Turnbull’s plan at least tries to keep the lights on

The end of car manufacturing in this country, marked poignantly yesterday with the final Holden driven off the assembly line at GMH’s now defunct plant at Elizabeth, South Australia, was a dramatic demonstration of the decline of the broader manufacturing sector across the nation in recent decades. Many factors have contributed — from reduced tariffs and the rise of Asian competition to inflated energy prices and union intransigence — but it also gives us pause to consider our power crisis.

Plentiful cheap energy was one of the natural advantages underpinning this nation’s development but, alas, it exists no longer. Just a decade ago Australia’s electricity was the fifth cheapest of 35 OECD nations; now we are the 12th most expensive and rising. For all the damage it has done, it is a simple fact the rise in energy costs has been driven largely by deliberate government policies, mainly enacted to reduce carbon emissions to meet global climate change targets.

Malcolm Turnbull’s energy policy announced this week is no silver bullet but it stands out as a carefully considered attempt to right some of the policy mistakes made by both major parties in the past. The Weekend Australian has long argued the renewable energy target was an unwise market distortion increasing costs on consumers and industry, undermining the electricity network and abating carbon emissions at a high price. It is a relief to know the RET will be capped at the legislated 2020 level of 33,000 gigawatt hours, but this is already too high and will see more subsidised wind and solar farms installed in the next two years. This generation will continue to be subsidised through large-scale renewable energy certificates until 2030. So the poor decisions of the past are still washing through the system and will not be fixed any time soon.

Mr Turnbull and Environment and Energy Minister Josh Frydenberg have devised a new National Energy Guarantee that will force retailers, state by state, to purchase set amounts of renewable energy (to meet emissions reductions goals) and a minimum amount of dispatchable power (to underpin baseload power). It is an additional strand of government intervention and it is still aimed at increasing investment in low-emissions technology to meet the Paris climate commitments. But at least it is simple and, crucially, attempts to circumvent chronic system vulnerability caused by an investment strike in thermal power.

The Coalition, Labor and the Greens have conspired over a decade to make a mess of the nation’s climate and energy policy. The major parties have changed their approaches, broken promises and rolled leaders of this issue. Like the fabled Irish traveller, you wouldn’t want to be starting from here. But the NEG plan is a deft attempt to find a bipartisan way forward and provide investment certainty.

It should be embraced by Labor and the states as a means to settle national policy. Then a debate about our emissions reduction targets and whether they are justifiable, affordable or worthwhile can continue without everyone worrying whether the lights will stay on.