Coke closure shows South Australia’s renewables experiment has failed

Two hundred jobs will be lost with the closure of the Coca Cola Amatil factory in Thebarton, Adelaide. Photo: AAP Image/David Mariuz

The trouble for the South Australian government is that Coca-Cola is a household name and everyone recognises the high-profile factory located on the Port Road close to the city. It has been there forever.

The closure of the plant, with the loss of 200 direct jobs, is therefore a body blow to the Labor state government that is steadfastly retaining its commitment to a 50 per cent renewable energy target by 2025 because “it is good for business”. I guess that’s if there is any business left in South Australia by that time.

Companies can often be tactful at this point — and let’s face it, it is heartbreaking for the affected workers at Coca-Cola, many of whom will have worked at the plant for years — but the reason given by the company for the closure of the plant — “expensive logistics” — is ominous.

BHP-Billiton, by contrast, didn’t bother to pull any punches. In announcing that the company had lost $137 million at its Olympic Dam operation as a result of the statewide power blackout last year — it took more than two weeks for full production to resume — it declared that “Olympic Dam’s latest outage shows Australia’s investability and jobs are placed in peril by the failure of policy to both reduce emissions and secure affordable, dispatchable and uninterrupted power’’.

It went on to say: “The challenge to reduce emissions and grow the economy cannot fall to renewables alone.”

And then there was the foreshadowed closure of the Pfizer pharmaceutical operation in suburban Adelaide with the loss of nearly 100 jobs, even though the company had previously announced its intention to expand the plant.

Of course, we don’t need to rely on anecdotes to realise that the South Australian economy is performing badly. Just take a look at unemployment in the state. And the rate of workforce participation is much lower in South Australia compared with the nation. Also bear in mind that a much higher proportion of employed persons in South Australia works in the public sector than nationally.

The South Australian government is in panic mode over energy policy. The idea that the state can break away from the national electricity market is just fanciful.

Were the South Australian government to buy Pelican Point, the gas-fired power plant located in Adelaide and owned by French company Engie, it would find itself in the same position as the current owner — running a loss-making operation that is only required occasionally under current policy settings. Can South Australian taxpayers really afford this option?

And what about the South Australian government bundling up its electricity demand and offering an exclusive contract to a new entrant? For starters, the amount of electricity is small, the gas is probably not available and the cost to the taxpayer is likely to be very expensive.

It might be time for Premier Jay Weatherill to concede that the state’s experiment with its over-reliance on renewable energy has failed and to consider some alternatives sooner rather than later.