a bipartisan agreement on a Clean Energy Target that allows high-efficiency, coal-fired power to be built (which it never will be) would remove, at a stroke, the government’s capacity to paint Labor as the party of higher power prices, because both sides would support the same policy framework.
Most of the media coverage of the debate over a Clean Energy Target has centred on whether Turnbull can get a CET through his party room. But what if he doesn’t want to? What it he wants to keep using the issue to attack Labor instead, even if it means continuing uncertainty for investors and a continuation of the same shambolic energy market situation as now? Political survival is the first order for any government — longer-term issues such as the closure of ageing coal-fired power plants can be dealt with after the next election is won.
It’s thus interesting that, today, Fairfax reported that Coalition backbenchers were now demanding not merely a CET that allowed coal, but some kind of “baseload investment scheme” that would fund coal-fired power as well.
This would be a significant movement of the goalposts by the Coalition: no longer would a “dirty” CET be required, but taxpayers would be required to waste billions on coal-fired power plants as well — the only thing that will ensure a coal-fired power plant is ever built in Australia ever again. Labor is unlikely to come at wasting money like that.
Remember that Labor has moved a long way on this — it rather courageously took a policy for two carbon pricing schemes to the last election (one for electricity, and a wider one). It then considered an emissions intensity scheme, which had strong business support. Then it shifted to endorse a Clean Energy Target following the Finkel Review. More recently, it has left the door open to CET that allowed coal-fired power, acknowledging that it might be necessary in order to accommodate Turnbull’s problems with his party room and a bipartisan policy is crucial to get energy infrastructure investment going again.
Along the way, Labor has copped abuse both from the Greens, who insist it is selling out the planet, and the government, which insists it is being ideological.
But it may well be that any offer of compromise by Labor is met by the Coalition simply moving the goalposts ever closer to coal-fired power, with the goal of portraying Labor as committed to plunging the entire country into darkness. After this week, it may well be the case that that is exactly what Turnbull wants to do. And the consumers and businesses of the 2020s be damned.
Aug 31, 2017
It's time for compromise on a Clean Energy Target -- set it to allow for coal, and wait for investors to show up to build new coal-fired power plants. The catch is, it's unlikely any will.
Australia isn’t the only country where coal-fired power stations are shutting down, investors are reluctant to build new ones and there are concerns about the stability of the power grid as renewables dramatically expand. The United States has a similar problem. Only, for the Americans, the shutdown of coal-fired power has been driven not by regulatory uncertainty about climate action but by the surge in shale gas production, the availability of gas-fired power plants and the failure of energy demand to resume its healthy pre-financial crisis growth.
But the current presence of a self-proclaimed saviour of coal in the Oval Office has done nothing to change the investment environment for coal-fired power. Total new projects for coal-fired power are a fraction of the capacity that’s been shut down in the last five years, and some of those projects are on hold. As one investment analyst told Scientific American, “environmental risk might not be a risk for four years, obviously referring to the presidential administration, or eight years. But when you’re building 30- to 50-year-type assets they’re certainly a high risk for carbon.”
Investors in Australian infrastructure plainly share that reservation about coal. Denialism and obstruction of climate action won’t hold sway forever. They might not even hold sway beyond late next year.
Perversely, however, that opens a window for a resolution of the climate wars. Following Labor’s shift to accept the second-rate solution of a Clean Energy Target (a carbon pricing scheme will deliver the most efficient carbon abatement, with least cost to consumers and taxpayers, but Malcolm Turnbull is too weak to deliver it), the main difference between the major parties now is whether a Clean Energy Target threshold is set at a level that excludes any coal-fired power, even much-hyped ultra-supercritical generators — say at 700 tonnes of carbon per megawatt hour — or higher, enough to allow new generation coal-fired power, say 800 tonnes.
The Finkel Review argued that the threshold be driven by Australia’s emissions abatement target — which currently is an unambitious 26-28% of 2005 levels by 2030. The political reality is that it will be driven by what Malcolm Turnbull can get through his restive partyroom. And a CET with a threshold at 800 or 830 tonnes, that notionally gave the hilariously misnamed “clean coal” technology a chance, would be much more likely to get through the partyroom even with denialists and Luddites like Abbott and Abetz raising hell.
Problem is, would Labor support it? Here’s a suggestion: Labor should back a higher target. Yes, the opposition has already compromised. No, it doesn’t owe Malcolm Turnbull anything. Yes, further compromise isn’t consistent with the bleak reality that we need to do a whole lot more than we’re doing to prevent catastrophic climate change.
But the trade-off would be no public funding for new coal-fired power. Coal would have to stand or fall on its merits. Coal spruikers insist that coal has a big role to play in our energy future. Well, let’s see if investors agree. Let the market decide if coal can play any role other than as a burdensome and toxic legacy.
It’s highly unlikely any investor will put their hand up. The maths simply won’t add up — partly because even under a high-threshold CET, coal-fired power isn’t very attractive, partly because it will take so long to build a new plant, which is likely to be beset by delays, cost blowouts and regulatory problems, and partly because investors know that a new plant may well be a stranded asset as soon as 2030, let alone by 2050.
It would be a win for Turnbull, which the opposition might want to resist, but Labor should reflect on the last time they played hardball with Turnbull on climate action, in 2009: it resulted in the removal of Turnbull, whose measure Kevin Rudd easily had, and his replacement by Tony Abbott, who proved anything but the easybeat Labor assumed he was. Labor thinks it has Turnbull’s measure again. Does it want to see him replaced by another figure — not Abbott, maybe not even Peter Dutton, but who might prove the kind of surprise Tony Abbott did?
Turnbull can tell the denialists and coal obsessives in his ranks that he’s paved the way for coal to play a role in our energy future. And he can do so knowing that few investors are likely to want to facilitate that role, but that they have a clear understanding of the rules of the energy game going forward, enabling them to invest with certainty — in renewables, in batteries, perhaps in gas if we can sort out that debacle.
It’s a compromise, but a rhetorical one only. Coal is dying.
Jun 15, 2017
Malcolm Turnbull is almost certainly going to lose the next election, thanks to Tony Abbott's constant sniping and undermining. So he might as well go down fighting -- and what better cause than saving the Earth?
It’s all over but the shouting — Tony Abbott has signed the government’s death warrant by creating disunity within the Coalition over the Finkel review. For as the battle-scarred Labor opposition is so fond of saying: we’ve seen this movie before, and there’s nothing to suggest it will end any differently this time.
Abbott knows the old maxim “disunity is death” is more than a glib three-word slogan — it’s an undeniable political reality.
But once again, a petulant and embittered former leader has judged his revenge is more important than the interests of the party to which he pledged fealty and the nation he swore to serve. And on polling day, voters will again express their disdain — not only for the perpetrator but the subject of his vengeance — by tossing out another “chaotic” government because it can’t keep its house in order.
The Coalition’s debate over the Finkel review appears to be about electricity prices, but it’s really about killing off Turnbull’s attempt to redeem himself with voters through an integrated energy and emissions policy. Just as Abbott did with Julia Gillard’s emissions reduction policy, the former PM is trying to provoke voter (and backbench) anxiety about Finkel’s Clean Energy Target by claiming it will increase the cost of living.
Turnbull and his team did their best to inoculate the report from such attacks. Energy Minister Josh Frydenberg spoke personally to the government MPs most likely to have concerns, against a backdrop of public support for a Clean Energy Target being expressed by energy sector and other business leaders through the media.
The minister delivered a detailed briefing on the report to his colleagues at the joint party room meeting on Tuesday, and he made Chief Scientist Alan Finkel available for a lengthy Q&A session after that. Then at a second meeting that day, every government MP was given the opportunity to express their views.
This was a worthy (if not somewhat masochistic) and seemingly genuine attempt by the PM and his Energy Minister to give everyone a say before preparing the government’s response to the Finkel report.
But Abbott’s interventions have made it almost impossible for that response to meet both the original objective of the exercise — making low-emissions energy affordable and reliable — and a new set of objectives that Abbott claims should be the priority. These are to lower energy prices, continue the use of coal-fired power, and have a strong manufacturing sector.
According to Abbott, the “problem’ with the Finkel report is that it’s “all about reducing emissions” when Australia’s Paris commitments are merely an aspiration, and while “it’s nice to reduce emissions” we shouldn’t do so if it’s going to “clobber power prices, hurt households and cost jobs”.
In a departure from his earlier tendency to backflip every time Abbott complained, Turnbull has notably pushed back against his predecessor on the Finkel taunts. The PM observed that “glib answers and one-liners” had not helped to keep Australian energy affordable and secure, that “glib leadership” was responsible for increased energy prices and decreased energy security, and that Australians needed “wise leadership, not glib leadership”.
According to Turnbull, there’s been “too much politics, too much ideology, not enough economics, [and] not enough engineering” in the discussion of Australia’s energy future. “My commitment is to ensure that Australians have affordable, reliable energy, and that we meet our commitments, our international commitments to cut our emissions.”
Interestingly, Abbott’s strategy is based on an outdated belief that voters are open to the argument that low-emissions energy causes high energy costs. At the very least, voters in the 2 million Australian households that generate clean and cheap electricity from their rooftops will be resistant to Abbott’s ploy. Many of those households contain Liberal voters.
And judging by the fact that Abbott could muster only a dozen Liberals to speak against the Finkel report (the rest were Nationals, who don’t have a vote for the Liberal leadership), it’s fair to say he doesn’t have anywhere near the numbers for a spill.
However, the broader community of Australian voters, who are barely watching federal politics this far out from an election, will register only that Turnbull is still squabbling with Abbott and the government is still wracked with division when it should be focused on serving the nation. Barring a very public –and genuine — rapprochement between the two men, this is the perception that will endure until polling day.
It’s tempting to wish the PM would find a way to spare himself — and us — from the months of soul-destroying civil war that lie before us, in what are undeniably the dying days of the Turnbull Coalition government. The PM could do us all a favour by dropping in to Bill Shorten’s office, conceding the match and handing over the keys to Lodge, before visiting the Governor-General to deliver his letter of resignation.
Of course, that won’t happen. No matter how this plays out, Turnbull can’t avoid the ignominy of defeat, and we voters won’t be spared from witnessing the ordeal.
However, there is a way that Malcolm Turnbull can emerge from the conflagration that is yet to come with what little remains of his integrity. Given he has little else to lose, the PM could fight to the death on the Finkel reforms, developing a credible energy and emissions policy and using his authority to gain cabinet endorsement, even if unanimous support from the joint party room is unattainable.
Yes, that would inevitably lead to usual Liberal and National insurgents crossing the floor to vote against any such “greenish” policy. But with Labor’s support in both houses of Parliament, the Finkel reforms would still prevail. This bipartisan signal would give the energy industry the certainty it desperately needs to make the investments that will bring electricity prices — and emissions — down.
Jun 14, 2017
Good morning, early birds. Almost two dozen coal-loving MPs are threatening the PM over the Clean Energy Target, and it might be time to switch off Channel Ten. It's the news you need to know, by Cassidy Knowlton and Max Chalmers.
Tony Abbott and almost two dozen other Liberal and National MPs have rounded on Prime Minister Malcolm Turnbull over the proposed Clean Energy Target, which they say would drive up power prices and hurt the coal industry. At least 22 Coalition members confronted the PM in a tense, three-hour joint party room meeting, demanding that he rule out any changes to Australia’s energy policy that would hurt coal and gas power. It’s a reaction to Chief Scientist Alan Finkel‘s report, released last week, which recommends forcing electricity companies to sell a portion of their power from renewable sources, such as wind and solar. Coal-loving MPs including Victorian MP Kevin Andrews, Western Australians Rick Wilson, Andrew Hastie, Chris Back and Ben Morton, South Australian Tony Pasin and Nationals Ken O’Dowd, Bridget McKenzie, Mark Coulton, Andrew Broad, George Christensen and Andrew Gee want the PM to promise not to implement the report’s recommendations, which Abbott described as “effectively, a tax on coal”.
Abbott was the most vocal in his opposition to the target, according to The Australian. Why might that be? An anonymous MP in the room told Fairfax: “Malcolm could lose his leadership over this if he doesn’t listen to us.”
CHINESE DONATIONS FALLOUT
The Labor Party received a donation of “at least $120,000” and “up to $140,000” from “gold dealers linked to a multimillion-dollar tax scam” during the 2016 federal election, it has been revealed. The donations were made by four companies with links to Labor adviser and 2016 Senate candidate Simon Zhou, who has been named by the Administrative Appeals Tribunal as being connected to a company that now owes the Australian Taxation Office $20 million in unpaid taxes and penalties after a $143 million gold-trading scandal. Zhou has resigned from the ALP, and yesterday Joint Parliamentary Intelligence Committee chairman and Labor member Anthony Byrne called for a parliamentary inquiry into foreign interference and donations. “This has to be done, even if it involves our own side,” Byrne said.
The Coalition is making hay of the ABC-Fairfax investigation into Chinese donations and influence-seeking, which has mostly targeted the Labor side. Foreign Minister Julie Bishop brought up the issue of Sam Dastyari‘s links to the Chinese in Parliament yesterday: “We now know that Senator Dastyari’s about-face on the South China Sea had a price tag attached to it, indeed a reported $400,000 was all it took for Senator Dastyari to trash Labor’s official foreign policy position.”
DON’T TOUCH THAT DIAL
The board of the embattled Ten Network is expected to put the broadcaster into administration, possibly as early as today, after billionaire shareholders Lachlan Murdoch, Bruce Gordon and James Packer refused to guarantee another $250 million loan. The board will meet today to discuss its options.
WHAT’S ON TODAY
Melbourne: A hearing is scheduled for the class action lawsuit brought by current and former Manus Island detainees. Most expect the government to settle rather than proceed to trial, and experts say the Australian government could have to pay compensation to almost 2000 detainees for mistreatment.
Melbourne: A man will face court today charged with supplying the firearm used in last Monday’s terror attack in Brighton.
Perth: A court will hear a legal dispute between Clive Palmer‘s private company Mineralogy and its Chinese partner CITIC over royalty payments for iron ore produced at the multibillion-dollar Sino Iron project in the Pilbara.
Brisbane: Former AFP Commissioner Mick Palmer and former director-general of Queensland Corrective Services Keith Hamburger will hold a media conference on “Australia’s failed drugs policy”.
Dili: Labor foreign affairs spokeswoman Penny Wong will meet East Timorese President Francisco “Lu-Olo” Guterres, Prime Minister Dr Rui Maria de Araujo and senior ministers on day one of her two-day trip to the country. The visit is hoped to smooth relations that have been strained by the ongoing maritime boundary dispute. The dispute centres on which country is entitled to the $50 billion oil and gas reserve in the Timor Sea.
Rethink on Finkel review vital if Coalition is to survive — Dennis Shanahan (The Australian $): “Despite his rhetoric, his chastising of Bill Shorten and ridicule of Labor, Malcolm Turnbull has failed to convince much of his backbench that he’s not being seduced by the Labor lure of cutting emissions ahead of lower power costs.”
Finkel road map takes scenic route to cutting carbon — Richard Denniss (Australian Financial Review $): “A well-designed CET could be a policy breakthrough, but a badly designed one could lock in over-investment in fossil fuels; increase prices; harm long reliability and lead to higher emissions.”
Ten Network situation overrun with conflicts — Tony Boyd (Australian Financial Review $): “It would be a miracle if the business does not go into voluntary administration on Wednesday. Directors will have little choice given the combination of bank debt, poor cash flow and onerous programming agreements.”
TODAY IN TRUMP
Donald Trump’s Attorney-General has had his turn before a Senate Committee looking into allegations of collusion between the Trump campaign and Russian agents. Jeff Sessions hit out at allegations that he was involved in any such collusion as an “appalling and detestable lie”.
In his testimony, Sessions frustrated Democrats on the panel who accused him of “stonewalling” as he declined to recount details of his conversations with Trump. The hearing is ongoing. — The Washington Post
The European Union has initiated legal action against Hungry, Poland, and the Czech Republic for refusing to resettle refugees that arrived in Italy and Greece. The countries have refused to take refugees, citing security concerns and issues with the allocation process. Of the 160,00 people in need of assistance, just 21,000 have so far been resettled to date. — Reuters
Uber CEO and co-founder Travis Kalanick has stepped aside indefinitely. Kalanick said he needed time to grieve the sudden death of his mother, but the move comes as the company starts to respond to an internal investigation by former attorney-general Eric Holder, spurred by allegations of a poor internal culture and sexism. — CNN
WHAT WE’RE READING
The long, lonely road of Chelsea Manning (The New York Times Magazine): “To an extraordinary extent, she had a more comprehensive view of America’s role in Iraq than the infantry in the field did — often, literally, a sky-level view — and as October ground into November, she found herself increasingly dismayed by a lack of public awareness about what seemed to be a futile, ceaselessly bloody war. “At a certain point,” she told me, “I stopped seeing records and started seeing people”: bloody American soldiers, bullet-ridden Iraqi civilians.”
Oliver Stone on Vladimir Putin: ‘The Russian people have never been better off’ (The Guardian): “Putin and Stone are a classic odd couple. The messy, craggy, ursine Hollywood wildman and the pantherine, inscrutable politician. It isn’t David Frost v Richard Nixon, oil v grease, but more The Jungle Book’s Baloo and Shere Khan transported to the Kremlin.”
A number of reasons I’ve been depressed lately (The Paris Review): “I talk to a longtime friend of the family who tells me with great authority that Hillary Clinton is a member of the Illuminati and that she and her husband have killed scores of people, including children, who they also sexually molested.”
Why the US needs its own BBC (GQ): “One thing Americans ought to realise in the wake of Trump is that, with respect to media, the free market cannot be the answer to everything. Americans are right to treasure the First Amendment. But the constitutional provision for a marketplace of ideas does not ensure that this marketplace will be of high quality, or provide citizens with the knowledge necessary to function as members of a democratic society. In this sense, America needs a BBC.”
HOLD THE FRONT PAGE
Declaring that “there is no going back from the massive industrial, technological and economic changes facing our electricity system,” the review of Australia’s electricity market led by Chief Scientist Alan Finkel has, as expected, recommended a Clean Energy Target as the primary mechanism for establishing a reliable and secure energy sector.
The review, released this afternoon, puts forward a significantly different regulatory framework for the electricity market composed of:
- A Clean Energy Target to commence after 2020, based on an agreed emissions reduction trajectory out to 2050. A CET will produce better price outcomes than an emissions intensity scheme, the report says — and both will produce better price outcomes than the status quo.
- “A requirement for all large generators to provide at least three years’ notice prior to closure.”
- A “Generator Reliability Obligation” that will require new generators to guarantee that “adequate dispatchable capacity is present in each region” — which will require new renewable generation facilities to have on-demand back-up or storage facilities.
- Curbs on the ability of power companies to appeal regulator pricing decisions, which are currently being stalled by some states.
- A suite of “Energy Security Obligations,” including requiring transmission companies to provide “a sufficient level of inertia for each region or sub-region, including a portion that could be substituted by fast frequency response services”.
- Better coordination and preparation for recovery after major blackouts, more rigorous governance and a significantly stronger Australian Energy Market Operator that would be involved in better planning of the network and information collection on reliability and security.
The review makes clear that the fantasy of climate denialists that coal continues to play a major role in the future of Australian energy simply won’t happen. “Australia’s coal fleet is old and coming towards the end of its design life. Investors have signalled that they are unlikely to invest in new coal-fired generation,” it says. Its modelling concludes that for both residential consumers and industry, a Clean Energy Target — which would operate like the current Renewable Energy Target, but be extended to any generation technology below an identified emissions intensity threshold, will produce lower prices than an Emissions Intensity Scheme or if the current “business as usual” scenario continues.
However, the review doesn’t recommend a preferred emissions threshold for a Clean Energy Target, saying this is a role for government. Coal industry rentseekers and their lobbyists, like the Minerals Council of Australia, will be pushing for a high threshold in order to ensure that current coal generation technology could be included as “clean,” defeating the intention of what the Review says should be an “orderly transition” to a zero-emissions energy sector by 2070.
The review also joins the chorus of demands for significantly greater transparency in the badly corrupted gas market, saying: “AEMO should have better oversight of gas supply contracts for gas-fired generators … Gas industry performance data should be transparent, clear and accessible.”