We have just elected a new government, and suddenly we find we have an energy crisis.
We may not be able to meet peak energy demand this winter, and energy prices are set to rise. What’s going on, what’s gone wrong and who was responsible?
Quick answer & spoiler alert
The previous government, especially the National Party, is largely responsible for the present crisis, aided by the coal industry, the Murdoch press and other conservative media figures. Plus Vladimir Putin of course.
Read on to find out why.
The headlines
The headlines have been quite strong, simply stating facts.
Of course the Murdoch press couldn’t resist the opportunity to misinform, by trying, contrary to the facts, to infer that coal is still a good source of energy and the new government is struggling. The Telegraph headline was
‘Get more coal power’: Labor’s environmental 180 amid gas crisis
It is instructive to consider what has happened.
The immediate cause
The immediate cause of the energy “crisis” is that global coal and gas prices have risen because of the Russian invasion of Ukraine and the world’s response to place sanctions on Russian oil and gas. Reduced supply means higher prices. Australia has abundant oil and gas, but most of it is exported. If Australian energy companies want to buy oil or gas, they need to pay a higher price than they used to.
On top of this, Australia’s coal-fired power stations are ageing and becoming less efficient and less reliable. They cost more to run and they are out of service more often – at present almost 30% of our coal generation is offline. Investment in new infrastructure has been adequate for the future.
So there is less power available and it is costing more.
The longer term cause
While the war in Ukraine couldn’t have been predicted, any business has to make allowance for variations in markets and supply. Energy companies, and the government who is ultimately responsible for Australian living conditions, should be planning in advance to meet future contingencies.
It has been obvious for some time that our power generation infrastructure was ageing, its design life was shortening, and renewable energy was now cheaper than fossil-fuel energy. It was clear that new generating and storage capacity was going to be needed.
Yet the previous government continued to prop up the fossil fuel industry (to the tune of $11bn per year in subsidies – more than it spends on the Army or public schools), while proposing new gas (and even coal) power stations despite them being economically unviable – for example, a gas-fired power station in the Hunter Valley.
Neglecting renewables
For nine years the previous government neglected the obvious need to develop a vibrant renewables industry, thus helping put Australia a decade behind. This neglect can be seen in:
- Reduced funding for renewable energy development, including electric vehicles.
- Making the government’s renewable energy agencies less effective by stacking them with fossil fuel proponents, reducing their funding, and diverting funding to dodgy projects.
- Not providing a sufficiently clear policy on renewables (while continuing to support fossil fuel investment) has reduced investor confidence and stifled private investment. This is highlighted by investors quickly pressing the incoming government to clarify its renewable energy policies.
- Attempting to slow the closure of ageing and inefficient coal-fired power stations which the operators know are increasingly unreliable.
All of these mean that Australia (in common with some other countries) has not had energy policies adequate to ensure future supply. We are now paying the price.
And yet it has been known for years now that:
- renewables are the cheapest form of new power;
- renewables will be the cheapest source of 90% of energy by 2030;
- it is cheaper to switch directly to renewables rather than transition via gas as the government proposed, and
- three years ago we were warned that government inaction would cost us consumers in the future.
Why has this happened?
We don’t need to be Einstein to work this out.
The previous government was deeply linked to the fossil fuel industry. Not only via political donations, but by movement of senior staff between the two, so that you could be excused for thinking that our former government was a subsidiary of the coal industry.
This led to the government being blind to the dangers of looming climate change, hypocritical about its inaction, and ranking last among developed countries and last among UN member countries on climate action.
Fortunately it was also a major factor in its recent record defeat.
When will they ever learn?
Despite all this, newly elected Liberal leader Peter Dutton is reported today as saying his party will continue with its “strong climate change policy” and won’t support policies that will raise energy costs prohibitively or drive “businesses and jobs and investment overseas”.
With the world moving inexorably (if too slowly) to renewables, with renewables cheaper to install and run, and with the ongoing costs renewable power much less volatile and affected by overseas events and market fluctuations, these statements look like nonsense.
Why the Telegraph headline was misleading
The Telegraph inferred that the new government needed to make a U-turn and embrace coal.
But no-one sensible thinks Australia can immediately end coal and gas powered electricity generation. This is a time of transition. We still need fossil fuels in the immediate future, especially since the previous government has left our power generation infrastructure in such a poor condition.
But we need to transition fast and efficiently. That requires planning, efficient implementation and time – as short a time as possible. but not immediate.
I presume the new government knows this. Instead of slyly gloating over the government’s need to depend in part on fossil fuels, a more honest headline would have admitted that the previous government, supported by the Murdoch press, has left the country in the lurch.
Conclusion
The previous government, especially the National Party, is largely responsible for the present crisis, aided by the coal industry, the Murdoch press and other conservative media figures. Plus Vladimir Putin of course.
Photo: installing a rooftop solar panel (photo courtesy of the Climate Council).