If the national energy guarantee dies, it will join the host of other climate policies Australia has squandered millions on
It’s an unfortunate journalistic cliche – on the brink – but if you
are looking for the Turnbull government’s national energy guarantee,
that’s where you’ll find it. On the brink.
Next Monday, cabinets in the ACT, Victoria and Queensland will resolve their final negotiating positions on the Neg, the policy that imposes reliability and emissions reduction obligations on power retailers from 2020. After that, energy ministers will gather for the first of three critical meetings.
The Coag energy council will meet next Friday to consider the mechanism. The following Tuesday, there will be a phone hook-up to assess the commonwealth’s emissions reduction component. The final meeting, probably in September, is to consider legislation the states will need to implement if the scheme is going ahead.
In between those fraught conversations, the energy minister, Josh Frydenberg, also has to steer the required emissions reduction legislation through the Coalition party room.
As usual, government MPs are wandering around like Brown’s cows, feeling all the feelings. “What the fuck is Neg-plus?” one exasperated state official exclaimed to me on Friday after a front-page story in the Australian pointed to the government now pursuing an outcome that was apparently the Neg, but with additional measures to reduce power prices. “When you find out, can you let me know?”
Apart from the predictable parade in Canberra, there’s another material complication: the Victorian government is in all sorts of political strife.
After Jay Weatherill lost the South Australian election, it was always going to fall to Victoria to be the critical voice in the Coag energy council on the Neg.
Victorian Labor faces a difficult political choice: say yes to the Neg and have progressive groups campaign against you in inner-city seats, or say no and have the federal government rain down fire and fury every day of the looming state election campaign.
The state wish list looks like this: an emissions reduction target higher than 26%; any legislation giving effect to 26% should be clear that 26% is a floor; better still, the target shouldn’t be in legislation, but in a subordinate instrument so a future government can ratchet it up easily; and it should be ratcheted up every three years to make sure we meet our Paris commitments.
If the state and territory cabinets dig in behind that log of claims, Frydenberg is in a difficult position. If the states hold firm (and that remains an if), then the Neg looks more dead than alive.
Perhaps that shouldn’t come as a shock. If the Neg ultimately dies, it will join the host of other climate and energy policies Australian governments have spent millions of dollars developing over the past decade, only to see them contemplated for five minutes and then dumped, or legislated and then repealed.
We’ve been running failure drills for 10 years. Over and over. Creating these elaborate policies for the remainder bins.
"Here’s my message to the political class of this country. Wake up. Get your act together. We haven’t got time to fail."
That’s what happens when zero sum, rather than sense, becomes the determining factor. Unfortunately, we know what this looks like – cynics and fools narrowcasting to their base at our expense. Self-interested rent-seekers and politicians prepared to traduce facts, reason and evidence have thus far won every round of this battle, leaving the Australian people the biggest losers.
So here’s my message to the political class of this country.
Wake up. Get your act together. We haven’t got time to fail.
People who care about the future of this country are sick of your taxpayer-funded self-indulgence, and we haven’t got the patience to buckle in for another round. We’ve seen too much of it.
So what we need from you in the next few weeks is for all of you to get over yourselves. We need you to come together, in good faith, and sort this out.
One way to sort it out would be this.
The 26% target the government proposes is manifestly inadequate. That’s not a partisan point, it’s a clear-eyed assessment of the available evidence. The architects of the scheme, the Energy Security Board, said it without saying it when the final design paper confirmed electricity would hit 24% in the first year of the scheme. That leaves a reduction of 2% for the remainder of a decade. As John McEnroe might say to an offending umpire, you cannot be serious.
But Frydenberg can’t offer the states a more ambitious target because he’s constrained by internal opposition. One way of splitting the difference between what Frydenberg can offer and what the states can live with would be to make it easier for a future government to scale up the target.
This could be done in a few different ways. The target could be implemented by regulation, which makes it easier to adjust, or if the premium is on certainty, the commonwealth could set out a series of default targets stepping up over the decade to 2030, which take effect unless otherwise adjusted.
The Coalition’s coal faction would carry on as if this was high treason but it’s actually common sense. Frydenberg could sell it as pragmatism. If you set out staggered targets, you would offer business more certainty than it gets at the moment, where one government would legislate 26% and the alternative government 45%. If you set the target by regulation, you could say it’s not up to current governments to tie the hands of future governments.
The other point is consistency. As it stands, the Neg target is inconsistent with another Abbott/Turnbull government policy – Australia’s commitments under the Paris agreement. Paris was voluntarily entered into, first by Tony Abbott and then by Malcolm Turnbull. It wasn’t foisted on the Coalition by a roving troupe of progressive bandits.
A range of experts say two things about the collision between the two policies: 26% in electricity is too low to allow Australia to meet its international climate commitments; and it’s not sensible to have a low target for electricity when abatement costs are lower there than in other parts of the economy – such as transport or agriculture.
A bunch of Nationals have been out in recent days declaring a Coalition government will never impose emissions reduction on agriculture. If that’s the case, two options present themselves: just succumb to full Trumpism and pull out of Paris, or stick to the government’s freely given commitments and require electricity to do more of the heavy lifting.
Then there’s price. The good news is the technology delivering the abatement, renewables, will also deliver cheaper electricity over the life of this policy. This isn’t just my feeling, or something I wish was true. The Australian Energy Market Operator told us this recently in very plain English when it said the lowest-cost replacement options for retiring coal plants were solar, wind and storage, with some flexible gas back up.
So that’s what you would do if you wanted to turn a corner. You’d split the difference, shake hands, and try and get this settled.
But is that what these folks want?
Do Australia’s political parties want war or peace on climate change and energy? Will it be detente, or is there political profit in confecting a state of permanent war, where virtue signalling triumphs, and practical progress is nailed to a national monument called failure?
Next Monday, cabinets in the ACT, Victoria and Queensland will resolve their final negotiating positions on the Neg, the policy that imposes reliability and emissions reduction obligations on power retailers from 2020. After that, energy ministers will gather for the first of three critical meetings.
The Coag energy council will meet next Friday to consider the mechanism. The following Tuesday, there will be a phone hook-up to assess the commonwealth’s emissions reduction component. The final meeting, probably in September, is to consider legislation the states will need to implement if the scheme is going ahead.
In between those fraught conversations, the energy minister, Josh Frydenberg, also has to steer the required emissions reduction legislation through the Coalition party room.
As usual, government MPs are wandering around like Brown’s cows, feeling all the feelings. “What the fuck is Neg-plus?” one exasperated state official exclaimed to me on Friday after a front-page story in the Australian pointed to the government now pursuing an outcome that was apparently the Neg, but with additional measures to reduce power prices. “When you find out, can you let me know?”
Apart from the predictable parade in Canberra, there’s another material complication: the Victorian government is in all sorts of political strife.
After Jay Weatherill lost the South Australian election, it was always going to fall to Victoria to be the critical voice in the Coag energy council on the Neg.
Victorian Labor faces a difficult political choice: say yes to the Neg and have progressive groups campaign against you in inner-city seats, or say no and have the federal government rain down fire and fury every day of the looming state election campaign.
The state wish list looks like this: an emissions reduction target higher than 26%; any legislation giving effect to 26% should be clear that 26% is a floor; better still, the target shouldn’t be in legislation, but in a subordinate instrument so a future government can ratchet it up easily; and it should be ratcheted up every three years to make sure we meet our Paris commitments.
If the state and territory cabinets dig in behind that log of claims, Frydenberg is in a difficult position. If the states hold firm (and that remains an if), then the Neg looks more dead than alive.
Perhaps that shouldn’t come as a shock. If the Neg ultimately dies, it will join the host of other climate and energy policies Australian governments have spent millions of dollars developing over the past decade, only to see them contemplated for five minutes and then dumped, or legislated and then repealed.
We’ve been running failure drills for 10 years. Over and over. Creating these elaborate policies for the remainder bins.
"Here’s my message to the political class of this country. Wake up. Get your act together. We haven’t got time to fail."
That’s what happens when zero sum, rather than sense, becomes the determining factor. Unfortunately, we know what this looks like – cynics and fools narrowcasting to their base at our expense. Self-interested rent-seekers and politicians prepared to traduce facts, reason and evidence have thus far won every round of this battle, leaving the Australian people the biggest losers.
So here’s my message to the political class of this country.
Wake up. Get your act together. We haven’t got time to fail.
People who care about the future of this country are sick of your taxpayer-funded self-indulgence, and we haven’t got the patience to buckle in for another round. We’ve seen too much of it.
So what we need from you in the next few weeks is for all of you to get over yourselves. We need you to come together, in good faith, and sort this out.
One way to sort it out would be this.
The 26% target the government proposes is manifestly inadequate. That’s not a partisan point, it’s a clear-eyed assessment of the available evidence. The architects of the scheme, the Energy Security Board, said it without saying it when the final design paper confirmed electricity would hit 24% in the first year of the scheme. That leaves a reduction of 2% for the remainder of a decade. As John McEnroe might say to an offending umpire, you cannot be serious.
But Frydenberg can’t offer the states a more ambitious target because he’s constrained by internal opposition. One way of splitting the difference between what Frydenberg can offer and what the states can live with would be to make it easier for a future government to scale up the target.
This could be done in a few different ways. The target could be implemented by regulation, which makes it easier to adjust, or if the premium is on certainty, the commonwealth could set out a series of default targets stepping up over the decade to 2030, which take effect unless otherwise adjusted.
The Coalition’s coal faction would carry on as if this was high treason but it’s actually common sense. Frydenberg could sell it as pragmatism. If you set out staggered targets, you would offer business more certainty than it gets at the moment, where one government would legislate 26% and the alternative government 45%. If you set the target by regulation, you could say it’s not up to current governments to tie the hands of future governments.
The other point is consistency. As it stands, the Neg target is inconsistent with another Abbott/Turnbull government policy – Australia’s commitments under the Paris agreement. Paris was voluntarily entered into, first by Tony Abbott and then by Malcolm Turnbull. It wasn’t foisted on the Coalition by a roving troupe of progressive bandits.
A range of experts say two things about the collision between the two policies: 26% in electricity is too low to allow Australia to meet its international climate commitments; and it’s not sensible to have a low target for electricity when abatement costs are lower there than in other parts of the economy – such as transport or agriculture.
A bunch of Nationals have been out in recent days declaring a Coalition government will never impose emissions reduction on agriculture. If that’s the case, two options present themselves: just succumb to full Trumpism and pull out of Paris, or stick to the government’s freely given commitments and require electricity to do more of the heavy lifting.
Then there’s price. The good news is the technology delivering the abatement, renewables, will also deliver cheaper electricity over the life of this policy. This isn’t just my feeling, or something I wish was true. The Australian Energy Market Operator told us this recently in very plain English when it said the lowest-cost replacement options for retiring coal plants were solar, wind and storage, with some flexible gas back up.
So that’s what you would do if you wanted to turn a corner. You’d split the difference, shake hands, and try and get this settled.
But is that what these folks want?
Do Australia’s political parties want war or peace on climate change and energy? Will it be detente, or is there political profit in confecting a state of permanent war, where virtue signalling triumphs, and practical progress is nailed to a national monument called failure?
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