Shooting for Turnbull on energy policy, Abbott and Credlin's latest misfire only alienates them further from their own voters.
For two people who claim to be in touch with “the base”, it’s astounding how out of touch Tony Abbott and Peta Credlin are. In their blind determination to blast Malcolm Turnbull from the prime ministership using whatever issue or policy best does the job, the two have missed the fatal flaw in the latest stanza of their Kill Malcolm campaign, which involves the demonisation of renewable energy.
In an “exclusive” interview last night with one Murdoch media outlet, and comments today in another, Abbott has sought to escalate tensions with Turnbull over renewables by calling for the proposed Clean Energy Target to be dropped. Abbott also reportedly threatened to cross the floor against any government attempt to legislate a CET.
As much as Abbott claims his position is about reliable electricity and the need to establish product differentiation with Labor, his anti-renewables campaign is all too obviously about the Liberal leadership.
Until now, every issue thrown in Turnbull’s way by Abbott and his enablers — in order to bring on a leadership crisis — has been avoided by the embattled Prime Minister. Instead of resisting the demands of Abbott’s far-right supporters, Turnbull has accommodated almost every one of them. He agreed to water down section 18C of the Racial Discrimination Act (although the Senate blocked the changes), ended funding for Safe Schools, and persisted with a plebiscite on marriage equality.
Turnbull and his Energy Minister Josh Frydenberg also initially appeared to back down under pressure from Abbott’s camp on a clean energy target mooted to replace the renewable energy target in 2020. However the concept is being considered again after it was revived by the chief scientist, Dr Alan Finkel, in his report to the government on the future security of the national electricity market.
If implemented, Finkel’s CET recommendation would fill the policy vacuum created by Abbott when he scrapped the carbon tax and created a lopsided market that only provided policy certainty to renewable energy providers. It’s no coincidence that not one coal-fired power station has been built since then.
Having created the policy settings that brought on the current “energy crisis”, Abbott is now trying to frame the best solution to the problem as yet another test of Malcolm Turnbull’s leadership — rather than an indictment of Abbott’s own.
The problem for Abbott and co. is that voters, especially those in some of the Coalition’s most marginal seats, love renewable energy — not necessarily for environmental reasons, but economic ones. And, for this reason, they are likely to have a dim view of Abbott’s anti-renewables stance.
These voters reside in the 1.7 million households with rooftop solar. To them, renewable energy means economic freedom — from the electricity bills that break the budget, and from the energy companies who gouge their customers. When Tony Abbott rails against renewables for causing blackouts or high power bills, these voters compare their reality with his rhetoric. And they know he’s talking through his hat.
This of course has political implications. Of the 20 Australian postcode areas with the highest number of rooftop solar installations (from 5900 rooftop solar units per postcode to almost 12,000), 13 are in Queensland. The postcodes cover two Coalition marginal seats and another 4-5 seats that would be at risk to One Nation.
Other data has shown that around 40% of rooftop solar installations occurred in rural and regional Australia, and that low-income households including older Australians feature heavily as adopters of the technology.
This explains the high number of Coalition voters that support renewables in the opinion polls. According to an Essential Poll in June, 57% of Coalition voters preferred more investment in renewables to meet Australia’s future energy needs compared with 26% who preferred more coal-fired electricity.
Another poll by the same organisation found in February that 58% of Coalition voters thought renewables were the solution to our energy needs, while 20% saw them as a threat to future energy supply. That’s an improvement on the same question four months earlier, when 52% of Coalition supporters saw renewables as a solution and 25% as a threat.
Even more interestingly, according to Essential, a majority of Coalition voters also support Labor’s 50% renewable target, with 48% approving in October last year, and 55% in February this year.
This would suggest that on the issue of renewables, Abbott and Credlin’s political antennae have yet again failed them. Even if Abbott argued that renewables are OK as long as the “subsidies” are scrapped, this would go down like a lead balloon with the 1.7 million households currently benefiting from small-scale certificates under the RET.
If Tony “Let’s Give the Prince a Knighthood” Abbott and Peta “Needs More Flags” Credlin really were in touch with the Liberal base, they’d know that renewable energy is a strength for Turnbull (and the Coalition) instead of a weakness.
This probably explains why Essential has also found the proportion of Coalition voters who want Abbott to resign from parliament has grown from 18% in August last year, to 31% in April this year and then 35% this July.
Jun 8, 2017
Crikey Worm: Spy agencies in spotlight after Brighton terror, LET gains support — just not from Abbott
Brighton killer blocked from deradicalisation program, all signs point to an LET, and ATO chasing Chevron for $1 billion. It's the news you need to know, by Josh Taylor and Max Chalmers.
BRIGHTON FALLOUT CONTINUES
On day three of the reaction to the Brighton terror incident, the focus has shifted to what the security and law enforcement agencies were doing in the lead up to the attack. The Age reports that the man who killed serviced apartments clerk Kai Hao on Monday, Yacqub Khayre, was recommended to be involved in deradicalisation programs in 2011, but this was rejected by law enforcement agencies. The AFP has denied this, stating it is a matter for the states. The Australian also reports this morning that ASIO had lost track of Khayre, and had to ask the Victorian parole board for his mobile number in May. It could be something to do with ASIO’s workload, which is at more than 400 cases at the moment (The Daily Telegraph has claimed this story as an exclusive, but Attorney-General George Brandis dropped the figure in an interview with 2GB yesterday).
The Daily Telegraph also reports that the NSW Government will today announce that 100 police officers in the riot squad in Sydney will be armed with M4 Colt Carbine weapons as part of the government’s first response to the Lindt cafe siege inquiry.
NSW Attorney-General Mark Speakman has also come out and suggested that Prime Minister Malcolm Turnbull‘s idea that the federal attorney-general should have the final say on parole would be “dangerous”.
LET IT GO, LET IT GO
After a decade of war between the political parties over climate change, there are signs that there might be peace in our time. Maybe. Ahead of the release of the Finkel Report on the energy sector on Friday, Bluescope Steel CEO Paul O’Malley has told The Australian that the steel giant backs a Low Emissions Target, and follows opposition leader Bill Shorten signalling that Labor would be open to the idea of a well-constructed LET. But, like clockwork, former prime minister Tony Abbott has signaled he may be opposed to an LET, now that it looks like it might actually resolve the divisive political issue.
“The Liberal Party has got to be the party of cheap power, let Labor be the party of expensive power,” he said. Energy businesses want certainty on policy for investment, but it seems unlikely they’re about to get it if Abbott is planning to lead a backbench revolt.
There is also expected to be new rules for renewable energy projects like solar and wind farms, to require them to have storage or back-up energy supplies in the event that there isn’t enough being generated to support the network.
INDIGENOUS AUSTRALIANS VICTIMS OF ANTI-ADANI CAMPAIGN
Indigenous academic Marcia Langton has used the annual mining industry lecture in Melbourne to state that the Greens and environment groups have delayed the passage of native title reforms in parliament in order to use the current state of the laws in their campaign against the Adani coal mine. Langton says the green groups are presenting “small handful” of Indigenous activists as representing the whole, and often rely on flimsy evidence in their opposition to the project. It wasn’t just the Greens that have delayed the passage of the legislation. The government attempted to bring on the legislation for debate in the senate before the budget estimates period last month and extend the sitting until it was passed, but there were no negotiations with Labor before it made this move, so the vote to extend the sitting never got up. It will return to parliament next week.
ATO WANTS $1 BILLION FROM CHEVRON
Fairfax reports today that due to the interest associated with the $340 million transfer pricing case Chevron lost against the Australian Taxation Office in April, the ATO is claiming Chevron owes the Australian taxpayers over $1 billion in back taxes with interest.
READ ALL ABOUT IT
Rushed changes to 457 visa laws are unlawful, say senior migration lawyers.
Man involved in car fire at Australian Christian Lobby HQ pleads not guilty due to mental impairment.
Bernardi calls for ABC to ditch Al Jazeera.
Housing prices the biggest threat to the economy.
WHAT’S ON FOR TODAY
Sydney: Directions hearing for Adam Cranston, the son of deputy ATO Commissioner Michael Cranston over the $165 million tax fraud case.
Sydney: Deputy Labor Leader Tanya Plibersek to speak at Gerard Henderson‘s Sydney Institute this evening.
Canberra: Hearing for the parliamentary inquiry into research for cancers with low survival rates.
Melbourne: Rebel Wilson defamation trial continues.
St George: One Nation leader Pauline Hanson is at the Isolated Children’s Parents conference in Queensland.
Time fascists were victims instead — Andrew Bolt (Herald Sun $): “I hit the head of one so hard that my knuckles are still tender, and when he was down, legs sprawled apart, I kicked.”
Uluru proposals deserve better than a knee-jerk reaction — Fred Chany (The Age): “Is giving people a chance to be heard so radical? Surely it is a conservative position to want Parliament to look and listen before it makes yet another legislative leap?”
We have word for it: opportunity — Niki Savva (The Australian $): “Malcolm Turnbull will decide [on a reshuffle], but after the Islamist attacks in Manchester, before even London and Brighton, the mood was hardening against delay, with momentum building for action sooner rather than later.”
TODAY IN TRUMP
Former FBI chief James Comey has released a lengthy statement ahead of his highly anticipated testimony before Congress tomorrow. Comey alleges that President Donald Trump demanded his loyalty at one point, and in another meeting asked aides to leave before imploring Comey to drop an investigation into his former National Security advisor Michael Flynn. “I hope you can see your way clear to letting this go,” Trump allegedly said.
Trump also asked Comey to help lift “the cloud” of the FBI’s probe into his presidential campaign. Uncomfortable being left alone with the President, Comey recorded the interactions in a series of memos.
Trump has also announced his new pick for FBI director, unveiling Christopher Wray, a Bush-era Justice Department official who represented Chris Christie as he was investigated over the “Bridgegate” scandal.
Twin attacks in the Iranian capital Tehran have left 12 dead after suicide bombers and gunmen struck both the parliament and the Mausoleum of Ayatollah Khomeini. The powerful Iranian Revolutionary Guards blamed Saudi Arabia for the attack, while the Islamic State claimed responsibility. Such attacks are rare in Iran, and the incident is likely to empower hardliners in the country, to the detriment of recently re-elected President Hassan Rouhani. — Reuters
Iraqi Kurds will hold an independence referendum on September 25. Quasi-official, the vote will be used to pressure the central Iraqi government if it is successful. — BBC
WHAT WE’RE READING
How Donald Trump shifted kids-cancer charity money into his business (Forbes): “In reviewing filings from the Eric Trump Foundation and other charities, it’s clear that the course wasn’t free — that the Trump Organization received payments for its use, part of more than $1.2 million that has no documented recipients past the Trump Organization. Golf charity experts say the listed expenses defy any reasonable cost justification for a one-day golf tournament.”
The radical crusade of Mike Pence (Rolling Stone): “Pence is the nation’s 48th vice president. Nine vice presidents have assumed the presidency as a result of death or resignation. That’s a 19 per cent ascendancy rate. Between Trump’s trigger-happy Twitter persona, the ethical nightmare of his business empire, his KFC addiction and possible entanglements with Vladimir Putin, I’d say the chances for Mike Pence are more than 50-50.”
Egypt: the new dictatorship (New York Review of Books): “Recent events in Egypt have raised the question of whether the tradeoff General Abdel Fattah el-Sisi has offered the Egyptian public — keeping them safe in exchange for an authoritarian state and far-reaching restrictions on civil society — is working.”
The oldest human fossils ever discovered have stories to tell (The New Yorker): “In any case, there was a long period — two hundred thousand years, it now appears — during which ‘human culture’ involved only stone tools, as with pretty much every other Paleolithic hominin. Were we like them, or were they like us? “
HOLD THE FRONT PAGE
May 16, 2017
Politicians and journalists alike seem reluctant to discuss nuclear as a viable (and actually scalable) alternative to wind and solar, reports science writer Geoff Russell.
The recent ABC Four Corners program “Power Failure” by Michael Brissenden began inauspiciously:
“By any measure Australia is an energy superpower. We’re the world’s largest exporter of coal, we have abundant sources of renewable energy and by 2020 Australia will be the largest exporter of liquefied natural gas. And yet, this apparently lucky country is now in the grip of an energy crisis.”
When I tell you that our roads are used by cyclists, cars and skateboarders, you probably have a good idea of the relative share of the traffic of each. And everybody would pick quickly that I missed trucks entirely. But almost nobody has any idea of the relative share of the energy system of the sources named; and the rest of the program failed to enlighten them. And I wonder, did anybody spot the energy export more than twice as big as liquefied natural gas that didn’t rate a mention?
According to the Australian Energy Update 2016, our total energy consumption in 2014-15 from renewables was 343 petajoules. A petajoule (PJ) is a large unit of energy. Most people are at best familiar with kilowatt-hours (kwh) from their electricity bills. A PJ is a rather large energy unit being equal to some 277 million kwh.
For comparison, our oil, coal and gas energy consumption was 2237, 1907, and 1431 petajoules respectively; and our energy exports were 13,088 PJs (mostly coal). Of the 343 petajoules from renewables, 186 were from biomass, and 48 were from hydro. Biomass might be renewable, but it isn’t necessarily low-carbon, and wood smoke has all the same toxic pollutants as cigarettes; it’s filthy stuff. Of the 343 PJs, wind came in at 41 and solar photovoltaic (PV) at just 21. People see solar panels on roof tops and don’t understand what a small piece of the energy puzzle they are looking at. Speaking very roughly, household electricity consumption is one-quarter of all electricity consumption, and electricity is one-quarter of all energy use and almost all energy use is from fossil fuels. Electricity certainly generates a disproportionate amount of CO2, but we have to solve the whole climate problem, not just the easy bits.
The other thing Australians, in particular, need to keep firmly in mind is that energy is not the be-all and end-all of our decarbonisation needs. We have more cattle than people in Australia and their methane will generate more warming over the next 20 years than all of our coal-fired power stations. And then there’s the land cleared, or kept cleared, to graze them.
In summary, wind and solar PV featured heavily in Brissenden’s story, despite only being worth 41 and 21 PJs respectively. And what of uranium? Remember uranium? Four Corners forgot it entirely.
The elephant in the room didn’t get a mention
We only produced 6110 tonnes of uranium in 2014-5, rather less than than the 67 million tonnes of coal we burned or the 392 million tonnes we exported. But what’s 6110 tonnes of uranium oxide in PJs? About 2592 PJ according to the Energy Update. That’s right, 123 times more energy than solar PV. But not all PJs are equal. Burning stuff produces around two PJs of heat for every one PJ of electricity. That’s not because engineers are incompetent, it’s a consequence of the laws of thermodynamics. Smart people use the heat for heating (fancy that!), desalination, or other industrial processes.
So if you used the uranium for electricity, rather than heat, then you can cut that 123 down to about 40. Meaning that our 6110 tonnes of uranium exports would produce about 40 times more electricity than our solar PV — plus a lot of heat.
A solid investigation of our energy problems would at least have have asked the obvious question: “Why don’t we use our uranium instead of just exporting it?”
So the Four Corners program began with a glaring omission.
Lakeland solar farm and other toys
Considerable time was devoted to the Lakeland solar farm without pointing out how tiny it is; it’s 10.8 megawatts (MW). The fact that it looked massive on the program is just because solar energy harvesting uses large amounts of land to harvest very little energy.
Brissenden interviewed Lakeland’s Christopher West who claimed, “What we’re creating is a base load power generator”.
A five-second look at the Lakeland specs (as reported to the Australian Renewable Energy Agency) shows that his claim is false; not just exaggerated, but false. Lakeland is 10.8 MW solar farm with a 1.4 MW/5.4 MWh battery. A 10.8 MW base-load power station would provide 10.8 MW continuously for every hour in the day; maintenance notwithstanding. When the sun stops shining on the Lakeland solar panels, it won’t provide 10.8 MW for any hours — not one. But if the battery happens to be full, then it could provide 1.4 MW for about four hours.
Clearly, talk of this being base load is a load of another sort entirely.
And then there’s the blackout
Think about a person riddled with metastatic tumours and weakened both by the tumours and large doses of chemotherapeutic drugs. When influenza finishes them off, how do you describe what killed them? The immediate cause of South Australia’s September 2016 blackout was the automatic shutting-down of the Heywood Interconnector when it needed to cover the loss of 456 megawatts of wind. The Australian Energy Market Operator (AEMO) has been worried about the stresses to the interconnector caused by renewables in SA for years. A 2014 renewable integration study wrote:
“High variability in non-synchronous generation in SA presents challenges in managing flows within required limits on the Heywood Interconnector. This can occur when non-synchronous generation varies by large amounts over short time frames, and the necessary balancing of the variation occurs via the interconnector.”
They came up with two strategies, firstly to upgrade the Heywood Interconnector to handle 650 MW, and secondly to limit the load on that interconnector to 250 MW. The second interconnector, Murraylink, is much smaller with capacity at just 220 MW.
At the time of the blackout, the two interconnectors were supplying 613 MW of the 1826 MW demand. The wind farms weren’t delivering; they’d slowed down because it was too windy. One hour before the blackout, they’d been supplying almost 1200 MW and within the space of 20 minutes, this slowing down had dropped the power supply by 340 MW to just 860 MW causing the interconnectors to make up the shortfall. This meant it was loaded well above the 250 MW safety limit. AEMO responded by dispatching more gas to try to reduce the interconnector flow. What does this mean? It means they were trying their best to implement their policy of leaving enough capacity on the interconnector to cater for the unforeseen.
This is similar to not travelling too close to the car in front because something might cause that car to brake suddenly. But the unforeseen happened before the interconnector had enough capacity to handle it. The graph below shows the kind of large wind variability that the AEMO had to deal with on that day.
Unfortunately, Brissenden’s coverage of this was limited. He didn’t ask anybody why the interconnector capacity between SA and the rest of the grid had been recently upgraded. He didn’t ask anybody why it was running so close to capacity on the day in question. He certainly didn’t ask anybody why it was so far above the 250 MW limit mentioned in the AEMO renewable integration report.
A European study in 2014 found that 100% renewable systems need interconnectivity to be increased by a factor of five to 10 to optimally shunt power from where it is to where it is needed. This is precisely because of the huge swings that must be stabilised by allowing increased flows.
The devil is in the detail
The appendices in the final AEMO report are particularly fascinating. They detail the conditions under which future blackouts may occur. Here’s a key result:
“These simulation case studies highlight that it is paramount for all SA wind farms to ride through a sufficient number of voltage disturbances in quick succession, to allow the Heywood Interconnector to stably and securely operate at an import level of 550 MW.”
Read this carefully: a robust system is one where multiple components can fail without causing a problem. The internet is a great example. A fragile system is one where a failure in any subsystem can bring the whole house of cards crashing down. The preceding quote makes it clear that when Heywood is heavily loaded, a single wind farm not operating according to specification could bring the system down.
Keep reading and the identified risks grow. If the interconnectors fail or are disconnected (as in September) what are the chances of a blackout.
“These calculations indicate that with the loss of the Heywood Interconnector there is at least 10% likelihood of an unexpected response of protective relays that could result in cascaded tripping across the system. During islanding conditions, the number of synchronous machines online would have a marginal impact on the available fault currents.”
Of ladders and renewable electricity grids
The standout feature of the appendices needs some explanation. Think about a company making five-metre-long ladders. The ladder has a number of rungs and each rung is in a different spot on the ladder. Ideally you want to get the rung-maker to deliver rungs within a certain tolerance and you randomly test a sample of rungs from each batch to ensure they meet specifications. You don’t want to have to test each rung in place on a ladder. You don’t want it to matter where in the ladder this particular rung might end up to do your testing.
Now compare this with our power system as described in the appendices. AEMO has a couple of computer simulation models and it can simulate the result of various types of failures of any component of the system. Except that the components aren’t like rungs in a ladder. Every single one is different and their position on the grid is critical to the simulation. So AEMO can’t just simulate a wind farm failure, they have to separately simulate the failure of each and every wind farm at it’s exact location and each and every combination of wind farm failures and each and every failure of the many connections between them; and combinations of failure. This is a mathematical and technical nightmare.
The difference between a traditional grid with a small number of fairly large turbines and this extraordinarily complex tangled ball of twine is vast. This complexity is a direct consequence of the distributed nature of renewable energy systems. Weatherill’s claim that renewable energy had no roll in the blackout showed not only that he doesn’t know what he’s talking about, but also that he doesn’t know that he doesn’t know.
In summary, you can get away with driving too close to the car in front for years. And then one day, a tree falls in front of the car in front and you smash into the back. Of course, you can always blame the damn tree.
If we are to appreciate problems of scale and complexity, we must explore the Adelaide blackout in great technical detail, and take into account the miniature size of the Lakeland farm.
To appreciate why the size of Lakeland is so important, you need to think about what happens when you scale it up.
It’s wrong to assume that things that work at small scales will work at large scales. Bicycles are wonderful things for commuting and just plain having fun, but they aren’t much use transporting a 30 million-tonne wheat harvest.
What does a solar farm look like at the kind of scale that matters?
Here’s a few numbers using a South Korean APR1400 nuclear reactor as a benchmark. The APR1400 is, unsurprisingly, a 1400 megawatt nuclear reactor. You could fit the main buildings on the MCG. There is always a safety zone around a large nuclear plant, but it’s typically used by wildlife so it’s really a benefit, rather than a cost.
Now compare this with the Nyngan solar plant, Australia’s largest and about 10 times bigger than Lakeland. You’d need 47 Nyngans occupying an area equal to about 6030 Melbourne Cricket Grounds to generate the same amount of electricity during a year as an APR1400. And none of that construction area would be wildlife friendly; it’d just be a sea of steel frames and solar panels. Lay those MCGs end to end and you’d have a 41-lane highway stretching 1032 kilometers.
Next we need to add in storage. Lakeland has a Lithium-ion battery, but that’s too expensive at scale, so molten salt is far more realistic. This isn’t sea salt but a mix of potassium and sodium nitrate made from stuff dug up by miners and transformed in large chemical plants. For 12 hours of storage, you’d need 1.6 million tonnes of the stuff and the current global output of these is about 3 million tonnes (see here and here). And that’s just for 12 hours of storage. If you have a few cloudy days in a row, you may still be buggered.
Infinite sunshine but finite harvesting tool
Many people confuse the renewability of sunshine and wind with the resources used to harvest them. These resources are non-renewable and quite normal. They include habitat, steel, aluminium, concrete, trucks, and rare earth metals, not to mention millions of tonnes of battery chemicals. Note that I said habitat instead of land. There’s no such thing as just land, all land is habitat for something and making this explicit helps ensure it gets thought about. We can’t avoid appropriating habitat, but we should be minimising our appropriation, not maximising.
Scaling that works
Uranium as an energy source scales incredibly well because of its energy density. Meaning that you need very little mining for a whole lot of energy. That should be obvious from earlier parts of this article, but here are some more numbers. You need about 280 tonnes of uranium oxide to power a 1400 MW nuclear plant for a year, but the same sized coal plant will need about 1540 kilometers of coal train cars carrying 4.3 million tonnes of coal. We are talking 11,000 to 12,000 tonnes every single day.
So in contrast to the vast coal mines producing our local and export coal, and the vast network of gas wells and pipelines producing gas, our uranium comes from a few small mines. The biggest producer is Olympic dam in South Australia; and this is really just a copper mine. It produces about 220,000 tonnes of copper per year and about 4000 tonnes of uranium oxide.
Scaling that doesn’t work: batteries
Scaling problems are also particularly relevant to the various battery proposals Brissenden looked at in the program.
Tesla got a mention, as did zinc-bromide flow batteries. Let’s think about the battery scaling problems.
Elon Musk is building the world’s biggest battery factory at present in the US. When it is complete in 2020 it will have as much Li-Ion production capacity as the entire global Li-Ion industry had in 2013. It will then be able to supply half a million car batteries a year. And how many car batteries do we need? We produced 95 million motor vehicles in 2016; up from 91 million in 2015. Can you see the problem? … and the giga factory will have taken five years to build when it is finished.
Now think what will happen if we start putting batteries into houses? We will have less battery capacity to put in cars. We desperately need batteries for cars because we have so few other clean ways of powering them. It’s a really tough problem and we need to solve it. Putting batteries in houses just makes that incredibly tough problem even tougher. It’s like trying to keep our antibiotics for really sick people while patients with colds keep demanding prescriptions.
Brissenden presented Tesla driving software guru Simon Hackett with his great zinc-bromide flow batteries and allowed him spin wondrous yarns of a city full of these things, all connected by intelligent software. The world produces plenty of zinc, but bromide is produced in quite small quantities and zinc-bromide is produced in even smaller quantities. Zinc-bromide is a Class 8 corrosive marine pollutant and it’s dangerous enough that you can’t legally carry more than 1 litre of it at a time on a passenger plane. Which makes it fairly innocuous in the toxic world of battery chemistry, but it should be enough to warn you that scaling it up to solve our global energy problem will require more than just smiling nicely and saying how cheap it is.
Case studies in energy planning that have worked
Brissenden was right when he said that we have had a total failure of leadership on energy in Australia. Not because nobody has done any leading, but they have been leading us up the garden path.
Let’s look at a few examples of what intelligent leadership coupled with planning and foresight could have delivered.
Aside from a little residual coal use, France decarbonised its electricity system in about 15 years using nuclear power between about 1975 and 1990. No other significant industrial country has come even close to this. The International Energy Agency measures this somewhat indirectly in tonnes of CO2 per terajoule of primary energy (tCO2/TPES). Between 1975 and 1990 France dropped its tCO2/TPES from 61.2 to 36.8. This shows that they’ve basically cleaned up half of their energy problem: electricity. They still need to deal with transport and direct industrial use of fossil fuels. In contrast, Germany during the first 14 years since its Renewable Energy Act in 2000 reduced her tCO2/TPES from 57.7 to 56.4. The numbers tell a truth that all the hype about the German renewable energy revolution can’t hide.
In the same year that I switched from being anti-nuclear to pro-nuclear, 2009, the United Arab Emirates started on their nuclear program. Meaning they started to build the regulatory structures. The first reactor build was begun in July 2012. It will come on line soon this year. Remember that Lakeland solar plant that featured in the Four Corners report? Well the South Korean APR1400 nuclear plant will produce about 580 times as much energy each year (assuming a capacity factor of about 20% based on this story). In 2018, the second reactor will start up. That’s another 580 Lakelands worth of electricity. And again in 2019 and 2020.
And lastly we need to look at China.
- For the past 17 years, China has been rolling out what are called super-critical coal plants. These run at a higher temperature and are more efficient than older plants. But the increase in efficiency is a minor matter. In 2006, China announced that work on a high-temperature gas-cooled nuclear (HTR-PM) reactor was a priority. The demonstration plants, 2×105 MW reactors, are due to start operation later this year.
A coal plant is a boiler hooked up to a turbine and generator, which are hooked up to a grid connection. Unremarkably, the Chinese have designed the HTR-PM to be plug-compatible with the super-critical coal boilers. The designs have identical steam production characteristics. Disconnect the coal boiler and connect the nuclear boiler. You can keep all the rest of the infrastructure. This provides a rapid and fairly cheap way to decarbonise almost all of China’s electricity.
Sadly, the state of reporting on energy in Australia is almost as dismal as the state of policy.
Apr 12, 2017
Australian climate policy has never been perfect. But having some policy is better than none -- and we can't freeload forever, writes Green Energy Markets' Tristan Edis.
My colleague Ric Brazzale and I have been involved in Australia’s energy and climate policy deliberations for several decades. Over our time we’ve seen — and in a number of cases been directly involved in — an array of weird, wonderful, downright ugly and utterly hopeless policy initiatives in the energy and climate space. Yet the key searing memory for both of us has been constant arguments with people more powerful than ourselves to get them to recognise a legitimate role for energy efficiency and renewable energy in our energy market.
Today we released a report lamenting, while also explaining, how Australia ended up with some the highest wholesale electricity prices in the industrialised world. We’ve achieved this miraculous feat while at the same time producing the developed world’s second most carbon polluting electricity in the world, second only to Estonia. And it has transpired after the Abbott government abolished the carbon price and wound back the Renewable Energy Target by a fifth. All done on the promise Australia would become a low-cost energy superpower.
The people behind this sterling success are also many of the people who set up the regulatory rules that allowed electricity network monopolies to spend $40 billion on network capacity expansions. This doubled household electricity prices while demand flatlined.
It has struck me over the years that Australian industry lobby groups, as well as senior bureaucrats at the controls of Australia’s energy policy, seem to all be very good at nodding their heads in favour of a long-term emission reduction policy. It’s just they seem to have an uncanny knack of rejecting or attacking any kind of significant emission reduction policy that has a good chance of actually being implemented.
The Renewable Energy Target and its state-based offshoots are the most significant single carbon abatement policy implemented in Australia. They have also been subject to withering criticism and almost endless attacks and government reviews. These have come not just from the usual subjects like lobby groups representing power generators or coal miners. They have also been repeatedly attacked by powerful officials within the energy policy making apparatus. This has included the Productivity Commission, the Australian Energy Market Commission, New South Wales’ Independent Pricing and Regulatory Tribunal, the Australian Bureau of Agricultural and Resource Economics, and the late head of the Australian Energy Market Operator.
Energy efficiency policies have also not escaped such attacks.
Even when the energy policy cabal got a policy almost perfectly matching their demands — which is what the Gillard government’s carbon price represented, with bucketloads of free permits, mild targets and lots of international credits — many cheered on Tony Abbott’s scare campaign to tear it down.
Recent remarks by Gary Banks, former head of the Productivity Commission, were incredibly revealing about a belief I suspect is pervasive among those who demand no climate policy until we get a perfect one:
“While Australia’s own actions can have no discernible impact on global carbon emissions, let alone on Australia’s climate, there is broad support for the idea that playing our part is a precondition for a joint international endeavour that could. This requires a leap of faith, but it is a legitimate policy objective, even if a particularly costly one for this country given its resource endowments.”
You can sense the disdain and cynicism with which Banks regards Australian efforts to reduce emissions. Australia should instead be a selfish freeloader. Indeed, perhaps a parasite on global efforts to avoid dangerous climate change as we persist in pushing the use of our great “resource endowment” in coal and gas.
Banks preceded these remarks in his speech by repeating an argument promoted by the Minerals Council of Australia:
“The inconvenient truth is that the increasingly high prices for increasingly unreliable electricity are a direct consequence of the increasingly high utilisation of renewable energy required by government regulation.”
This is wrong. But to appreciate it you need to rely on more than simple refrains like “when the sun doesn’t shine and the wind doesn’t blow the power doesn’t flow”. You need to understand that ageing coal-fired power stations like Hazelwood face bills of hundreds of millions of dollars to address safety and reliability problems. You also have to make the effort to familiarise yourself with the technological progress and reductions in costs achieved by wind turbines and solar module manufacturers. And of course you just have to take your nose out of a book to see and hear about the incredible prices Australian businesses are now paying for gas.
The report we released today, Overcoming ideology to support new power plant investment and reduce power prices — Could Judith Sloan and Chris Kenny hold the answer?, helps to explain just how wrong Gary Banks is.
Don’t get me wrong; Australian climate policies have been far from perfect. While at the Grattan Institute, I co-wrote a two-part forensic critique of all that has gone wrong with Australian climate policy from 1997 to 2011 — Learning the Hard Way. But unlike Gary Banks, I actually care about achieving the objective of avoiding dangerous climate change.
* Tristan Edis is director of analysis and advisory with Green Energy Markets, a firm that assists clients make informed investment, trading and policy decisions in carbon abatement markets.
Mar 16, 2017
The only real gas crisis is that suppliers are artificially keeping supply low to drive up prices, writes freelance journalist Claire Connelly.
Experts have called claims of an impending gas crisis a “rope-a-dope, billion-dollar bait-and-switch”, threatening exorbitant prices unless land-owners allow exploration.
Yesterday’s announcement from east coast gas companies guaranteeing supply demonstrates there never was any crisis — at least not one of availability.
“We have adequate supply,” said energy analyst Dr Liam Wagner, senior economics lecturer at Griffith University. “They’re not actually accessing what they have. It certainly boosts the price.”
And he should know. Wagner has provided advice and modelling on Australia’s gas market as a trader and quantitative analyst in the energy industry.
“There has been a complete lack of co-ordination between state, federal governments and energy providers,” he told Crikey. “It’s a mess.”
Wagner says the states want to move away from being responsible for electricity, abdicating their responsibility to provide essential services.
“If you were to say ‘we simply don’t have supply so you’re going to have to pay exorbitant fees for gas unless you allow exploration’, it’s a rope-a-dope, billion-dollar chicken,” he said.
Gas companies began liquefied natural gas exports from eastern Australia a few years ago, but disappointing coal seam gas yields from Queensland and ambitious export contracts led companies to buy up South Australian and Victorian gas previously used by manufacturers, power stations and retailers.
Professor John Quiggin, Australian Research Council Laureate Fellow at the University of Queensland and board member of the Climate Change Authority, told Crikey the crisis emerged because of government policy and “blocked investment at every turn”.
“All of this is about culture war point scoring,” he said. “It has no notion of anything resembling policy.”
“Everyone knows that we will, sooner or later, need a carbon price. That means that no one will invest in, or spend substantial money maintaining a coal-fired power station.”
Quiggin says the gas problem could be addressed with an emissions intensity scheme, “which is what everyone except the government wants”.
“If we had a carbon price, gas would be more appealing than coal,” he said. “We’d have a lot more use of existing gas to protect our investment in gas-fired stations.”
Dr Richard Denniss, chief economist of the Australia Institute, told Crikey that for the gas industry, everything was going to plan.
“It took 10 years and $60 billion building three enormous gas liquification plants in Gladstone with the specific goal of increasing the domestic price to Asian levels,” he said.
Indeed, the industry is frustrated prices aren’t even higher. Just as it had succeeded in linking the Australian gas market to the world, global gas prices fell.
“The plan was always for manufacturers to pay even higher prices,” said Denniss. “Bizarrely, the unpopular high prices of gas is being used as an excuse to do more unpopular fracking even though the latter will do nothing to fix the former.”
The only way to reduce prices is to limit the amount of gas that can be exported, Denniss says, but that would impact the industry’s ability to recover the $60 billion they spent on export infrastructure.
“The low world gas price means they need their export plants working at full capacity year round to have any hope of recovering their investment,” he said.
“There is no case to build new gas-fired power stations now renewables and storage are so cheap. But if we used the gas plants we already have, electricity prices would be lower.”
Wagner told Crikey there is a potential crisis in the making — but not one of supply, rather the “potential withdrawal of capacity”.
“The whole incentive and market structure for the electricity market, at both wholesale and retail generation levels needs to be reassessed,” he said.
“Gas may be cleaner than coal, but remember there are all these other emissions created to get it to the power stations in the first place.”
“Additional ‘fugitive’ emissions from methane leakage in gas fields and transport aren’t understood well. The emission of methane (coal seam gas and natural gas) has a far greater effect on the environment than CO2 does — around 20 times more, in fact.”
Then there is the enormous environmental cost of drilling. “It is like figuratively fracking an Aero Bar where each bubble is filled with methane. I don’t think we understand the science well enough,” Wagner said.
The industrial process of turning gas into a power source is incredibly expensive.
“The cost of input to factors of production are double — if not triple — what gas and electricity used to be for energy,” Wagner said.
He says it is essential for Australians to understand the social benefits of the grid and advocates against privatisation. If anything he believes the government should “re-nationalise” the power grid.
“The grid has an enormous social benefit,” Wagner said. “As more people go ‘off-grid’ the price of energy increases significantly for renters, public housing residents and particularly those in lower socio-economic areas because they would be amongst the few still having to buy off the grid.”
Australians pay for the grid by the volume of energy pushed down power lines. Energy companies would have the same capital costs with fewer people using the grid, driving up prices, costing more for people who can afford it the least.
“It’s a Catch-22. Yes, we should all have solar panels, yes, we should have storage in the network, but it should all be connected so that panels and batteries can provide support for local communities.”
Wagner also says demand-side energy management is being stifled.
“Access to transmission rights are being constrained nationally,” he said.
The economist said providers should be able to hook their extension cable from wind or solar farms into the grid, but this is not currently occurring. “Australia has the highest solar irradiance in the world and we have less solar panels than Germany, it’s an absolute joke,” he said.
As for the challenge thrown down by Elon Musk over the weekend that he could supply all of South Australia with Tesla Powerwall generated batteries, Wagner say it would be a “massive win for the company and proof of concept”.
Pity we have to import a solution, given we’ve already developed — and exported — one of our own. CSIRO pioneered technology is keeping the lights on in the PJM (Pennsylvania New Jersey & Maryland market) in the north-east United States through a spinoff company called Ecoult.
“They’ve deployed boatloads of the stuff,” said Wagner. “It’s being bolted onto wind farms to smooth out power transmission and provides a form of spinning reserve.”
It is sad that renewable energy technology born in Australia is good enough for the American market, but not our own.
Feb 20, 2017
What is the Clean Energy Finance Corporation anyway? And should it be investing in clean coal? Crikey intern Sophie Heizer explains.
In the wake of the South Australia blackouts, the Coalition has proposed changes to the Clean Energy Finance Corporation, which would allow it, or essentially force it, to invest in ultra-super critical coal-fired power stations.
But what is the CEFC anyway? And is coal-fired power part of its remit?
What is the CEFC?
The CEFC is a government-owned green bank created in 2012 under the Clean Energy Finance Corporation Act 2012 by the Gillard government to finance the clean energy sector. Tony Abbott tried and failed twice to get rid of the CEFC while he was prime minister.
What is the CEFC’s mission?
The main function of the CEFC is to invest directly (through partnerships, trusts, or joint ventures) or indirectly (through subsidiaries) in renewable and low-carbon technologies.
The CEFC invests in businesses and projects that develop or commercialise clean energy technology, and in businesses that supply the goods or services necessary to businesses that develop or commercialise clean energy.
The CEFC is directed under legislation to develop a diverse portfolio of investments and to only invest in projects with an acceptable, not excessive, level of risk.
Where does the CEFC get its funding?
The CEFC Act created a CEFC Special Account, which receives $2 billion each July 1 for five years from July 2013 from the government. It is expected to be operationally self-funded at the end of those five years through investment returns.
What’s wrong with using the CEFC to fund new coal-powered plants?
Energy Minister Josh Frydenberg wants the CEFC to invest in “carbon capture and storage”. Carbon capture technology is one of two energy sources the CEFC is currently prohibited from investing in (the other is nuclear power). This is in part because the CEFC cannot invest in any project that doesn’t reduce emissions by 50% or more. The government would have to relax the CEFC’s 50% cap to allow investment in the proposed high-efficiency, low-emission coal-powered plants.
Isn’t ‘clean coal’ an oxymoron?
There are two main “clean coal” technologies. Carbon capture and storage is done by catching the carbon emissions before they are released into the atmosphere by forcing the exhaust through a liquid solvent that absorbs the carbon dioxide and then burying the compressed waste. Problems with the technology include high cost, unproven technology, and logistics of disposing of the waste.
High-efficiency, low-emission power stations are also labelled as “clean coal”, though “cleaner coal” is a more accurate term. These power stations operate by burning coal at ultra-high levels to increase efficiency and reduce carbon emissions. Malcolm Turnbull says they are essential to securing Australia’s energy future. Opposition environment spokesman Mark Butler says they’re twice as expensive as gas-fired power and more expensive than renewables.
Why does the government want to invest in carbon capture?
The government is planning to repeal the ban on carbon capture, as well as urging the CEFC to invest in ultra-super critical coal power plants. The CEFC has said that it would be resistant to investing in new coal-fired generators, meaning the government would have to change the CEFC’s investment rules if it wants that to happen. Frydenberg is considering doing just that, and says that it would be possible, since the CEFC is the Clean Energy Finance Corporation, not the Renewable Energy Finance Corporation. Frydenberg told ABC’s Insiders program that the goal was to lower emissions at the same time as stabilising baseload power so Australians don’t experience more blackouts.
CEFC chief executive Oliver Yates has said that it would be a risky move for taxpayers due to the fact that renewable energy costs are on a downward trend and the proposed ultra-super critical coal plants are unlikely to have a long-term path. Yates has also said that it would be difficult to find a private operator or commercial investor in the current market and there’s no point in building the coal stations, which are likely to provide energy at a higher cost.
Whatever the flaws of Malcolm Turnbull and his government, the incessant baiting and sniping of Tony Abbott, like the relentless destabilisation of Kevin Rudd against Julia Gillard, is profoundly unhelpful to the task of getting on with governing the nation. In contrast to Rudd, of course, Abbott does his destabilisation in full view of the public rather than behind the scenes. Moreover, he does it on policy, whereas Rudd in exile rarely gave anything more than opportunistic consideration to policy. Problem is, in doing so, Abbott reveals how little grasp he has of policy, or even of basic facts.
Take his argument on the weekend recycling a proposal 14 years ago from John Howard to make it easier for governments to force through bills rejected by the Senate (Abbott airbrushes out that Howard suggested two different proposals, one of them based on an idea from Labor’s Michael Lavarch). Howard was being profoundly hypocritical in trying to curb the powers of the Senate — a fact that John Faulkner skewered with forensic accuracy at the time; as Faulkner noted, “it seems constitutional reform is only desirable when the Liberals are in government”.
But Abbott argues that this is a solution to “gridlock between the two houses of parliament”. Abbott, of course, was notoriously unable to negotiate the passage of his bills through the Senate. In contrast, Julia Gillard was able to negotiate bills through both the House of Representatives, where conservative independents and Andrew Wilkie held the balance of power, and the Senate. Indeed, Howard himself managed to get some of the most important legislation of recent decades, including major industrial relations reforms and the GST, through a reluctant Senate. Abbott tries to cover himself on this front by saying that it “doesn’t matter much for Labor governments that want higher spending, more regulation and heavier taxes (at least on the so-called rich); but it matters a great deal for Liberal National governments that want less spending, fewer regulations and lighter taxes (on the people who create wealth and jobs).”
Well, let’s put that to the test. In Labor’s last full fiscal year, 2012-13, spending was 24% of GDP, according to 2016 Mid Year Economic and Fiscal Outlook data. Under Abbott, spending immediately rose to 25.6% of GDP and remained at that level throughout his short and disastrous prime ministership. And while it partly relies on some very convenient revisions to demand-driven programs, Treasurer Scott Morrison has, since Abbott’s ouster, got spending down to 25.2% of GDP — still well above the level inherited from Labor but much better than Abbott. As for heavier taxes, Abbott is completely delusional. The tax burden in Labor’s last year was 21.4% of GDP — the highest since 2008-09. When Abbott was dumped it had reached 21.9% of GDP — and that’s despite Abbott securing the agreement of the Senate to dump the mining tax and carbon price, which curiously the Senate was prepared to do despite its alleged preference for higher taxes. That 21.9% was the highest since the Howard years, when Peter Costello was slugging taxpayers 23-24% of GDP.
Then there was his other effort to undermine the government, attacking the Renewable Energy Target again and lauding “clean coal and gas”. “The past year has shown us what happens when mainstream parties lose touch with their supporters,” he warned. Again, let’s put that to the test: Abbott was third behind Turnbull and Julie Bishop as leader of his party in November among Coalition voters (he was fourth, behind “Someone else”, among all voters). Presumably, then, he should rule out any return to the leadership, given how out of touch that would be with Coalition voters. And, by the way, how do Coalition voters feel about renewable energy? In 2014, Coalition voters were indistinguishable from Labor voters in supporting the then-current Renewable Energy Target (which Abbott then reduced); in 2015, over 60% of Coalition voters thought the RET was about right or “too low”. Coalition voters also support Labor’s proposal for a 50% RET by 2030. And despite constant Turnbull government scaremongering, over half of Coalition voters agree that renewable energy is “the solution to our energy needs.”
If Abbott wants to make being in touch with party supporters his guide, he should support his Prime Minister and back more renewable energy.
Jan 17, 2017
Former prime minister Tony Abbott is full of advice for his successor on policy, most of which he failed to do when he was PM.
Since losing his prime ministership and becoming a humble backbencher, Tony “It has been a great honour to serve the people of Warringah” Abbott has had many helpful tips for the man who deposed him, Malcolm Turnbull. Funnily enough, many of the things Abbott believes should now be government policy were not on his radar when he was in the top job.
So what backbench armchair policy advice does Abbott now offer to Turnbull that he didn’t do when he was prime minister the first time around?
Government taxes and spending
As Crikey‘s Bernard Keane wrote a few months into Turnbull’s prime ministership, when it comes to Abbott calling for the Turnbull government to rein in spending, it’s a case of “do as I say, not as I did”. During Abbott’s term as PM, taxes rose from 21.5% of GDP under Labor to 22.3% of GDP when he got the boot, and spending rose 1.8 percentage points to 25.9% of GDP.
Renewable Energy Target
In Abbott’s increasingly busy writing schedule, the former PM this week wrote in the Weekend Australian that Australia should scrap plans to reach 23.5% renewable energy by 2020, something his government had said was enough when Labor announced plans for a 50% renewable energy target. Abbott admitted it might be difficult to get through the Senate (something he always struggled to do as PM) but said the government would be on the side of lower power prices and jobs.
Section 18C of the Racial Discrimination Act
In government, Abbott abandoned plans to overhaul section 18C of the RDA in exchange for support from some ethnic communities for one of the many tranches of national security legislation the Abbott-Turnbull government has brought on over the past few years. Now he no longer has to bear the consequences of his policy stance, Abbott says he made a mistake, that 18C is a “bad law” and the Australian Human Rights Commission is “a pretty crook organisation”.
Abbott has said he would have continued to pursue tax reform (which Turnbull mostly abandoned after a mild Abbott-like campaign against GST increases from Labor). Most of Abbott’s tax reform was in the early stages when he was ousted two years into his term as PM.
In June 2014, then-Abbott government minister Scott Ryan launched the Safe Schools Coalition — work that had been commenced by the former Gillard government but continued under Abbott.
“It is simply the right thing to do. Every student has a right to feel safe at school,” Ryan said.
After an obsessive campaign from the Australian Christian Lobby, the national broadsheet and far-right politicians like Cory Bernardi and George Christensen, now Abbott claims the anti-bullying program isn’t an anti-bullying program and is just “social engineering”.
Australian embassy in Israel
In another Trump-inspired move, Abbott has publicly advocated for moving the Australian embassy from Tel Aviv to Jerusalem if the US does the same. Labor MP Michael Danby — who also backs this move — has suggested the revelation has more to do with Abbott taking shots at Turnbull.
TV & Radio
Nov 14, 2016
The ABC has dismissed complaints about Chris Uhlmann's coverage of the South Australian blackout.
ABC political editor Chris Uhlmann has survived the “pitchfork crowd” (his characterisation) baying for his blood, coming out unscathed after numerous complaints about his coverage of the South Australian power blackout.
The ABC’s Audience & Consumer Affairs division on Friday dismissed at least two of the complaints against Uhlmann filed in late September and early October. The complaints focused on the ABC’s coverage of South Australia’s blackout, with Uhlmann speculating on the role of renewable energy (particularly wind power) in causing blackouts at a time when others (including SA Premier Jay Weatherill) blamed infrastructure failures as a result of a storm.
The ABC has said it received about 180 complaints about its coverage of the blackout — we’ve asked the ABC what’s become of the rest. The public broadcaster publishes summaries of upheld complaints on its website, and there are currently none relating to Uhlmann published online. Any complaint not upheld can be appealed to the Australian Communications and Media Authority — one of the complainants tells Crikey he intends to appeal to the external agency.
Uhlmann was pivotal in driving the ABC’s coverage. But the ABC’s Audience and Consumer Affairs division — which operates separately from the content-creation parts of the ABC — said Uhlmann had never claimed renewable energy had caused the blackout, instead providing context around the state’s energy mix, which includes a high reliance on wind turbines. In light of this, the Audience and Consumer Affairs division determined that Uhlmann had not breached editorial standard 2.1, which requires the ABC to “make reasonable efforts to ensure that material facts are accurate and presented in context”.
One of the complaints dismissed on Friday focused on Uhlmann’s live interview with SA Senator Nick Xenophon on the afternoon of the blackout, during which both discussed the role of wind power in the state’s electricity mix. A response to the complaint states:
“Through the course of the interview, Mr Uhlmann indicated that limited information was available about what was occurring in South Australia. He therefore explained that he was necessarily speculating about the nature, extent and cause of the electricity outage. Mr Uhlmann and Senator Xenophon discussed a range of issues including South Australia’s power generation mix and its operational status at the time; some of the complexities associated with South Australia’s power grid; the political decision making that lead to South Australia’s energy mix; together with information about the operation of the national electricity market. Mr Uhlmann did not state that renewable energy, particularly wind power, was the cause of the blackout. Rather, he raised a series of newsworthy questions about the State’s energy mix, including about the possibilities of how the power could be out when the wind was blowing, and 40% of South Australia’s power is wind generated.”
The issues covered in the interview, the report says, were “all highly relevant and newsworthy”:
“Given the unique nature of South Australia’s power generation mix, it was appropriate for Mr Uhlmann to question whether the State’s heavy reliance on wind turbines might have increased the risk of a state-wide blackout.”
Another complaint, filed by journalist and academic Ben Eltham, focused on a follow-up analysis piece filed by Uhlmann about the role of wind energy in the state, which “might have increased the risk of a state-wide blackout”.
The response from the complaints division states:
“Given what had occurred in the preceding 24 hours and the unique nature of South Australia’s power generation mix, these issues were all highly relevant and newsworthy. It was therefore appropriate for Mr Uhlmann to address these issues in the manner he did.”
The Audience and Consumer Affairs division says in both letters that while it has not upheld the complaints, it has brought them to the attention of ABC News.
Following the Business Council of Australia’s tradition of having only the finest scolds head up the big business peak body, incoming chairman Grant King, who is replacing Catherine Livingstone, is hardly in a strong position to adopt the BCA’s traditional role of scold and primary complainant to the rest of us about our slack, self-indulgent ways.
King recently stepped down as head of Origin Energy, which posted an impressive 2015-16 loss of $589 million. Still, that wasn’t as bad as the $658 million loss last year, when the company urgently raised $2.5 billion in equity to ward off a further trashing of its credit status.
Origin’s share price is currently trading at a 12-year low. The share price has fallen more than 50% in the past few years to $5.45 yesterday — a particularly nasty destruction of value. The company was worth around $13.9 billion at the start of 2015, and at the close yesterday that had shrunk to $9.42 billion — a loss of around $4.7 billion. Much of the company’s problems stem from the huge debt burden it has taken on for its multibillion-dollar central Queensland coal seam gas natural gas project APLNG, which came on line just in time for the collapse in oil prices. It’s one of three separate liquefied natural gas projects in Queensland, which bid against each other for construction resources in their development. There’s been talk of one of the LNG trains being mothballed and of a far slower production ramp-up than planned. According to Australian Electoral Commission data, Origin has handed over $412,000 to political parties since 2011, with around 60% going to the Coalition.
But King — who takes the role at the BCA’s annual dinner on November 17 — is rare in the history of Business Council presidents in that he is not a heavy hitter. He doesn’t yet have a major board chairmanship, so his mates will have to round one up for him so he can have a second pulpit from which to hector us from — maybe Wesfarmers, which already has an iron grip on the BCA? Or perhaps the Commonwealth Bank can find a slot — his predecessor, Catherine Livingstone, is about to become chair from today ,and the bank’s CEO, Ian Narev, is on the BCA board. Livingstone, in comparison, was chair of Telstra and is about to become the chair of the Commonwealth Bank from today (now there’s a hospital pass). And her BCA predecessor, Tony Shepherd, was chairman of Transfield (remember them?) for part of his reign at the BCA.
While we’re on the BCA itself, why is Foxtel a member? It is not an independent company — its owners, News Corp and Telstra, are also BCA members and would have votes on issues. This means on issues such as media and communication and technology questions, they are three votes — News, Telstra and their joint venture, Foxtel. Cosy, no? Throw in that News Corp’s main banker in Australia, the Commonwealth Bank has BCA membership, and its CEO is a board member. In contrast, Fairfax Media is not a member of the BCA, according to its website.
It was under King that Origin — once a strong investor in renewable energy — pushed hard for the Renewable Energy Target to be cut. And King immediately attacked renewables in his first interview as incoming BCA chair, criticising state-based renewable energy targets (adopted because of the unwillingness of the Coalition to adopt meaningful targets at the federal level) and slamming solar subsidies as “iniquitous”. King was one of the more hysterical critics of the Rudd government’s mining tax in 2010, claiming it would triple electricity prices.
But whatever King’s shifting positions on high-profile issues, there’s one important consistency about him — he’s another standard-issue business executive from a traditional industry given the gig of representing Australia’s mediocre corporate sector in its continuing rent-seeking and self-interested pleading. He even restores the tradition of the old white male BCA chair, after the interregnum of Catherine Livingstone, who hailed from a much more tech-intensive and export-oriented business background than the usual BCA luminary.
The Business Council has reached a point of such irrelevance that even its Liberal allies publicly ridicule it. It is in desperate need of new thinking — thinking that starts from the principle that the next half-year bottom line does not automatically equal the national interest, that workers and unions are not enemies to be smitten hip and thigh and that paying a reasonable share of tax is a basic expectation in a civilized society. Who knows — perhaps King will surprise by demonstrating some capacity for innovative thinking in the role. But on his preliminary comments, he’s the same old, same old.