Elephant in the Room: Australia’s Renewable Energy Target the Cause of an Energy Calamity

Australia’s energy crisis is all self-inflicted and largely down to the scaremongering waged by global warming catastrophists.

A rolling jumble of false premises and false promises, the frenzied and ill-thought-out reaction to the ‘threat’ posed by CO2 gas has all but destroyed Australia’s once natural advantage of having abundant, cheap and reliable energy.

Here’s The Australian’s Nick Cater on the Genesis of a perfectly avoidable calamity.

Look out when science and politics tell us the future
The Australian
Nick Cater
15 March 15 2017

The broken promises of green energy were as inevitable as they will be costly

A growing mood of catastrophism is enveloping our more serious newspapers as the cost of anthropogenic change to the business climate bites.

A decade of ill-judged environmental and energy policy has exacted a terrible toll on the national economy. There is little chance of the investment needed to rid South Australia of its basket-case status while the government is unable to guarantee a stable power supply. Across the country, household electricity prices have more than doubled in less than a decade, and gas is running out on the eastern seaboard.

A decade ago, Australia enjoyed an efficient and reliable energy market and some of the cheapest power in the world. Hubristic government intervention has changed that and the damage could take decades to repair.

The politicisation of the global warming debate began almost 30 years ago with the 1988 climate change conference in Toronto. It was the start of a series of international gatherings, each larger than the last, with escalating apocalypticism and ever more strident demands for action.

The hyper-dramatisation of the millennial drought and the release of Al Gore’s An Inconvenient Truth set the stage for Kevin Rudd to declare climate change our greatest moral challenge.

“There are two stark choices,” Rudd said in an extraordinary speech in late 2009, “action or inaction.” A pedant might describe it as a single choice constructed around a false dilemma, but his rhetorical point was made.

His government, naturally, would choose action since in modern progressive politics the urge to do something is stronger than the imperative to assess the likely consequences of the thing they are intending to do.

Time has helped illuminate the dewy-eyed naivety of the climate change policy Rudd took to the 2007 election. Ineffectiveness is one thing; the damage caused by the unintended consequences is quite another.

By setting a 20 per cent renewable energy target for 2020, the government privileged the suppliers of intermittent energy — wind and solar — over sources of energy capable of producing a reliable supply.

The costs of the scheme were seriously underestimated. The myth was allowed to percolate that renewable energy was free.

If we thought we’d been let off the hook when the Abbott government scrapped the carbon tax, we were wrong. The collective weight of government interventions, large and small, driven by compassion for the planet, has made us poorer than we would otherwise be. The Garnaut report in 2008 spoke of the massive economic transformation required to adapt to a carbon-constrained future but greatly underestimated the cost.

Its logic was obscure and its economic modelling so ambitious that it was frankly unbelievable. Treasury had forecast Australia’s gross national product for the next 92 years, yet one has only to read old budget papers to realise that their modelling breaks down over four.

Today the Garnaut report, with its lofty, theoretical arguments, reads like a brilliant postgraduate thesis. As a blueprint for government policy, however, it is dangerously flawed.

Yet by 2008 science and politics had become indistinguishable. Science provided the justification for political action; politics provided the grants that sent science heading along a single track.

Some say the politicisation of climate change picked up where the Cold War left off. There are certainly parallels: Marxism, according to Friedrich Engels, was scientific socialism; its theories supposedly held to an empirical standard, based on the methodical observation of history.

Once you understood — or thought you understood — the rules according to which human beings operated, you could build a perfect society and create economic order from chaos. There was no room for dispute because the science was settled; authoritarianism was its natural consequence.

The science of global warming offered the intellectuals another chance to organise the world as they wanted it to be, to take charge of human affairs and to bypass the irksome process of democracy. It was a global problem that called for global action.

It was an opportunity to settle old scores by re-fighting the lost battle of the Cold War: the fight against free markets. It justified a new technocratic world order, constructed in the spirit of Thomas Paine: “We have it in our power to begin the world over again.” And they weren’t shy to admit it. As Christine Figuerres, executive secretary of the UN’s Framework Convention on Climate Change, put it in 2015: “This is first time in the history of mankind that we set ourselves the task of intentionally, within a defined period of time, to change the economic development model that has been reigning for at least 150 years, since the Industrial Revolution.”

From the perspective of free-market liberals, this is bound to end in tears. The massive collective interventions that have distorted the energy market are choking the economy in the 21st century, as surely as socialist interventions did in the 1990s.

An ideological commitment to address market failure has resulted in something worse: non-market failure. Australia is running short of baseload electrical power, but the disincentives for investing are large.

So the South Australian government now talks of taking electricity generation back into public ownership. Others talk about subsidising baseload power plants from the public purse, falling back on the industrial welfare habit.

It all makes perfect sense to the technocrats and central planners.
The Australian

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Nick Cater correctly identifies ideology as the driving force that led to a country, renowned for its energy resources, becoming an international laughing stock, within the space of a decade.

And the punchline of the joke about attempting to run on sunshine and breezes is, of course, South Australia.

Jay Weatherill tries to fix power mess he has denied
The Australian
Editorial
15 March 2017

The crossed wires and short circuits of energy policy in South Australia would blow most political fuses.

When Labor Premier Jay Weatherill announced a $550 million energy intervention yesterday, the paradoxes and contradictions reached the point of absurdity.

Six months ago, in the wake of a disastrous statewide blackout, Mr Weatherill was denying any problem with his electricity system; it was all about “two tornadoes ripping through” the state. “This was a weather event,” he said, “this was not a renewable energy event.” Yet now, after more episodes of load shedding during peak demand, the Premier has decided his grid requires complicated and costly government action on generation, storage, supply and the market.

It is an audacious switch, yet it is overshadowed by the longer view of what has transpired because Mr Weatherill is trying to correct the problems flowing from the outcomes his policies were designed to create.

South Australian Labor’s headlong rush to procure a 50 per cent renewable energy share was designed to force fossil fuel generation out of the market, thereby reducing emissions. Indeed, as gas generators have been mothballed and the state’s two coal-fired generators prepared to shut down, Mr Weatherill rejected requests to protect energy supplies by subsidising their continued operation.

Now he is planning to directly fund the construction of a new emergency gas generation plant and to pool government contracts to encourage another gas-fired outfit into the market. When it campaigned for office 15 years ago Labor promised to build an extra interconnector into NSW and to “fix” the electricity system. It has failed on both these counts but now plans to reduce interstate reliance.

The problem is that the mistakes cannot be undone. As the Premier noted yesterday, the Northern Power Station in Port Augusta is already partly demolished, so it is too late to revisit the folly of allowing the baseload power station to close. Likewise, with enough renewable energy in the state to produce more than 40 per cent of supply — wind permitting — the subsidised energy that has mothballed gas turbines and stymied investments can’t be dismantled.

So the kneejerk intervention from Mr Weatherill is something of a political circuit-breaker. For now it will fix nothing. The state remains vulnerable to the vagaries of wind, fragility of state-based generation and availability of interstate power. Even if construction were fast-tracked, a new gas generator would not be on stream for the critical peak demand period of next summer; and supply will be further constricted before then when Victoria’s Hazelwood power station closes within weeks.

Mr Weatherill’s policy — complete with brochure and website — seems designed primarily as something of a plan for Labor to take to the next election, due in a year. Labor had to do something and now it has a document with something of a plan.

For all that, some of the ideas are worthy of consideration. By allowing landowners to share in royalties the government is hoping to smooth the way for the exploitation of more gas reserves, which is critical to underpin energy security and affordability. Also, on the face of it, bundling government contracts to attract new generation investment is a smart way to make the market work for the state.

Yet some gas generation in South Australia is already underused for the lack of long-term contracts. Mandating retailers to purchase 36 per cent of energy from state-based sources seems more problematic.

As federal Environment and Energy Minister Josh Frydenberg has pointed out, it messes with the National Electricity Market and could put more upward pressure on prices. Mr Weatherill also wants to invest $150m in large-scale battery storage, a cutting-edge but risky use of public funds — especially when the reliability issues it aims to fix are caused by the push to renewables. This brings us to the renewable energy target that funds this push and undercuts investment in other sources.

Labor plans to double the RET, which is already set to deliver an extra $10 billion in renewable investment across the next three years. It is the biggest lever in the mix but Mr Frydenberg and Malcolm Turnbull won’t touch it.
The Australian

Australia’s Large-Scale RET is the elephant in the room. From here until 2031, it operates as a $42 billion tax on all Australian electricity consumers, with the subsidies in the form of Renewable Energy Certificates (RECs or LGCs) directed to wind and large-scale solar.

The market distortion has destroyed the viability of Australia’s base-load generators, led to rocketing power prices and has placed South Australia’s grid on the very brink of collapse.

For some reason Malcolm Turnbull simply cannot confront reality (see our post here). But, sooner or later, the PM needs to front up to the single most destructive policy this country has ever seen.