Shorten fires up energy debate

Bill Shorten’s declaration of support for gas and industry can be read as an ominous sign of leadership instability within the ALP and a welcome call to arms on the need to foster a durable energy market for the nation’s future prosperity. There are now clear divisions within Labor over moves to backtrack from its election campaign support for new gas infrastructure. Opposition resources spokesman Joel Fitzgibbon was slapped down by Anthony Albanese and energy spokesman Mark Butler after supporting calls by the federal government’s National COVID-19 Commission advisory group for new gas infrastructure.

By rejecting gas, the Opposition Leader and Mr Butler are signalling they intend to go all in on renewables in the hope that new technologies such as hydrogen and storage will deliver on their promise before coal, which supplies 70 per cent of power, exits the system. In doing so, they risk forgetting a key lesson from last year’s federal election on the shallow depth of voter support for renewables when it comes to cost. The pandemic has clouded an already confused picture. But there have been sufficient warnings in recent days for government not to lose sight of the challenge in finding a secure and affordable replacement for the existing fleet of coal-fired power stations, which increasingly are in financial peril.

A report on Monday by the Australian Competition & Consumer Commission warns of medium-term supply shortfalls of gas in southern states without new developments to compensate for declining production in Victoria’s Gippsland Basin. ACCC chairman Rod Sims criticised the gas sector for selling Australian gas cheaper to overseas customers than domestic consumers, saying it “will have an inevitable impact on Australia’s industrial sector during what is already a difficult economic period”. To correct the market, the ACCC is calling for more investment in north-south pipelines and the development of new import terminals to promote competition.

While some people celebrated confirmation from the Australian Energy Regulator last month that electricity generated from coal had fallen to its lowest level since the start of the National Electricity Market, it is not all good news. Record high levels of wind and solar generation displaced coal from the market, playing financial havoc with the sector that still represents the backbone of domestic electricity supply.

Shareholder activists are calling on AGL to bring forward the closure of its remaining coal-fired power plants by at least 12 years in the name of tackling climate change. Big investments are needed to replace ageing coal generators. In response to questions from a Senate committee, National COVID-19 Commission chairman Nev Power warned that investment in gas should not be allowed to drop off the agenda. Mr Power said the commission had looked at the advantages of using gas as a firming fuel to assist the introduction of renewables. He said Australia had a very large pipeline for investment in renewables but a very small pipeline for investment in storage and firming because those technologies were not as well advanced.

Energy and Emissions Reduction Minister Angus Taylor is correct to say that Australia’s competitive advantage has always been based on cheap energy, and that affordable gas will be good for jobs and economic growth. It is equally true that gas has an important role to play in providing grid reliability and in reducing emissions alongside renewables, not instead of them. This fact appears to have been embraced by Mr Shorten and his ALP colleagues, including Mr Fitzgibbon and Kim Carr.

Mr Albanese and Mr Butler, however, appear to have lost their stated appetite for bipartisanship on the renewables transition, even in the time of COVID. They risk reminding voters that Labor is not sure if it is for the workers or the greens, reanimating the ambitions of a former leader and ultimately slowing the recovery from the pandemic and putting the financial security of the nation’s industry at risk.