Frydenberg's 'myths' are what we traditionally call facts

January 20, 2017

Today in the Australian newspaper, the Minister for Environment and Energy, Josh Frydenberg, engaged in a grand exercise of attacking Labor policy. In doing so, he used all the usual tricks of a government desperate to distract from its own record; misrepresentation of Opposition policy, mischaracterisation of modelling and of course, a fanciful description of the actual challenges we face. This morning Australian newspaper once again reaffirmed its opposition to balanced coverage of the challenges facing the nation by refusing me a right of reply in their pages. A sad an unfortunate state of affairs to say the least, that only adds to the challenges we face as a nation.

Like a skilled magician, Minister Frydenberg’s recent efforts offer a masterclass in misdirection. While we watch his right hand engage in hysterical fury at Labor policy, we’re meant to not notice his left hand. But it is in this other hand that sits the government’s own national energy policy; a policy better described as a continuous and chaotic policy vacuum that promotes investment uncertainty, grows pollution and delivers higher prices and less reliability.

This isn’t just my characterisation of the government’s (non-existent) energy policy. The same case has been made by industry, large energy users, energy experts, broader (including manufacturing) industry, the ACTU, and even former Liberal party energy advisers.

For example, a group of 18 organisations including the Business Council of Australia, the Australian Aluminium Council, Energy Networks Australia, St Vincent de Paul and the Australian Council of Trade Unions released a statement late last year stating: “The status quo of policy uncertainty, lack of coordination and unreformed markets is increasing costs, undermining investment and worsening reliability risks.”

The fact that such a diverse and large group of organisations, from coal to solar generators, from large energy users to unions, can arrive at a joint statement that identifies the lack of national policy and its resultant investment uncertainty as the core challenge in the energy sector is very telling. Where Minister Frydenberg, is the joint statement from stakeholders attacking the great threat you want Australians to focus on; renewable energy and policies to support its deployment?

Of course as the Minister, Josh Frydenberg’s job is to deliver sensible national energy policy, something he and his government hasn’t been able to do even though the Abbott-Turnbull government has now been in office for over 3 years. Minister Frydenberg and Prime Minister Turnbull still have every opportunity to deliver a national policy, and what’s more, they can immediately announce a reform that will deliver on every single important metric. If they chose, they could deliver a reform that:

  • Would provide investment certainty to industry and support the transition to low pollution electricity,
  • Would do so at lowest cost, estimated by the Australian Energy Market’s Commission to deliver a $15 billion saving to customers compared to other options (including the government’s current policy of doing nothing),
  • Would have the support of ALL stakeholders, from the electricity generation industry (fossil fuel and renewable), to large energy users, to industry associations (including the Business Council of Australia and the Australian Industry Group), to experts and scientists (such as the Prime Minister’s former energy adviser Danny Price, the Chief Scientist and the CSIRO), to state governments (both Liberal and Labor), to unions and community groups,
  • Would have bi-partisan support, given it is a central feature of federal Labor’s energy policy.

I am of course referring to an emission intensity scheme (EIS) for the electricity sector, a policy that Minister Frydenberg flagged as a possibility before being slapped down by a Prime Minister singing the tune of the extreme right of the Liberal Party. This back-down caused the Prime Minister’s former energy adviser Danny Price to declare “By doing this, it means they are the party of increasing electricity prices and reduced energy security.”

This is the reality of energy policy in Australia. A government unable to deliver with a simple strategy. Blame Labor, so no one will think to ask what they’re doing as a government to provide affordable, reliable and clean energy. They desperately don’t want this question asked, because the answer is; absolutely nothing.

In the interests of setting the record straight, it is also worth addressing Minister Frydenberg’s “myths”, or what are more traditionally called, facts:

“Myth” 1: Electricity prices will be lower under Labor than under the government’s current policy.

This is because we will implement an EIS as the central piller of our energy policy, which the Energy Market’s Commission says will cut electricity prices by $15 billion. In addition, unlike Minister Frydenberg’s claims and as I have made clear on numerous occasions, Labor will not implement a renewable energy purchase obligation on electricity retailers, which is the policy he cites as being costly for customers.

As outlined above, every credible stakeholder has made the case that the most costly policy available is to persist with the current vacuum. This prolongs investment uncertainty, risking security and pushing prices up.

“Myth” 2: “Renewable energy has nothing to do with the problem” in South Australia, it “is really a product of the gas market”.

South Australia has always been at the end of the national electricity market and has always had relatively high power prices. This is due to a historic reliance on expensive gas generation and recent gas price movements, not due to high renewable penetration. For example, average wholesale prices in South Australia were $26 (per megawatt hour) greater than NSW in financial year 2000/01, at a time when South Australia had practically no renewable generation. In financial year 2015/16, this difference was $13 (per megawatt hour). If renewables were driving higher SA prices, we would see this gap widen significantly, not narrow.  

“Myth” 3: a 50 per cent renewable target is consistent with our obligations under the Paris Agreement.

One third of Australia’s carbon pollution comes from electricity generation. In addition, cleaning up power generation plays a central role in cleaning up other sectors of the economy, such as transport. If our electricity is pollution intensive, moving to electric vehicles for example won’t generate the cuts in pollution that it should.

Australia is currently on track to miss the government’s 2030 26-28 per cent emission reduction targets (based on 2005 levels) by 26 per cent, based on the government’s own official numbers. In addition, this target is not consistent with the 2 degree goal of the Paris Agreement and will need to be increased. More importantly, Australia’s obligations under the Paris Agreement imply our economy and therefore our energy sector needs to be carbon neutral by 2050. All of this means we need to quickly move to clean energy, which is exactly what a 50 per cent renewable energy target delivers.

“Myth” 4: Labor’s 50 percent renewable energy target will create more jobs.

The Climate Council has estimated Labor’s target will create 28,000 net new jobs. By definition, 28,000 more jobs than it costs, which Minister Frydenberg should understand. In addition, if the Minister is interested in the details he seems to think Labor is hiding, a simple internet search will show him the detailed report is freely available.

“Myth” 5: Countries like China are starting to wind back their coal generation.

Perhaps Minister Frydenberg should keep up to date with the news in his portfolio. Recently, China announced a plan to invest $360 billion over the next 5 years in renewable energy, while they are also scrapping plans to build coal fired power stations.

The Government would like to pretend the status quo is a plan for the future but it isn’t. Ageing coal fired generators will retire, whether in a planned, orderly way as Labor would prefer, or in a chaotic unplanned way, as the government prefers. Industry needs investment certainty to invest. We do need to move to clean energy. Our system needs to be modernised, to be able to take advantage of rapidly changing technology. These are the energy challenges we face. But the biggest challenge is a national government paralysed and unable to do anything but play politics. That is the challenge we need to address first.