ABC Adelaide: 08/06/17

June 08, 2017



HOST: This is on ABC News this morning the Federal Opposition’s indicating it may back a plan for cleaner energy through a Low Emissions Target, reports Caitlyn Gribbon, which could bring to an end, ten years of climate policy wars. Mark Butler, welcome to the program.


HOST: Can you explain what the opposition is proposing, or offering?

BUTLER: Well, just to indicate why we’ve taken this step, what we’ve heard now for a couple of years, particularly from the business sector, is their very high level of anxiety that Australia is now in the midst of an undeniable energy crisis. Wholesale energy prices around the country have doubled since the election of the Abbott government. They are double what they were under the carbon tax, and as I’m sure most listeners know, we’ve really entered a very severe crisis in the gas market. They say if there’s not some constructive approach in the national parliament to put in place a long term energy policy, literally tens of thousands of jobs, particularly in the manufacturing industry are at risk. So we see ourselves as having a deep responsibility to do all that we can to sit down constructively with the Government to study carefully the report that Dr Finkel, the Chief Scientist, will deliver tomorrow, and see whether we can put the past, very toxic, divisions in this policy area behind us, and hopefully turn a new page. I don’t underestimate the difficulty that involves, but we’re going to try to be as constructive as we can possibly be.  That’s what the business sector has said very clearly they want us to do. Even though they think, and have said publicly, that the Finkel report is likely to recommend a ‘second best’ option, they say that shouldn’t prevent us from sitting down and constructively approaching the issue.

HOST: Is it also the case though that both sides, Coalition and Labor, are punch drunk when it comes to energy policy. You have both fought the good fight when it comes to energy policy and what you think should be done, but you’ve both taken severe blows and you’re sick of the debate in terms of politics as well. Is that a fair comment?

BUTLER: Well more importantly than us being punch drunk, the community’s punch drunk on this issue. We’ve seen around the world, country after country, perhaps not the United States under the Trump administration, but country after country, whether it’s developed countries like the UK, Europe and Canada, or whether it’s countries in our own region like China and India, really grasping the transition to a new electricity system, but we’ve just been paralysed here by political divisions.  It’s not really about whether I’m punch drunk, or whether Malcolm Turnbull’s punch drunk, it’s that the community is, and particularly the business community is.  It’s not like five or seven years ago when we were having this debate and things just kept trucking along anyway; we now have a very serious energy crisis in this country that’s threatening vast parts of our manufacturing industry and tens of thousands of jobs, so we just can’t afford to continue to have the political fights that we’ve had in the past.

HOST: Okay. The ‘plan B’, as Caitlyn Gribbon describes it, is a well-designed Low Emissions Target. How would the Labor party see that working?

BUTLER: Well we’re flying a little bit blind here because no one’s actually seen the Finkel report and a Low Emissions Target can operate in a range of different ways, but it is slightly different to the model that has been supported by pretty much every business organisation, that is an emissions intensity scheme, in that it puts the obligation on retailers, and ultimately consumers to bear the cost of this. That’s really why we’ve been a little bit ambivalent about this model, instead of the obligation being on coal-fired generators, essentially, to bear the cost of it. Ultimately, as the Grattan Institute said earlier this week, these are all different versions of a carbon price. So it provides a price signal in favour of renewable energy.

HOST: So how would it work?

BUTLER: Again, it would  work in a number of different ways, so we’ll have to wait until Dr Finkel hands down his report, but essentially it would require electricity retailers to source more and more of their electricity from clean energy.

HOST: But in Adelaide, in South Australia, they just delivered high prices. That’s what’s happened here in South Australia.

BUTLER: That’s not entirely right. Wholesale power prices are running around the country at very high levels, at very comparable levels whether you’re talking about South Australia which has very high levels of renewable energy, or Queensland which has about five or six per cent renewable energy.

HOST: I know that, I’m talking about the increases, sure, eventually the rest of the nation caught up but we’ve been doing this for ten years, with high power prices here.

BUTLER: To be clear, over the last ten years, power prices have pretty much doubled around the country and, if anything, the gap between South Australia and the rest of the country has narrowed. South Australia has always had higher energy prices. We’ve always relied more on gas and we’ve always had a smaller market with much higher levels of market concentration. The gap between the eastern states and South Australia ten years ago was quite substantially bigger than it is nowadays. So we need to be honest about why power prices are going up. You don’t accept that?

HOST: Well it’s not for me to accept or not.

BUTLER: I just heard the groan.

HOST: Well I do groan, only because David and I have covered this debate since the privatisation of ETSA. You know, I think journalists in South Australia are probably more versed on energy policy, renewables vs carbon-

BUTLER: Everyone is now.

HOST: No, we have a big head start on the rest of them.

BUTLER: The point I think the business community makes without going over the history of the last ten years, which is all very interesting and obviously very useful, the point we have now is that power prices are spiking because there’s an investment strike.  The electricity industry says until we get an enduring framework for energy policy at a national level we are going to continue to see security of the system go down and prices go up.  So that really is why we’re trying to take a constructive approach. Obviously we are going to stick to some of our key principles in the area, but we’re not going to stand on our digs, just because the Government has decided to reject an emissions intensity model in favour of, potentially, a Low Emissions Target.

HOST: So under this scheme that you think Finkel is going to recommend tomorrow, it will be from the retail end wouldn’t it? They will have to source a certain amount of their power from low emissions sources?

BUTLER: That’s right.

HOST: And that would be higher than what it is currently, although perhaps not in South Australia?

BUTLER: That’s right. Not in South Australia, it’s really the eastern states that need to start to bear the responsibility of reducing our carbon pollution.

HOST: If you are going to pursue this, would you also have to have other measures to make sure there is stability in the system, because despite the rhetoric from Jay Weatherill and Tom Koutsantonis, their actions speak louder than words and their energy plan is about bringing stability into the system, and they are not asking for more renewable power, they are asking for gas or diesel.

BUTLER: Or a range of other methods, and different market rules.

HOST: Oh yeah, but they’re also asking for diesel generators if they can’t get their gas generators up. So my question for you is, if you are going to have a target for more low emissions sources, would you also have to have policy that would ensure stability?

BUTLER: I think you’ll find that Dr Finkel will make a series of recommendations about system stability or system security. Really it’s only been in the last year, year and a half that we’ve come to understand the enormous pace of development in the battery storage sector particularly. I’ve been talking to that industry, whether it’s the big global companies like Tesla, or a range of very exciting Australian companies, about what policies we should put in place in Australia to ensure that consumers and businesses get the most effective and quickest advantages from that technology. In some states in America they have storage targets; so you have to have a certain amount of storage attached to new renewable developments for example, and I think Dr Finkel may explore those issues. I also think we need to have a more orderly approach to closing down our old coal-fired generators. So Hazelwood for example, closed earlier this year in Victoria. No one knew it was going to close until we got a message from a corporate boardroom on the other side of the world, and it gave us a few months’ notice of the closure of one of our most important electricity assets that we have. So there’s got to be a more orderly approach to those things that impact system security as well.

HOST: And the South Australian equivalent of that would have been the Port Augusta power station?

BUTLER: Exactly. So there will be a lot of focus when the report is delivered on the question of a Low Emissions Target, but there will also be a series of very important recommendations from Dr Finkel that go towards system stability, particularly as we transition into a very different type of  electricity system.

HOST: You’ve obviously had the fizz on this.

BUTLER: The fizz?

HOST: Well he’s been sitting next to you at the airport and he’s left the folder there and said “I’m just going to get a coffee; I hope no one looks at this.”

BUTLER: No, no.

HOST: How do you know what’s going to be in it?

BUTLER: This has been a very interactive process by Dr Finkel and his panel and, not with us, but particularly business groups and other groups. So there is a degree of speculation about this but I think that people understand what some of these solutions are and have understood them for some time, it’s just that we’ve struggled to actually get a process that’s actually allowed us to put them in a line so that we can put them in place.

HOST: So you’re saying a good Shadow Minister would be out talking to the people who are talking to Finkel, and piecing it together?

BUTLER: Well obviously there’s a lot of talk that goes on.

HOST: No crime in that. Just finally, does whatever olive branch that’s extended to the Government, does it have to fit the Tony Abbott test?

BUTLER: This is the $64 billion question. In December I think we all thought we had a consensus around an emissions intensity scheme. Every business group in the country except the coal industry has signed up to it, the Farmer’s Federation, even the Young Nationals. All of the state governments were signed up to it, Labor and Liberal, and at the last minute Tony Abbott and Cory Bernardi effectively vetoed it. So if that happens again we’re not going to get anywhere.  If Malcolm Turnbull is not willing to stare down the frankly unrealistic expectations that Tony Abbott puts on this issue, and others in the Coalition party room as well, we’re not going to get anywhere. So it’s a question really, of who’s going to run this debate from the Coalition? Will it be the Abbott forces, or will Malcolm Turnbull finally stare him down and have a sensible debate. I have no control over that, obviously, that’s a matter for them.

HOST: I see exactly what you’re saying on their side, but on your side, does Labor have to grow up? The whole business with Kevin Rudd saying this was the greatest moral challenge and then it wasn’t and then Julia Gillard making promises and then breaking them. That did so much damage to the energy debate, as much damage as Tony Abbott did with the wrecking ball on his side. So do you agree that both sides frankly have to grow up when it comes to energy?

BUTLER: There are no angels in politics, and I think Kevin has been very honest about the mistakes he made and Julia Gillard also, about the mistakes we made in the face of Tony Abbott’s attack about some of the design questions of our carbon pricing mechanism. Frankly I’ve heard nothing from the Coalition to fess up to whether or not they over egged this pudding. Certainly nothing from the Greens in deciding to oppose the carbon pollution reduction scheme and vote it down in line with Tony Abbott, so I think we have been honest about accepting the mistakes that we made, and also the good things in our policy. So some honesty from other sides of politics would be useful as well.

HOST: Mark Butler thanks for talking to us.

BUTLER: Thanks very much