Next time you read your increased power bill, blame Tony Abbott

Extract from The Guardian

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Energy

Opinion

Matt Grudnoff

For the last four years we’ve had a fact free zone of bad politics and no interest in understanding energy policy. The biggest losers are electricity consumers

‘Shouting slogans while someone talks policy is a fitting metaphor for Mr Abbott’s contribution to the climate change debate’ Photograph: Lukas Coch/AAP

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Wednesday 14 June 2017 14.26 AEST

Electricity prices paid by households are about to rapidly increase and the single person who is probably most responsible is Tony Abbott.
It has been claimed that in a party room meeting Tuesday afternoon, Abbott was interjecting while Craig Laundy was speaking in favour of a clean energy target. Shouting slogans while someone talks policy is a fitting metaphor for Abbott’s contribution to the climate change debate.

The Finkel report highlights what is currently wrong in Australia’s energy policy: there isn’t one. We haven’t had an effective energy policy since Abbott abolished the carbon price and replaced it with nothing. The result of this has been a lack of investment certainty.
This shouldn’t come as a shock to anyone. It’s what experts were warning about for years. A failure to tackle climate change will have higher costs in the long run. But it seems that when it comes to energy policy, ignoring experts is what Australia does.
Electricity prices have jumped almost 20% in some states, with many others soon to follow. Even before these increases, electricity prices are higher now than when the carbon price was in place.

This is the unfortunate price that we pay when we listen to self-interested politicians and ignore experts.
You might think that this all has to do with climate change. But while climate change is important, the increase in electricity prices would have happened even if we lived in the fantasy world where climate change doesn’t exist.
Why? Because there is a technological transformation happening in energy, and much like the horse and cart, the VHS cassette and photo development labs, coal is about to be pushed out of the market by something better and cheaper.
While you might be able to find those who cling to the past and try and convince people that coal still has a future, it is telling that none of them are investors in electricity generation. Those who have to come up with the money and take the risk are all uninterested in investing in coal.

If you want to build a new coal plant you have to think about what is going to happen to electricity prices over the next 20 or 30 years, because that is the time frame that you have to sell over to make back the cost of building the plant.
The reality is that renewables and storage is going to be much cheaper than coal in far less than 20 years, so anyone building a coal plant today is never going to make back their money.
The problem Australia has is that right at the changeover point when energy production is shifting from fossil fuel to renewables and storage, we have a bunch of very large, very old coal fired plants coming to the end of their working lives.
Anyone who has owned an old car knows that there comes a point when maintaining and repairing it just isn’t worth it anymore. So it is with our ageing coal fired power stations.
After the abolition of the carbon price by Abbott and Hunt there was a drought in investment in new generation, including for renewables. Renewables had previously been pushing additional generation into the market. According to many studies, including Mr Abbott’s own review, renewables were putting downward pressure on electricity prices.
Along with the withdrawal of ageing coal assets, the lack of investment in new generation slowly built pressure in the market. The final result was a rapid rise in wholesale electricity prices, a rise that is going to be increasingly felt by Australian consumers.
These kinds of problems are very solvable, and all it needs is political leadership and a sensible energy policy. Instead Australia got political self interest in the form of Abbott and the abolition of astute policy.
The market for electricity is not the only part of energy policy where we have ignored the experts. We have also had a massive fail when it comes to natural gas.
Gas on the east coast of Australia until recently was relatively cheap. In order to increase the price the gas industry has built three large export facilities. This linked the east coast gas price with the world price. The effect was to massively increase the price paid by Australian consumers.
Governments were warned well in advance that this increase in gas prices was coming. Yet nothing was done. There appears to have been no consideration by state and federal governments about the impact these higher gas prices would have on industry or electricity prices. Instead governments happily waved through approval of the export facilities.
For the last four years energy policy in Australia has been a fact free zone of bad politics and no interest in understanding the issue. The biggest losers are electricity consumers. It is long past time for the government to reengage with experts and start ignoring self-interested politicians.

The Finkel review - Politics over science

This is not to say that we should blindly listen to experts. There are many good democratic reasons why it might be appropriate to ignore the experts. But if this is the case, people should be able to expect that politicians can clearly explain those reasons. Whyalla being wiped out and $100 roasts are not sufficient explanations.

When you open your electricity bill and it’s gone up, think of Tony Abbott and the policy instability he helped create.