Day 107: 'Myth-making and hysteria'
An introductory weekday newsletter from Schwartz Media. Counting the days since Australia had an energy policy.
Good morning and welcome to day 107.
Today in summary: the big stick legislation may be watered down after internal objections within the Liberals; the NSW Energy Minister plans to distance the state’s Liberal government from its federal counterpart; and Ausgrid could cut jobs after an AER draft determination about its revenues to 2024.
— Sophie
Today’s policy spin level: 💨💨💨
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There’s more heat on the Morrison government to drop the ‘big stick’ legislation, which is set to be tabled tomorrow. The Guardian reports that the Coalition is revising the bill after internal objections from more than 20 backbenchers. The proposal could be changed so that the government can only force power companies to divest assets upon the recommendation of the ACCC, and the ultimate decision could be made by a court, not by the energy minister.
“Some government MPs have also urged senior ministers to impose a sunset clause on the proposed regime, and ensure that the circumstances for ordering divestiture be made more onerous than alleged price gouging by power companies, which is the trigger suggested by Scott Morrison and the energy minister Angus Taylor.”
Meanwhile, the AFR reports that the government will struggle to pass the legislation, with crossbench MPs yet to support the policy. In the House of Representatives, the government needs at least two extra votes for the bill to pass; in the Senate, it needs eight.
NSW’s energy minister Don Harwin will say that the state’s Liberal government remains committed to cutting carbon emissions to net zero by 2050, regardless of the federal Liberals’ lack of policy, according to the SMH. Harwin was set to speak at the NSW Smart Energy Summit at 10am today, just before Malcolm Turnbull, and the SMH reported he would say:
"The federal government may have changed its position on energy policy but we haven’t changed ours… it's clear that energy policy must deal with the emissions trajectory over the longer term, in addition to addressing reliability.”
The Australian Energy Regulator’s draft decision on Ausgrid’s revenues for 2019-2024 could see Ausgrid cut 400 to 500 jobs, the SMH reports. The determination, released on November 1st, says that Ausgrid can recover $7.41 billion in revenue over the five-year period, 11% less than Ausgrid’s proposal. Consultation on the AER’s draft views closes in February and a final decision is due in April.
The Commentariat
In the AFR, Adani Australia’s chief executive mining Lucas Dow writes that the “demonising” of the planned Carmichael coal mine should stop.
“The project is now commercially sharper and will be in the first quartile of the global cost curve. It stacks up environmentally and financially and let's not forget that the Carmichael mine and rail project is probably the most scrutinised project in Australia.
Despite that, we are still subject to myth-making and hysteria and the public has been misled by this.”
While for The Conversation, Samantha Hepburn - director of the Centre for Energy and Natural Resources Law at Deakin Law School - writes that there are no guarantees that the mine will go ahead given worsening economics of coal mining and environmental and Indigenous issues.
“While the decision of Adani to self-fund a scaled-down coalmine in Queensland might indicate determination, it also suggests a resistance to, and misunderstanding of, a rapidly changing energy sector and the broader social and environmental responsibilities that this change necessitates.”
Three more things
The ACT’s move towards renewable energy, including its large-scale feed-in tariff scheme, added $71.95 or around 2% to the average power bill in the territory, according to a new government report. The price of electricity is expected to continue to rise in the ACT as it backs in more large-scale renewable energy projects to help meet its aim of 10% renewable energy.
China’s temporary trade war truce with the US could see Australian LNG exporters worse off, according to experts closely watching the deal. Full detail is yet to emerge, but China’s commitment to buy a “very substantial” amount of energy from the US could cut across Australian exports, reports the AFR. China it yet to roll back its 10% tariff on US LNG, a move expected to put more competitive pressure on Australia.
The US Department of Energy has commissioned two new economic studies to evaluate the long-term value of pumped-storage hydropower projects. The Department says increases in variable renewable generation have changed how plants are operated and the value they provide to the grid.
“For example, instead of generating during the day and pumping at night, many plants now change operational modes multiple times per day and are relied on to provide quick ramping or frequency response.”
It says determining the value of pumped hydro under these conditions requires new modelling tools and analysis.