Were hypocrisy combustible we’d power the nation

Protestors against the Adani coal mine rally outside Adani's headquarters in Brisbane.

If only hypocrisy could be harnessed to power our country, the ­energy wars would be over. The energy “trilemma” would be solved, hypocrisy being reliable (see social media any time), affordable (it’s free) and low emission (especially when expressed in writing). Next to sanctimony, it’s the great force of our age.

We happily export uranium for others to generate emissions-free, reliable power, yet turn our noses up at using it ourselves. The clamour to stop new coal-fired power generation, even to tide us over until battery technology improves the reliability of renewables, smacks of hypocrisy.

Coal and iron ore in particular finance our lifestyle, making affordable cars, televisions, foreign holidays — indeed all of the $35 billion worth of goods and services we import every month.

The mere whiff of a Chinese ban on Australian coal imports dragged the dollar down 1 per cent last month. And China’s not even our biggest customer, buying about $11bn of $60bn in thermal and metallurgical coal last year.

The push to derail the Adani Carmichael mine in Queensland, which would provide electricity for low-income Indians, is the pointy end of an even more extreme movement, exemplified by Labor’s Richard Marles, that wishes for a collapse of the coal market.

Without coal exports (and iron ore, the second most valuable) our currency would collapse. Chinese, Japanese and Korean demand for our resources underpins demand for our currency, which our exporters, such as BHP, Rio Tinto, Yancoal and Glencore, need to pay their taxes, staff, local suppliers and shareholders.

Without those taxes you could forget about the cuts planned for next week’s budget, which rest entirely on a revenue surge courtesy of the nation’s exporters.

A world powered by renewable energy would be a scientific and ecological triumph, but also an economic disaster for Australia, which — absent some dramatic innovation — depends on fossil fuel exports to pay its way.

If the world moves away from fossil fuels as planned by the 2015 Paris Agreement our currency, already among the weakest in the Western world, will fall another 6 per cent by 2030, according to economist Warwick McKibbin.

“The implicit tax on Australia’s exports through the CO2 tax ­causes a substantial loss in the terms of trade in both the short and long run,” he writes in his latest Brookings paper, which points to a 2 per cent drop in wages, too.

However sunny and windy parts of the nation may be, we can’t bottle and export it. Our expertise at royal commissions, government inquiries and making coffee — however advanced — is unlikely to come near the $100bn plus in fossil fuel exports last year.

And we’re making life harder for ourselves in the meantime by forcing more renewable energy into our grid while letting reliable baseload power lapse, an approach described as “chaotic” in the Australian Energy Market Operator’s December health check of the market.

It is hardly a free market in any meaningful sense, distorted as it is by state and federal regulations and interventions on top of the confusopoly of the big three retailers — AGL, Origin and Hong Kong-owned EnergyAustralia.

Government renewable targets have “broken the link between the physical needs of a reliable power system and the economic incentives on market participants that keep wholesale energy costs as low as possible”, it says. Rent seekers are taking over the power grid.

Renewables advocates argue wind and solar are cheaper than coal and gas. Yet retail prices have increased 56 per cent in real terms across a decade as the renewables’ share of energy supply has increased to about 16 per cent (55 per cent in South Australia). Correlation isn’t causation but at some point the dividend from this “cheap” power source should start showing up on our bills.

Victoria’s Hazelwood coal- fired power station, which supplied about 5 per cent of the power for the national market, shut in early 2017, owing to a decision by a French company controlled by the French government.

Wholesale electricity prices in Victoria have increased from less than $40 to $100 a megawatt hour since then, AEMO says. In January this year they reached $250 a megawatt hour. Prices have increased 100 per cent in NSW and 86 per cent in South Australia across the same period. (And would France allow an Australian firm dictate the country’s energy supply and prices?)

Liddell power station in NSW, of similar size to Hazelwood, is set to close in 2022. Its owner, AGL, says prices won’t increase and reliability won’t be undermined. Suppliers have a vested interest in less power and higher prices.

Even the authorities can’t be trusted. In early 2017, AEMO said Hazelwood’s closure “wouldn’t compromise the security of the Victoria” electricity market. Then in November it pointed to “heightened risk of supply disruptions for the coming summer … if no further steps were taken”.

Steps taken entail Snowy 2.0, a fancy, expensive battery, able to provide power for about 140 hours. Far from solving the problem of a lack of reliable inexpensive power, this pet government project, an expansion of the Snowy Hydro scheme, depends on high prices.

Water is pumped up the hill when wholesale electricity prices are low and is released at the top when they are high. The higher the prices, the better for Snowy and its ultimate owner, the federal government. At about $6bn, including about $2bn to update the transmission network, it is three times the cost of a new low-emission coal-fired power station.

Common sense is unlikely to prevail in power, as most voters don’t feel the pain. Electricity expenditure made up 2.17 per cent of household spending in 2017 — even after a decade of price increases. That’s less than takeaway food, 2.56 per cent, or restaurants. Households made up only a quarter of electricity sales by volume last year. Business, especially heavy industry, makes up the balance. Alas for them, they don’t vote.