January 17, 2017





DAVID SPEERS: The Shadow Minister for Climate Change and Energy joins me from Adelaide, Mark Butler good afternoon and Happy New Year to you, thank you for joining us. Do you disagree with anything the Prime Minister just said there that coal will be a part of the energy mix for the foreseeable future?

MARK BUTLER MP, SHADOW MINISTER FOR CLIMATE CHANGE AND ENERGY, MEMBER FOR PORT ADELAIDE: Well I think all of the expert agencies say that coal will be a part of the energy mix for the foreseeable future. I’m not sure that adds much to the debate that we should be having here in Australia about what the future of electricity generation is, but certainly around the world you are going to see coal-fired power continue to be a substantial part of the energy mix for many years to come.

It’s really about how we wane that down over the course of the next few decades to align with the commitments that the world’s nations have made to keep carbon pollution levels to certain levels, to keep global warming well below 2-degrees Celsius. That is the job for national governments around the world and it is clear that particularly developed countries, but also countries like China are already starting to wind back their coal-fired generation (in China’s case) or to set dates for coal-fired power to be withdrawn entirely from some developed nations electricity systems. The UK will have no coal-fired power beyond the mid 2020’s –

SPEERS: But the countries you are referring to there, like China, India and others are also rolling out this ultra-supercritical coal-fired power that the Minister Matt Canavan has been talking about?

BUTLER: That’s right, and there are some reductions that you can get from ultra-supercritical. We think that the best practice model the coal industry tends to rely upon is a coal-fired station built in Japan which, as you would remember shut down all of its nuclear stations after the Fukushima disaster, so they’ve built an ultra-supercritical that we think is about 25 per cent less polluting than traditional coal-fired power stations. But that is still 25 per cent more heavily polluting than gas-fired power stations and much more heavily polluting than renewable power.

I think the question here really is whether this has any prospect of happening in Australia and the industry says there is not. AGL, the biggest electricity company has said they won’t be interested in any new coal generation in Australia. Grant King, who was the long-term CEO of Origin Energy, now the President of the Business Council said he can’t see any coal generation being built ever again in Australia and many others have said the same thing –

SPEERS: So to be clear what you’re saying is gas would make a lot more sense than ultra-supercritical coal-fired power because of the emissions difference? It is also expensive to build these sorts of coal-fired power stations with this new technology.

BUTLER: It is, it adds about 40 per cent to the cost of a power station and that really does start to make it substantially more expensive over coming years than renewable energy technology. Particularly, solar power which according to really all projections is starting to become the cheapest power source over the course of the 2020’s. But look I will give Matt Canavan this; at least he is coming up with –

SPEERS: But it doesn’t have the reliability - sorry go ahead

BUTLER: Well you are right about reliability and all of the serious analysis being done about high level or large scale rollouts of solar power are being connected to really the revolution we are seeing in storage technology, in particular battery technology. But getting back to what I was about to say David, I’ll give Matt Canavan this, at least he has come up with some ideas about the future of energy policy, though I think, to use the words of Humphrey Appleby, 'courageous' ideas that don’t have much prospect of being picked up in Australia. They really do stand in stark contrast to the Prime Minister who has really said nothing about the future of energy policy which is now at the top of the list of the concerns that businesses have in their ability to do business here in Australia.

SPEERS: The energy policy we are told is coming in the next two or three months. Can I just go to – well Matt Canavan didn’t go this far he didn’t say we should subsidise this sort of technology but what do you think? We have various subsides and renewable energy  targets that help give a leg up to solar and wind power, should we do likewise when it comes to this sort of coal technology if it can lower our emissions?

BUTLER: We’ve said for some time that the centrepiece of electricity policy in this country should be an emissions intensity scheme which sends a long term price and investment signal to the industry as they go about their very important work of working out what the new generation of infrastructure is going to be in Australia. We are going to have to recognise that leaving aside carbon pollution concerns and what is happening in Renewables, we are now in a position in our history David that about three quarters of our existing coal and gas-fired generators are operating beyond their design life. They simply are going to have to be replaced over the next 10 to 15 years and there is the question of what will replace them. So the centrepiece must be an emission intensity scheme –

SPEERS: Yeah you would have an emissions intensity scheme but you would also have a RET wouldn’t you? You would have a renewable energy target which as I say would really give a leg up to solar and wind.

BUTLER: Well it depends how that target is rolled out. I’ve said for example on a number of occasions that I wouldn’t see a 2030 renewable energy target being rolled out through the sort of retailer obligation that you see the current renewable energy target based on. It would probably be a very different system, and it may well be an emission intensity scheme that sent that long-term price signal to the industry was sufficient to start to see the building of that scale of renewable technology. Because particularly with that price signal, renewable energy will simply be the cheapest option over the course of the 2020’s according to all advice. So that was really the first -

SPEERS: (inaudible) renewable energy target?

BUTLER: The target will still be there. It’s a question of whether you need levers to actually get to 50 per cent; it may well be that with a proper emissions intensity scheme in place, you'll get there. This is certainly the advice of people like the Energy Markets Commission.

The really important point though David, is we didn’t even get to first base on this because even though there was the support for an emissions intensity scheme from all state governments, Labor and Liberal alike, the Energy Markets Commission, the Chief Scientist, the CSIRO, the electricity industry itself and many others I’m sure I’ve forgotten including the Federal Labor Opposition, Malcolm Turnbull overrode Josh Frydenberg just before Christmas just because Tony Abbott and Cory Bernardi started frothing at the mouth at the idea of a long-term price signal. This really is the problem. If Matt Canavan wants to add something he should go into the Cabinet room and re-litigate the importance of an emissions intensity scheme.

SPEERS: Well I’m not sure if the minister will do that, point taken. But just getting back to what you’ve just said –

BUTLER: Hope springs eternal, David.

SPEERS: (laughing) yeah. If we did have an emissions intensity scheme what you are saying is that we could restrict the renewable energy target or wind it back so it doesn’t necessarily apply to the retail sector. That would become less important?

BUTLER: Well the important thing is the target. The important thing is getting to the point where there is enough clean energy, so zero emissions energy in the system to ensure that we are able to satisfy the commitments we made around carbon pollution levels and avoiding dangerous levels of climate change.

Now if you can do that through an emissions intensity scheme, that sort of price signal, well I don’t think people are particularly fussed about how it happens so long as it does happen in a way that is consistent with reliable electricity supply and affordability for households and for businesses –

SPEERS: So does that mean Labor’s renewable energy target remains.

BUTLER: Yes. I’ve said on a number of occasions that that is our target but we’ve kept an open mind on how that target would be implemented. The retailer obligation that was adopted in 2009 was generally the way in which countries around the world then implemented renewable energy targets.

Remembering David, that there are 173 nations at last count that have renewable energy targets; we’re not one out here. But more and more governments have started to use different mechanisms to get to the targets. I’m not particularly fussed about the mechanism; I’m fussed about making sure we get to a point where there are sufficient levels of clean energy to keep faith with our carbon pollution footprints, but also good, reliable affordable energy for consumers.

SPEERS: To be fair you’re critical to the Government for not having a path to get to its target. We don’t really know from Labor how you would get to 50 per cent –

BUTLER: It (the Government) doesn’t have a target. It doesn’t have a target is the point David. They don’t have any policy beyond 2020 –

SPEERS: But your 50 per cent renewable energy target, we don’t know how you would get there?

BUTLER: Well I’ve said the first thing we would do is put in an emission intensity scheme and that is what all of the industry, and all of expert advice have said is the important foundation for a plan to modernise our electricity system. You saw the Government creeping that way when Josh Frydenberg did some media before Christmas but then had Malcolm Turnbull come over the top of him and veto that important foundation.

If we were in Government now and were elected in the middle part of last year; by now we would have gone through a process with the industry, with advisers like the Chief Scientist and the Energy Markets Commission to start to refine that mechanism that would operate alongside an emissions intensity scheme to get to the point where we need to be at by 2030.

SPEERS: Let me move to a couple of other issues. Alcoa’s aluminium plant in Portland, Victoria – are you happy to see it keep running even if it does mean continuing to use what you would no doubt call dirty brown coal-fired power below the market rates?

BUTLER: Alcoa’s aluminium operations have been a very important part of Victoria’s regional economy now for the best part of three or four decades. It sustains the economy in Portland, it is a very important part of Victoria’s exports and we want to continue to see those jobs. Obviously we want to see improvements in carbon pollution output from all industries, including the aluminium industry which is largely producing carbon pollution through the use of electricity; it’s a massive user of Victoria’s electricity. But we don’t want to see any jeopardy over Alcoa’s future and the very many jobs that depend on Alcoa –

SPEERS: How does that fit with having 50 per cent renewable energy, presumably a lot of coal-fired electricity use when you keep something like an aluminium smelter going on brown fired power?

BUTLER: Yeah we have to clean up our electricity system that’s the point David. We have to clean up our electricity sector over not just the coming one or two years but the coming couple of decades. Alcoa has only been able to operate in Victoria through very significant subsidies from the Victorian Government as it is because it is such a significant distance from the La Trobe Valley where the electricity is generated. Alcoa has always had very significant support from governments and we know that if we want to be able to sustain strategic industries into the future like steel manufacturing, like aluminium and such like there is going to have to be a serious look into strategic industry policy –

SPEERS: Yeah but you’re identifying strategic industry, whether it be steel making or aluminium, these are big emitting industries at the same time we’ve got to get to 50 per cent renewable energy. In the end it means everyone else is going to have to pay more to get to your 50 per cent target, if these big emitters like steel and aluminium aren’t?

BUTLER: Aluminium emits carbon pollution through its use of electricity by and large. So really the question of aluminium is a question about the future of electricity policy.

I can give you this assurance with confidence David that power prices in the future will be cheaper under our plan to modernise Australia’s electricity system then they will be under the shambles that you see under Malcolm Turnbull. You don’t have to take my advice on that you can just look at the report that the Energy Markets Commission and Danny Price gave to the Government last month that said without an emissions intensity scheme power prices would be $15 billion –

SPEERS: But a handout for aluminium produces and so on to keep them going?

BUTLER: Well no what I’ve said is that there needs to be strategic industry policy as there always has been. Aluminium has never been able to operate in Australia, since it was first established in the late 1940s under the Commonwealth Aluminium Commission it has never been able to operate without substantial support from Government. The same goes really for the steel industry. And if you are a country that wants to continue to make steel, aluminium and other strategic products like that, it is certainly my position and I know it is Bill Shorten’s position, you do need well thought out policy.

Now the fact that there is going to be a shift in how we generate electricity in Australia won’t change that fact. The important thing will be to have good industry policy that gels with climate change and energy policy. You don’t see any connection between those three strands of Government policy under Malcolm Turnbull.

SPEERS: Final one Mark Butler, the Barnett Government in WA has now approved three new uranium mining projects in the lead up to the state election there in March. Do you have any problem with that?

BUTLER: That is a matter really for Western Australia. The Federal ALP policy allows states to expand their footprint if you like in the uranium mining and export industry. That’s really a matter for Western Australia and I think the Western Australia branch of the Labor party at last time I looked had a different position to the one the Barnett Government has put. We had a debate about this at the Labor party conference a few years ago and have taken the view that it is really a matter for State Governments and state communities to decide whether or not they want to be a part of the uranium mining and export industry. I come from a state that has been a very significant player in that industry for some time. It is really a matter for Western Australia and I’m sure it will be debated throughout the course of the state election over the coming weeks.

SPEERS: It probably will be. Mark Butler Shadow Minister, thank you for joining us this afternoon we look forward to talking to you more throughout the year. We’ll see you again soon.