The Australian energy debate rages on. There’s certainly a lot of noise, plenty of drama, a heap of finger pointing, and every proponent is claiming justification and the moral high ground for their energy agenda and position.
However, apart from the death of the NEG and a federal leadership spill, has anything really happened to progress the energy debate? That’s a good question, but a little tricky to answer, as the term ‘progress,’ in this instance, should be considered somewhat subjective.
Ultimately, is there actually something to report? Or are we locked into the 24/7 news cycle where every angle of this debate is exploited and rehashed ad nauseum, to the point where we are bored, totally confused, profoundly apathetic, or perhaps all three?
In truth, for better or worse, it’s kind of energy business as usual here in Australia. Let’s have a brief look at the key players and core inputs as they stand currently. You can be the judge as to whether there has been progress, improvement, regress or stalemate.
Please note: We’ll refrain from taking sides here and just present the state of play in as brief a summary as possible.
Firstly, let’s revisit, very quickly, why there is an energy debate in the first place.
The current government, against every conceivable trend and review, wants to revert to significant input from fossil fuels to power Australia. They want to do away with emissions targets, scrap renewables subsidies, and subsidise coal power generation (current coal subsidy insight here). If they could, they’d also give Paris the middle finger, Trump style.
Nobody else, apart from coal miners, shock jocks, climate change sceptics, and those of us who have been convinced that renewables are the reason for high electricity costs, wants this fossil fuel revival.
With a couple of decades of non-existent energy policy, big energy wants to know what on earth is going on so they can invest accordingly. In the absence of clear government policy, they simply charge more, (or rort the system) citing market forces brought on by a complete and perpetual lack of federal energy policy. This makes the rest of us very upset.
Those parties, political and otherwise, as well as many an Aussie citizen desperate to avoid the consequences of climate change, are arguing very vocally and very strongly against the apparently regressive energy policies of the current federal leadership. We’re not so happy as the alternative position on energy seems a little weak.
Without clear direction from Canberra, the states are doing their own energy thing, as is their wont. The NEG certainly ruffled the feathers on many a premier, adding further fuel to the fight…’debate’.
So that’s it. No-one can agree on energy. Hence, the debate. We, the people remain more or less in the dark, yet we’re still required to pay the electricity bill. Let’s look at a little more detail. The operative words here; a little.
1. The Federal Government
The Morrison government, fresh from its NEG policy driven leadership coup, is making no secret of its desire to revitalise and extend the role of coal in our power generation. In fact, they’re staking their claim to power on it, under the guise of cheaper, more reliable electricity generation for the Australian people.
We are aware that the main players in the Liberal leadership spill are climate change sceptics. We are also aware that our energy minister is an activist against wind power generation, despite his statement that he does not deny climate change. Clearly, ideology is a significant contributor to the situation here.
The Government intends to cease renewables subsidies by 2022 yet intends investing billions in new coal power generation subsidies. They (we) will have to invest this money, because corporate and private enterprise will no longer touch coal power generation investment.
The Libs will abandon emissions targets also, stating we will reach our Paris targets anyway. Interestingly, the Morrison government is a signatory to the Paris agreement, yet has no policy to meet the targets.
In short, the Federal Government intends to nurture the extension of coal-fired power and leave emissions targets alone and renewables to fend for themselves. There is no policy on vehicle emissions reduction and certainly no policy on emission reduction for agriculture.
2. The Federal Opposition
The Shorten Labour federal opposition has a clear policy of 50% renewable power by 2030. His prefered scheme, The Emissions Intensity Scheme comes at a cost of around 48 billion to the economy. While the scheme was lambasted by the government as profoundly costly to Australians, the CSIRO and the Australian Energy Networks Australia indicate Australians could save in excess of $200 a year on power costs.
Like the Government, the opposition appears to have no policy relative to agricultural and vehicle emissions.
Shorten intends to keep a lid on power prices by increasing domestic gas supplies. To ensure enough gas remains here in Australia instead of being sold to offshore markets, he proposes a gas export control trigger. It’s not clear how this “control” would be enforced apart from providing the ACCC with new powers.
In summary, while energy policy is not exactly clear in detail, you can rest assured that Labour will continue to do what opposition political parties do best. Oppose the incumbent.
3. The States and Territories
All but Western Australia and NSW have significant renewable energy targets. NSW has no renewables target but has a target of net zero emissions by 2050. The rest well and truly outstrip federal renewables targets sharing similar renewables and zero emissions goals. As the NEG policy never saw the light of day, the states and territories continue to set their own energy agenda and policy.
NSW and Queensland, still very rich in thermal coal, will continue to mine while constructing energy policy to power their states via renewables. Both NSW and Queensland have significant wind and solar plants under construction and in planning.
Tasmania is already nigh on 100% renewable, essentially by default. The ACT has the same ambitions to reach 100% renewables by 2022. It’s diminutive size, however, makes the feat little more than symbolic in the scheme of things. Size aside, they were very potent as a persuasive critic of the NEG.
The Victorians, while late starters, have just launched a scheme to subsidise 650,000 solar rooftops, demonstrating renewable energy is firmly on their agenda. This is a big renewable move for the Vics, in spite of being very slow off the renewables starting blocks. The Northern Territory has a renewables target of 50% by 2030, yet policy to achieve it is still at the consultation stage.
South Australia is still setting the benchmark for the adoption of renewables, already close to the lofty 50% target. They will reach this goal by 2022, even though the local Southerners are suffering from Australia’s highest electricity prices. It should be noted, that despite the right wing blaming renewables, the SA high electricity costs is actually far more complicated.
In short, while Canberra ‘debates,’ the states are at least moving forward, however disparately and effectively, unilaterally. No change in the status quo here. Click here for further insight to the states and territories.
4. The Energy Markets. Gas and Coal Electricity Generation
Corporate energy, contrary to the wishes of their customers, are far from benevolent associations. They are and will continue to maximise profits as best they can, playing the regulatory hand they are dealt. They are not driven by ideology; they live by economic imperative.
They are also looking toward the future in a time of energy transition which has profound implications for the fossil fuel energy sector. While coal and gas will play an important role as we transition to 100% renewables, their lives as the majority source of electricity provision have relatively little time left to play out.
Coal and gas equate to expensive power, regardless of what the current federal government may preach. For coal, aging power plants are increasingly inefficient and no longer cost-effective. For gas, regulation still struggles to ensure sufficient supply remains in Australia to cap prices.
Irrespective of price gouging, collusion or supply manipulation (as what happened with the gas market), supply and demand will play a determining role in the price we pay for electricity from these providers.
So next month, as the drought continues, expect water heavy coal power to be more expensive. A spike in coal process and gas prices will also ensure we pay more for our electricity.
These companies too, face transition. They will restructure to remain relevant in a future that no longer needs copious volumes of their current products. They will take advantage of present conditions in whatever way they can to maximise profits, while gradually reinventing themselves to survive in a renewables dominant power market.
Importantly, the now strong and increasing competition provided in the form of renewables, will ensure coal and gas cannot continue to name their price without risking market share. Government regulation is currently toothless in curtailing the current fossil energy pricing. It should be noted, competition from renewables, contrary to popular myth, is the only thing that will keep the lid on electricity prices.
5. The Renewables Industry
While climate change and early government incentives certainly hastened the growth of renewables, markets and investment are now firmly behind them and this trend is increasing. Interestingly, it would seem that government inaction on a coherent path forward with energy policy, has also allowed for renewables to gain a very firm foothold. Big investment locally and especially from offshore is seeing big growth in solar and wind.
We are mistaken if we think about renewables simply in terms of global warming mitigation. The “clean energy” billing of renewables tells only part of the story and can be misleading, in a way. Think of renewables in terms of new technology, increased efficiency, more cost-effective and far more advanced energy generation technology.
Now it’s up and running, it’s attracting investment. Big investment. It’s where the future lies technologically and economically and the input of finance from big business is a testament to this.
While the current debate is all about renewables, renewables are somewhat insulated from the noise. Industry and the people (in the form of rooftop solar) have made the decision. It is the future, and rockets from strength to strength regardless of climate change and political loggerheads.
It’s not that complicated really. Political parties are looking for election and re-election and they’ll choose their energy policy or agenda based on ideology, for sure.
Importantly, they’ll push their position only if they believe it has the numbers to get them elected.
It’s critical to remember the primary goal of a political party is to win an election. Effective national management is secondary. We have two leading political parties with significantly disparate views about the way forward with energy, hence, we have a debate. There’s nothing at all extraordinary about this situation.
The complication here is that we are hearing that climate change is demanding desperate measures for mitigation. Again, despite the evidence, opinion is very divided but is an influence. So again, we have a debate.
As for us at the bottom of the debate hierarchy, can we decipher between what is agenda driven energy propaganda and fact? Do we possess sufficient knowledge to discriminate appropriately? For many Aussies, it’s understandably difficult to sort fact from fiction. Therefore, confusion and indeed, division are perpetuated amongst us.
So little has changed, both now and more broadly, in a historical context. This is what we do at times of major transition. Some stand to lose, some stand to win, therefore debate is passionate and often underhanded.
Ultimately, if we don’t destroy the planet, human technological innovation and our economic imperatives will continue to run the show while the rest of us ‘debate’. Business as usual, nothing to see here.
The political debate has not progressed at all, nor will it if recent history is to be our guide. But the move to a new energy paradigm continues and will continue regardless, with every solar plant, and every windmill, every citizen that seeks affordable electricity and every energy company that seeks relevance in the future.
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