NEG becomes a farce

Malcolm Turnbull specialises in scapegoating and threatening, while Josh Frydenberg sits there looking vacant, as well he might, until it’s his turn.

Danny Price in an article well worth reading, says Politicians have destroyed the trust needed to make the NEG work.

Kane Thornton CEO of the Clean Energy Council says NEG car is worth buying, even if tyres need pumping up, the flat tyre to him being the 26% emissions reduction target, which will be met by work under way before the NEG starts. If you want to use that analogy, the NEG is like a car without an engine, because it does no work.

David Leitch has two compelling articles – Energy (In)security Board and its modelling spreadsheet and Know your NEM: The ESB is becoming a laughing stock. If, however, you want to read just one article, read Simon Holmes à Court’s NEG promises death of wind and solar, and even battery storage.

He says:


    Statistician George Box is famous for the aphorism “all models are wrong, but some are useful”.

Nobody expects the modelling to play out exactly, he says, but we would expect the modelling to make a clear case for the NEG.

It doesn’t. In fact I get the impression that the modelling had a different purpose – pretending that a NEG that does no work will lower household electricity bills by $550 pa. Others, including the above-mentioned plus Salim Mazouz, Frank Jotzo, Hugh Saddler, and earlier Bruce Mountain, can’t see how it will. Turnbull is saying that the states will be to blame if they reject the NEG and power bills stay high, and will be punished by angry consumers.

According to Holmes à Court here’s what the Energy Security Board modeller Acil-Allen says will happen as a result of the NEG:

We need to understand that AEMO has a very different view of what will happen with out the NEG. Follow the blue line on this graph from Mazouz, Jotzo, and Saddler:

This is how the ESB see our electricity system ‘transitioning’ to renewable energy over the next decade:

Mazouz, Jotzo, and Saddler derive an instructive graph from ESB modelling:

By contrast this is how Bloomberg saw it late last year:

Holmes à Court:

    The most surprising outcome is the predicted death of the large-scale renewable industry — the modelling forecasts only 14MW of large scale wind and solar over 9 years. (For context, Australia is installing about that much every week of both wind and solar… ).

You need a magnifying glass to see it. 14MW is equivalent to four current model wind turbines.

This is how all this astonishing inactivity leaves emissions reduction:

Note the bar on the right of economy-wide reductions left unaddressed.

Somehow, magically, power bills will plummet. Remember that electricity generation represents only about a quarter of the bill. Several experienced commentators have come up with the same answer – the cost of power generation would need to fall by around 74%:

Mazouz, Jotzo, and Saddler struggle to find explanations, including the cost of money. Policy uncertainty is thought to evoke a premium of around 3% in the interest charged. However, they say uncertainty will not go away with this version of the NEG, Essentially it is too ridiculous to be stable.

I would ask, why do you need to borrow money when you are not doing anything? ESB even sees storage as essentially not happening apart from Snowy 2.0:

Holmes à Court:

    Surprisingly the modelling assumes that there is currently no storage in Australia. In this alternate universe, Australia’s three pumped hydro plants don’t exist — Tumut 3 (600MW), Shoalhaven (240MW and Wivenhoe (480MW).

    There are no new mega-batteries, of the likes of Hornsdale (100MW) or Dalrympe (30MW).

    The plethora of planned pumped hydro projects aren’t going to happen — Kidston, Goat Hill, Cultana, Shoalhaven Stage 2, Tasmania’s Battery of a nation — except for the 2GW Snowy 2.0 project. Apparently household batteries won’t materialise, despite thousands already in use and tens of thousands planned in South Australia’s Virtual Power Plant alone.

The only answer could be that renewables built under the RET between now and 2020 must be doing the work, if the power bill reduction is believable, which it isn’t.

Danny Price is right:


    The government now says the introduction of the NEG will restore investor confidence in the NEM. Unfortunately, the truth will be very different. The introduction of the NEG is a necessary but not sufficient condition for the restoration of investor confidence. The government points to modelling to demonstrate the likely success of the NEG. Unfortunately, the model assumes all the preconditions for the NEG’s success [already] exist.

Seems bodgie modelling has made a mockery of the whole process. You also have to wonder who is calling the shots on the ESB and whether they actually understand which way is up. Price says the whole area is very complex (remember Bruce Mountain said the same). Price says you can count the people who understand the NEG, which he says is deliberately opaque, on the fingers of one hand. That leave room for perhaps one of the ESB members, but no more.

Michelle Grattan says that Frydenberg, along with Peter Dutton, is struggling with the currents in shark-infested waters. AFR cartoonist sees it a little differently:

While all this has been going on a group of scientists have worked out that if the temperature gets to 2°C there is a strong chance that tipping points will take us to 5°C no matter whether we have zero emissions by then or not. Michael Mann said back in 2014 that we are looking at 2°C by 2036.

Time to get on our bike. Zero net emissions by 2030 looks like cutting things a bit fine. The Coalsheviks should be arraigned for crimes against humanity.

Update:

I should have added what Holmes à Court said about reliability, or energy security, especially since Frydenberg was tonight warning Victoria that if they didn’t sign up to the NEG pronto the lights will go out:

    The modelling provides absolutely zero information on reliability, not surprising given that AEMO predicts the network will exceed the 99.998% reliability standard in every region over the next 10 years. The Reliability Guarantee only kicks in if the standard is expected to be breached. The modelling has not even bothered to make the case that the NEG improves reliability.

55 thoughts on “NEG becomes a farce”

  1. Today’s SMH article headlined Energy deal in limbo as states step up their demands, by David Crowe, Nicole Hasham & Peter Hannam, link here, begins with:

    A national deal on energy security is hanging by a thread as Labor state governments issue new demands that appear impossible to meet, challenging the Turnbull government to redraft its flagship National Energy Guarantee within days.

  2. I now added to the post what Holmes à Court said about reliability, or energy security, especially since Frydenberg was tonight warning Victoria that if they didn’t sign up to the NEG pronto the lights will go out:

      The modelling provides absolutely zero information on reliability, not surprising given that AEMO predicts the network will exceed the 99.998% reliability standard in every region over the next 10 years. The Reliability Guarantee only kicks in if the standard is expected to be breached. The modelling has not even bothered to make the case that the NEG improves reliability.
  3. Geoff M, The Guardian covers much of the same ground and states the Victorian demands as:

    Victoria says emissions reduction targets can be only allowed to increase over time “and never go backwards”; future targets will need to be set by regulation; the targets will need to be set every three years, three years in advance; and it wants a the emissions registry to be fully transparent.

    However, Victorian Energy Minister Lily D’Ambrosio told Patrician Karvelas on RN Drive that Victoria would not consider the NEG until the Commonwealth had passed legislation establishing the emissions targets.

    She says that’s not new, but it sounds as though it is. I suspect the idea is to prevent Turnbull telling porkies about what the party room thinks.

    Turnbull said on the weekend that the party room supported the NEG only to be contradicted by several backbenchers, including Craig Kelly.

    Qld minister Dr Anthony Lynham won’t be at the meeting on Friday. He’s a surgeon and apparently will be doing voluntary work for PNG, so they’ll send an acting minister. I hope it’s Mark Bailey, now in Transport, because he was the one that got renewables moving in Qld.

    Meanwhile we aren’t hearing much from the Qld gov’t except that their targets (50% by2030) are nonnegotiable.

    Frydenberg finds state targets offensive because he says it’s his patch.

  4. Brian

    How does Lily D’Ambrosio square these propositions:
    1. Commonwealth must legislate emission targets
    2. Targets should be set by regulation, reviewed every 3 years, with 3 years’ notice of newly revised emission targets.

    ??
    BTW
    Minister Frydenberg should not be miffed by high State targets…. they are assisting the nation to crawl along towards Paris requirements, at a snail’s pace.

    And once upon a time, power supplies were entirely in the hands of State authorities. Down here we had the SECV. I recall another State had the SEQEB.

    No Federal Minister in those days grizzled…. oh wait, the Tassie HEC got into bother when it planned to dam the Franklin River….

  5. Ambi, I was wondering myself how Victoria squared those two positions. The only thing I can come up with is that they want the Feds to legislate a regime that can be managed by regulation according to a framework set by the legislation.

    Apart from electricity being a state matter, states have a right to develop and transition their economies towards a sustainable future. They are also better placed on how to structure how that happens in relation to the states’ topography, population dispersion and need.

    They also want to know that the Feds, having intervened with Snowy 2.0 (like an elephant sitting down in the sand pit), won’t do the same with mad schemes to use their fiscal power to build coal, as the Coalsheviks would want then to.

    The biggest uncertainties are in the LNP party room. It’s more than reasonable for the states to want them sorted before they proceed.

  6. On targets, the ACT has been helpful ib saying, let’s start with 26% but then put in a revision clause that provides for the target to be reviewed when we reach 24%, which would be in 2021, if current forecasts are correct.

    Sounds reasonable to me.

    Otherwise we have Greens with 90% by 2030, ACT with 100%, Tasmania is basically 100% now, Qld with 50% by 2030, Victoria I forget, but I think 45% by 2025, Labor with 45% by 2030, and the Climate Council saying that anything less than 60% by 2030 is not fair dinkum.

    I’ve always said 100% by 2030 for the whole economy, but I think that is a bit late.

    See also Ian Dunlop – NEG: An abject failure of principled political leadership. He says gradualism won’t cut it, we are in an emergency. Also the government should be looking after its people, now and into the future, not killing them:

    Because the brutal reality is that climate risk now has to be handled as an emergency. Either we act, or we face a bleak future. Parliament must work for the people, not destroy them.

  7. Kerry Schott of the ESB told Fran Kelly this morning that the real urgency related to the election cycle and reliability issues. Victoria goes into caretaker mode at the end of October, and NEM legislation needs to be passed in SA after sitting out there for public comment for a month. She says NEG is not needed until 2021, but the reliability issue needs sorting by mid-2019.

    I think she can only be talking about proposed rule changes to allow AEMO to use demand response at their own discretion. I understand they can onl use it now in a specific concrete emergency, and then with the permission of the Australia Energy Commission, which has slow, drawn-out procedures and I think needs involvement of COAG.

    Danny Price, who doesn’t like Audrey Zibelman and thinks the ESB is a dark phantasmagorical empire, complained in his piece linkes in the post that the NEG if legislated would change the game so that AEMO could get rule changes by simply going to the ESB.

    In these days of ‘agile’ management, that seems sensible.

    Demand response kept the lights last summer, and I think is sorted for 2018. However, AEMO can’t set up standing arrangements with major firms and has to repeat the painstaking business by putting out tenders each time, while the feds can hand out half a billion dollars without any such inconvenience.

    Demand response needs to be normalised with longer term arrangements. I think it already is in Qld between the distributors and major firms and even households (google Peaksmart).

  8. On Tuesday, I rang my state parliamentary representative’s office (Paul Toole MP – NSW Member for Bathurst) to urge that the NSW Government NOT SUPPORT the NEG as currently proposed.

    Late yesterday, I prepared and sent a letter to my federal parliamentary representative (Andrew Gee MP – Federal Member for Calare) to urge him to NOT SUPPORT the NEG. My letter began with:

    I urge you as my federal parliamentary representative to NOT SUPPORT the National Energy Guarantee (NEG). Indications suggest the NEG, as it currently stands, will likely lock-in less affordable, less reliable electricity supplies for the National Energy Market (NEM) for a decade, and have minimal effect in reducing carbon emissions beyond what is already planned to occur.

    Topics in my letter included:
    – Continued burning of fossil fuels is an existential risk to humanity
    – Fossil fuels are finite energy resources, approaching a global supply peak
    – Global coal power pipeline is shrinking fast – global peak coal capacity is near
    – New renewables are now cheaper than new nuclear, coal and gas technologies
    – Continued support for proposals for new coal-fired power generator units in the Lithgow LGA is futile
    – The NEG appears to stifle new wind, solar and energy storage development

    My letter includes these statements:

     Humanity must leave petroleum oil, before oil leaves us;
     Humanity must leave fossil natural gas, before gas leaves us; and
     Humanity must leave petroleum oil, fossil natural gas, and coal, before 2050, to mitigate dangerous climate change.

    An emergency response by the Australian Government is required now!

    The Australian Government needs to encourage and expedite a rapid, orderly and just transition away from fossil fuel extraction and use, towards affordable, reliable, zero-carbon emissions renewable energy technologies, to safeguard Australia’s long-term energy security and prosperity. I think the NEG, as it currently stands, will likely obstruct and hinder this critical objective.

  9. AGL full year profit almost trebles on higher electricity prices

    “This increase in prices in the broader electricity market has mostly been a result of the abrupt closure of non-AGL power stations such as Hazelwood in 2017 and Northern in 2016 and higher input costs from coal and gas,” AGL chief executive Andy Vesey said.

    High prices paid by consumers have nothing to do with this of course.
    Nothing to do with the cost of supporting the middle men or privatization of course!

  10. So, as a corporation, AGL is cruising along very nicely, John.

    Even less inclined to be bullied persuaded by Federal Govt pressure concerning its energy generation plans?

  11. And it’s great for us, because when corporations have more money, (whether from increased profits or reduced tax), they inevitably employ more people (Jobs and Growth!) and eventually everybody’s better off – a rising tide and all that.

  12. Can that be true, zoot?
    What about the folk and businesses who have been paying much higher power prices? Hasn’t their spending power dropped? Isn’t it likely that their payments for other goods and services may have been lower recently?

    Wouldn’t that affect jobs and growth, in a negative kind of way?

    I mean good on AGL, lucky b*****ds, but what about the others?

  13. Can that be true, zoot?

    Of course.
    Just ask any Austrian or Chicago school neoliberal market fundamentalist rational economist. He/she will tell you wealth trickles down.
    Unfortunately I have yet to see any evidence of the phenomenon in the real world. And I assume those of us coping with unconscionably high power prices just have to keep in mind, “No pain, No gain”!

    [off topic – I wish there was a sarc tag :-)]

  14. While I’m here , it looks like Mr Turnbull is going to do to the energy market what he did to the NBN.
    What a disappointment he’s turned out to be.

  15. What a load of convoluted jiggery-pokery!

    It is all a compelling argument for the nationalization of the entire electricity and fuel system, followed immediately by the replacement of all coal-fired and diesel driven power stations with renewable energy devices within 450 ~550 days.

    “But, but, but it cannot possibly be done !”

    “Sorry you feel that way, sir. Just step this way; there’s still a bit of room on this tumbril. Now, now, sir, if you come along of your own accord, I’m sure the guards will stop hurting you ….. Next?”

  16. No Austrian or Chicago school neoliberal market fundamentalist rational economist has ever used the term “ trickles down “ in any way other than to illustrate the mendacious missuse of the English language by socialists.

    ( off topic reply to off topic rubbish )

  17. wmmbb: Higher power prices are a defacto carbon tax that, if you believe the theory, will drive down power consumption and associated emissions.
    Schemes like the ACT renewable auction scheme are far more effective, and, if anything will help drive prices down.

  18. From John’s AGL link:

    A large part of the profit increase came from a $562 million gain on electricity hedging contracts which had lost $263 million the year before.

    However, AGL’s standout division was wholesale power generation which reported a more than 30 per cent increase in margins on the back of higher prices.

    Sales revenue from retail consumers rose 9 per cent to $4.1bn, reflecting higher prices which more than offset lower volumes.

    Sales to business rose 4 per cent to $1.6bn despite the loss of two big industrial customers.

    Gas sales fell 4 per cent with higher prices being outweighed by a sharp decline in volumes contracted to industry.

    (Emphasis added)

    I’ve got no idea what that hedging jiggery pokey is about.

    Recently EnergyAustralia (Hong Kong owned) made a mozza. In the SMH, EnergyAustralia triples profit.

    They say prices are going to fall, and this graph shows how:

    That will hardly produce savings of $550 on electricity bills.

    BTW AGL is an Australian public listed company and would be a standard hold in super accounts, so their fortune is spread around a bit.

  19. so their fortune is spread around a bit.

    Thank you Brian. I have been flippant, but the obvious corollary to the LNP’s arguments for reduced company taxes is that company profits are ipso facto good for us all, no matter how they are achieved.
    For the record, I don’t agree.

  20. Jump

    If I may be so bold, the profitability of corporations engaged in production, transmission and retailing electric power, is entirely relevant to a discussion of power supplies in Australia.

    As also are the profitabilies of companies involved in manufacturing solar pv panels, wind turbines, large scale or domestic batteries; and the builders, plumbers abd electricians who install the gadgets on homes.

    Really, without successful private companies, large and small, where would we be?

    Look to your self interest, Sir!!

  21. Of note, the AGL share price went down, principally because the market thinks profits will be harder to come by in the future. AGL is saying the same.

  22. Geoff M, you will note that the article is titled States and territories give National Energy Guarantee the go-ahead — for now.

    They’ve given in principle approval, but have not backed off from their demands. In principle approval allows the NEM legislation to be exposed, so everyone can see exactly what is proposed.

    The Turnbull government gets to proceed with their party room discussion. That’s the next step, we’ll see what happens then, but I heard Shane Rattenbury on radio. They are willing to talk, but the Feds will have to compromise if they want final approval.

  23. Brian

    I’ve got no idea what that hedging jiggery pokey is about.

    As I understand it it’s about risk sharing.
    AGL in this instance acts as the supplier that forecasts energy prices and purchases now energy to paid at the market price at an agreed time in the future.
    A generator of energy also forecasts what the price will be at that time and if AGLs paying price estimate is above the generators estimate then the hedge contract is entered into.
    When hedge losses occur it’s because the purchaser forecast to high and overpaid.
    Hedging is Mr Huge Pockets sharing risk with Mr Lessbig Pockets.
    It doesn’t directly effect the price of the given commodity in the meantime.

  24. Hedging was originally about reducing risk. for example, a company that is placing an order in $US that is used to produce something that sells in $Aus might hedge to protect it from a sudden rise in the value of the $Aus.
    Two problems:
    Hedging costs money since the company will on average be paying someone to take some of the risk. That is money that doesn’t go into reducing prices or paying dividends.
    Hedging departments can change from something that is about reducing risk into a dept that starts speculating in its own right. Can give nice profits for a while but then a bad call made worse by attempts to gamble (sorry hedge) have driven many companies into bankruptcy.

  25. Power prices have gone up in part because of profit taking by middle people who contribute little and an inappropriate marketing system that drives up risk and average prices.

  26. How would the ACT reverse auctions contracts for energy not be hedging ?
    It’s the same principle only the taxpayers are taking on some risk.

  27. Jumpy (Re: AUGUST 11, 2018 AT 8:12 AM):

    How would the ACT reverse auctions contracts for energy not be hedging ?

    Here’s the ACT government webpage on How do the ACT’s renewable energy reverse auctions work? The webpage includes:

    An interesting outcome of the process is that the ACT electricity users are insulated from future wholesale price movements. If wholesale electricity prices increase over time, this will be offset by reductions in FiT payments the community will have to carry.

    Thanks to this approach, by 2020, when the ACT’s electricity supply is sourced from 100% renewable energy generation, electricity prices in the Territory will be much more stable and predictable than anywhere else in Australia. ACT consumers will be protected from extremely high wholesale prices because of the hedging provided by the contract for difference model and will continue to enjoy among the cheapest (and greenest) electricity supplies in the nation.

    This IEEFA article on energy reverse auctions in India includes:

    And it points out that in June, Karnataka introduced reverse auctions for wind-powered electricity, with an upper cap of Rs3.45/kWh, following the success of similar auctions in Gujarat and Tamil Nadu in 2017, when tariffs fell by as much as 50% to as low as Rs2.43/kWh.

    It seems to me that energy reverse auctions are bringing down energy prices.

    You also say:

    It’s the same principle only the taxpayers are taking on some risk.

    Someone has to take-on the risk. If the generators take-on all the risk by speculating then energy prices will likely be higher, and the energy consumer will pay for it. Is that what you would prefer?

  28. Geoff, don’t try to pull that shit.
    I didn’t comment either for or against hedging.

    You confirmed reverse auctions are hedging so your argument is with John that said,

    Hedging costs money since the company will on average be paying someone to take some of the risk. That is money that doesn’t go into reducing prices or paying dividends.

    So you may have a good case, but not with me.

  29. Jumpy: I don’t see the ACT reverse auctions as hedging. They are essentially the same competitive tendering process that is the bread and butter of the industry you claim to work in Jumpy. In this case they are long term contracts to supply similar to the mining contracts I am familiar with.
    Long term contracts give investors confidence and encourage them to offer very competitive bids(=low cost power). The process is particularly effective for renewables because the operating cost is negligible and the contractor is not exposed to the risk of coal and gas price increases.
    Reverse auctions are being used world wide to drive investment in renewables.

  30. John, no, I disagree.
    I’m tendering on specific projects in the short term directly. If a builder offered to pay me more than I forcast the profit margin in 10 years time to be, I’d consider taking it and probably sign up.
    In mining contracts, that you claim to be familiar with, are rife with hedging. If you don’t agree the ACT is hedging, take it up with the ACT Government that stated, to repeat GMs link,

    ACT consumers will be protected from extremely high wholesale prices because of the hedging provided by the contract for difference model and will continue to enjoy among the cheapest (and greenest) electricity supplies in the nation.

    A question I have is what occurs if something like Flannerys Geothermal wins an energy contract in the ACT, despite all the subsidies, and crashes. Who foots the bill ?

  31. Jumpy: In terms of contract mining contracts can range from cost plus (owner takes all the risk) to fixed royalty per tonne (contractor takes all the risk) with lots of cunning variations in between. So I guess you could label all contracts as a form of hedging that reduces the risk level of at least one of the parties.

  32. Jumpy (Re: AUGUST 11, 2018 AT 1:26 PM):

    Geoff, don’t try to pull that shit.

    What “shit” would that be, Jumpy? I asked you a question:

    Is that what you would prefer?

    You could have had a few response options:
    1. Confirm that was your preference;
    2. Deny that was your preference;
    3. Ignore the question; or
    4. ‘Fence-sit’.

    You chose the fourth (‘fence-sit’) option:

    I didn’t comment either for or against hedging.

    The purpose of hedging is to moderate rapid price fluctuations – businesses and consumers need consistent and reasonable pricing to plan and operate. Rapid price fluctuations and higher prices reduce (or eliminate) confidence with consumers and discourage economic activity.

    Here’s the Australian Productivity Commission Inquiry Report info on Hedging in the electricity market, that includes:

    Electricity prices in the spot market are highly variable. The price, which usually sits between $0 and $100 per megawatt hour, can suddenly rise to $12 900 or fall to -$1000 per megawatt hour, depending on market conditions.

    Such price fluctuations potentially expose both retailers and generators to significant risk. Retailers make agreements with homes and businesses to deliver electricity at an agreed price — agreements that must be met even if the price in the spot market rises dramatically.

    You say:

    So you may have a good case, but not with me.

    I suspect with that statement, you are implying that you are against hedging, particularly by governments (but I suspect you don’t want to expressly admit it), and you would accept rapidly fluctuating and higher energy prices, as that would be consistent with your apparent overriding anathema for any government interference in markets. If I have that suspicion wrong, then please do illuminate with us what your “case” is.

  33. On yesterday’s ABC Insiders programme, during the final observations segment (from time interval 55:33), panellist Lenore Taylor (from The Guardian Australian edition) said:

    So, as we enter, or progress through this, our eleventh year of trying to discuss getting a workable national climate policy, there was a story this week ah… from leading researchers around the world about how close we are coming to tipping points, which lead to these feed-back loops, which makes climate change effectively unstoppable. Just putting it out there.

    Perhaps she was thinking about this article? Or perhaps this scientific paper titled Trajectories of the Earth System in the Anthropocene, dated August 6, by Will Steffen, Johan Rockström, Katherine Richardson et al., published in the Proceedings of the National Academy of Sciences of the United States of America?

    Politicians and business leaders don’t seem to be able to get their act together – an abject failure of principled political and business leadership. Meanwhile, the world’s climate gets closer to locking-in irreversible, existential outcomes for humanity.

    And then panellist Mike Seccombe (from The Saturday Paper) said:

    Funnily enough, I’m in sort of the same area, which is ah… given the drought, we all sympathise with the farmers, but they keep electing National Party politicians who don’t believe in climate change. I mean, if… at the very least, you would think that the National Party would start preselecting some people who actually accept the first principle that climate change is happening, that inland Australia is getting drier as a result, and that farming is getting more difficult. That’s all – I just don’t understand it.

    I don’t understand it either.

  34. Geoff Miell,

    “Funnily enough” I reckon the article you refer to at 5.05pm today (August 13th), is based on a scientific paper in PNAS, which you also cite.

    “Funnily enough” Brian referred to it also, in the post above…….
    published on August 8th.

    The paper is admittedly speculative (cannot predict catastrophe with certainty), but points out many ‘positive feedback loops’ in the climate system. [The modelling problem, as usual, is to identify the strengths and timescales of those feedbacks. Suffice it to say, that so many of them being ‘positive’ doesn’t bode well for human, plant and animal comfort.]

    “Funnily enough” none of this is funny.
    Even with my taste for black humour, the joke is wearing very thin.

    🙁

  35. GM

    The purpose of hedging is to moderate rapid price fluctuations – businesses and consumers need consistent and reasonable pricing to plan and operate. Rapid price fluctuations and higher prices reduce (or eliminate) confidence with consumers and discourage economic activity.

    Nonsense, hedging if successfully done ( A ) by the nonproductive party can push prices up above the market rate. On the other hand, if done unsuccessfully ( B ) , push prices down. These hedge fund managers are more generally successful.

    It is true that confidence and security ( C ) to a generator can lower prices.

    Ultimately if the difference between A and B is on the higher side, does C outweigh it.

    Truth is I don’t know, so I’m neither for nor against.

    Your last paragraph is the same shit as above “ I suspect you are implying “ and intentionally miss -positioning me just to attack.
    I’m sure there’d be a well established blog label for that tactic, whatever it is please stop doing it for your own sake.

  36. Geoff Miell:

    The purpose of hedging is to moderate rapid price fluctuations

    Jumpy:

    Nonsense

    Jumpy, are you sure about that?
    This dictionary says (amongst other things) “Its purpose is to reduce the volatility of a portfolio by reducing the risk of loss”.

  37. That definition is wrong.
    It doesn’t deduce the risk, it shares the risk of both profit and loss.
    The price it fundamentally a function of supply and demand.

    I recommend Thomas Sowell’s book Basic Economics.
    Or Economics in One Lesson by Henry Hazlitt.

  38. One thing I’ll say, for what it’s worth, about the NEG is it’s deeply unpopular and receiving ridicule on right wing blogs too.

  39. Jumpy: You quite rightly say:

    One thing I’ll say, for what it’s worth, about the NEG is it’s deeply unpopular and receiving ridicule on right wing blogs too.

    The reason may be that it is lousy policy no matter where people are coming from.
    It might be productive to ask what we would do now if we were starting from scratch and did not have to consider protecting the interests of those who are currently rorting the system or the politics of climate change.

  40. Ambi, you are right about the article and the paper, and my earlier reference to it. I’m hoping to do a post, because from what I’ve heard so far it is more definite about tipping points than anyone has yet been. However, I did hear Will Steffen telling Patricia Karvelas that we still had carbon we could burn and gave the impression that the shit would not hit the fan before about 2045.

    I think that’s way too optimistic. Karvelas said something like”Oh good, we have a little time then” which is wrong and I don’t think Steffen put her straight.

    Lenore Taylor is very knowledgeable about climate, went to the Paris meeting, may have gone to subsequent COP meetings.

  41. John, the NEG is thrid or fourth best option. I think Mark Butler knows that but looks as though he’ll play along in the interests of waht’s politically doable, except for the targets.

    Victoria has an election coming up and is being wedged by the Greens, so I think will play hardball. Laura Tingle report on 7.30 didn’t mention Victoria, which I think will be the biggest hurdle, though the ACT will probably join them.

    Not sure where Qld is at. A pity Mark Bailey was moved to Transport.

  42. Brian at 11.56pm.

    (Hope you’re getting good sleep).
    The problem is both long and short term, ja?

    Lead times for some infrastructure, e.g. tunnels in the Snowy region, are quite long. Meanwhile the CO2 and other greenhouse gases keep emerging, water vapour abounds, deforestation proceeds, etc.

    And the electricity sector is merely the easiest realm in which emissions can be reduced significantly. Low hanging fruit.

    Some progress in manufacturing, transport, ….. and what of agriculture???

    If it’s such a long, hard slog on electricity…. what prospect for strong progress in the other sectors??

  43. Jumpy (Re: AUGUST 13, 2018 AT 7:01 PM):

    Truth is I don’t know, so I’m neither for nor against.

    If you don’t know, then how can you have an opinion about the subject?

    Your last paragraph is the same shit as above “ I suspect you are implying “ and intentionally miss -positioning me just to attack.

    So, I’m not allowed to express my suspicions/thoughts, Jumpy? Joe Stalin would be proud! I’m giving you the opportunity to explain your position, and you just throw up more mud.

    I’m sure there’d be a well established blog label for that tactic, whatever it is please stop doing it for your own sake.

    I’m trying to tease-out the reasoning behind your statements. I suspect you don’t even know – unthinking/blind ideology perhaps?

    Jump (Re: AUGUST 13, 2018 AT 8:59 PM):

    That definition is wrong.

    So, you think you know better than the dictionary definition offered by Zoot (at AUGUST 13, 2018 AT 8:59 PM), and the Australian Productivity Commission Inquiry Report info referred to in my comment (at AUGUST 13, 2018 AT 4:37 PM)? Is that what you are saying?

    Jumpy (Re: AUGUST 13, 2018 AT 9:08 PM):

    One thing I’ll say, for what it’s worth, about the NEG is it’s deeply unpopular and receiving ridicule on right wing blogs too.

    That’s your observation of some others. What’s your opinion of the NEG? Do you have one? If so, what’s your reasoning leading to it?

    My opinion of the NEG is here. Do you have a different perspective? Care to share?

  44. Here’s another tack:
    Hedging your bets
    is a common phrase. Doesn’t it refer to reducing risk, not getting out on a limb where “all your eggs are in one basket”??

    Ambi
    CEO
    Egg Transport Authority
    Safety Division

  45. Phrase Of The Day:

    merchant bankers’ gobbledegook

    emitter: A. Abbott, MHR.

    Q. Are there any merchant bankers, or former merchant bankers, in the Parliament?

  46. SMH article headlined Turnbull gains Coalition support on energy over Abbott’s objections, link here, begins with:

    Prime Minister Malcolm Turnbull has secured the support of an overwhelming majority of Liberal and Nationals MPs for his energy policy, clearing the way for legislation in Federal Parliament as soon as this week.

    Also covered by The Guardian here. It includes:

    While the majority of government MPs spoke in favour of the Neg, five MPs reserved their right to cross the floor once the legislation comes to parliament: Tony Abbott, Andrew Hastie, Eric Abetz, Craig Kelly, and the National George Christensen.

    Another group expressed concerns: Tony Pasin, Kevin Andrews and the National MP Andrew Gee. The former Nationals leader Barnaby Joyce – who, like Abbott, has been campaigning publicly against the Neg – said he would support the policy but has flagged moving an amendment during parliamentary debate.

    Expect higher electricity bills and less reliable power in the 2020s as almost no new investment in renewable generation kicks-in (under the currently proposed NEG) and ageing coal-fired power stations become more unreliable, unless the Senate and states/territories have the sense to extensively modify the NEG to encourage more investment in cheaper renewables.

  47. Wow GM, you’re another one where “ wining “ on a blog is more important than your integrity and honesty.
    Ok, I’ll just treat you like the others and scroll on by.

    Best of luck and fair well with others.

  48. Ambi, Michelle Grattan has the best news report I’ve seen so far on the NEG in Turnbull beats Abbott over NEG, now Frydenberg has to win Victoria. She quotes Abbott at length.

    I think games are being played in that certain parties (Federal Labor and the states) want the NEG stopped, but want someone else to do it. This is frustrating for Richard Di Natale, who perhaps doesn’t understand that politics is the art of the doable, and one thing you have to do is win elections.

    Federal Labor wants labor states to stop it, but the next thing to happen will be the Federal bit, about targets, will be presented to the HoR. I think there Labor will wave it through, so you’ll see Adam Bandt, Tony Abbott and perhaps three of his cohorts on one side and everyone else on the other.

    Labor will then try to amend the legislation in the Senate, and have a reasonable chance of doing so, but it might go off to a Senate Committee before being settled.

    If Labor gets its amendments through the Senate there is no chance they’ll pass the Reps, so we have stalemate, and the states won’t move.

    If Turnbull prevails in the senate, then I think there is no chance Victoria and the ACT will accept low-ball targets.

    That’s where I think we’ll end up, with Labor going to the election promising 45% reduction targets.

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