- One energy company executive, who asked not to be named, said the industry was beside itself.
“One of the most concerning developments in politics is that the quality of an argument no longer matters,” he said.
He went on to say that they all knew we needed to head for zero emissions. They just wanted to know what the rules would be on the way.
That was from the AFR article Labor backs the NEG as political mess sends power prices up. The print edition carried it as a front page headline story:
Political power price hit
Here’s what has happened on prices:
Opposition energy spokesman Mark Butler pointed to the Energy Security Board modelling which showed an annual saving of around $150 a year for the NEG which would be due largely to investor certainty. That is quite apart from the cost of energy production and I think can be attributed to sentiment and cheaper money because of reduced risk.
The modelling also showed that having no policy would add another $300 to bills over a decade.
The article goes on to say:
“I can’t see how the death of the NEG will have helped suppress future prices. Future contracts represent the market’s consensus view of where electricity prices are headed,” Energy industry expert Paul McArdle, who is the chief executive of energy software company Global-Roam, said.
Future prices in most states started heading north from mid-August in most of the 36 contracts as investors saw the Coalition’s signature NEG slowly being dismantled, according to Global-Roam.
Future prices for 2019 have jumped to $86.77 per megawatt hour in NSW, $92.93/MWh in Victoria, $72.42/MWh in Queensland and $96.71/MWh in South Australia, according to ASX Energy.
PM Scott Morrison has separated responsibility for energy and climate. Senior cabinet members simply assert that we will meet our Paris commitments of a 26% reduction in emissions “in a canter” (it was actually 26-28% across the board), from the cherry-picked starting point of 2005, as against the more usual starting point of 1990 used by serious countries. For a good example of how they handle this question, see Stephen Long’s There’s a certain Trump-like quality to Australia’s discourse on emissions reductions:
The PM reckons we’ll meet the targets “in a canter”.
“We’re on track to achieve them,” the new Environment Minister, ex-mining industry lawyer and mining executive Melissa Price, also reassured radio listeners, adding that she supports the construction of new coal-fired power stations.
Foreign Minister Marise Payne — back from meeting Pacific Islands leaders whose nations literally face an existential threat from climate change — joined the chorus, as did Energy Minister Angus Taylor.
Australia is on track to “meet and exceed” the Paris commitments, according to Trade Minister Simon Birmingham.
“We are already more than meeting the 26 per cent that was set down in the Paris agreement,” National Party leader Michael McCormack confidently told David Spears on Sky News, though when pressed, he was a bit unsure about what information that claim was based on.
“Well it’s er, based on, er, the figures that er, the data that is, er, produced by those people who measure emissions, as far as I’m aware,” he said.
these reassurances are at completely at odds with the Government’s own official advice.
Australia’s commitment to the global community is to cut greenhouse gas emissions by 26 to 28 per cent below 2005 levels by 2030.
Just before Christmas last year, the Australian Government published a report which suggests that — without significant policy change — Australia will miss that commitment by a long way.
Emissions in 2020 will be just 5 per cent below 2005 levels, according to the official projections and — without further measures to cut them — emissions will grow by 3.5 per cent on 2020 levels in the 10 years to 2030.
In other words, we’ll go backwards in the coming decade.
As seen on this graph, when reality is inconvenient you just draw a dotted line to where you want people to think you are going:
In truth climate minister Melissa Price has been tasked with coming up with the necessary plans, but it looks like mission impossible with the energy sector policies in shambles.
Problem is, we don’t just have inaction, we have an erratic government that seems capable of just about anything. The AFR article says:
The Australian Competition and Consumer Commission’s 56 recommendations on the electricity market were predicted to bring electricity prices down by an average of $409 by 2020-21, but the Coalition cherry-picked a handful of market interventions, including setting a default contract price and the federal government helping underwrite new generation, rather than all, the recommendations.
There is much hand waving and threats of using a “big stick”, meaning breaking up companies and compulsory divestment. Tony Wood from Grattan:
“People will still invest in things, but there are big questions about whether the government is going to start bashing up AGL again about keeping Liddell open, will the new government stick with the ex-prime minister’s nation building project Snowy 2.0. There are so many moving parts and we don’t know what’s going to happen.”
We have full-scale sovereign risk.
Killing the NEG has set Labor free. It had been inclined to support the NEG for the sake of achieving bipartisanship. Now Mark Butler says:
- Labor was talking to stakeholders “about a policy that will pull through the investment we need to renew a system that is getting old and increasingly unreliable, will cut pollution, drive jobs, and particularly put downward pressure on power prices once and for all”.
He all but ruled out carbon price schemes such as an emissions intensity scheme because they “require a level of bipartisanship”.
Meanwhile Giles Parkinson points out in his piece in the price hikes that the large coal burner Loy Yang A has just tripped four times in five days:
Old coal is neither dispatchable nor reliable.
Meanwhile Morrison has pulled a number from somewhere (there is a rude explanation for this which seems the most likely) by claiming that:
“Labor will legislate a 45 per cent emissions reduction target that will push power prices up by $1400 a year.”
I searched and all I could find was this – Coalition’s national energy guarantee predicted to drive up power prices:
New modelling forecasts Labor’s 45% target will force down Australian prices but government’s 26% will not.
On Friday 20 July Reputex modelling showed;
Over the life of the Turnbull government’s scheme, wholesale electricity prices are forecast to fall initially, reflecting the entry of already committed renewable capacity, then rise above $70 per MWh after the Liddell coal plant in New South Wales closes, then climb to $80 per MWh after the expected retirement of Yallourn in Victoria 2028.
But RepuTex says if the emissions reduction target was higher, at 45%, the policy would impose a constraint on emissions from coal-fired generators, and drive more new investment in large-scale renewables, adding more than 22GW of solar and wind capacity.
“Similar to the price decline under the 26% scenario prior to 2020, the competitive pressure from higher solar and wind energy is modelled to push wholesale prices lower, eventually resulting in the closure of excess coal capacity,” the analysis says.
The modelling assumes the AGL-owned Liddell plant closes in 2022, with other coal plants retiring closer to 2030. It then assumes renewables will displace some dispatch of gas generation during the day, which increases the opportunity for energy storage of excess renewable energy.
“As a result wholesale electricity prices oscillate around $60 per MWh through to 2030, rather than rise above $80 per MWh as seen under the low investment scenario under a 26% Neg,” the analysis says.
Stephen Long is right, there is a Trump-like character to this government.