ABC AM Interview 26/02/2019

February 26, 2019


SUBJECT/S: Snowy 2.0 business case, Labor’s plan for more renewables and cheaper energy.

SABRA LANE: Mark Butler is the federal Opposition’s climate and energy spokesman. He joined me earlier.
MARK BUTLER, SHADOW MINISTER FOR CLIMATE CHANGE AND ENERGY: We’ve said since Malcolm Turnbull made this announcement that we support these pumped hydro projects in principle, subject only to be able to see the full business case, which still hasn’t been released  publicly. Today’s announcement takes the spend by this government on Snowy to about $7.5 billion dollars but they still won’t show the full business case. So certainly we’re supportive in principle but we do want to be able to kick the tires on this thing.
LANE: So in principle, that’s a big asterisk. We’ll wait until we see the full business case, is that right?
BUTLER: Well the government should release the full business case; the government has spent $7.5 billion on this-
LANE: Sorry, just on that, they haven’t spent $7.5 billion. They are committing only to just under $2 billion, and say that the company should foot the rest of the bill.
BUTLER: Well they spent $6 billion on buying Snowy from the state governments to pursue these projects, so yes Malcolm Turnbull spent $6 billion buying Snowy from the New South Wales and Victorian governments to allow Snowy 2.0 to proceed, and Scott Morrison’s added another $1.5 billion today. So this is a very significant investment by the Commonwealth and I think good government would require it to show the business case.
LANE: All right. There’s nothing in this announcement today either about the upgrading of transmission to cope with the power, putting it into the national grid. I’m told that could be another $2 billion. How confident are you that the economics of this project stack up?
BUTLER: Well we need to see the business case. We certainly think there needs to be substantial expansion of pumped hydro in the system through the course of the 2020s, but it would help everyone I think if Scott Morrison took us into his confidence, and by us I mean the broader Australian community, so that we could see these numbers.
But Sabra, there’s a fundamental contradiction in today’s announcement. Snowy and the Tasmanians, relating to yesterday’s announcement, have made it crystal clear that the viability of these pumped hydro projects depends entirely on a very big expansion of renewable energy through the 2020s. But Scott Morrison and his Energy Minister Angus Taylor have made it very clear they don’t support that expansion. What’s more Snowy has testified that Snowy 2.0 is completely unviable if the government pushes new coal fired power into the system, but that’s exactly what Scott Morrison intends to do.
LANE: Let’s just come back to, if Labor does win office in May, will you hit the pause button on this project until you are sure of the economics?
BUTLER: This government is effectively moving into caretaker mode, we’re only three months from the next election and Scott Morrison should be starting to reveal details of very big commitments and spending commitments in particular to the Opposition and the broader Australian community. So we shouldn’t have to wait until the next election; Scott Morrison should release the full numbers.
LANE: If you are the Energy Minister come May, will you hit the pause button on this until you are absolutely certain the sums add up.
BUTLER: Any incoming government would want to make sure that if it was committing this sort of expenditure it was doing so on the basis of a proper business case. We could do that very quickly but we could also save everyone time if Scott Morrison abided by good caretaker convention and brought the Australian people and the Opposition into his confidence. They have committed $7.5 billion, and that’s before you start building the project, and before, as you pointed out, linking them up with new transmission lines. This is a very expensive commitment, and at the moment Scott Morrison’s making this commitment in a completely contradictory way to the rest of his energy policy.
LANE: Labor’s policy is for a 50 per cent renewable energy target by 2030 and a 45 per cent reduction in emissions right across the economy. Will Labor be explicit with voters about how much this will cost them?
BUTLER: Very explicit, but Snowy and the Tasmanians have made it very clear that these projects only stack up with about a 50 per cent renewable energy share in 2030. They sit side by side. You cannot build these projects if you don’t also have a commitment to that sort of expansion of renewable energy.
LANE: Sorry Mr Butler, back to the nub of that question, when we will Labor be explicit with voters about the cost?
BUTLER: Well we’ve said that our 50 per cent renewable energy target can be achieved in two ways. Our preference is to have the Liberal party return to the table on the National Energy Guarantee. The modelling for that Guarantee showed that implementing it would save households about $550. The modelling also showed that a failure to implement it would see household power bills go up, and we’re already starting to see the signs of that in the wholesale power market. We’ve also seen modelling from Reputex, a very reputable analytical firm here in Melbourne, show that a 50 per cent or a 45 per cent emissions reduction target would see wholesale power prices through the 2020s about 25 per cent lower than they would be under Scott Morrison’s target. So I think the numbers are there, and everyone in the industry will tell you the cheapest way to renew our ageing, increasingly unreliable generation infrastructure, is to build renewable energy, and that will flow through to households.
LANE: Sorry, you’ve pointed to a couple of different modellings. When will Labor be explicit with voters, before the election, as to how much your policy is going to cost them?
BUTLER: It’s not going to cost households because they won’t be building the renewable energy projects.
LANE: But companies will pass that cost on.
BUTLER: Of course and companies will pass on cheaper wholesale power prices. That’s what the modelling shows. There is no alternative to rebuilding our electricity system Sabra. About 75 per cent of it is already operating beyond its design life, and it will be replaced over the coming decade or decade and a half. The question is what replaces it? Now renewable energy is the cheapest way to replace it, and all of that modelling shows it will put downward pressure on wholesale power prices. Now the government’s plan for replacing it is to build very expensive highly polluting new coal-fired power stations which will require further indemnities from taxpayers running to billions and billions of dollars.
LANE: That’s the federal Opposition’s climate and energy spokesperson, Mark Butler.