En­ergy prices the key to Turn­bull’s chances

The Sunday Telegraph (Sydney) - - PETA CREDLIN -

BY fail­ing to get agree­ment on their so-called na­tional en­ergy guar­an­tee at Fri­day’s en­ergy min­is­ters’ meet­ing, the Turn­bull govern­ment might just have kept their po­lit­i­cal prospects alive, as well as our chance to make the best use of Aus­tralia’s abun­dant nat­u­ral resources to se­cure our eco­nomic fu­ture.

Not that this was planned of course. Malcolm Turn­bull be­lieves his en­ergy plan, the pol­icy that’s sup­posed to re­duce prices, end black­outs and cut emis­sions, is an ab­so­lute win­ner.

For the rest of us, it’s a sure-fire path to the dein­dus­tri­al­i­sa­tion of our econ­omy and self-harm, on a colos­sal scale, for no en­vi­ron­men­tal ben­e­fit when we’re re­minded Aus­tralia makes up less than 1.5 per cent of global emis­sions.

It’s just as well de­ci­sions were pushed off to Au­gust be­cause any­thing that sat­is­fies the La­bor states and ter­ri­to­ries is un­likely to please the Coali­tion party room. De­spite the min­is­ter’s as­sur­ances that the NEG has the full sup­port of his col­leagues, the re­al­ity is that his Can­berra col­leagues have only had a brief­ing about the plan in ab­stract form. The Coali­tion party room is yet to see any de­tail about the set­tings for the NEG and as al­ways, it’s the devil in the de­tail that mat­ters.

The stakes here are high. If Josh Fry­den­berg and Malcolm Turn­bull can’t keep the party room on­side, the leg­is­la­tion is un­likely to pass through the House of Rep­re­sen­ta­tives and the govern­ment will be in di­a­bol­i­cal trou­ble: ei­ther de­feated on the floor of par­lia­ment or with­out an en­ergy pol­icy at a time when this is the most im­por­tant cost of liv­ing is­sue fac­ing the coun­try.

The ba­sic pol­icy prob­lem is that the govern­ment is try­ing to do what’s nearly im­pos­si­ble. You can’t re­duce prices with­out main­tain­ing the place of coal in Aus­tralia’s power sup­ply — be­cause coal is by far the cheap­est form of re­li­able baseload power.

And you can’t re­duce emis­sions and avoid black­outs with­out putting prices up be­cause the ex­tra wind and so­lar needed to get emis­sions down re­quires backup gen­er­a­tion for when the wind doesn’t blow and the sun doesn’t shine. It’s ei­ther gas, which is al­ready in short sup­ply and more ex­pen­sive than coal, or it’s diesel, which is ex­pen­sive and self-de­feat­ingly emis­sions in­ten­sive.

I know some push bat­ter­ies, but they’re ex­pen­sive and, at cur­rent tech­nol­ogy, just not up to the task. So too is the PM’s pumped hy­dro, which is wildly over-hyped, ex­pen­sive and re­quires the use of more power than it ac­tu­ally gen­er­ates. I kid you not.

The Prime Min­is­ter con­tin­ues to claim that you can square this par­tic­u­lar cir­cle but many in the party room have se­ri­ous doubts. The ba­sic prob­lem is that both Turn­bull and his min­is­ter think that re­duc­ing emis­sions is a crit­i­cal pri­or­ity but the party room thinks that keep­ing prices as low as pos­si­ble is what re­ally counts.

And head­ing into an elec­tion, it’s their con­stituents, not cli­mate change, that have their fo­cus. So where to now? As I see it, no one will want the govern­ment to have a big brawl over en­ergy pol­icy in Bud­get week or its im­me­di­ate af­ter­math lest they blight the sales job … but it would be a big mis­take for Turn­bull and Fry­den­berg to stitch up a deal with the La­bor states and present this to the party room on a take it or leave it ba­sis. You see, La­bor has de­cided that it wants to be the party of lower emis­sions — hence its even higher Paris tar­gets and its 50 per cent re­new­able en­ergy tar­get. But by far the Coali­tion’s best chance of claw­ing back in the polls, and pos­si­bly even win­ning the next elec­tion, is for it to be the party of lower power prices — and the closer the elec­tion gets, the less likely the party room is to sur­ren­der this chance to be dif­fer­ent from La­bor, and pitch to swing­ing vot­ers.

Know­ing Malcolm Turn­bull, I sus­pect his in­stinct will be to de­mand the party room ac­cept a COAG deal, on what he will say are na­tional in­ter­est grounds. He could then say that not only did his prime min­is­ter­ship de­liver same-sex mar­riage, it also de­liv­ered a car­bon­con­strained fu­ture. In a van­ity sense, he would fi­nally have achieved in en­ergy pol­icy what he couldn’t get done back in 2009: namely bi­par­ti­san­ship with La­bor on cli­mate change. Hardly the mark of a cen­treright govern­ment, is it?

Rather than try­ing to find a con­sen­sus, the govern­ment should make the next elec­tion a fight be­tween cut­ting prices or cut­ting emis­sions. As a cli­mate change war­rior, the Prime Min­is­ter won’t like it but it’s now be­com­ing a choice be­tween his legacy or Aus­tralia’s na­tional in­ter­est.

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