RN Breakfast: 14/07/17

July 14, 2017



FRIDAY, 14 JULY 2017


FRAN KELLY: The leader of the National Party, Barnaby Joyce, yesterday laid down the law to his Coalition partners that the Nats will support a Clean Energy Target as long as that target allows for High-Efficiency Low-Emissions coal into the mix. The Coalition is bitterly divided over this target. Some want to dump it all together because they regard as just another way of increasing the Renewable Energy Target.

The Clean Energy Target, you would recall, was the centrepiece of the Finkel energy review. Barnaby Joyce’s ultimatum was delivered ahead of today’s COAG Energy Ministers meeting; where the states and the feds are due to agree on the Finkel recommendations.

This is the latest chapter in what continues to be a toxic issue for the Turnbull Government, and the disagreement sends Energy Minister, Josh Frydenberg, into today’s COAG summit with no concrete decision from his federal colleagues on the Clean Energy Target. So if the Libs and the Nats can’t agree, where does that leave Labor? Mark Butler is the Shadow Minister for Climate Change and Energy, and he joins me in the Breakfast studio this morning. Mark Butler, welcome to breakfast.  


KELLY: If the government sets the target to include low-emissions coal, will Labor support it?

BUTLER: Well we’re not going to respond to the various different hypotheticals that have been floated by different members of the government. What they need to do, instead of getting on the media and floating all of these different scenarios, is do the hard work within their cabinet and their party room and put a proposal not just to the Labor Opposition but to the state governments. That was the decision coming out of the COAG Leaders meeting who received the Finkel Report a few weeks ago, that Malcolm Turnbull chaired. There was a clear decision directing the Energy Ministers to make progress on this but because the government couldn’t get its act together on what type of a Clean Energy Target, if any, it wants, we’ve now got a meeting coming together this morning that is not going to be able to do its job.

KELLY: But I thought you might welcome this pronouncement from Barnaby Joyce, because it puts some clarity around the Coalition’s position. The Nats will be in, if they set the benchmark at that 0.7 tonnes of Co2 per megawatt hour, which would allow clean coal, low-emissions coal, let’s not call it clean coal I know a lot of the listeners don’t like that, low-emissions coal, to be included. If that is what it takes to get this done and dusted, will you support it?

BUTLER: It is certainly a better signal than the signals we get from the Abbott camp which is trying to scuttle the Clean Energy Target in its entirety, I’ll give him that. But we don’t know where that threshold will be, it could be at 700kg, or 800kg -  

KELLY: Does it really matter?

BUTLER: I think the important thing to say is every expert, every industry person I speak to says that it won’t really change the facts on the ground. If you set the threshold intellectually at a position that could incorporate High-Efficiency Low-Emissions coal, or so called clean coal, it still won’t see it being built. It still won’t change the economics which is that renewable energy is going to beat new coal-fired generation every day of the week now.

KELLY: I’m going to come at that in a moment, but if that is right and that is what the experts, and the Chief Scientist Alan Finkel is very relaxed about the benchmark he says it is not the imports that matter, it is the outputs. In other words, it is now what you allow into the Clean Energy Target certificate scheme it is about bringing down emissions. If he can live with it, surely Labour could?

BUTLER: Yeah but if you put in coal you get emissions out. That really is the nonsense I guess of trying to have a definition of clean energy that brings in every energy type short of burning old tyres does make a nonsense of the thing. But we are not going to rule anything out, we are going to sit down with the government once they finally develop a position and work through this in the national interest because we are in the throes of a fully blown energy crisis. We need sensible discussion about this issue.  

KELLY: And sensible discussion, with respect, does not include allusion to burning old tyres. These High-Efficiency Low-Emissions coal generators are lower emitters then the dirty coal-fired generators. Something like 28 per cent lower emissions. This is the point the Minerals Council makes today. It has got a report out arguing that in fact what we should do is bring on several of these High-Efficiency Low-Emissions power stations to replace the dirtier brown and black stations that we’ve got going at the moment. By doing so it argues that we preserve cheap baseload power and we still meet or Paris commitments.

BUTLER: Well it is not cheap. I think every indicator we’ve got about how much it would cost to build one of these relatively low-emission coal generators runs to the many billions of dollars. The Mineral Councils reports that we’ve seen over the last couple of weeks frankly are I think at odds with all of the other advice that we are getting from the companies overseas, particularly the Japanese companies, that have presented material to the media that indicate that these plants cost several billions of dollars.

KELLY: But Japan’s been building a slew of them?

BUTLER: Japan is in a unique position because they have had to shut down a vast amount of nuclear power because of the crisis over there after Fukushima. They are also building extraordinary amounts of renewable energy. Japan is installing 10 times as much solar energy every year as we are on this vast sunny continent. The other point I’d make is that you only get marginal emissions reductions if you are building new coal. We already have in the National Electricity Market about 76 per cent of our electricity coming from coal. We need to reduce that, not to maintain or even increase it.      

KELLY: And everyone agrees that it needs to be reduced but in the interest of getting a start and setting something in place that the nation can get some certainty for the investors to build, and as you acknowledged, we need bipartisanship on this. Even if the Coalition needs to lift that target to 0.75, you must have been discussing this with your colleagues, will Labor support it?

BUTLER: Well we will sit down with the government and talk through any proposal for a Clean Energy Target; we think it is that important. But I want to be clear that I don’t think that is actually going to change the facts on the ground, and that is the advice of every expert. Even if you lifted the benchmark to 0.75 or 0.8, still renewable energy is going to beat coal on economic grounds every day of the week, including if you attach dispatch ability. Whether that is battery storage or some peaking power capability to a renewable energy project, it will beat coal on the economics.

KELLY: If the Coalition can’t agree on a Clean Energy Target, if the stalemate continues, do you support this push from some of the Labor states to go it alone on their own version of the target.

BUTLER: It’s obviously not the first preference, as it wasn’t 12 or 13 years ago, when you had exactly this situation, when John Howard wouldn’t move on climate and energy policy so the states filled the vacuum.

KELLY: But are you warning your state of South Australia don’t do that?

BUTLER: Well it is better than nothing. If the federal government presents the states with essentially a blank piece of paper and says that “we can’t get our act together on a Clean Energy Target,” of course the states are going to respond to the energy crisis that is happening in their states and seek to construct a second best solution.

KELLY: Yeah, but Josh Frydenberg says we have only had the Finkel Review for 4-6 weeks or something, let’s take some time here and get it right.

BUTLER: No one is expecting a Clean Energy Target to be settled today. But what I think the COAG Leaders meeting, the Prime Minister and the Premiers directed the Energy Ministers to do at this meeting was to make progress on all of the recommendations. And the most important recommendation by a mile is this Clean Energy Target.

KELLY: You’re listening to RN Breakfast, our guest is Mark Butler, he is the Shadow Minister for Climate Change and Energy. As one of the listeners has reminded us, you and I think the Minister have said that business as usual is not an option.

BUTLER: And this is the choice that is confronting all of the Energy Ministers here. Now the best option without a doubt is a national solution, driven by the Commonwealth Government, endorsed by both major parties and the national parliament and supported by the states. But the federal government is still not able, the Minister and the Prime Minister have not been given the authority by the party room to start to progress this central recommendation, so of course the states are going to make progress. They received the report as well, it wasn’t a report delivered to Malcolm Turnbull, it was a report delivered to all states and the commonwealth.

KELLY: Let’s talk about gas. This week an Australia Institute study showed that it is the increase price of gas that is primarily responsible for driving up the electricity bills for households and businesses so sharply. Josh Frydenberg, the Energy Minister, will push at this meeting today for states like Victoria, and the Northern Territory, to lift their bans on onshore exploration of gas, to bring on more supply and bring down prices. Do you support a push to get the states to lift those bans?

BUTLER: I support a sensible discussion about onshore development of gas. Let’s leave aside the fact that a big driver of gas prices and supply shortages is that we are exporting too much of it and we need a mechanism to redirect some of that gas from the export market in Gladstone back into the domestic market. But in terms of domestic supply we are going to need more supply into the future as some of our traditional sources in the Cooper Basin and the Bass Strait start to taper off in the next few years. But this is a discussion that needs the Commonwealth to bring something to the table. You can’t simply have Malcolm Turnbull wagging the finger from Canberra at the states, without recognising the Commonwealth has a role to nurture community understanding and community consent to development.

KELLY: So what should they do? Should they offer to subsidise he states to do that? Josh Frydenberg is already threatening to pull back some GST from some of the states if they don’t go ahead and develop this.

BUTLER: It’s not about money, it’s not about threats. It’s about trying to nurture community understanding and consent around this. When we were in government, we worked with Tony Windsor and Rob Oakeshott to put in place a framework that would nurture community consent based on good independent advice about water impacts in particular. All you’ve seen over the last four years is the Commonwealth government try to deconstruct that framework, shift Commonwealth responsibility back to the states, do silly things like try to prevent farmers groups and environment groups from taking matters to court. All that is doing is agitating, aggravating, community opposition, rather than seeking to work through it to recognise in some communities and cases these onshore developments can precede in a safe way.

KELLY: The state minister for Victoria, Lily D’Ambrosio has already said on this show this morning that they are not going to do it because the community doesn’t want it. But in Queensland the community seems to be relatively, couldn’t speak for them all of course, at peace with that development, with that industry.

BUTLER: This is particularly an issue in New South Wales and Victoria. In those states there does need to be some very serious work done to work through that community opposition. You can’t wish it away, you can’t threaten it away, and you can’t just wag the Prime Ministerial finger at state governments, whether it is the New South Wales Liberal government or the Victorian Labor government. The Commonwealth has a responsibility to bring something to the table other than threats and Malcolm Turnbull and Josh Frydenberg haven’t done that yet.

KELLY: Just one last question, again this is a question we hear a lot, if renewables are so much cheaper, why does it cost me more?

BUTLER: Well it is very clear what is driving power prices up; there are two things. The turmoil in the gas market means gas is setting the price more often than usual. This means that the gas price problem that we are seeing in manufacturing is also a problem for the power market. The second thing that Alan Finkel said and other experts have said is that policy paralysis is stopping new investment coming through to the system with new supply. That is why the Clean Energy Target proposal is so important and that we move on this quickly. Josh Frydenberg might say that this is only an issue for 2020 but, in the world of electricity investment, 2020 is the blink of an eye away.

KELLY: Mark Butler thank you very much for joining us.

BUTLER: Thanks Fran.