December 04, 2018


RAF EPSTEIN: We did actually get a change in the way your power is generated, or at least the laws around how your power is generated today. The Federal Coalition wanted the legal power to break up energy companies. The Government says that power would be used if the companies were found to be price gouging. The Government’s critics say the law is being thrown around to try and force companies to try and sell their coal-fired power stations if they won’t invest to try and extend that old coal life. That policy did have a change today because the Government are going to give what they call the divestment or divestiture power to the Federal Court rather than to the Treasurer – so a judge would make that final decision rather than a politician. So that’s a change. But almost every question to the Prime Minister was constant and painful as he was asked why he wasn’t adopting the energy policy of the former Prime Minister Malcolm Turnbull because Mr Turnbull was today saying that the Government should work with the Opposition to endorse the National Energy Guarantee. Mr Turnbull pointedly said that both Scott Morrison and Josh Frydenberg were ardent supporters of the NEG – the National Energy Guarantee. Have a listen to some of the fire power coming from the Opposition Leader Bill Shorten.

BILL SHORTEN (RECORDING): Does the current Prime Minister agree with the recently retired former Prime Minister Malcolm Turnbull who said today about the National Energy Guarantee, and I quote “it was a vital piece of economic policy”?
EPSTEIN: The Energy Minister Angus Taylor was not available. Mark Butler is the Shadow Energy Minister, part of Bill Shorten’s team. Mark Butler, good afternoon.
EPSTEIN: You asked that question repeatedly, I’m sure you probably quite enjoyed the answers. Your policy’s not the same as Malcolm Turnbull’s though – it’s different because you’ve got a different target?

BUTLER: We do have a higher target; we have a higher level of ambition particularly around the deployment of renewable energy. But what investors have been saying to us – not just the energy companies but the bankers, the owners of these companies – have been saying to all of us in the parliament now for a number of years is that we need an investment framework to guide the replacement of our ageing, increasingly unreliable generation kit over the course of the 2020s. There are absolutely no investment rules to guide electricity investment beyond 2020. 75 per cent of our existing thermal generators, so our coal and gas generators, are already operating beyond their design life. We are going to have to replace them in coming years. What the investors have said to us is that they need the rules agreed between the two parties.

EPSTEIN: I understand and I agree that they would like some firmer investment rules, but just so people can understand some of the criticism you’re directing at the Government – you have adopted the NEG, and having a different or higher target – that means something quite different to people’s electricity bills doesn’t it?

BUTLER: Well that’s the point I was about to make – investors say they need the rules agreed. They understand that there will be different levels of ambition between the two major parties and they say they can deal with that risk, the same way they deal with the risks involved in movements in commodity prices or currency movements. What they can’t deal with, what won’t allow investment, is uncertainty in what the rules are per se. That’s what we were trying to come to grips with last year when Alan Finkel, the Chief Scientist, proposed a Clean Energy Target and this year with the National Energy Guarantee - a policy that was supported by every single business group in the country, by every state and territory government Labor and Liberal alike, and by the vast majority of the Federal Parliament. That’s really the tragedy of what’s happened three months ago – it also cost Malcolm Turnbull his job – but it really was the last, best chance of a bipartisan solution to the energy crisis that’s been bedevilling the country now for a couple of years.

EPSTEIN: You’ve got a 45 per cent emissions target, Malcolm Turnbull’s was 28 per cent, all people need to know is that yours is higher. Germany’s got one of the highest renewable energy targets in Europe; they’ve got some of the highest electricity prices in Europe. How do we know that won’t be replicated here?
BUTLER: Well we’ve seen report after report, including going back to Tony Abbott’s review of the Renewable Energy Target by, frankly a climate sceptic, businessman Dick Warburton, concerned that putting more renewable energy puts downward prices on wholesale power prices-
EPSTEIN: That’s wholesale, that’s not the retail – not the ones I pay.

BUTLER: There’s a whole range of things that are happening to power prices now and it’s got nothing to do with whether renewable energy has been put into the system. What everyone agrees is that the big burst of investment over the last couple of years in renewables is the only thing that’s been putting downward pressure on power prices. Not enough to counter the fact that there’s enormous amounts of investor uncertainty and a bunch of other things interfering in the market; but additional renewable energy will put downward pressure on prices.
Reputex which is a very well-known energy analytics firm based in Melbourne, for example, modelled the National Energy Guarantee with two different target – Labor’s target and the government’s target – and found that wholesale prices would be as much as 25 per cent lower under our more ambitious target because you’re putting more zero cost renewable energy into the market.

EPSTEIN: Can I repeat that question though, and you keep using wholesale energy prices as an indicator not that that is not significant but they are not the prices I pay. A lot of people look at your target and say hang on, a country like Germany has a high target, and they’ve got high electricity prices. Is there a country that’s got a high target, like yours and like Germany that has low electricity prices?

BUTLER: I think what Malcolm Turnbull talked about today, very eloquently as is his habit, is the fact that renewables only after the last year or two has started to beat existing coal and gas generation in the market. You’ve seen that with the Victorian Renewable Energy Target, where the Government in Victoria has got some really quite astoundingly low strike prices in their auctions because the cost of solar and wind in the last few years has come down so dramatically.
Really it is a question of casting forward and recognising that over the course of coming years as we need to renew our electricity infrastructure every single energy company, every single analytics firm or commentator that knows anything about energy knows that the cheapest way to build new energy is building new renewables.

EPSTEIN: Mark Butler is the Shadow Energy Minister so he is part of Bill Shorten’s team. If the shenanigans in Canberra and the public polls are anything to go by Mark Butler is going to be your Energy Minister sometime in the New Year.

Mark Butler I know you talk a lot about electricity but we need to cut our emissions across the economy. We are not talking at all, either side of politics, about things around agriculture and transport. One idea that a lot of people talk about is having a really simple adoption of the American emissions standards on cars. They are tougher than our emission standards. You need to do something like that don’t you to make sure that the entire economy meets our Paris targets?

BUTLER: Over coming weeks we will be announcing the remainder of our climate change policy. We decided to pull energy out as a separate announcement because the degree of focus and the degree of concern in the community about energy. But at the last election, for example, we released all of our climate policies in one fell swoop and in 2016, for the election, we did have a policy of adopting the American emissions standards.

EPSTEIN: That’s why I asked, will you do that again?

BUTLER: Well we will release that in due course but now we are the only developed country that does not have mandatory emissions standards on our light passenger vehicles, so our cars particularly and light commercial vehicles.  You can now buy versions of the global platforms of cars in Australia that you simply would not be able to buy in the US, Canada, the UK, Europe, Japan, or increasingly companies like China as well.

EPSTEIN: I asked about the American ones because Donald Trump, the President, has of course spoken about unwinding them. So would it be wise to follow something that America is going to unwind?

BUTLER: I think it is still very much unknown whether President Trump is going to be able to unwind them because there was a long process that involved those standards being adopted, essentially beginning in California. California has very clear legal rights to maintain those standards in that state, which is an enormous economy, 40 million people. It is one of the ten biggest economies in its own right in the world. And a range of other states have also a legal, they say, inalienable right to adopt those standards as well.

I think the industry recognises it is in a difficult position now where it could be subject to two different sets of standards in the one country and I think this has got a long way to go. Frankly since the adoption of these standards in North America and the slightly stronger standards in the EU, where there is a quite stronger sort of fleet, the car industry has already shifted. They’ve shifted their production to having these standards in place. It would be very difficult for them to unwind that.

EPSTEIN: Thank you very much for your time.

BUTLER: Thanks Raf.