Like the rest of the world, Australia is facing a historic transition in our energy sector. Several drivers of change are overlapping, presenting us with massive challenges and massive new opportunities. In order to rise to the former and take full advantage of the latter, we need to do more than embrace new technology; we need to re-establish something that has been lacking for far too long in Australia – a real national energy policy.
The drivers of change in our energy system are well known. They include: the retirement of ageing thermal power stations, three quarters of which are operating beyond their design life; the rapid take up of new generation, storage and system management technologies; and the need to move to cleaner sources of energy, to avoid catastrophic climate change. Added to these is a uniquely Australian challenge; an east coast gas crisis being fuelled by the rapid establishment of the world’s largest LNG export industry.
While reasonable people can disagree, the debate that has raged about energy policy has become toxic, ideological and often devoid of facts. As an example, I often recite the story of the Adelaide Adele concert, where a plug being accidentally pulled from a wall by a revolving stage led to a Twitter storm attacking South Australian renewable energy.
This simply isn’t good enough. Addressing our energy crisis isn’t a luxury; it is a pre-requisite for the continued societal and economic progress of all of us. Our media must do a better job of reporting facts, exposing fiction and differentiating between vested interest and objective expert opinion. Our business community must do better in advocating for the systemic underpinnings of success, not for their specific company interests. And of course, we politicians must do better too. Better at explaining our challenges and ideas; better at choosing the public interest over the ideologically pure default, and better at working together for the common good, rather than seeing our vocation as little more than a form of sport.
The importance of bipartisan consensus
With the possible exception of foreign and defence policy, in no area of policy is a degree of bipartisan consensus as important as in climate and energy policy. Assets in the sector are decades long lived; private investment simply cannot occur without policy certainty over the medium and long term. The importance of bipartisan consensus is only elevated by the challenges we face, both the universal challenges of technological change and the climate change imperative and the uniquely Australian challenges of an ageing thermal fleet and a broken gas market.
The Environment Minister, Josh Frydenberg, and I are both very much aware of the importance of finding common ground. That is a central reason why Labor’s position on electricity sector policy has moved from an Emission Trading Scheme to an Emissions Intensity Scheme (EIS). It is also why the Liberal party’s inability to make a similar move to an EIS, a policy with broad and deep support in the industry and among experts, has been especially disappointing for business, Labor and the broader community. In recognition of the Government's continued opposition to an EIS, the Finkel Review has recommended a Clean Energy Target (CET) as an alternative mechanism. Labor will continue to work with stakeholders on this and other Finkel Review recommendations, and we still hold out some hope that this review will present a way forward, but even if it does, more political courage than we’ve recently seen will be needed.
It is clear to any serious observer what solutions to our energy challenges look like. More transparent gas markets and mechanisms like an export national interest test that won’t allow exports to create domestic gas shortages.
An electricity sector policy framework like an EIS or a well-designed CET that supports private investment in new generation and that is consistent with tackling climate change and meeting our Paris obligations.
Reforms to the market to better ensure security of supply as renewable penetration grows, competition, and the utilisation of new technologies that empower consumers; like distributed generation, batteries, peer to peer trading, and others. And greater public investment, to ensure the market is supported by the infrastructure it needs and to ensure energy security is guaranteed. This is the future of our energy sector and it is one we shouldn’t be scared of. In fact, it is one where Australia will once again be an energy superpower with an abundance of affordable, reliable energy. Yes, coal will play an important part in our energy system for many years to come, but other technologies will become dominant over time.
Accepting either of these facts shouldn’t place you on one side of an ideological war, as it increasingly does today. Time is running out and the costs of our current national policy vacuum only grow with each month of pitched political and ideological trench warfare. It’s time for all of us to rise up out of our trenches and start building again.
This opinion piece was published in the Victorian Chamber of Commerce and Industry: Business Excellence magazine, Volume 10, Issue 2, Winter 2017.