Day 81: 'Not about China'
An introductory weekday newsletter from Schwartz Media. Counting the days since Australia had an energy policy.
Good morning and welcome to day 81.
Today in summary: Energy Minister Angus Taylor’s retailer roundtable delivers a power comparison rate, but no price cut commitments; the government rejects Hong Kong-owned CK Group’s bid for Australia’s largest gas pipeline business; and Victoria’s state government would lift its renewables target if re-elected.
— Sophie
Today’s policy spin level: 💨💨💨💨
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The government and the energy retailers have agreed to develop a new power bill comparison rate, but the companies couldn’t agree to cut prices as Angus Taylor wanted lest it be seen as collusion. Fairfax Media reported AGL interim chief executive Brett Redman said the:
"elephant in the room was the one thing we couldn’t talk about - pricing. Everything else was not difficult to move forward on”.
Despite not getting a commitment to cut prices by January 1st, as he is pushing for, the AFR reported Taylor said:
“The companies have seen that we are serious… The companies are on notice: they understand our expectations and they are taking action also to make it easier for customers to compare offers."
The federal government has rejected the A$13 billion bid from Hong Kong’s CK Group to buy APA Group, which owns more than half of Australia’s gas pipeline network. Treasurer Josh Frydenberg released a preliminary view that the bid should be turned down because:
“it would result in an undue concentration of foreign ownership by a single company group in our most significant gas transmission business”
Victoria’s incumbent Labor government has released its energy policy for this month’s election. It plans to raise the state’s renewable energy target from 40% to 50% by 2030 if re-elected. Energy Minister Lily D’Ambrosio said the legislation would create “thousands of jobs” and help drive down energy prices.
The Commentariat
Josh Frydenberg has tried to be conciliatory in rejecting CK Group’s bid for APA Group, but China “will likely feel more broadly bruised by this decision”, according to the AFR’s Chanticleer.
“While Frydenberg insisted on Wednesday that the preliminary APA decision "is not discriminatory against any investor or country" the jungle drums have been suggesting for some months that FIRB's resistance to the deal was hardening at the prospect that too many gas transmission assets could end up in the hands of Chinese groups, including Jemena, which is 60 per cent owned by the China State Grid.”
The Australian’s Simon Benson says it’s “rubbish” to suggest the government had no security concerns around CKI, as Australia’s intelligence agencies have become more influential in decision-making while China has become more assertive in both the South China Sea and cyber warfare.
“The problem is that government has struggled to work out how to articulate its changing posture without offending our trade partners. It has yet to get the language right, which is why it tries to soften the decisions by saying “It’s not about China”.
Three more things
State energy-related initiatives met with mixed success in the US midterm elections. Notably, Washington state’s Initiative 1631, which would have “funded a rolling series of investments in clean air, water, and land use programs with a rising fee on carbon emissions” was defeated 56-44 by a “no” campaign funded by big oil companies from outside the state.
Renewable energy capacity in the UK has overtaken fossil fuel capacity for the first time, with wind, solar, biomass and hydropower exceeding coal, gas and oil due in part to ageing power stations going offline, according to new data compiled by Imperial College London. However, fossil fuels still led renewables in power generation during the period, 40% to 28%.
Australia is tipped to become a leader in the battery storage technology boom, which is forecast to develop into a $1.7 trillion dollar industry as prices fall by more than 50%, according to Bloomberg New Energy Finance. The boom is expected to result from emerging needs for electric vehicle charging and energy access in remote locations.