Coalition elders fire up for coal-fired power, seek to end infighting
Coalition elder statesmen are urging the government to support coal-fired power as they seek to avoid new government infighting.
Coalition elder statesmen are urging the government to facilitate the entry of new coal-fired power stations alongside the national energy guarantee to drive down electricity prices and secure reliability as they seek to avoid a new round of government infighting.
Howard government resources minister Ian Macfarlane yesterday urged the Coalition to consider covering the commercial and carbon risks for any private sector investment in a new clean-coal-fired power station and insisted the major energy users be compensated for their role in ensuring reliability of supply under the energy guarantee.
Former Nationals senator Ron Boswell — who met with party colleagues in Canberra on Friday — is also calling for a new policy to complement the energy guarantee, arguing in favour of an open tender for new supply through a power purchasing agreement over the next two decades. He predicts coal will easily emerge as the most competitive.
The intervention in the debate came as Nationals MPs met yesterday at Parliament House in Canberra amid mounting concern that internal divisions on the energy guarantee could distract from the government’s Senate victory last week after it passed its $144 billion personal income tax package. Some MPs are now strongly pushing for a special deal behind the scenes, arguing in favour of incentives to drive investment in coal-fired power as the best way of minimising the internal opposition to the energy guarantee.
Energy Minister Josh Frydenberg is responding to the Coalition unrest by launching a new charm offensive to quell government concerns about the impact of his signature policy. Under the initiative, business and industry heads will speak to the Coalition backbench to outline the benefits of the energy guarantee.
Speakers to the Coalition backbench energy committee tomorrow morning will include BlueScope chief executive Mark Vasella; BHP chief commercial officer Arnoud Balhuizen; Minerals Council of Australia chair Vanessa Guthrie; Business Council of Australia chief executive Jennifer Westacott; Australian Industry Group chief executive Innes Willox; and National Farmers Federation president Fiona Simpson.
Writing in The Australian today, Mr Frydenberg appeals to his Coalition colleagues to heed the message from business leaders to end the 10-year impasse on energy and climate policy.
“If we can’t listen to them now, after a decade of missteps in energy policy, then when?” Mr Frydenberg asks. “People are simply sick and tired of the hyper-partisanship and mistruths that have characterised this debate. Unless we effectively manage the inevitable transition to a cleaner energy future, we will not deliver the lowest cost market-based outcomes that are in the interests of consumers. This is why the NEG is so important and should be supported.”
Chair of the Coalition’s backbench committee on energy policy, Craig Kelly, responded by telling The Australian: “We’re always interested in what they have to say. However, it’s surprising that some of these industry groups might have taken a position on the national energy guarantee when the final details are yet to be released.”
Others are speaking out in favour of the energy guarantee, with NSW Liberal senator Jim Molan saying his colleagues “must be practical”. He said the policy should be supported “without compromise” at the Council of Australia Governments’ Energy Council meeting in August.
“Current or planned renewables are here to stay and dispatchable Snowy 2.0 makes them reliable. Under the NEG, subsidies will ultimately go. We will achieve our Paris obligations early,” he said. “The NEG plus other government initiatives is the only comprehensive policy and should force household bills down.”
Key conservative Liberal MP Michael Sukkar also told the ABC yesterday he believed the NEG would achieve its twin objectives of underpinning the security and stability of the electricity system.
“Those two objectives are things we all agree on and within those two objectives we will see the NEG pass through the parliament,” he said.
Mr Macfarlane yesterday welcomed the energy guarantee as a “great concept” that would help manage an increased renewables energy mix, but urged the government not to rule out taking steps to promote new coal-fired power stations. “It’s virtually too late. But if the government wanted to step in and say we will support the most efficient, low-emissions plant in the southern hemisphere and cover the commercial and carbon risk — you’d then have a surplus of electricity in the market which would lower prices,” he said.
Mr Macfarlane is the head of the Queensland Resources Council and led the Coalition’s negotiations in 2009 with Labor’s Penny Wong over the proposed emissions trading scheme developed by the Rudd government.
He said yesterday that any decision by government to cover the risks of a new coal-fired power station should take place in the “context of a growing renewables mix”. But he noted new coal-fired power plants featured in the power generation mix in Germany, Japan, America, China and India.
“We have philosophically said ‘no’ to that,” he said. “What’s causing the current ‘crisis’ is that coal-fired generators are being closed down and not being replaced.”
An alarm was also sounded on the latest design work for the energy guarantee, with Mr Macfarlane saying he had deep concerns about any plan that would require the 100 biggest energy users to contract their own back-up power or agree to dial down usage when required in order to keep the lights on. “In a country with so much energy that we aren’t in a position to reliably produce enough power for the 100 biggest users to operate at maximum efficiency is a travesty,” he said.
He argued the biggest energy users were being treated as “defacto virtual generators” and hoped it would be made clear they would be compensated for freeing up power to be diverted elsewhere in the market. “If a large consumer is asked to switch off a pipeline or a dragline or whatever then they should be paid for the electricity they release into the grid at the default rate,” he said. “It’s got to be a fair system”.
Mr Boswell — who played a key role in pushing back against green policies in the 2009 leadership change from Malcolm Turnbull to Tony Abbott — has also proposed a “supplementary plan” to complement the energy guarantee. Writing in The Australian today, Mr Boswell says he is not convinced the NEG will bring on new baseload investment and suggests the government commit to an “an open tender for new supply through a power purchasing agreement for 15-20 years”.
“It might be new super-efficient coal, gas, or renewables with batteries or some mix of the above. But the prime consideration should be price and reliability,” he writes. Mr Boswell says that “new low emissions coal will bolt in” under such a plan. Let the most cost-effective and reliable energy source win in a reverse auction.”
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