Day 61: Serving the national interest
An introductory weekday newsletter from Schwartz Media. Counting the days since Australia had an energy policy.
Good morning and welcome to day 61.
Today in summary: Australia’s energy policy freeze extends to our inadequate fuel security says retired Air Vice-Marshall John Blackburn, and electric vehicles could offer a solution; shock jock Alan Jones joins the no camp on the bid by Hong Kong-based CKI for pipeline major APA Group; and coal producers say stable energy policy, not subsidies, are what’s needed to lure investment to coal-fired power stations.
— Charis
Today’s policy spin level: 💨💨💨💨
Electric vehicles could help improve Australia’s energy security by reducing the demand for foreign sourced liquid fuels says retired Air Vice-Marshall John Blackburn, but first, we need a coherent energy policy framework.
In his submission to the Senate Select Committee on Electric Vehicles, Blackburn said Australia was “moving towards a situation where by 2030 we could have no refineries, less than 20 days of liquid fuel stocks, and 100% imported liquid fuel dependency”.
The Select Committee investigation is being led by independent Senator Tim Storer, who argues increasing our uptake of EVs will shift transport fuel payments from international oil companies to Australian electricity companies.
The electric vehicle push comes at the same time as the government undertakes a review of liquid fuel security. But Blackburn, who was once head of strategic policy for Defence, is pessimistic on our ability to return to compliance with the International Energy Agency's emergency stockholding obligations.
"Without any policy framework, apart from 'get electricity prices down', it makes it incredibly difficult to do a proper assessment or to look at the options for what the government should do."
2GB presenter Alan Jones has called on Treasurer Josh Frydenberg to say no to the CKI bid for APA Group.
Jones: “I am telling you Treasurer something that you know, CKI won't go near anything in the United States, anything strategic, because they know they'll get blocked. And in Australia, I understand, that CKI didn't think they'd get approval to own the Dampier to Bunbury pipeline, and this is a try-on. This bit is a try-on. CKI will keep buying until they are told no more and they expect to be told no. I don't know why you just can't say no it will not happen.”
Frydenberg: “Let me make two points, you let me make the first. The first is that we do have a savings gap; so infrastructure has helped us develop the Pilbara for example and create the billions of dollars' worth of export income that we have.
But the second point is, we have a national interest test and the national interest always has to be served, particularly when it applies to critical infrastructure and assets that are, you know, important to the country. So, let me consider it. It's currently going through a process.”
Meanwhile, The Australian is reporting the likelihood of the deal being approved as slim, despite CKI offering up concessions including having Australian directors remain involved in APA or injecting Australia-backed capital into the deal.
“Coal can form part of the energy solution along with renewables as well as gas,” argues New Hope Group managing director Shane Stephan. In an interview with the Australian Financial Review the coal producer suggested investment money could still flow into new coal-fired power stations, without the need for government subsidies.
"No [it doesn't need government assistance], I think what's needed is policy certainty and the market will resolve the situation provided the market is allowed to find the most efficient solution between balancing environmental sustainability, cost and also reliability."
The Commentariat
The energy network providers are not responsible for the recent blowout in electricity prices, despite what the ACCC review into retail electricity markets might say, says Spark Infrastructure chief executive Rick Francis.
“Increasing electricity bills are not being driven by network charges. The price reductions delivered by network businesses have occurred in response to strong incentives under the regulatory regime to achieve efficiencies whilst maintaining services. The contribution of network charges to the average bill for residential customers has also declined since 2014. Clearly the root issue is in government ownership, and not the regulatory framework."
ExxonMobil’s announcement last week that it would spend US$1 million lobbying the US government to introduce a carbon tax is being pitched together with a demand that the company be immune from all climate related lawsuits in the future, writes Vox’s Urmair Irfan.
“The proposal Exxon wants to enact is one that would shield the company from lawsuits while also preventing further climate change regulations. All in all, it would grant oil companies the kind of immunity from litigation the gun industry currently enjoys.”
Three more things
The Australian Energy Market Commission has published an options paper setting out different ways for AEMO to procure “standby” electricity reserves under the Reliability and emergency reserve trader (RERT). The RERT had to be activated twice last summer in order to avoid potential blackouts.
US utility companies are spending twice as much money donating to Republican groups than on Democrats, according to new data from the US Energy and Policy Institute. Since 2008, the industry has given three Republican and three Democratic organisations a total of US$41.2 million.
US electric carmaker Tesla has signed an agreement to secure land in Shanghai for its first factory outside the United States, with production expected to kick off two-three years after construction begins.
This is an introductory service while we’re building a comprehensive daily paid online publication, coming in early 2019.
We’re not here to take sides, simply to cut through the noise, and help you make sense of the emerging policy and market trends you need to be across. We call it pure intel. You can read more about us here.