Day 65: 'More Third World than First World'
An introductory weekday newsletter from Schwartz Media. Counting the days since Australia had an energy policy.
Good morning and welcome to day 65.
Today in summary: the government is moving forward with the ACCC’s recommendation for default offer pricing; Deloitte Access Economics says Australia’s “Third World” energy investment environment will push up energy prices; and as Chief Scientist Alan Finkel talks up the hydrogen opportunity, Resources Minister Matt Canavan rounds off his two-day trip to Japan with a speech to the Hydrogen Energy Ministerial Meeting.
— Charis
Today’s policy spin level: 💨💨💨
Energy Minister Angus Taylor will today outline the government’s plans to move forward with a default market offer for energy prices for households and small businesses. The government will need the support of the states to legislate the change, which it is expected to seek at Friday’s COAG energy council meeting.
The Australian Energy Regulator is expected to start work immediately to determine a default offer price that will apply in each network distribution region. The government is also moving forward with the ACCC recommendation on a “reference bill” requiring electricity retailers to advertise their consumer discounts using a common reference point. A reference bill for each of the 13 network distribution regions in Australia is to be publicly released by April 30 next year, setting out the new price benchmark. The AER will make a final determination for July 1. The sector has given early support to the reference bill, but has warned any move to cap prices could dampen investment in the sector and reduce scope for competition.
Sydney Morning Herald | The Australian | Australian Financial Review | The GuardianThe dysfunction in Canberra and the collapse of the National Energy Guarantee have led to a situation where investment in the sector could dry up, warns economist Chris Richardson.
“Canberra’s inability to compromise — and, on this issue, the current government’s inability to craft a compromise within its own ranks — leaves Australia locked into an investment landscape that looks more Third World than First World.
“The energy companies may not be perfect, but yelling at them isn’t a great substitute for having a coherent energy policy.”
Deloitte Access Economics expects Australian economic growth to lag global growth over the next few years.
The AustralianResources Minister Matt Canavan is on a two-day trip to Japan, reportedly attempting to muster Japanese investment in new HELE coal fired power plants for Australia. On the official agenda is a speech to the inaugural Hydrogen Ministerial Meeting in Tokyo, hosted by Economy, Trade and Industry Minister Hiroshige Sekō.
Meanwhile, Chief Scientist Alan Finkel continued his calls for Australia to focus on building a multi-billion-dollar hydrogen industry as part of the energy transition.
“There is an opportunity for Australia to take importing countries like Japan and South Korea, who are determined to reduce their carbon-emission profiles from energy use. The race is on to do well in this market, and it will not just be one country.”
The Commentariat
Saudi journalist Jamal Khashoggi’s disappearance and death could have a ripple effect for the world oil market, to the benefit of the US, writes King’s Policy Institute chair Nick Butler . With the Saudi Arabian government dependent on US support, the US could demand an increase in Saudi oil output for as long as their sanctions against Iran result in a shortfall of supply. In effect, the US can take as hard a line as they like without risking a blowout in oil prices.
Despite attempts by the US federal government to dismantle the nation’s few energy regulations, renewable energy projects are on the rise in both Democratic and Republican held states, largely due to the economic opportunity they represent, writes the University of Michigan’s Sarah Mills.
“Landowners earn money when they host wind turbines or solar panels on their property. This arrangement provides a drought-proof and pest-proof income stream that supplements what they make from agriculture. And solar and wind developers also often pay property taxes that fund government services, such as local public schools.”
Three more things
The global shift to renewable energy will reach an "unstoppable" tipping point by 2035, with renewables meeting up to 20% of the world's power demands, according to a report by energy consultants Wood Mackenzie. By 2040, electric vehicles could have cut oil demand by almost 6 million barrels per day. However, the report notes that obstacles including battery prices remaining high, slow consumer acceptance of electric vehicles and charging infrastructure development could delay progress.
Non-profit group the Energy Web Foundation says its “blockchain of blockchains” could facilitate global energy trading as soon as next year. The group says its open-source software application, called EW Origin, could provide digital links between existing energy trading platforms, akin to what interconnectors do in the physical electricity market world.
Mining giant BHP continues to support a carbon price. BHP head of sustainability & climate change Fiona Wild told the Australian Financial Review:
"I think in the Australian context what we'd really like to see is a really well integrated climate and energy policy which looks at affordability reliability and emissions reductions and that's what we're aiming for.
"At the moment we don't have a long term and effective climate and energy policy."
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