Our only energy fix has been ‘snatched away’
EVERYONE has been crying out for the major parties to agree on an energy policy for Australia but it's becoming clear this is probably not going to happen.
At an energy forum being held in Sydney today, new Federal Energy Minister Angus Taylor dismissed suggestions a bipartisan agreement was the way forward and pointed to the huge difference in the policies of the major parties.
"I don't know how we're going to get bipartisanship given we have a 26 per cent emissions reduction target … and the other side has 45 per cent," Mr Taylor told the AFR Energy Forum 2018.
Australia's energy policy is in tatters after the National Energy Guarantee was abandoned by the Coalition after Malcolm Turnbull lost the prime ministership.
Now even Labor's shadow minister for climate change and energy Mark Butler has acknowledged defeat. Speaking after Mr Taylor, he said the idea of developing a bipartisan "market mechanism" to address climate and energy policy would not happen.
"We need to recognise that the solution we've been banking on now for a number of years … has been snatched away," he told the forum.
"They (the Coalition) have walked away from the table because they've said they can't countenance any agreement with Labor over climate and energy policy."
Mr Butler noted the two parties got close in 2016 with the emissions intensity scheme, then again in 2017 with the clean energy target and most recently with the NEG this year, but each time the policies were taken off the table largely due to revolt within the Coalition party room led by Tony Abbott, despite the policies having broad support among state and territory governments as well as the business community.
"Now we confront a position … where investors are left with no rules to guide their investment decisions once the renewable energy target starts to taper off in coming months."
As Australia heads towards its next federal election - likely to be held next year - Mr Butler noted there were warnings electricity prices would rise if the NEG was not passed and the futures market was already predicting hikes next year.
But he acknowledged there was no quick fix and said getting the unit price of electricity would be difficult. He said Labor would focus on policies to reduce consumption as a way of lowering bills. It has already announced plans to help businesses with tax write-offs for capital upgrades and software to make them more energy efficient.
He said Australia's energy efficiency and productivity was already lower than average compared to some other OECD countries and China, which haven't enjoyed low prices in the past like Australia has.
"The pathway for really substantial reductions to energy bills for business and households, I think, lie more in an aggressive approach to energy efficiency and productivity," Mr Butler said.
When it comes to the Coalition's approach, Mr Taylor said Prime Minister Scott Morrison had given him one KPI (Key Performance Indicator) and that was to lower power prices while keeping the lights on.
At least one aspect of the NEG may be salvaged, with Mr Taylor confirming the Government still supported a reliability mechanism for retailers to ensure a stable supply of electricity.
He said he would work with states and territories to implement the mechanism as soon as possible and the plan would be discussed at a COAG Energy Council meeting later this month.
The Government will also set up a price "safety net" to stop loyal customers in particular being ripped off and back investment in reliable sources of electricity generation.
When asked about the possibility of a royal commission into the energy sector and what could potentially trigger this, Mr Taylor said he had been speaking to energy companies about prices and was optimistic about achieving a better deal for consumers without an inquiry.
"I think there is a recognition from everyone that we've all got to lift our game and deliver a better outcome for customers," he said.
He warned of potential disruption from competitors and regulators if there wasn't change, which he said had been seen in "industry after industry".
When asked whether he supported keeping the coal-fired Liddell Power Station open, Mr Taylor said he did not want to say whether he supported certain technology over others.
"We need to have enough dispatchable, reliable, fair dinkum energy generation in this system to keep the lights on and keep prices down," he said.
He said there were lots of ways of achieving this and he wasn't going to prescribe every detail about how it had to be done.
"The role of government is make sure that if people can't work that out, we step up and take action."
It seems the Coalition is also still considering Mr Turnbull's plan for the Snowy Hydro 2.0 scheme. Mr Taylor said it needed to stack up and the Government was working on the business case. However he acknowledged that "firming capacity" was absolutely necessary in the sector.
In a sad reminder of what could have been, Mr Butler noted that many at the forum may have been expecting to celebrate the passing of the NEG and the end of the climate wars.
"But such optimism … underestimated the level of toxicity that attaches to energy policy and energy politics in Canberra," he said.
There was however, one tiny glimmer of hope for the policy. When asked whether Labor still supported the NEG, Mr Butler did not rule out resuscitating the policy if the party won the next election.