No one can deny the severity of the energy crisis gripping Australia.
Since 2015, when we entered the greatest energy crisis since the 1970s, wholesale power prices have risen 158 per cent, reliability has suffered, gas prices have tripled, and carbon pollution continues to rise.
The Australian Financial Review has reported forward prices for electricity have jumped by 29 per cent in the past 12 months, indicating the market sees little relief any time soon.
The great tragedy of our current crisis is that unlike the 1970s, it wasn't caused by events overseas. It's a crisis of Canberra's making, and it needs to be fixed by Canberra.
Labor has tried to play a constructive role from Opposition by supporting sensible policies like the ACCC's Default Market Offer, and by basing our positions on the best advice from experts, energy users, the energy industry, and the Government's own energy agencies such as AEMO and the Energy Security Board.
This advice has been clear: a key driver of the energy crisis is a lack of national policy to support new investment in electricity generation. We need to invest in new generation to replace an ageing and increasingly unreliable fleet of old generators to lower emissions and, crucially, to increase supply to bring prices down.
Yet the only national energy policy that has been in place since 2015 is the 2020 Renewable Energy Target (RET), which has now officially been met. For investors seeking to invest in 20, 30 or 40 year electricity generation assets, no certainty exists about how their investment will be treated in the next 10 years, let alone over the next 40, severely hampering the ability to invest.
Over the last Parliamentary term, Malcolm Turnbull proposed an Emission Intensity Scheme, a Clean Energy Target, and finally a National Energy Guarantee to address this uncertainty. Labor was and remains willing to work with all of these policies. But after the ousting of Prime Minister Turnbull, and the advent of a Morrison government that denies the need for a national energy policy, Labor and the states simply don't have a partner in government that acknowledges the nature of the energy crisis they are presiding over.
Modernise and expand
Australia also needs to modernise and expand our energy networks. We need policies to support the integration of new technologies and distributed generation, and we need to address a gas supply and price crisis. Leadership on all these issues is severely lacking in Canberra, replaced by wedge politics designed to exacerbate a climate culture war and inconsistent ad-hoc interventions designed to give the impression of action.
A good example of this approach is the Morrison government support for pumped hydro storage projects, Tasmania's Battery of the Nation and Snowy 2.0. Feasibility studies, business cases and common sense all confirm these projects only stack up with strong future renewable energy investment. But with the 2020 RET already met and no national energy policy, it shouldn't be surprising that Bloomberg New Energy Finance already report a 50 per cent drop-off in renewable energy investment this year.
Rather than supporting renewables investment, the Morrison government is actively exploring the option for a nuclear power industry in Australia even though it isn't consistent with large pumped hydro storage projects, and is up to three times as expensive as a combination of renewable, storage and gas power. Even if these and other barriers to nuclear didn't exist, nuclear power wouldn't be available for well over a decade while the energy crisis is here and now.
Likewise, the Liberals insist their so called 'big stick' legislation will lower prices, but have provided no evidence or modelling to support this claim.
The ACCC has called it "extreme" and energy users, producers and experts have warned it will at best do nothing and at worst add to investment uncertainty.
In either case, it's no solution to the energy crisis.
Since Scott Morrison became prime minister, electricity prices have kept rising, investment uncertainty has persisted and gas prices have remained excessive for Australian users, at a time when Australia has become the world's largest gas exporter. As a result, the viability of many Australian businesses that use large amounts of energy is now at risk.
For years this paper has produced articles almost daily warning of rising energy prices, both electricity and gas, investment uncertainty, and the challenges of decarbonisation. Any objective analysis points to years more reporting along these lines.
This was first published in the Australian Financial Review on Monday, 23 September 2019.