Labor plugs in to a surge of ­reality

Energy Minister Chris Bowen.

Labor has been dealt a dose of ­reality after sweeping to power on the promise of a renewables revolution.

Facing an energy crisis with no end in sight, Energy Minister Chris Bowen will need to rely on fossil fuels in the short term to keep the lights on and power bills down.

Labor’s Powering Australia plan, pledging a $275 cut to the average household electricity bill by 2025, has been up-ended by a “perfect storm” of international headwinds and years of structural neglect in the National Electricity Market.

Bowen doesn’t like mentioning the C-word but there is no ­escaping the fact that coal-fired power and gas are the only ­options to keep the nation running until renewables and ­storage are brought to scale and transmission networks are improved.

The states and territories ­lobbying against including coal and gas in a capacity mechanism ignore their roles in fanning the crisis: dithering over unlocking more gas, failing to connect ­renewables to the grid and sending mixed investment signals to energy companies.

Climate 200-backed teal independents, who unseated inner-city Liberal MPs on the back of ambiguous climate change promises, must now explain whether they back coal and gas to help drive down prices for families and businesses.

It will be a long, cold and ­expensive winter for their consti­tuents if they stand in the way of commonsense responses to ­alleviate the crisis.

While a capacity mechanism will not resolve the current ­energy shocks, there is growing urgency to have it in place by the end of the year to ­provide investment certainty across the electricity market. The Energy Security Board, which will release its draft ­capacity mechanism in the next two weeks, has indicated that coal will be included as an option in its final design aimed at supporting investment in electricity generation by forcing retailers to lock in contracts in advance.

Insiders close to the process say there is an option for coal to be excluded from the mechanism but that could bring forward the early closures of coal-fired power plants, add “huge costs” for ­replacement energy and put the electricity market at risk of ­blackouts.

Regardless of who is to blame for the crisis, the priority for Labor is to avoid a run of ­energy crises over the next three years while maintaining its focus on ­renewables, storage and transmission.

Labor MPs and backers who thought ending reliance on coal and gas prematurely was the way to go should be forever grateful to Joel Fitzgibbon’s commonsense approach that such a move would have killed the economy.

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