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Perhaps the worst policy botch ever

By Don Aitkin - posted Thursday, 23 August 2018


There is one over-arching imperative about the National Energy Guarantee: there must be agreement. The Prime Minister says so. The Leader of the Opposition says so. The media say so. The reason is quite clear. Once there is agreement the energy issue can be put aside for a while, and people can get on with other business. Unfortunately the issue itself won't go away. It has nothing to do with Tony Abbott. The NEG has an utterly fundamental flaw, in that its two elements are incompatible. You cannot both produce lower, cheaper and more reliable electricity and gas, while at the same time reducing greenhouse gas emissions in any significant way. Ahead of all consumers is a series of higher prices for both gas and electricity, whatever the politicians say now. Their hope is that you will have forgotten what that was when the next bill arrives.

I think that nearly all those who are involved in formulating this energy policy know that to be the case. But they are trapped. Both the Government and the Opposition are committed in their separate ways to some kind of Renewable Energy Target, which requires a government to subsidise renewable energy sources (meaning more cost to consumers) and make life difficult for those who are producing electricity through burning coal and natural gas (meaning less reliable and more expensive electricity). Indeed, various State Governments and local government entities have made it clear that there will be no exploration for gas, no fracking, no new coal-fired power stations, no new anything that would offend those who are worried about saving the planet. Companies like AGL are doing very well out of following these policy guidelines. Why wouldn't they? Their duty to shareholders is to maximise profits, and closing coal-fired power stations and replacing them with subsidized wind and solar farms is a no-brainer. They are being invited to do it.

Rising prices, however, offer a signal that most consumers get to understand quickly. And the signal hurts. The various 'measures' that Mr Turnbull has put forward, like a new dam on the Snowy to provide pumping water on demand and thereby creating 'clean' electricity are a long way ahead of us, unlikely to have any tangible outcome, and are hardly past the model stage. But, like the cry for 'agreement now', and 'the time for talk has passed', these proposals do nothing other than to put forward further into the future the moment when our political system faces the compatibility issues squarely and says something brave about real policy, and then does something brave about it.

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The Chief Scientist has already offered the brave remark that whatever Australia does about reducing greenhouse gas emissions will have virtually no effect on global emissions, and by extension on global warming. He's right. We can't. Australia is just too small a player in the world. The idea that we can or should be a world leader in this or related areas is laughable. Yet people like to say so. Who would we be impressing? Why would they even notice what we did? Why should they care? Other countries pursue their own national strategies for good reason. We should do the same. That we don't is a sign of real immaturity of outlook on the part of those who are our political leaders.

What exactly are our political leaders worried about? In electoral terms there seem to me to be two, and they're similar. A significant section of the Labor Party is worried about a leaching of electoral support from Labor to the Greens if Labor is not sufficiently exercised about the environment, global warming, climate change and that bag of inter-related issues. And there are some Labor people for whom the matter is no less important than it is for the Greens. Though some readers don't like my use of the term, it seems to me quasi-religious. Christianity has been replaced by Gaia-worship, not in any especially organised way, but as an underlying theme in the way such people see the world. People, too many of them, are a curse on the planet, and they exacerbate their curse through digging up and burning fossil fuels that took ages to accumulate. We are wicked, bad people who deserve to be punished. And it's coming!

The Coalition has elements that have comparable fears, though I haven't encountered any real 'believers' in AGW on the Coalition side. But many Coalition MPs and backroom people, I have little doubt, are fearful of a slide to the Left, meaning the Greens, if the issue were to become important. There are quite a few rural seats, once Country Party and then National strongholds which through demographic change have battles between the Coalition and the Greens, not Labor. 'Don't stir them up!' is the cry. 'For goodness sake let's have some agreement, and it will all go away.' Yet the leaching effect can't really be strong. The Greens' share of the vote hovers at around ten per cent, and has done so for a decade or so. The proportion who care deeply about global warming I would put at about 7 per cent, much the same as in the USA. Yes, one or two per cent in one or two seats could be worrying. But courage, leaders!

The issue won't go away until we face the reality. Australia has large reserves of coal, gas and uranium. All of these fossil fuels could be used to generate electricity, heat houses, keep cities well lit, and all the rest of it, without real difficulty. In the way of our using uranium are a couple of killer cultural weapons. The first is the fear generated at the end of World War II that a nuclear war would be the end of our playing around in any way with this deadly stuff, including the generation of electricity and even the use of uranium in developing medical science. Any media mention of the Lucas Heights facility in Sydney seems to be accompanied with gloom. There is little or no recognition of the lives saved.

That cultural bomb comes with a set of little bombs. Where would the used uranium be stored? While I can't give chapter and verse, my understanding is that any proposal to build a new nuclear power station would require two decades of preparation, paper work and the rest, while banks are apparently reluctant to lend any investment capital. To government would come all the need for heavy lifting. Hence my reiteration of the need for bravery.

And that's just uranium. I should say that in my youth I was reluctant to go down the nuclear path. I do remember the end of the War in the Pacific, and the shock it caused, indeed the feeling among many almost of guilt, that we, the goodies, the Allies, had killed so many ordinary people like us in this new and horrible way. I've changed my mind since, seeing that France has generated 70 per cent of its own electricity from nuclear sources for a long time. The world has in fact managed not to have a nuclear conflict over the last sixty-three years.

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It is the coal issue that really puzzles me. We are prepared to sell the coal to China and India, which use it just as we would. So we are not subtracting the burning of these fossil fuels from the global sum, just letting other countries burn it instead for us. How is this in any way a sane Australian policy for Australians? Beats me. The citizens of those smaller Australian government entities that don't want any search for gas on their turf are nonetheless happy to burn gas discovered elsewhere in their own space- and water-heaters. That's not our problem, they might say, if they had the nerve to say anything.

And all the problems with renewable energy, which have been enumerated again and again, continue to apply. Solar and wind are unreliable sources of dispatchable energy. Yes, you can get around the unreliability, but only by providing back-up that is not in fact renewable. In terms of CO2 emissions there seem to be no great savings if the full cost of the making of turbines (in the case of wind) is taken into account. Solar and wind farms take up a great deal of land, and the connection costs to the grid are important and reduce efficiency. If we were seriously to try (and we wouldn't because the facts become so obvious) to get rid of coal altogether we would need clear and open land of the size of Tasmania. And not many people actually want a large solar array close to where they live. Why would they? They are not attractive sights, at least to my eyes, just large silent factories.

We know all this. We have known it for years. All those who are involved in developing and determining energy policy know it. They have to because that is what happens when you start formulating policy: you learn what has happened so far, and why it didn't work, and why it probably won't work in the future.

But for heaven's sake, let's have some agreement now!

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About the Author

Don Aitkin has been an academic and vice-chancellor. His latest book, Moving On, was published in 2016.

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