Day 256: 'Selective modelling'
An introductory weekday newsletter from Schwartz Media. Counting the days since Australia had an energy policy.
Good morning and welcome to day 256.
Today in summary: there’s new modelling on the financial impact of Labor’s climate policy, and on the environmental impact of the Coalition’s climate policy; Labor announces renewable jobs funding; and Business Council of Australia members are unhappy with the lobby group’s climate statements.
— Sophie
Today’s policy spin level: 💨🌪️🌪️🌪️
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Brian Fisher from BAEconomics has released more modelling on the cost of climate and energy policy, which he says is based on Labor’s announced policy. Fisher’s two previous reports were dismissed by Labor as not having modelled its actual policy.
Fisher now says Labor’s climate change plan could see businesses paying as much as A$405 per tonne for emissions in 2030 - or as low as A$67 per tonne - depending on how many international offsets Australian businesses are permitted to buy. He also says that if Labor restricts international offsets to 25% of total abatement, it could reduce GNP by A$542 billion from 2021 to 2030; if it does not restrict international permit buying, that would mean A$264 billion in GNP loss over the decade, he claims.
Labor leader Bill Shorten appeared on ABC’s 7:30 last night and said the Coalition is playing a “game of gotcha” and the modelling doesn’t include the cost of doing nothing about climate change.
“Both in the short term and the long term, the cost of not acting on climate change is far worse than acting on climate change… When you talk about the cost to business, the reality is, that lots of businesses are so far ahead of government they're already investing.”
Energy Minister Angus Taylor appeared on RN Breakfast this morning, where he said the modelling was the clearest analysis of Labor’s policies available.
“What’s clear in all these scenarios is very big impacts, and intuitively that makes sense.
If you want to take 45% of the emissions out of the economy in just over 10 years, it is going to have very significant costs, and the notion that you can’t model those costs is clearly wrong.”
The Australian | SMH | AFR | The Guardian
In other modelling news, energy analysts Reputex say the Morrison government’s climate policy allows businesses to increase their emissions to the point of completely cancelling out benefits under the Emissions Reduction Fund, the SMH reports. It shows exemptions for industrial polluters will mean 280 million tonnes more emissions by 2030, while the ERF has currently abated about 193 million tonnes of emissions and Reputex forecasts it could abate another 25 million to 100 million tonnes by 2030. The government has described this as "selective modelling", the SMH says.
Labor has more policy announcements: if elected, it says it will establish renewable energy zones in North West Tasmania and South Australia’s Spencer Gulf, alongside A$75 million for a renewables training package. The Guardian reports on the funding, which will be split between A$45 million for apprentice subsidies, A$20 million to upgrade renewable training equipment at TAFEs and A$10 million for a clean energy training fund.
The Business Council of Australia is facing dissent from its members over its stance on climate policy, after Telstra last week announced it’s reviewing its membership, joining Rio Tinto, BHP and Westpac, the SMH reports. The BCA has described the Coalition’s emissions reduction target of 26% as “appropriate and achievable” and Labor’s 45% target as “economy wrecking”, and some members are unhappy with that stance, the SMH reports.
The Commentariat
At the AFR, AEMO chief executive Audrey Zibelman explains how the market operator deals with energy losses over power lines via Marginal Loss Factors. The topic has proven controversial since AEMO released the draft decision in March. The final decision on the MLFs is now set for May 10th, as AEMO said its draft decision “may not be reflective of actual marginal losses in many parts of the network”.
“AEMO believes the energy losses we are experiencing in some regions are becoming a matter of real concern for Australia.
In the near term, AEMO is looking to help market participants understand the potential changes by publishing as much information as we can about where new generators are being built. We are also planning to publish loss calculations more frequently so that there is greater transparency for potential investors. Whilst none of these actions will change the level of losses, they will help participants have better information before they make investment decisions.”
Three more things
AGL reportedly pushed for a change to Victorian wastewater policy that would have made it easier for it to get environmental approval for the proposed Crib Point gas import terminal. AGL made the request in a public submission on draft environmental regulation in 2018, reports The Guardian.
Origin Energy chief Frank Calabria says the pace and type of investment the company will make in new generation depends on the outcome of the Federal election. Calabria told a conference the company faced near-term headwinds including an expected decline in average wholesale prices in 2019-2020, lower renewable energy certificate prices, and the default offers due on July 1.
Countries with a high dependence on hydropower face heightened financial risk and should look to diversify their energy sources, according to a new report from experts at the World Bank. The experts also recommend a temporary tariff surcharge during dry periods to help transfer risk away from the energy sector during periods of low rainfall and to compensate the electricity companies for bearing the volatility from hydropower.