PM’s faith in energy exporters to do the right thing

Liddell Power Station in the Hunter Valley. Picture: Jane Dempster

Malcolm Turnbull is taking a political risk by relying on assurances from three big gas exporters that they will make sure Australians does not run out of energy next year.

The companies are pledging to supply anywhere from 54 to 108 petajoules of gas to prevent the shortage, a huge amount when a single petajoule can power a city such as Wollongong for a year.

The government has dropped the immediate threat to impose export controls, but what if the companies cannot be trusted?

Any increase in prices next year will leave the Prime Minister exposed to Labor accusations that he went soft when he should have “pulled the trigger” on the extraordinary powers.

The government reasons that it is more effective to get the companies to volunteer the gas. This is probably right, but Labor will not let the opportunity slip if this plan does not work.

All sides bear the blame for this crisis, given the Liberals sneered at Labor’s idea of export controls and them embraced it later, while Labor missed the chance to set up a gas reservation policy when it was in power and the three big export hubs were built. The greatest problem lies with the states. The premiers have tried to outsource their energy problems to Canberra when the solution is at home.

In NSW, the Liberal government was warned four years ago to develop the Pilliga coal-seam gas field or face prices of more than $12 a gigajoule. That warning has come to pass.

In Victoria, the bans on new gas production mean households pay higher energy bills. This is the conclusion of the Australian Competition and Consumer Commission. The nation’s Chief Scientist, Alan Finkel, says there is a lot of evidence that fracking is safe. The Greens reject this science even as they embrace Finkel’s conclusions on a clean energy target.

The environmentalists are winning the debate on coal-seam gas, which is why so many politicians of all stripes are too timid to develop it.

Yet voters need to consider the cost of these bans: deeper shortages, higher bills or a huge new terminal in Victoria to import what the southern states could produce themselves.