Even in the cheapest countries, renewable power is subsidised
Only then can she embark on the real art of politics – the art of persuasion – by convincing voters that wind and solar are neither cheap nor good for the environment.
Ley may be tempted to run dead on environmental and energy policy, as Scott Morrison did in 2022 and Peter Dutton did earlier this year.
At best, that will secure another term in opposition. More likely is that the Liberals will be condemned to irrelevance as a stand-for-nothing party jumping at its own shadow.
The road to recovery begins by exposing the most fraudulent policy inflicted on Australians in living memory. Ley must take on a renewables-industrial complex, which will throw more money to stop her becoming prime minister than her party will have to spend.
The Gretafication of environmental policy, utilising tens of billions of dollars in murky overseas funding to defend renewables, has become an even more corrupt force in Australian politics than the trade unions.
Perversely, it has also set back the cause of natural conservation as practical measures to protect biodiversity have been sidelined in the cause of saving the planet.
The Liberal Party must attack the glaring contradiction in Labor’s energy policy. If renewable energy is cheap, why have retail electricity prices risen more than 20 per cent in real terms since the Albanese government came to power?
Why the continued need for subsidies? It was not unreasonable to assume that as the price of renewable energy infrastructure decreased, it would reach a point where the transition away from fossil fuels could be justified solely on the grounds of price.
That fallacy was baked into the policy Labor took to the 2022 election. It gave the party the confidence to set ambitious emissions reduction targets, in the expectation that once renewables became more affordable the market would take off.
Yet it hasn’t. Investment has not been occurring at anything like the level required by Climate Change and Energy Minister Chris Bowen to meet his 2030 targets. Financing remains the ultimate chokepoint.
The government’s attempts to ease investment decisions with subsidies have been only partially successful.
And few are naive enough to imagine that subsidies can go on forever.
The unfortunate truth is that without government handouts, the renewable sector can’t survive, however low the price.
Nowhere in the world is wind and solar energy operating subsidy-free. Not even in India and China, where the cost of building renewable infrastructure is the cheapest.
Brett Christophers explains the paradox in his new book, The Price Is Wrong: Why Capitalism Won’t Save the Planet.
Christophers argues that while the price of renewables has indeed tumbled, the profitability for private investors has not increased. The key metric for the financial market is not price but profit – the ability to forecast a stable return on investment.
He points out that most renewable projects must achieve stable, satisfactory returns over decades and that without government support they do not.
That is a more honest admission than governments are willing to make. Bowen repeatedly reassures us that the energy transition will cost less than business as usual.
Bowen’s optimism overlooks the fact that private investors still demand risk premiums.
Christophers, by contrast, embraces the inconvenient truth: if renewables are to scale, they require permanent government support.
By accepting that the state must underwrite returns – either via regulation, public ownership or long-term contracts – Christophers forces us to recognise that the transition is not purely about cheaper electricity; it’s about paying for that transition. In other words, renewables may be more affordable to produce than fossil fuel generation today, but turning them into a reliable, risk-managed low-carbon system remains more expensive and capital-intensive.
The implication for future energy prices is clear. Renewable energy carries an unavoidable premium price. Whether that cost is passed on to customers or offset with government subsidies makes no difference to the downward economic spiral.
The Liberal Party must do more than regain its traditional advantage on economics if it is to win this or any argument. It must revisit the wisdom of Robert Menzies, who saw the party’s mission as more than looking after pounds, shillings and pence.
Practical care for the environment was a strong suit for the Coalition until the early 1980s, when Labor began to see the potential of the tree-hugging vote.
Graham Richardson’s passing reminds us of his achievements as environment minister, notably in Tasmania and the tropical far north, where rainforests received permanent protection as a UNESCO World Heritage site.
Such practical measures were abandoned under Kevin Rudd, where pragmatic environmentalism was subsumed by climate change, the great moral issue of our time.
Nowhere is the conflict between saving the planet and protecting the Earth more apparent than in the carnage created by grid-scale renewables.
Ley understands the tension better than most. In June 2020, as environment minister, she rejected the Lotus Creek wind farm proposal on remnant native forest in Central Queensland, ruling it “clearly unacceptable” under national environment laws. Her decision was reversed by her Labor successor, Tanya Plibersek, who gave the green light to the bulldozing of old-growth forest on the Clarke-Connors Range, including 341ha of known koala habitat.
The Coalition should seize the opportunity to address the gap in biodiversity, adopting a strategic approach to combating invasive species for the benefit of the natural environment in general and agriculture in particular.
The threat of fire ants spreading from southern Queensland into NSW is real, yet funding has been patchy and inadequate. Fire ants attack crops, livestock and equipment. They chew through electrical wiring, irrigation systems and even machinery. They can reduce farm productivity by up to 40 per cent.
Yet on the list of government priorities, eradicating feral ants, goats, deer and pigs comes a distant second to climate goals. The Liberal Party should capture the vacated ground, not for the sake of symbolism but out of the conviction that sound land management is key to successful agricultural policy.
Environment and energy policy alone won’t win the next election, although it will be a more potent issue than most if tied to the cost of living.
The first party to level with Australians about who pays and why will own the future of energy policy. That could still be the Liberals.
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Cat herding is an indispensable skill for a Liberal Party leader. All being well, Sussan Ley will have managed to coax, prod and cajole her caucus into the pen by Wednesday evening, ankle-deep in dust and nursing a few scratches, but with her leadership intact.