Hypocrisy thy name is Frydenberg, via the AFR
Energy Minister Josh Frydenberg will today call for an end to the extreme ideologies on both sides of the energy debate, warning that consumers and taxpayers were paying the price of policy paralysis.
Mr Frydenberg will escalate his pitch for the adoption of the government’s proposed National Energy Guarantee while taking aim at the coal zealots in his own ranks, such as Tony Abbott, who this week called for the nationalisation of the Liddell power station, as well as those on the left who oppose the use of the fossil fuel.
With energy policy the flashpoint in the leadership tensions inside the Coalition, Mr Frydenberg will observe that energy policy in Australia “is no longer simply an economic issue”.
“It has also become a cultural one,” he will tell the National Press Club.
“As politicians set their battlelines, it is consumers who are the casualties. This is the hard truth.
I’ll say it is, Frydenberg being the outstanding example. Why is the government pre-occupied with coal when it is gas that is the problem for the energy market? This is the key diver of the energy cost spike not coal nor decarbonisation. Remember it is gas that sets the marginal cost of electricity in the National Electricity Market (NEM) not coal. It was always gas that was planned to supplant coal as base load power as we waited for renewable storage to catch up. The only thing that has changed is the formation of a gas export cartel.
As the ACCC reported in December, the gas gouge remains huge:
$12Gj is 400% above where it was four years ago and is double the WA price where domestic reservation works superbly.
The gas price has been driven up by capital misallocation into QLD LNG plants. The LNG plant owners lied about having enough gas when they built the plants. Especially Santos which has been buying up all cheap third party reserves and throwing them offshore at huge losses, leaving us short.
The Turnbull Government was forced to act on this last year when the scam was threatened by locals paying more for their own gas than the Japanese. The domestic reservation deal that was struck was enough to hide this PR disaster:
But is has done nothing to reduce the energy shock. Australian gas-power generators used to pay $2-3Gj. Now they pay $12Gj just four years later. Paying Japanese prices for your own gas is still ridiculous. It comes out of the ground for $1-4Gj. So why doesn’t the Government do more?
Simple. Frydenberg loves the energy crisis. He wants energy to remain a political issue so he can misallocate blame for prices onto coal power closures and Labour’s decarbonisation plans. Then he can apply mock solutions to a non-existent problem, such as the National Energy Guarantee (NEG). This goes so far beyond public-interest policy that it is operating in the Twilight Zone.
A few folks have some idea of what’s going on, via Domainfax:
The federal government must overhaul its centrepiece power policy or suffer defeat at a crucial meeting with states and territories, the ACT government has signalled after a report found the package risked driving up electricity prices and may not reduce the chance of blackouts.
…Economic consulting firm Ecoperspectives prepared the research. It was co-authored by internationally renowned environmental economist Frank Jotzo, who is also a professor at the Australian National University.
…the report argued the guarantee’s “very low” emissions reduction ambition, which could be locked in for a decade, could reduce returns to investment in renewable energy.
Because investment in new coal-fired power stations was highly improbable, this may lead to inadequate new electricity capacity and ultimately result in “upward price pressures”, the report said.
The low ambition of the target underpinning the guarantee – a 26 per cent emissions reduction from 2005 levels by 2030 – also “requires much stronger and costlier action in other sectors of the economy”, meaning the risk of future changes to the architecture of the scheme was high, which created further investment uncertainty, the report said.
The ACT should stand firm and reject the great NEG scam. All we need to fix energy prices is:
- install gas reservation that keeps 10% of current east coast exports here;
- if prices don’t fall enough then fix them at $5Gj.
That will push the costs of the LNGer’s huge capital mis-allocation back onto them, crash gas and electricity prices, and put our decarbonisation plan back on track.
Amid the extraordinary wider collapse of Australian governance underway, Frydenberg’s energy scam is the absolute worst.
