Eraring deal welcome sign of pragmatic Labor Right

While Anthony Albanese on Thursday was pledging more millions of taxpayers’ dollars to a battery scheme Treasury says does not make economic sense, NSW Premier Chris Minns was taking the hard decisions. Mr Minns’ deal with Origin to extend the life of the Eraring coal-fired power station is the logical and inevitable response to the uncertainty and risk that currently characterises the net-zero transition. Origin has agreed to extend the life of the Eraring plant for at least two years and taxpayers will make up any losses for the company to a maximum of $225m a year. The government will share in any profit made by Origin on running Eraring to a maximum of $40m a year. Bitter as it may be that taxpayers are left exposed, the cost would be much higher if Eraring were allowed to close early and the state ran out of power. According to the Australian Energy Market Operator, this is an increasing likelihood given the problems being experienced in delivering the new generation and storage capacity needed to replace the ageing coal-fired power plants that still supply the bulk of the nation’s electricity. Further evidence of the difficulties was delivered on Wednesday with confirmation by Snowy Hydro that the much troubled tunnelling machine, Florence, was again stuck in the mountain. This will add further delay to the Snowy 2.0 hydro-electric scheme, which has been sold as fundamental to providing long-duration storage to back up a renewables-heavy grid. The cost of the Malcolm Turnbull-initiated Snowy scheme has blown out from $2bn to an uncapped and uncertain $12bn on a cost-plus basis for the commonwealth.

Rather than Snowy 2.0, Mr Albanese and Industry and Science Minister Ed Husic were concentrating on batteries and the desire they be made in Australia. The battery manufacturing plan is part of the federal government’s Future Made in Australia push that has been criticised as a return to industry protection. The government says it has identified four high-value strategic opportunities: stationary storage for short-duration grid back-up; upgrading raw minerals into processed battery components for export; developing more secure batteries connected to the grid; and building batteries for our transport manufacturing industry, including heavy vehicles. Mr Albanese has pledged $532.2m to the plan.

The federal government is pushing ahead despite Treasury warnings battery making could be just another net-zero boondoggle. According to Treasury, “accessing cheap, clean-energy technologies that are manufactured offshore supports Australia’s ambition to become a renewable energy superpower”. It suggests we buy our panels from highly subsidised producers in friendly nations elsewhere, such as Europe, Canada, France and India.

The more pressing issue is keeping the lights on today. On this score Mr Minns is showing leadership and bringing some order to the mess he inherited from Liberal energy minister Matt Kean. Mr Kean’s disapproval of the Origin deal and the speed with which it was roundly denounced by environment groups is proof enough that Mr Minns is on the right track. Like his Labor Right contemporary, South Australian Premier Peter Malinauskas, Mr Minns has been able to demonstrate a pragmatic approach that has eluded Labor’s left-wing adventurists in Queensland, Victoria and federally. Mr Malinauskas has embraced an unashamedly gas-fuelled future and called for a science-based debate around nuclear energy. In Queensland, meanwhile, Premier Steven Miles is pushing ahead to legislate a punitive royalty regime on coal producers that will only undermine confidence in his state. Victorian Labor refuses to see reality on gas and appears hellbent on doing to the state’s energy sector what has already been done to the debt-laden Victorian budget.