Canberra tilts at windmills as climate and energy warnings multiply

Comment by Peter Roberts

Barely a day goes by without some sort of warning to Australia and Australian business that the future is at risk because of our political paralysis over the related issues of global warming and future energy needs.

In little more than a week we have seen warnings of various kinds from the Australian Energy Market Operator (AEMO), the Australian Competition and Consumer Commission (ACCC), the Reserve Bank of Australia (RBA) and the Australian Securities and Investments Commission ACCC).

To sum up:

# ACCC warned that the eastern Australian gas supply remained tight (and prices high), though we may just avoid absolute shortages in 2020.

# RBA head Phillip Lowe told an audience of risk managers “to take appropriate account of one risk that plays out over a longer horizon, namely climate risk….businesses need to take account of both the physical risks and the transition risks”.

# ASIC noted its regulatory guidance for company directors was to “adopt a probative and proactive approach to emerging risks, including climate risk (and) disclose meaningful and useful climate risk related information to investors”.

# And AMEO said NSW and Victoria were at risk of summer blackouts if ageing coal plants were not brought back online in time. Its forecast of supply said power reliability will continue to decrease in the next decade “due to an uncontrollable, but increasingly likely, high-impact” event in Australia’s “ageing coal fleet”.

Just how we got to this state is evidenced in the subsequent exchange between federal energy minister Energy Angus Taylor and his his Victorian counterpart, Lily D’Ambrosio.

Taylor blamed the ALP Victorian government for the state’s woes (but not the LNP NSW government) , and D’Ambrosio hit back: “The biggest threat to reliable energy supply in coming years is the complete lack of a national energy policy.”

So don’t hold your breath for a political solution to this mess.

The story on the ground is that our coal plants are very old, are breaking down regularly, some will soon be closed completely, and it is extremely unlikely another will ever be built.

Gas hasn’t taken its place as expected because of the three-fold increase in gas prices in eastern Australia since 2014. Gas is this price, and we face shortages, because we export it instead of utilising it at home in value-adding industries.

Renewables such as wind and solar PV are the cheapest form of power and hence attractive to investors. But operators are only now racing to install the batteries and pumped hydro storages that will make them able to fully replace fossil fuels.

Behind all this is the specter of global warming which is changing the climate, melting sea and glacial ice and threatening to dislocate agriculture.

This has been met with decisive action in nations such as Norway which has a vehicle fleet more than 50 per cent electric, Japan which is pursuing a hydrogen economy and Germany, which will shut down all 84 of its coal fired power stations in the next 19 years.

Meanwhile in Australia, consumers are getting on with it and installing record amounts of home solar PV and battery storage

But back in Canberra, well, they are still tilting at windmills.

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