Day 99: 'Dumb and dumber'
An introductory weekday newsletter from Schwartz Media. Counting the days since Australia had an energy policy.
Good morning and welcome to day 99.
Today in summary: The state election results in Victoria will mean more renewables subsidies; the fallout from RCR Tomlinson’s collapse continues; and the AER asks for submissions on how it should determine the default price for power.
— Sophie
Today’s policy spin level: 💨💨
Please don’t keep Australian Energy Daily to yourself. Forward this email to your colleagues and encourage them to sign up for free here.
Victoria’s state election result from Saturday means the state will see more solar panels and battery storage alongside tougher rules for energy companies. Labor, led by Premier Daniel Andrews, increased its majority by an expected 10 seats, taking it to a likely 55 seats in the 88-seat Legislative Assembly, while the Coalition and the Greens fared badly. The Australian reported:
‘“The 50 per cent renewable energy target is exactly what our state needs and it is pretty good for the planet, too,” Mr Andrews said when asked whether Saturday’s poll had delivered a verdict on renewable energy.’
Engineering group RCR Tomlinson’s collapse was due to its aggressive strategy to become dominant in the solar market amidst intensifying rivalry, reports the AFR, and now solar farm developers that hired RCR are calling on its bank guarantees and insurance bonds.
“While solar farms are not technically difficult to build, they are hard to make money from. This is partially because the materials used in building them are purchased cheaply from the same Chinese suppliers (meaning companies can't find alternative materials at lower prices), and also because the contracts are relatively short at around 18 months – making it hard for contractors to catch up if there are delays.”
The Australian Energy Regulator is asking for submissions on its initial approach to determining the default market offer price for energy, which the Morrison government asked it to do as part of its bid to cut power prices. It has published a position paper and reference bill on the subject and wants interested parties to submit their response by December 7th.
The Commentariat
A ‘Robin Hood’ carbon tax at A$50 per tonne of emissions could raise A$21 billion in revenue per year and that money could be returned to every Australian citizen, producing net winners and losers, according to a proposal from two professors at the University of NSW, Richard Holden and Rosalind Dixon. The SMH’s economics editor Ross Gittins writes:
“In the absence of a carbon price, polluting coal-fired electricity has an undesirable price advantage over non-polluting renewables electricity. This is the economic justification for government subsidy schemes for renewables electricity and household solar power systems.
“But Holden and Dixon remind us that, if we introduced their Robin Hood carbon tax, those subsidies would no longer be needed, saving governments (and often, other power users) about $2.5 billion a year.”
Federal Labor and the Coalition’s respective energy plans are ‘dumb and dumber’, according to the AFR View.
“Energy company investors face being clubbed by the government's big stick or crowded out by Labor's taxpayer-funded interventions.”
“Labor's new plan does include an embedded carbon price through a so-called baseline and credit scheme that would apply to the 300 biggest manufacturers, miners and LNG producers, perhaps with exemptions for emissions-intensive production exposed to foreign competition...Coalition policy previously has included the option for such a scheme. Yet the rest of Labor's plan is so dominated by more heavy-handed subsidies and a recklessly ambitious emissions reduction target to be considered any better than the Coalition's.”
Three more things
Global warming could be worse for the US economy than the Great Recession, according to a new report from the US Global Change Research Program. The report from 13 federal agencies is required by US law, and was released late on Friday ahead of the US Thanksgiving holidays.
A White House spokesperson told the BBC the 1,600 page report was “largely based on the most extreme scenario, which contradicts long-established trends by assuming that... there would be limited technology and innovation, and a rapidly expanding population”.
The Taiwanese have voted 51% to 49% to repeal the government’s planned phase out of nuclear power by 2025. The result was a surprise for pro-nuclear activists. Two nuclear power plants are already in the process of being decommissioned, however a third plant is now likely to have its operational life extended.
The City of Sydney Council has become the first investor to tip A$10 million into a new “green deposit” scheme from Westpac. The bank said the scheme was targeted at big investors who want to back environmentally-friendly projects including renewable energy, low-carbon transport, low-carbon buildings, forestry and land rehabilitation as well as waste and water projects.