Day 96: 'A sensible step'
An introductory weekday newsletter from Schwartz Media. Counting the days since Australia had an energy policy.
Good morning and welcome to day 96.
Today in summary: Labor’s energy policy is announced in full, and industry reacts; the Coalition’s forced divestment plan gets further criticism; and Woodside Petroleum has plans for a A$28 billion LNG plant north of Broome.
— Sophie
Today’s policy spin level: 💨💨💨💨
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Labor’s energy policy, which was fully announced yesterday, has been met with both praise and criticism for the Opposition’s A$15 billion in planned debt spending on new energy projects. Industry has criticised the plans as creating uncertainty and deterring private investment. Still, big business is in favour of the National Energy Guarantee as a mechanism to cut carbon emissions, which Bill Shorten said he would revive if voted in next year - though he’d need bipartisan support, which he’ll struggle to get.
Labor’s 45% emissions reduction target and possible carbon offsetting scheme also attracted critique. The Opposition hasn’t yet announced its climate policy, with yesterday’s release focussed on electricity, though energy minister Mark Butler did say he’s:
“in deep discussions with the manufacturing sector, the LNG sector, companies like Woodside, about a sort of emissions trading scheme that would operate for those industries that will do the job”
Prior to its full announcement yesterday, Labor said it would offer A$200 million in home battery subsidies. The SMH said the clean energy sector was pleased by the plan, while the AFR said big energy players were ‘lukewarm’ on it.
The Coalition’s energy plans came in for criticism too. There’s further heat on the forced divestment plan, with the Australian Energy Council and the Business Council of Australia blasting it as extreme.
Woodside Petroleum has applied to build a A$28 billion LNG plant north of Broome, WA, but doesn’t have a plan to reduce or offset the emissions, the Guardian reports. The offshore part of the development could emit up to 200 million tonnes of carbon dioxide over 50 years.
The Commentariat
Labor’s battery policy is likely to help rather than hinder Australia’s energy transition, writes the Grattan Institute’s Guy Dundas. The policy think-tank has been critical of solar subsidies in the past, but Dundas says the case for public subsidies for household batteries is stronger than for household solar panels because they don’t just benefit the people who install them.
“On balance, federal Labor’s policy appears to be a sensible step towards a smarter, lower-emissions electricity grid. It can be tweaked to maximise benefits to the whole system, not just to the lucky households that get government assistance. And its cost is capped, which reduces the risk of the sort of cost blowouts that have plagued solar subsidy schemes.”
The paradox in Bill Shorten’s new approach to climate change is that it aims to settle a nightmare policy by circumventing the obvious forum to create certainty, writes the Sydney Morning Herald’s David Crowe.
“It may be technically possible for a Labor government to negotiate the NEG with state and territory governments, but there is no escaping the fact that certainty will be elusive until the federal Coalition settles its internal arguments on climate change.”
Engineering contractor RCR Tomlinson’s fall into voluntary administration should make all those involved in Australia's $8.7 billion renewables energy development boom rethink their risk management, writes the AFR’s Chanticleer.
“It was common knowledge that former chief executive Paul Dalgleish had gone too hard and too fast in his quest to dominate solar project development in Australia.
“He had incredible success winning tenders. But the fixed price engineering, procurement and construction (EPC) contracts won by RCR Tomlinson resulted in too much risk being carried by shareholders when things went wrong.”
Three more things
Economic consultants Frontier Economics have labeled the proposed Snowy Hydro 2.0 project a “waste of money”. The group’s modelling also suggests the project would not deliver any price or emissions benefit. Economists Matt Harris and Danny Price said, in a briefing note to clients:
“The impact of Snowy 2.0 on total emissions is negligible: emissions are marginally lower around 2025 and marginally higher by 2030, which is to be expected for a fixed emissions target,”
For more on Snowy 2.0, read today’s Friday Exclusive: Snowy Hydro hopes shaded by secrecy
Science agency CSIRO has partnered with Fortescue Metals Group to help it commercialise technology that enables hydrogen fuel to be more easily transported. Fortescue will invest A$19 million over 5 years to support R&D in hydrogen, including CSIRO’s metal membrane technology, which enables ammonia to be used as a carrier material for hydrogen storage and transport.
Pacific island nation Vanuatu is considering suing fossil fuel companies and industrialised countries for their contribution to catastrophic climate change. Foreign Minister Ralph Regenvanu said his government was exploring all avenues to utilise the judicial system, including under international law, to shift the costs of climate protection back on to fossil fuel companies, financial institutions and governments he says “knowingly created this existential threat to my country”.