Frydenberg mummifies energy truth with red tape

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The combination of an evil government and the reflexive support of Newscorp has doomed the Australian energy market. Via The Australian:

Major Australian companies and small businesses are struggling to cope with record electricity price hikes that have forced them to seek alternative power sources, consider cutting thousands of jobs and pass costs on to consumers.

As the Turnbull government today hopes to secure support for its signature energy policy in Melbourne, some small to medium-sized businesses have questioned how the national energy guarantee will reduce soaring power bills.

Independent supermarket owners have experienced price rises of hundreds of thousands of dollars in the past 12 months, warning that it could push up ­grocery prices and benefit Coles and Woolworths, which they argue have the ability to absorb the increases and strike better power deals.

The NEG will do nothing. It does not even address the underlying causes of energy price spikes – gas – and will hold prices up for longer by delaying the supply response in renewables without enabling coal.

Yet on it marches, at The Guardian:

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The federal energy minister Josh Frydenberg has urged his state and territory counterparts to get behind the national energy guarantee as one of his cabinet colleagues has publicly dismissed the need to curb emissions in the transport sector.

With states and territories set to push the Neg through to the next stage of detailed work when energy ministers meet on Friday, the Nationals leader and transport minister Michael McCormack complicated the issue by declaring he would not support “unrealistic [emissions reduction] targets that are going to force people off the roads”.

Asked at the National Press Club what the emissions reduction target should be for the transport sector given the Turnbull government had now set an emissions reduction target for electricity through the Neg – a cut of 26% on 2005 levels by 2030 – McCormack suggested no significant action was required in transport.

While the real culprits, the gas cartel, enjoy the spoils. STO is making hay:

Takeover target Santos is pursuing deals to expand its Papua New Guinea gas position and sell its Asian portfolio even as US suitor Harbour Energy scours its books to firm up a proposed $13.5 billion takeover bid.

Chief executive Kevin Gallagher said Santos is still advancing discussions about taking a stake in the P’nyang gas field in Papua New Guinea to play its part in the proposed expansion of PNG LNG.

The sale of its Asian business is meanwhile at “a very advanced stage” while a decision to start engineering and design work on a multi-billion gas project at the Barossa field off the north coast to supply Darwin LNG is “imminent”.

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While ORG is changing its name to reflect affordability over sustainability:

Origin Energy’s first major brand refresh since its spin-off from Boral in 2000 will boost emphasis on the affordability of energy in response to research showing that price is the No.1 priority for customers, even as rivals focus more on environmental credentials.

The “good energy” slogan that underpins Origin’s rebrand also alludes to the retailer’s commitment to switching towards cleaner energy, said chief executive Frank Calabria. But he added that the positioning of Origin is different to that taken by rivals AGL Energy – which is emphasising its commitment to close the Liddell coal plant – and EnergyAustralia.

“I would like to think that the distinction that we will do will be much more grounded in what we feel resonates with customers today and tomorrow, and we know that that means you have to face into the affordability message much more directly,” Mr Calabria said.

The irony is staggering given ORG and STO are the two Australian firms most responsible for the collapse of the energy market. It was they that over-built LNG white elephant plants in QLD and bought up all of the surplus gas on the east coast driving the price wild. It is gas that sets the price of electricity in the National Electricity Market. Thus it is the gas price that has trashed the decarbonisation plan, not coal nor renewables.

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Domestic gas reservation fixes everything. Instead we have Frydenberg mummifying this simple truth in ream upon ream of red tape.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.