The Killing Season Begins: Renewable Energy Disaster Puts PM Malcolm Turnbull at Risk

In Canberra, political knives are being quietly sharpened in back rooms and corridors, with one target in mind.

Malcolm Turnbull knifed sitting PM, Tony Abbott in September 2015, on the basis that Abbott had lost public support. Whatever Turnbull thought he might have done in power, if that included sorting out Australia’s self-inflicted power pricing and supply calamity, he has failed abysmally.

The fact that power prices in Australia are now the highest in the world, and warnings have been given about inevitable blackouts this Summer and beyond (whenever the sun goes down and the wind stops blowing), makes government backbenchers nervous. Rather than watch their own seats disappear into the hands of their opponents, quite rationally, Liberal and National MPs are considering giving their hapless leader the chop.

Killing season is on the cards
The Australian
Chris Kenny
14 October 2017

For most of us, the Christmas break is so close we can almost smell the food. For Malcolm Turnbull, it is a sanctuary almost within reach but with mortal dangers looming in between.

Picture the Prime Minister as a wildebeest in a David Attenborough documentary, trying to cross a crocodile-infested river. If he can wade through the muddy waters there will be a moment of relief on the far bank before he carries on, scouting the savanna for lions and hyena.

Canberra’s killing season is upon us again. Regular as the monsoon rains, the final parliamentary sittings of late spring and early summer have a habit of culling wounded leaders. Ask Simon Crean, Kim Beazley or Turnbull himself, cut down by Tony Abbott in December 2009.

There is much about the current climate that is redolent of 2009. They couldn’t do it again, could they?

This is the rhetorical question being posed in exasperation within political circles right now — not only by journalists and onlookers but by the Coalition players themselves as they ponder what to do about their seemingly intractable predicament of policies, personalities, polls and paralysis.

Climate and energy policy, once more, is the catalyst. Like the summer heat, this is a constant vexation since 2007, when climate change in a time of drought helped end John Howard’s career before it played a role in Brendan Nelson’s demise, saw Turnbull dragged down, precipitated Kevin Rudd’s downfall and enabled Abbott to destroy Julia Gillard before triumphing over Rudd.

Now Turnbull tries to match the global diplomatic consensus on carbon emissions reduction targets with a long-term policy that can contain electricity prices and appease his partyroom and the Coalition voter base. Just like 2009.

Abbott rails against the zeitgeist with a sceptical and intelligent critique of an approach that can do significant economic harm without providing environmental benefits. Just like 2009.

Labor dominates in the polls, smug with climate virtue and preaching clean, green policies with less of an eye for economic consequences than for stirring Coalition divisions. Just like 2009.

There are also important differences. Some of the intensity has gone out of climate alarmism; Tim Flannery’s predictions of dry dams and endless summer are now a running joke after rivers filled and desalination plants became expensive white elephants.

The decade brought admissions of a pause in global temperature rises, controversy over the temperature records and an easing in some of the language and forecasts through the Intergovernmental Panel on Climate Change even while it firmed the thrust of the science and trends.

And we have seen the consequences of domestic climate policies. Not on the planet — most people now realise that with Australia accounting for only 1.3 per cent of global emissions our efforts can pay no environmental dividend — but on the electricity sector. We have seen the future and it is South Australia.

That state’s 50 per cent renewable energy share has resulted in an over-reliance on interstate power leading to a statewide blackout, supply shortages and the most expensive electricity in the world.

The argument now made forcefully by Abbott — despite almost universally deceptive mockery from the ABC, Canberra press gallery and wider media/political class — is stark and intellectually incontestable: our climate policies have delivered economic harm that will only get worse and they have not (and cannot) deliver discernible environmental benefit, therefore we should pay less attention to emissions targets and focus on energy costs and security.

The blame for this mess is shared by Abbott, Turnbull and Labor. For a decade the hotly contested arguments focused on emissions trading, carbon taxes, direct action and clean energy targets while the real damage was being done by the widely supported renewable energy target.

Until now the RET has been a politically easy method to meet reductions targets in a popular fashion — the abatement of least resistance. Both sides of politics were blind to the distortions of this market intervention until it was too late.

Intermittent generators were never obliged to provide back-up for when the wind didn’t blow or the sun didn’t shine. Yet they were encouraged to supply the grid with power at low or even zero cost, pricing coal-fired and gas-fired generators out of the market.

The rise of renewables meant we needed more rapid-response gas-fired back-up generation but those suppliers couldn’t lock in gas contracts when on any given day their output might be undercut by wind generation. The renewables are given guaranteed returns but carry none of the risk.

Now, most of the gas has been contracted offshore, coal-fired baseload power is shutting down and no one in their right mind would invest in new thermal plants or upgrades.

It is a disaster. An energy-rich nation — a leading energy exporter — now has expensive electricity and is in short supply.

If ever there were time for Abbott’s policy message, it is now. Turnbull is crab-walking towards some kind of compromise position that recognises the higher priority of price and security but still delivers the Paris emissions reductions commitments.

Even Chief Scientist Alan Finkel has made clear that emissions targets necessarily will cut across price and supply goals. You can’t have it all.

If the Prime Minister and his Energy Minister, Josh Frydenberg, deliver a policy that somehow picks a sweet spot and retains a strong point of difference with Labor’s ominously ambitious plan to take the whole country down the road to SA, then Turnbull will see Christmas and beyond. But the potential for failure or dismal disappointment is immense.

All the while other issues bubble along: the GST carve-up debate, gay marriage implement­ation and the fallout from the dual citizenship shambles. Crocodiles are everywhere and there is a lot of river to cross.

The hysterical response to Abbott’s London speech this week shows how irrational the climate debate has become. Journalists and politicians pretend there has been a fundamental shift from the former prime minister on the issue whereas, for all the policy missteps and repositioning by all players, Abbott’s acceptance that climate change is “real” and that humans have an impact, but that policy responses have often been over-egged, is one of the few consistent strands across the decade.

At his urging, Coalition policy is reverting strongly towards this position after a flirtation with a clean energy target. The question is whether Turnbull can convincingly prosecute the argument and, if there were to be another leadership conflagration, whether Abbott could be a contender in a replay of the Rudd-Gillard-Rudd regurgitation.

Anything can happen and it would be foolish to rule out Abbott. The government is drifting downstream. It saw how Turnbull campaigned last time. If events conspire to cause another spill, the partyroom will want someone who can expose Labor and save seats.

Labor is most vulnerable on the same issues that hurt it in 2013: fiscal plans, border weakness and climate evangelism. Can you think of anyone in Coalition ranks who can take up the fight to Bill Shorten on those issues?

Much is made of Turnbull’s self-imposed metric of 30 Newspolls — the number Abbott trailed in before Turnbull toppled him. The Prime Minister has now lost 20 on the trot.

Tallying the period behind in the polls, rather than counting the individual polls, brings the records closer together. Abbott trailed for 16 months before being brought down; Turnbull has been behind for 13 months.

An ugly season approaches. It is less than three months until Christmas.
The Australian

Chris might stop peddling the hackneyed tale that wind turbines ‘supply the grid with power at low or even zero cost’.

What Chris probably meant to say is that wind power outfits can deliver power to the grid manager and happily receive nothing for it in the spot market. Indeed, wind power outfits in South Australia literally pay the grid manager to take their skittish wares.

What Kenny ignores is that the wind power outfit collects a Renewable Energy Certificate (currently worth $85) for each and every MWh delivered to the grid. That cost is added to retail power bills. In the majority of cases, the wind power outfit holds a Power Purchase Agreement with a retailer, under which it will receive a fixed and guaranteed price of around $110 per MWh, and it receives that amount irrespective of what it receives in the spot market. Hence the ability to literally give away electricity.

The REC subsidy is not zero cost: $85 per REC (under the LRET they are designed to trade at $93) compares with the cost of delivering coal-fired power to the grid of less than $40 per MWh. The cost of that subsidy to power consumers will top $2.6 billion this year alone and reach $3.1 billion a year from 2020 to 2030 (for more detail, see our post here).

Chris Kenny is on stronger ground when he suggests that Tony Abbott has a real prospect of toppling Turnbull to take charge of the Coalition and the victory at the election. STT’s Canberra insiders tell us that Tony has the numbers and that if there is a spill, Abbott will take the prize.

Either way, Malcolm Turnbull’s days are numbered. And it was his failure to tackle the largest single industry subsidy scheme and the greatest wealth transfer in Commonwealth history that will mark him out as one of Australia’s great political failures.

Knifed once, is Tony about to return the ‘favour’?

About stopthesethings

We are a group of citizens concerned about the rapid spread of industrial wind power generation installations across Australia.

Comments

  1. Can’t wait for Turnbull to get tossed aside one way or another. He and his cronies have no intention of dropping the RET system. They might remove the name, but the underlying mechanism will still be in place as a precursor to a carbon tax. It’s like playing Follow-the-Pea. If his backbenchers haven’t worked this out yet, then the entire party deserves a thrashing at the polls.
    Like the electricity users who want to use as much electricity as possible and bring on a blackout crisis sooner rather than later, perhaps the best option is to vote labor or green and bring on an economic come-to-Jesus event as soon as possible.

  2. Jackie Rovensky says:

    Even if Turnbull bit the bullet and dropped the RET tomorrow he has shown no true leadership or desire to do the right thing during his time as our PM.
    Whether he has found it hard and distracting not being able to txt constantly which may have produced an element of withdrawal is of no importance, as our Nations leader – a position he coveted – he is obligated to work for the peoples interests and not his own. He is obligated to ensure things happen to secure our energy needs that are produced in a cost effective manner that does not cause harm or loss to any citizen of this nation.
    If he cannot ensure his every effort is for the people of this nation he should step down and let someone who can take over.
    He still has time to show leadership, he can stop the RET ( and therefore the rot) immediately. This would ensure those who have lied, pilloried and held the people of this Nation to ransom are brought to heal or maybe even demise.
    Does he have the disposition or character to do this, to go against his personal ideology????

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