Steel giant backs clean energy plan

Steel giant BlueScope has controversially backed a clean energy target for the electricity sector.

Workers Tamara Gluzman and Matthew Giles at BlueScope Steel’s plant at Port Kembla, NSW, yesterday. Picture: John Feder

Steel giant BlueScope, Australia’s largest manufacturer, has controversially backed a clean energy target for the electricity sector but warned the Turnbull government that it must throw a lifeline to ­baseload coal-fired power generation or risk the shutdown of the nation’s industrial base and the loss of jobs offshore.

In an interview with The Australian­ ahead of the release ­tomorrow of the Finkel review into energy security, BlueScope chief executive Paul O’Malley said the government had a chance to reverse a decade of bad policy by adopting a low emissions target­ that addressed climate change but did not lock out coal.

“We need reliable and secure baseload power,” Mr O’Malley said. “We are technology agnostic … but there are problems with ­renewable technologies … they don’t provide baseload power.

“The other fundamental issue is affordability, in both gas energy and power. The detail needs to be sorted out … (but) the government is on the cusp of a transform­ational policy. The lens through which this has been viewed has ­ignored the fact we need reliable, affordable and secure baseload. For the first time in 10 years we are finally addressing all three.”

Mr O’Malley said that if multi-party support could be secured, it would reverse a decade of bad policy­ and Australia would have ­reliable baseload and more ­affordable power.

His calls for all political parties to get behind a clean energy target­, which he said was the only way to drive new investment in energy supply, had the “in-principle­” backing of BHP’s president of Australia’s mineral oper­ations, Mike Henry, who has broken ranks with the industry lobby. He told The Australian that Australia desperately needed certainty around energy policy.

The Finkel recommendations — revealed in The Weekend Australian last Saturday and to be handed to Energy Minister Josh Frydenberg tomorrow — will ­include a low emissions target, to be called a clean energy target, of 0.7 tonnes of carbon per megawatt hour for the electricity sector.

The backing of two of the country’s largest industrial companies­ will assist Malcolm Turnbull and Mr Frydenberg in winning partyroom support for a unified position on energy policy.

Several Liberal MPs said they were sceptical about a clean ­energy target, claiming the renew­able energy target had driven­ up prices and needed to be adjusted or scrapped.

Former prime minister Tony Abbott expressed reservations yesterday, saying the Liberals should stand for “cheap power”.

“My anxiety ... is that the scenario which the Finkel report is recom­mending gives us not 50 per cent, but 70 per cent renewable by 2030, and coal, which is by far the cheapest form of baseload power … goes from currently about 65 per cent to 20 per cent of total energy generation,’’ he told Sydney­ radio station 2GB.

“Anything that makes it impossib­le for us to bank new efficient­ coal-fired power stations I think is a big mistake.”

Mr O’Malley warned that those pushing for an emissions intensity scheme, currently supported by Labor, would risk the future of manufacturing by driving power prices higher.

“An EIS will shut down Australian jobs and industry quicker than you can say ‘we made ­another mistake’,” he said. “To have Aussie jobs you need affordability … you need a transition to reliable baseload which is technology agnostic. An EIS would condemn coal to the scrap heap overnight.”

BlueScope, with 8000 local workers, employs the most highly trained, technologically advanced manufacturing workers in the country — also among the highest-paid. Their jobs were at risk because of the growing competitive disadvantage from soaring energy costs in Australia.

BlueScope has experienced power price spikes since the closure of the Hazelwood plant in Victoria, which supplied up to 10,000 megawatts of power into the national market. That increased wholesale prices and threatened future contracts.

BlueScope has argued that an EIS would bring forward the closure of coal plants across the country, with little environmental benefit, while at the same time crippling the National Electricity Market.

Mr Henry told The Australian that “the market shouldn’t be picking winners”.

“It should include all possible technologies,” he said. “We believe in climate change and the need to reduce global emissions. At the same time, we need to ensure we have reliable and affordable power.”

Without blaming either side of politics, Mr Henry said certainty in policy was essential if Australia wanted to drive investment in new energy sources.

Both companies suggested it would be the emissions benchmark that would make or break the policy and clean coal could not be indirectly penalised.

Industry groups who have been briefed on the report have been told it would provide tradeable clean-energy certificates for low-emissions generation, such as wind, solar and gas, and coal-fired power with carbon capture and storage. Energy retailers and large industrial users would then be ­required to source a mandated amount of certified clean power.

Critics of the scheme claim a punitive emissions benchmark would indirectly penalise coal-fired power. Minerals Council of Australia chief executive Brendan Pearson has warned that the clean energy target would lock out hi-tech coal plants that did not have carbon capture and storage.

“If the government adopts the Finkel plan in its current form, electricity prices will be higher than they should be and supply will be more unreliable,” he said. “The Finkel proposal seems deliberately designed to exclude new low-cost super-­efficient coal generation that is slashing emissions in dozens of countries around the world, including in Japan, Germany, China and Southeast Asia.”