Date: 19 August 2014
HOST: I spoke earlier to Mark Butler, Shadow Climate Change Minister. Thanks
very much for your company, big splash across the Financial Review
today about the Government perhaps walking away from the Renewable
Energy Target. They’ve tried to hose that down today though, haven’t
they?
SHADOW MINISTER FOR ENVIRONMENT, CLIMATE CHANGE AND WATER MARK BUTLER: Well,
they’ve tried to but the problem is it just adds one more piece of
speculation to a series of events, a series of strategic leaks and
decisions over the last several months that has been an absolute kick in
the guts to the renewable energy industry. This was after the clearest
possible commitment given by Tony Abbott at the last election that the
Renewable Energy Target would be kept in place as a bipartisan piece of
policy, which is what it has been for four elections now going back to
John Howard in 2001.
HOST:
The interesting thing about this is the same story, it carries a quote
from Tony Abbott, the Prime Minister, from July this year, just over a
month ago, saying that the Renewable Energy Target is ‘very
significantly driving up power prices’. But, there’s a graphic attached
to that that makes the point that it only accounts for about 3% of an
average household’s electricity bill. That doesn’t sound like a lot in
percentage terms, but probably to voters struggling under cost of living
pressures, 3% might still be a lot.
BUTLER:
That’s right, every percent counts for people who are under pressure,
pensioners, people on low and middle incomes. The point about that 3%
though is that it doesn’t take account of the suppression effect - the
fact that solar and wind power in particular, are actually driving down
wholesale prices. Today we also saw the release of the fourth report now
in only a matter of months, that shows that to remove or to dilute the
Renewable Energy Target would actually drive up power prices because
although there’s a 3% gross impact of the Renewable Energy Target, the
addition of renewable capacity is also driving down wholesale power
prices, so the net impact is actually a positive one for Australian
households and that really is what Tony Abbott is missing here. We’ve
now seen four reports since Tony Abbott first tried that form of words
on an Alan Jones program, including the Abbott Government’s own
modelling for the RET Review, confirm that household power prices would
be higher, they’d be higher, not lower, if the RET was tampered with in
anyway.
HOST:
Ultimately though, that’s not going to happen though is it? Because
Clive Palmer said it best today, you won’t always hear me utter those
words, but he said it best when he made the point that his party won’t
support this change, the Greens clearly aren’t likely to and by the
sounds of it, I can’t imagine Labor walking away from it either and
that’s game, set and match in the Senate.
BUTLER:
Well, that’s game, set and match in the Senate for the time being. The
problem is that what Clive Palmer has delivered is a stay of execution.
The problem here is that this sort of policy that underpins very long
term, very large investments – we’ve seen almost $20 billion of
investment under this policy so far, with about $18 billion in the
pipeline between now and 2020. These investments are not proceeded with
on the basis of a Senate vote of 50% plus one. The whole nature of this
policy is to get bipartisan commitment – long term, bipartisan
commitment. So, it’s great to have Clive Palmer recognising that Labor’s
renewable energy policies were good, but at the end of the day, what
this industry needs to get lower household power bills, to get cleaner
electricity, to get those billions of dollars back in the investment
pipeline with the thousands of jobs that come with it, is for the
Liberal Party to come back to the table so that the two alternative
parties of government can underpin this investment into the future.
That’s really what Tony Abbott needs to do.
HOST:
Well, as I understand it, the Environment Minister Greg Hunt is making
it clear that he’s not for turning on this particular issue, he’s
certainly been telling journalists that today, from what I’m being told
albeit second hand. That would suggest, wouldn’t it, if the Environment
Minister is behind this, the RET is perhaps likely to stay as it is?
BUTLER:
Well, we need more than that. Unfortunately, I don’t and I don’t think
the community has much confidence in Greg Hunt’s ability to land this
thing. We know for example, that the RET Review, the review underway at
the moment into the Renewable Energy Target, was taken away from Greg
Hunt and Ian Macfarlane, the relevant ministers and their departments,
and put straight into the Prime Minister’s office, with that office
handpicking the panel and apparently, according to the strategic leaks
this morning, actually sending the draft reports back and getting their
handpicked panel to add another option to abolish the RET altogether.
So, the problem I think is that the two relevant ministers, Greg Hunt
and Ian Macfarlane, aren’t in the loop on this one.
HOST:
But, if the reports are true though, Mark Butler, if the reports are
true and ultimately if we do see some stage down the track, the
Government walking away from its RET commitments, that leaves the
Environment Minister isolated, surely, I mean, he’d have to step down, I
mean, he’s given up other things along the way, you could argue and
massage the reasons behind that, but this is something that he’s been
pretty absolute about right from the get go.
BUTLER:
Well, it would be a terrible blow to Greg Hunt’s credibility, but also
to Ian Macfarlane’s credibility. This is actually a portfolio that rests
with Ian Macfarlane. He backed in the commitment given during the
election campaign and has backed it in ever since. It is the right
balance for the electricity industry to have this new capacity built, to
bring Australia’s electricity carbon pollution down, so it would be a
terrible blow to their credibility and they would have to, I think,
consider their position. But the problem is whether this is just put in a
drawer or if there is just continued speculation, or a firm decision is
announced by Tony Abbott, either way we’ve seen renewable energy
investment absolutely freeze over the last six months. Last year, we got
to the position when we were still in government, when Australia was
seen as one of the four most attractive places to invest in renewable
energy, up with the powerhouses of the US, Germany and China. We’ve been
plummeting on the international investment tables ever since and we
simply won’t recover unless Tony Abbott walks back from the position he
took earlier this year to start to back down on the clearest possible
election commitment. He simply has to swallow his pride and start doing
that.
HOST:
Is renewable energy really the future? I mean, what about something
like coal-seam gas. You see a real economic boom, coupled with a clean
energy boom going on in the United States at the moment around coal-seam
gas. They’ve of course got different rules at their state by state
level compared to what we do in terms of state ownership of that gas but
that would be the kind of thing that could really get us into a
stronger clean energy future here in Australia, a more vibrant embrace
of coal-seam gas. Why not, for example, I’m just thinking outside the
square here; why not wrap up renewable energy targets with cleaner
energy targets that would include things like coal-seam gas.
BUTLER:
Well, no one’s really argued that position. They did try to do that in
the UK for a while and it didn’t work perfectly well but I think you are
right that gas provides a much cleaner electricity source than the
traditional coal-fired power that we’ve relied on for so long. For
example in South Australia, my state, where we’ve seen a reliance on gas
over the last several years and a big growth in renewables, our carbon
pollution is down by more than a third, more than a third in the
electricity sector because of the growth of gas and the growth of
renewables. So there’s no question, as a bridging fuel, gas has a lot to
contribute to starting to clean up Australia’s and America’s
electricity sector and that’s why President Obama has focussed so
squarely, I think, on the gas revolution there, because it is very
significantly responsible for the reduction in carbon pollution we’ve
seen in that economy.
HOST: Is the problem here the different approach that we take in terms of land holders right visa vie what’s in the ground?
BUTLER:
That’s one difference. In America, the land holder receives royalties
for gas being extracted from his or her property and that takes the
sharpness off the politics if you like, in that respect. The other
problem we have here in Australia in the future – this is tied up with
what happens with renewables – is that the gas price is expected by
everyone – all of the economist and the Industry - to significantly
increase once the LNG export trains start to operate in Gladstone. We’ll
see the end of cheap gas really in Australia and gas-fired electricity,
now with no carbon price mechanism, gas-fired electricity will become
increasingly uneconomic compared to coal-fired electricity and I think
that along with the Renewable Energy Target being effectively frozen
from an investment point of view, means the carbon pollution from our
electricity sector is likely to increase not continue to reduce.
HOST:
I’ve got to ask you before I let you go about Labor’s approach as we
head towards the next election in relation to carbon pricing. You fought
the fight against the abolition of the carbon tax, but ultimately the
Government with a few amendments got their way through both Houses of
Parliament. We’re now left with a scenario where they can’t get Direct
Action through but by the same token, as the alternative government,
Labor’s going to be having to look at what your policy for the next
election ultimately is in terms of pricing carbon. Where are you at with
that process?
BUTLER:
Well Bill Shorten made it very clear in the last sitting of the
Parliament some weeks ago that Labor will take an emissions trading
scheme to the next election. A scheme that has a legal cap on carbon
pollution, that reduces over time in line with our international
commitments, but is underpinned by a market mechanism that lets business
work out the cheapest and the most effective way to operate. Alongside
that, there will be strong support for renewable energy; there has been
in Labor’s policy suite for many, many years. Beyond that, quite what
the fine policy details of that emissions trading scheme will be – where
that cap might sit?, what the scope of the trading might be? - we’re
going to continue to talk over the coming months to business, to
environmental stakeholders and many others about this and we’re also
going to keep an eye on the fast developing international negotiations,
particularly being led by China and the US, because I think most
observers think that there is likely to be quite a substantial amount of
movement over the next 12 or 18 months on that front as well and we
need to make sure that our policy development aligns as far as possible
with those developments.
HOST:
Can I ask on that, if there isn’t that chance of those developments
over the next 12 or 18 months, as you say, is it possible that Labor
would look to take to the next election, exactly as you say, an ETS
scheme, however one which if you like is along the Clive Palmer model
where it only really gets ramped up and running when we see certain
international actors also moving?
BUTLER:
Well I’m not really going to get in to that detail. I mean, that’s the
work that we have to do over coming months. I’m not going to rule
anything in or out about that detail about timing and scope and the cap
and such like. But it is important to say that among the trading
partners we usually look to, there is already very significant shift.
So, China has now got its seventh pilot emissions trading scheme in
operation covering about a quarter of a billion people, I think. South
Korea starts one on the 1 January 2015, our third largest export
partner. Our oldest trading partners, the UK and Germany and France have
got very mature operations in place, so there’s already much to look at
in the rest of the world. Irrespective really of what happens in the
discussions leading into Paris next year, the rest of the world is
moving forward on climate change. Unfortunately, Tony Abbott at the same
time is trying to take Australia backwards.
HOST: Alright Mark Butler, we appreciate your time on the program. Thanks very much.
BUTLER: Pleasure, Peter.
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