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The Paris Agreement, Trump, Turnbull and Tesla

By Alan Moran - posted Wednesday, 15 March 2017


On the night Malcolm Turnbull became Prime Minister, Julie Bishop was quick to step in to forestall him responding to a press question about Australia's future global warming/emissions policy. She said, as Malcolm was collecting his thoughts, the policy remains the same.

Turnbull, flanked by Bishop and Frydenberg, announced the ratification of the Paris Agreement the day after Trump's election victory in full knowledge of the President-elect's determination to pull the US out of its economically irresponsible provisions. She has answered later questions about what Australia might do in light of the Trump response to the Paris agreement by saying she thought it likely that the US would stay in because, "like Australia", the US will find it relatively easy to meet its 26-28 per cent emission reduction goals.

Bishop has finely tuned political antennae as regards Australia but is economically illiterate and hence follows the advice on these issues from her green left bureaucracy. And that ideology is unshiftable within the public service, as evidenced by the appointment that Megan Quinn, former head of the Treasury team that told the government that a $150 per tonne carbon tax would have only a trivial effect on the economy to a new $400,000 a year position.

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Many warmists take consolation from White House leaks by former lobbyists George David Banks apparently joining with Ivanka Trump in promoting some continuation of the Obama policies. If that were to occur it would be only nominal as Pruitt at the EPA is already undoing the regulations on carbon dioxide emissions; these were the cornerstone of the US measures to throttle fossil fuels as a means to meeting the Paris Agreement.

All this has a bearing for Australia's immediate policy position. Since the South Australia crisis Turnbull has relegated his Energy Minister and personally taken control of the Energy portfolio, assisted by his Departmental Secretary, and fellow climate alarmist, Martin Parkinson (Megan Quinn's former boss).

Although Infrastructure Minister Darren Chester on Sky this morning maintained that Turnbull is neutral between different energy sources and the ALP is trying to paint him as pro coal, Turnbull's climate alarmist credentials are painted in blood (few politicians would, as he did in 2009, give up the leadership rather than abandon the carbon tax, a policy favoured overwhelmingly by his colleagues).

He is not above sledging the ALP for going too far with a renewable policy that's bringing about the deindustrialisation of South Australia. In doing so, he and his colleagues neglect to say this is an outcome caused by the South Australian government readily grasping the wind/solar subsidies that the Commonwealth government is offering (subsidies that ALP governments in Victoria and Queensland are taking steps to gain a greater share).

Following the eradication of coal in South Australia, the next stage of the destruction of the Australian electricity supply industry is the closure of Hazelwood. Even before this has happened, it has already required actions to save, the Portland aluminium smelter hit by consequential price rises. But Portland's rescue is at the expense of other consumers who see their wholesale electricity prices doubling.

Turnbull, in vanquishing coal, has not been able to rely on gas because state governments, bowing to pressures from mystics of the left and right, have stifled new supplies. Now he wants to jawbone the gas suppliers into subsidising his campaign with artificially low prices. But the gas is only there at a steep price – though less than the threefold cost of wind versus coal.

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In steps Elon Musk with a plan to sandbag South Australia's unreliable supply system with storage batteries at a cost of some $300 million (steeply discounted if he does not complete the job in 100 days). The prospect of more honeypots being laid out by Canberra has attracted the usual subsidy seekers – including the Garnaut-Hewson duo at Zen Energy – who find government a softer touch than consumers.

Lost within the battery sound bites is the reality: batteries store but do not create electricity. If we were to completely offset the irregular nature of wind in South Australia and move to a full wind/solar system we'd have power at three times the cost of coal plus whatever is the final price for the batteries.

Turnbull and his acolytes in the media as well as direct employs have not bothered telling us this. They may not care as they are focussed on the green chimera which has inoculated them with constant tales of how much cheaper exotic renewables are or soon will be. Cheap renewables are not going to happen. The only feasible strategy to pre-empt economic disaster (and political penalties) involves preventing the closure of Hazelwood after which, policy sanity might be restored. This though is unlikely to happen on Turnbull's watch.

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Alan Moran is the principle of Regulatory Economics.

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