Slow Burn: Australia’s Renewable Energy Fiasco Causes Continued Economic Destruction – No End In Sight

The proof, as they say, is in the pudding. Following the various angles pitched up by the wind industry, its parasites and spruikers is like playing chess with a madman: it’s exciting, but you have absolutely no idea what move he’ll come up with next.

Notwithstanding that Australia’s renewable energy wonderland, South Australia continues to suffer the highest retail power prices in the world, the boys and girls over at ruin-economy and yes2ruining-us keep on ranting about how wind and solar are as cheap as chips and how, one day soon, those with the appropriate kind of faith in sunshine and breezes will enjoy plummeting power prices. Except … except … except, they never, ever do.

Blind faith and dogged ideology aren’t substitutes for logic and reason. And it’s the former attributes on display in the hotchpot of policies being promoted by PM, Malcolm Turnbull and his hapless sidekick, Josh Frydenberg.

Frydenberg, as Australia’s nominal Energy Minister, continues to disappoint, as laid out in this Quadrant piece from Alan Moran.

Frydenberg: Saviour or Suicidal?
Quadrant
Alan Moran
5 January 2018

The Member for Kooyong, mooted as a prime minister-to-be, earnestly believes he is cushioning the cost impositions of the disastrous renewables program. His timidity, and an apparent wish to cruel rival Tony Abbott’s return, may damage his prospects while definitely harming the nation.

In the slow news period that is the first few days of the year, The Australian broke a story about dissension in the Coalition ranks regarding the “in principle” decision, announced by Energy Minister Josh Frydenberg, to allow Australian firms to acquit their carbon dioxide emission obligations by buying overseas credits.

Mr Frydenberg was at pains to say this merely advanced a decision to “consider” these measures taken when Tony Abbott was at the helm.  And when Mr Abbott and others denounced the option of overseas emissions purchases, which will, of course, be either totally bogus or downright fraudulent, Minister Frydenberg made a smart-alec comment: “It is worth noting that Mr Abbott’s position on international permits is closer to the Greens than that of Australia’s big employers.”

That disingenuous remark was made in spite of the minister being fully aware that Abbott’s position now – and then – was diametrically opposite to that of the Greens.  And, to the degree that business leaders favour the policy, this reflects their interests in reducing the costs of the carbon impost that the present Prime Minister and the opposition leader require.

Perhaps Minister Frydenberg also was simply trying to claim a continuity of support for what he saw as the least-worst option available to him, but bagging his former leader made him appear to be undermining a rival to his likely and widely mooted ambition of becoming the next leader of the Liberal Party.

Acting Opposition Leader Tanya Plibersek was quick off the mark in accurately describing the brouhaha as early evidence of Coalition internecine in-fighting.

Faced by the reverence of Mr Turnbull, and his departmental head, Martin Parkinson, for wind and solar energy, the Frydenberg strategy has been to ensure the costs of the policy are fully understood, including requiring the inherent unreliability of “renewable” plant is recognised by forcing those contracting to buy it also to buy a “firming” contract as insurance for when it is unavailable.

This feeds into the National Energy Guarantee, which will allegedly — emphasis on “allegedly” — provide us reliable energy at $110-115 per MWh (a little over twice the price that would be available under the coal-based system now being deliberately destroyed).  It will also provide a pathway to meeting Australia’s targets under the Paris Climate Change Agreement which specify emission reductions of 26%-28% (50-52 per cent per capita) on 2005 levels by 2030.

The progress on that path — how each year’s target will be set and what disciplines will enforce it — are all left unexplained.

These matters take on an ethereal nature when set against the reality of international developments.  Now that Trump has taken the US out of the Paris Agreement, countries having agreed to abatement measures (chiefly the EU Japan, Korea, Canada as well as Australia) account for only one quarter of global emissions.

Even their one-quarter share of emissions overstates their importance since any carbon taxing actions they take will ensure their energy-intensive industries shift to developed countries with no carbon taxes.  Australia is already seeing this with the departure of aluminium smelters, previously the nations’ paramount manufacturing sector (Kurri Kurri in NSW and Point Henry in Victoria have already closed).

Compounding this is the actions of President Trump in making the US more business friendly.  Not only has the president rejected the Paris Agreement, reversing the Obama Era restraints on coal and gas, but his taxation reforms and deregulatory agendas are proving extremely attractive.  The Pratt organisation, the Visy group of companies, has committed to a $2 billion expansion of its US pulp and paper business. Australia is too uncompetitive for the Pratts to make such an investment at home.

Trump’s policies fan the flames that were ignited by the exclusion of the developing world, accounting for two-thirds of emissions, from any meaningful abatement obligations.  The severity of the adverse impact of self-harm policies, like carbon taxes, is much diminished when the policies are coordinated.  The lost income is much greater when major nations refuse to play the game and attract resources from those locations where punitive measures are in place.

The US is already seeing an economic upsurge, with growth in factory output reinforced by strong investment activity.  If this persists it will force the unwinding of the harmful policies that are preventing Australia and other countries sharing the benefits of the sort of policies Trump is implementing.

Meanwhile, for Australia, not only have abatement-driven energy policies brought a doubling of wholesale prices, but every hot day tests the electricity system’s reliability. Such has been the induced depowering of the Australian economy by renewable subsidies that the market manager has to hunt out firms willing to power-down in hot spells, plus the absurdity of embracing carbon-belching diesel generators to keep the system operating.

But the search for palliatives is unabated.  The Prime Minister’s favoured Snowy 2 pumped-hydro plan was initially costed at $2 billion.  But the (mainly redacted) feasibility study puts this at $4 billion, with one observer estimating an outcome price at over $8 billion for a largely worthless investment.

Australia seems a long distance from adopting the novel Trump solution of allowing the market to operate freely and without subsidies, a system that at the turn of the present century gave us the cheapest electricity on earth.  Hopefully we will be startled into a return to common sense rather than a continuous pursuit of costly gestures to shore up the increasingly unreliable and costly system created by regulations.

Alan Moran is the author of Climate Change: Policies and Treaties in the Trump Era
Quadrant

Malcolm and Josh: Australia’s Crack Economic Suicide Squad.

About stopthesethings

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

Comments

  1. Andre Den Tandt says:

    Note to editor: the last three paragraphs are a repetition of the previous three. Otherwise it’s a great article, one that Canadians, especially those in Ontario, understand only too well.

  2. Jackie Rovensky says:

    CSIRO has a department: Weather and Energy Research Unit, which within there is a section ‘Coal Based Electricity’. there isn’t very much information about this section – plenty on wind and Windlab which grew from CSIRO research. Though some information can be found at:

    https://www.csiro.au/en/Research/EF/Areas/Coal-mining/Advanced-carbon-power/Direct-Injection-Carbon-Engine

    The Coal Based research has ‘developed a new method of coal processing to produce MRC fuel by reinventing the physical cleaning process.’
    Yes on the website they say this can be used for backup of ‘Renewables’, but they would say that as so called ‘renewables’ are the flag waving section of this Department within the CSIRO. Who’d be foolish enough to suggest coal could make a comeback and be considered worthy of top shelf positioning in our energy supply?
    You have to wonder why Frydenberg and Turnbull haven’t put this forward as a solution to our problems.
    Perhaps because it goes against their true Green/Labor leanings! Which requires them to ignore one of this Nations most prolific commodities – coal.
    Amazing considering using coal would provide many more jobs across the energy system than Wind can.
    Security of supply and affordability is the most important thing our Federal and State Governments should be looking at.
    Turnbull jumped in the dirty end and hasn’t pulled himself out and Freydenberg is a man who cannot give true allegiance to anyone and would do well to remember as others should – Politicians come and go at the whim of their electorate.

  3. The proof is not in the pudding. It goes “The proof of the pudding is in the eating”.

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