Energy blame game solves little

Malcolm Turnbull has been busy blaming Labor governments, mainly in the states, for the nation’s energy crisis. Treasurer Scott Morrison has been spruiking a five-point plan to resolve the power problems. Deputy Prime Minister Barnaby Joyce’s party, the Nationals, has passed a conference motion opposing the introduction of a clean energy target. Environment and Energy Minister Josh Frydenberg is beavering away trying to come up with the electricity supply silver bullet. So activity around energy policy is very energetic but it is a long way from being resolved.

The Prime Minister is right to criticise the states for limiting gas exploitation and for the way in which they hastened the closure of major coal-fired generators in South Australia and Victoria. Yet even in the electricity basket-case of SA, where prices and reliability have suffered primarily because of a rush towards a 50 per cent renewable energy share, the states have acted on the back of bipartisan federal policy. The renewable energy target, backed in government and opposition by Labor and the Coalition, has forced electricity consumers to subsidise the installation of solar and wind energy that also has undercut the viability of thermal electricity generation, still required as a backup. With insufficient backup or storage the National Electricity Market is dangerously exposed, with shortfalls forecast this summer and for at least a decade to come. For an energy-rich nation this is an unthinkable policy disaster.

Mr Turnbull offers a range of fixes, from reserving domestic gas supplies to a feasibility study into expanded stored hydro in the Snowy Mountains. He is also keen to forestall the closure of the Liddell coal-fired power station in NSW’s Hunter Valley. A case can be made for all these interventions but they are initiatives to resolve problems created by the RET intervention. What is required most is a coherent, long-term policy to deliver investor confidence. Will this involve a CET? If not, what? And can any certainty be created without bipartisanship? The rhetoric on energy is heating up but we are a long way from resolution.