From Gottiboff:
What I want to see from Angus Taylor is the truth and the whole truth. A series of state politicians, led by those in New South Wales, Victoria and South Australia, set themselves high renewable targets and began subsidising vast investment in wind and solar farms, as well as other renewable projects, including home solar.
…The whole truth reveals that Coalition and ALP state governments were not telling their voters about the implications of simply erecting solar and wind farms and doing nothing else.
…Worse, in Coalition-governed NSW, while they erected solar and wind farms, there was major investment in a grid designed for the old system of power generation. Incredible.
It was an admirable decision to build a renewable system. But it had to be a total investment and linked in to existing facilities making sure there was plenty of backup – which might have come from hydro, batteries or other sources other than conventional power sources.
But there was no plan.
There is some truth to this. The investment in the grid for instance, which was $80bn wasted and recouped through higher prices.
But the rest is rubbish. There was a plan to decarbonise the ppower. It was the same plan that everyone worldwide had. It was that coal base load would be supplanted by lower emissions gas base load as renewable storage prices caught down.
What went wrong with this plan is that because everyone wanted to do it there was bubble in gas investment. Australia spawned a brand new industry in QLD coal-seam gas exports virtually overnight. Three consortia overbid for reserves, overbuilt LNG plants and duplicated infrastructure all over.
They built so much export capacity, so fast that they left themselves short of gas to feed the plants. So they bought up everybody else’s gas on the east coast creating an artificial shortage and drove prices wild.
Australia has no strategic framework to decide where its energy resources go so nobody did anything.
Gotti would reply that governments restricted access to coal-seem gas and this is true. But that is not relevant. The gas remaining is all very expensive. And even were it dug up today it would not lower local prices. The export cartel dominated all cheap reserves.
This is matter of historical record, from The Australian:
As Santos worked toward approving its company-transforming Gladstone LNG project at the start of this decade, managing director David Knox made the sensible statement that he would approve one LNG train, capable of exporting the equivalent of half the east coast’s gas demand, rather than two because the venture did not yet have enough gas for the second.
“You’ve got to be absolutely confident when you sanction trains that you’ve got the full gas supply to meet your contractual obligations that you’ve signed out with the buyers,” Mr Knox told investors in August 2010 when asked why the plan was to sanction just one train first up.
“In order to do it (approve the second train) we need to have absolute confidence ourselves that we’ve got all the molecules in order to fill that second train.”
But in the months ahead, things changed. In January, 2011, the Peter Coates-chaired Santos board approved a $US16 billion plan to go ahead with two LNG trains from the beginning….as a result of the decision and a series of other factors, GLNG last quarter had to buy more than half the gas it exported from other parties.
…In hindsight, assumptions that gave Santos confidence it could find the gas to support two LNG trains, and which were gradually revealed to investors as the project progressed, look more like leaps of faith.
…When GLNG was approved as a two-train project, Mr Knox assuredly answered questions about gas reserves.
“We have plenty of gas,” he told investors. “We have the reserves we require, which is why we’ve not been participating in acquisitions in Queensland of late — we have the reserves, we’re very confident of that.”
But even then, and unbeknown to investors, Santos was planning more domestic gas purchases, from a domestic market where it had wrongly expected prices to stay low. This was revealed in August 2012, after the GLNG budget rose by $US2.5bn to $US18.5bn because, Santos said, of extra drilling and compression requirements.
The rest is history. Gas prices drove electricity prices wild. And politics went nuts.
There was a plan for Aussie decarbonisation. It was stolen from under our noses by the gas cartel. The resolution of this impasse must involve costs to it even if it means renegotiating some export contracts. We are only taking 5% of Australia’s total gas exports to fix this permanently.
We need domestic gas reservation that drives down the price of gas to $5Gj now. Negotiated or imposed. It does not mater.
