THURSDAY, 12 JULY 2018
SUBJECT/S: ACCC report, new coal-fired power stations, Coalition civil war
LAURA JAYES: I’m glad that you’ve read all 56 recommendations. What do you like out of those recommendations? What would Labor likely adopt?
MARK BUTLER, SHADOW MINISTER FOR CLIMATE CHANGE AND ENERGY, MEMBER FOR PORT ADELAIDE: I really don’t want to get into an assessment of each recommendation individually Laura, but I think the important thing at this very early stage as people digest this important report is to recognise the thrust of the report is a good one. The ACCC, Rod Sims, have done some really good work getting to the crux of the problem which is that the system is fundamentally not working in the interests of consumers. This is an essential service; it must be a service that works in the interests of consumers. Instead it’s working in the interests of a small number of companies that have enormous market control because of privatisation decisions taken over the course of the last couple of decades. So I think that’s an important recognition – this is a report that has some very challenging recommendations in it; challenging for the commonwealth government, some of them particularly challenging for the state governments, to unwind some of the systems that have emerged over the last couple of decades. It deserves an important, serious response not just from the government but also from the alternative government at a federal level, from state governments, industry, stakeholders and the rest.
JAYES: Okay, fair enough. You haven’t read all 398 pages but you say this deserves some due consideration-
BUTLER: I’m getting through it Laura, I’m getting through it.
JAYES: Good, I’m very glad. When do you think Labor might formally respond to this and how will you respond? Will you look at each recommendation and say how many recommendations you might implement as the alternative government?
BUTLER: First we’ll want to see what the federal government and the state governments as part of the COAG Energy Council propose as a way forward to considering this. For example the Grattan Institute have said this morning that consideration of these recommendations, these 56 from the ACCC be combined with the consideration of the 50 recommendations that were delivered by the Chief Scientist, Alan Finkel last year. If there’s a formal process established by the commonwealth and the relevant state and territory governments, we’d obviously want to craft our response around that time frame as well. So I’m not going to try and set a time frame now; I think the important things is all of us – stakeholders, government, and private give this hard work by the ACCC over the last 18 months the consideration it deserves.
JAYES: Okay, let’s look at recommendation four, because this is what many political organisations seem to be seizing on, which is that the government could underwrite new players in the market that would provide firm energy. Now I read that as dispatchable energy, do you? And is it a good idea?
BUTLER: Let’s get to this definition because I think one of the real pities of the last 24 hours is that some of the ideologues in the Coalition party room have tried to hijack this recommendation as an endorsement particularly of the National party’s policy of throwing billions of dollars of taxpayers’ money at building new coal-fired power stations. Dispatchable power is very different to the language that is being used by Tony Abbott, Matt Canavan and others, the idea of ‘baseload’ power, if you like, to what I understand the ACCC had in mind. Rod Sims has talked about this a bit over the last 24 hours saying that companies had talked to the ACCC about renewables, about gas, but they hadn’t raised coal-fired power with them at all. So I think dispatchable power is power that is able to be, obviously, dispatched to end users – businesses and households – at any time of any day. I think the industry is quite clear that what that will look like in the future in terms of new investment is renewable power that is firmed up – that is able to be stored and then dispatched at relevant times through gas peaking plants, through pumped hydro which is a very old technology, and through a much newer technology, which is batteries. That’s what everyone except perhaps Tony Abbott and Barnaby Joyce have in mind. This is an important recommendation.
JAYES: Batteries aren’t quite there, are they, just yet, to provide that dispatchable power?
BUTLER: Well they provide some things that pumped hydro isn’t quite able to provide, that gas peaking plants aren’t quite able to provide – each of them have their merits and their drawbacks. That’s why, when you look for example at the suite of options that are being pulled together to replace the Liddell power station, it has a bit of all of them. The batteries are providing something very important and new to the system; the big battery in South Australia is able to respond much more quickly than gas fired power can, for example, as these old coal units are increasingly dropping out of the system with no notice. The harder recommendation-
JAYES: Can I just- as you were.
BUTLER: Before you get to the question of is it coal or is it renewables, that seems to obsess a number of MPs in the national parliament, particularly in the Coalition party room, the heart of the issue the ACCC is identifying is the level of market power held by the big retailers. It’s very hard to get finance for new generation if you can’t get an offtake agreement for the power that’s going to be produced by the generator – you can’t get it to market. At the moment that whip hand is essentially held by a small number of companies. So what the ACCC as I understand it is trying to get to is to create a bit of support for new entrants to the market, so you can get more generation built, you can get more competition into the market, and you can get prices down for households and businesses, and that’s something I think that’s a pretty sensible principle. Obviously we’ll need to think about the detail, but it’s something that the Clean Energy Finance Corporation, a body set up by Labor has been doing, and at the last election we also suggested that the commonwealth government should get into the market and use its market power as a very large user of energy as well. This is something, I think , very worthy of consideration, but unfortunately it’s already been hijacked by these ideological zealots in the Coalition party room.
JAYES: Okay sure, but does it matter in the scheme of things, when you look at the principle of this recommendation, if Labor was to adopt it and essentially there was a new player on the market with a government guarantee that wanted to set up a new coal-fired power station – would you have a problem with that?
BUTLER: I think it’s a fantasy Laura. I don’t understand why so much energy, forgive the pun, goes into this-
JAYES: Sure, but that’s fine. This goes to Matt Canavan’s tweet, and I think it’s a fair point – he says “what is Mark Butler afraid of? If renewables are cheaper than coal they will win the race. The ACCC is right that all power sources should be on the table” and he goes on to make a political point. But it doesn’t matter, that wouldn’t be up to you – wouldn’t this be an independent assessment if the government would underwrite new players in the market for dispatchable power, if someone came to the table with private money and they wanted to build a new coal-fired power station - you say it’s a fantasy, but maybe it’s not. Would you have a problem with it?
BUTLER: Well, it is a fantasy, Laura. Malcolm Turnbull first raised this issue 18 months ago at his National Press Club address. Since then, the only business figure who has indicated any interest in this fantasy is Clive Palmer. He’s the only business figure who has come out and said that he’d be interested, subject to the commonwealth paying the ticket frankly, in building a new coal-fired power station. Everyone in the industry has recognised that building new coal-fired power stations, one isn’t suitable for the nature of the market in the future; it’s not sufficiently flexible, it’s more expensive than other power options, but also there is very substantial carbon risk, regulatory risk, price risk, associated with building new, high polluting, or high emitting assets. That’s why the industry won’t go near it, investors, bankers, won’t go near it, because they understand quite how risky it is. Now, Matt Canavan, I don’t understand this ideological obsession he has. If there’s an even race, without the government or particularly figures like Matt Canavan putting their finger on the scale by channelling billions of dollars of taxpayers’ money. The industry is quite clear what is going to win the race, and it’s not coal.
JAYES: Okay, but just to be clear: you are open to this recommendation?
BUTLER: We’re open, at this stage, to all of the recommendations and this recommendation, number four, is something that, particularly big end-users of energy have been talking to us, and I’m sure others, about as well. How do you get some new entrants into the market to provide dispatchable power that they can rely upon for several years. More than five years or so because some of these big users are having to make investment decisions of upgrading their factories that go well beyond the contracts that might be on offer from the electricity market at the moment. So this is an important recommendation. We’re not going to rule things in or rule things out within 24 hours, but I am really concerned that already the recommendation has been hijacked, essentially as a play thing of this civil war that is being waged in the Coalition party room on energy policy.
JAYES: Okay, small-scale solar, it seems to be an issue that has been identified by the ACCC. Do you share those concerns and would you phase them out as the ACCC recommends?
BUTLER: Well again we’re not going to say yes or no to any of these recommendations. I think one of the things people need to bear in mind as they think about the impact of rooftop solar, or small-scale solar is that yes, there’s obviously been a benefit to those households that are lucky enough to have the panels on their own rooves. They’re saving on average about $500 a year, but there have also been some very substantial system-wide benefits. We know that rooftop solar has shaved the peak in demand, that really was a big spiker of power prices for everyone over the last decade or so. So this, again, is a recommendation that we’ll want to consider very seriously. It’s quite a new recommendation, for example it’s not something that was floated when we were reviewing the renewable energy target with the government only three years ago. It is quite a new recommendation and we’ll want to think about it carefully and engage with stakeholders carefully.
JAYES: Alright we’ll leave it there because you need to get to those 398 pages. A lot of people very upset that you haven’t read this entire report Mark Butler. Thank you for your time.