Queensland may go it alone on energy
The Queensland government has called an urgent meeting to resolve a national policy vacuum.
The Queensland government has called an urgent meeting with major energy producers, unions and state-owned producers to resolve a national policy vacuum, threatening to break away by developing its own solutions to high prices and electricity market reforms.
Amid unprecedented volatility in the national power grid, high gas prices and agitation among states for greater action on cutting emissions, Queensland Energy Minister Anthony Lynham will hold a high-level meeting on Thursday to address pressing industry issues.
With the last Council of Australian Governments meeting with state, territory and federal leaders held in December, the energy-rich state said it was time to act. ‘‘There’s a complete vacuum at a federal level on energy policy,” Mr Lynham told The Australian.
“Queensland has led the nation on gas policy, going it alone to increase domestic supply. If Angus Taylor isn’t going to work on energy policy, including prices, then we’ll do it in Queensland with our stakeholders.”
The meeting is expected to stoke fears among policymakers and key energy producers of states going their own way in developing responses to the nation’s energy pressures, which could put stress on other parts of the network.
Major energy users, electricity groups, distributors and generators are understood to be attending the meeting along with agricultural groups and union leaders to discuss issues ranging from the east coast gas industry through to major reforms mooted for the national electricity market and emissions reduction measures.
The Ai Group, which represents big manufacturers and industry, will attend and said it wanted to discuss any measures that could provide relief on gas prices.
“From our perspective, price-wise things are still very bad with users,” Ai Group policy adviser Tennant Reed said. “There are also major reform discussions of the national electricity market including the co-ordination of generation and investment, the design of the grid and emissions that all need to be addressed too.”
The Australian Energy Market Operator warned on Friday that coal-fired power plants faced being pushed out of Australia’s power grid earlier than forecast by negative daytime spot prices, sparking a call for a redesign of the national electricity market to prevent blackouts and ensure security of supply.
Prolonged periods of negative prices at minus $1000 per megawatt hour emerged as a new feature in Queensland’s market last week, due to a solar surge and transmission constraints, raising questions over the longevity of some coal plants in the system.
However, Energy Minister Angus Taylor hit back at the criticism, noting the Morrison government had developed a wide range of policies to lower prices and improve supply in the electricity market and was engaging in extensive talks with industry on pending gas market reforms to ease prices and boost supply.
“There will be a COAG meeting later in the year,” Mr Taylor said. “We are pleased Queensland is doing the right thing to increase gas supply and we want Victoria to do the same,” referencing the southern state’s ban on gas exploration. “I’m looking forward to Anthony Lynham getting in touch.”
Federal Resources Minister Matt Canavan is understood to be holding meetings in Canberra, also on Thursday, with major manufacturers to discuss their view of the gas market and how government can work to ease tariffs and constraints. The Energy Users Association of Australia, which represents large gas consumers, said the Canberra meeting was recognition of the need for both sides to accelerate action to ensure manufacturing remained in Australia.
“We are sensing urgency from the government with solving the gas crisis and bringing prices down,” EUAA chief executive Andrew Richards said. “They don’t want to be presiding over the death of Australian manufacturing. That’s the worst case scenario we are genuinely facing and we need to be there to work on solutions from our side as well.” Among measures being considered by the federal government are tweaks to the Australian Domestic Gas Security Mechanism, with a review due by the end of September, and a long-dated proposal to consider a gas reservation policy for the east coast.
Mr Taylor said the reservation policy was partly being considered because of a failure by Labor to put in place adequate reserves prior to Queensland’s huge LNG export plants starting up. “It was Labor who refused to reserve domestic gas when the LNG trains were put in place. Look where we ended up.”
Queensland had the lowest electricity and gas prices in the second quarter of this year.