No choice: Labor crushes gas price or is stillborn

The reason why is obvious at The Australian:

Coal-fired power generation would fall by 60 per cent within the next decade to meet Labor’s 45 per cent emissions-reduction target, leading to the likely closure of more than half the existing east coast plants, according to ­independent expert modelling.

The closures would bring an end to coal-fired generation in Victoria. But the retirement of coal assets would also be inevit­able under the Coalition’s commitment to the Paris target, with up to three early closures and a reducti­on of almost 20 per cent in the total share of coal generation by 2030.

The final report of independ­ent modelling research conduct­ed by former government scientist Brian Fisher shows the energy mix in 2030 under Labor’s highest-cost scenario of a 45 per cent target, and using no carry-over from the overachievement on Kyoto targets, would mean a drop in coal’s contribution to the total energy mix from 40 per cent to 12 per cent.

…Gas would rise to 37 per cent and renewables would be at the Labor-mandated target of 50 per cent.

Thus gas power would set the marginal cost of power at almost double the current frequency it does currently. From the ACCC:

Every $1Gj rise in the gas price adds $10MWh to power prices, up roughly 10%. The same arithmetic applies to increasing its frequency of use.

In short, if Labor does not crush the east coast gas price via a more stringent domestic gas reservation price of $5-6Gj before it encourages more renewables use then it will be committing energy suicide in Government.

David Llewellyn-Smith


  1. The more I look at this the more it no longer matters. It’s about as important as Shorten wearing a strawberry flavored condom while they’re preparing to have their way with the stiff corpse that is now Australia.

      • With energy, I’m pretty sure that only the Ranga can save us.

        She’ll unload the grid by shipping out about a million vibrants, and with that kind of hit to marginal demand, we’ll be roses.

      • That, my good sir, is the cross that I have to bear.

        But I do have to ask: what is it left of our industries that matters that much anymore? What is left standing that we can say: “Hey, if we lose this, we’re done for”? We’ve lost the car industry, we’ve closed refineries, most of our steel is imported… All we do is “life-style industry”: keep them lights on, pump up them duck-lips for the instagram account and we take pictures of our food. Oh… and we have a burgeoning Royal Commission Industry – we run them up and high as fast as we can think of them, and then we promptly pay our most outstanding journalists to make points to the contrary, and muddy the waters because, you see, all that was revealed sounded bad, but there were reasons…

        This is one of those messages which I was tempted to hit delete on, because the list of sh*t is a mile long and I just feel exhausted and depressed just looking at it, let alone start counting up the ways.

      • Oh, Ino, that HnH bloke depresses you – it’s clear as day from your post.

        you shouldnt talk to him. Talk to me and Harold, we are always much cheerier.

      • Industry is a marginal issue. The issue is utility prices for income starved households. You know, voters. If Labor does not drop gas prices then power prices will soar with their big renewables push and Tony Abbott et al will be all over it with a “we told you so” agenda.

      • Falling living standards mean the same awaits all governments in the foreseeable future. Gas reservation or not, living standards are falling, and the voters are gonna want someone else instead of the encumbents to fix it. See our revolving door PM’s for the last decade. It’s only going to continue.

  2. I wonder if Labours narrative is just hyperbole? Power prices, as high as they are, would go through the roof if they cut half the coal!!! Owing an EV would be punitive.

    I am sure substitution in the future will be possible… but seriously!

    • What I am being told from within the Union movement is that the ALP will go solar in a big way once the election campaign is underway

      Apparently both the ALP (federally) and the LNP were impressed with the electoral kick the ALP (Daniel Andrews) got out of solar in the recent VIC election campaign.

      The only issues with that would be where the CFMEU types have coverage of coal miners, but I understand that even the CFMEU gets that coal mining may be easing off the stage

      • It’s going to be beautiful! Australia is going to be living in a beautiful paradise wandering around joyfully picking fruit from the plentiful trees that are everywhere. We’ll go back to the time before we needed clothes; the sun will always shine; everything will be free. It’s all going to be really beautiful.

      • Obviously @flawse is creative director of the campaign and customer engagement focus groups.

        I just hope he remembers to ensure that women and children will control their own power with solar and be freed from the primacy of helmeted men, and that footage of a PM, who his brand management advisors would rather hadnt carried a lump of coal into parliament, will get a run during the campaign suitably spliced with subliminal images of things protruding from Archbishopric robes, which should really help get out the wymyns vote in a range of electorates

      • FFS Gunna!!! What is it with this place now??? Numbers, facts etc don’t matter a Rat’s Ar$e. It’s become just a Labor/city propaganda machine. Yeah the whole bloody nation, well the cities, are all going to gather around in a circle and sing Kumbaya with the ABC in the centre leading the dance. They’ll bloody have to because we need to be living in some fantasy world.
        Sure!!! Let’s blow up all the damned power stations! Let’s stop exporting coal! Let’s shut down Agriculture! let’s get rid of all these dirty dirty factories! uuugh! None of that affects us in the cities. The world will be so much more beautiful for us in Sydney and Melbourne Our rarefied atmosphere will be sooo much more pure!
        By the way….if we are seriously “Decarbonising” this whole Gas idea just needs to be passed over. It’s just another way of saying we are doing something when we’re not. We should go straight to renewables.
        Does ANYONE watch the electricity flows around the country at different times of day and night? Where they come from and where they go to? What is generating the electricity?

        BTW Gunna Focus groups that are all city centric – is that the way policy should be set? Does that give us the right policy or just the latest piece of shallow BS that is on the Breakfast show squeezed in between celebrity BS?
        (Focus groups are too damned hard to run in the rural areas – I suppose who gives a Rat’s ar$e what they think anyway? Stupid, uneducated redneck morons! When we do away wityh Agriculture we’ll be rid of them.))

        P.S. And by the bloody way – is all you have to do to win arguments is to brand someone a ‘conservative’ or a Liberal voter? (whether it’s true or not doesn’t matter. it wins the argument?”

      • Note to self.

        1. Take day off and go fishing, they are biting like crazy.

        2. Sometimes people assume you believe what you posit even if you are articulating what other decisionmakers and stakeholders appear to think, and not what you actually think, and have no discernible influence over decisionmakers.

        3. A key part of the art of comedy is engaging with the audience about what you find funny, not simply stating what you find is funny

      • ErmingtonPlumbingMEMBER

        Gotta love and Respect flawsies passion.
        Most people I come across don’t really give a FK about anything, execpt em selves

      • Rain When I Die

        Very interesting to see how it manifests.

        Low/no interest grants/loans
        I prefer the first, I think, so as to not skew prices so much (subsidies/rebates akin to FHVendorsGrant?) – happy to be corrected.

        I have 63sqm of new roof space ready for a big fkoffski solar PV array pointing 3 different directions, smart grid interactive inverter and battery.

  3. Who is actually going to build all these new power stations?
    How many greenfield power stations have actually been built since the networks were privatised?
    Buying an existing one from the government for cents on the dollar is a very different proposition to funding one at actual cost.
    To get the snowy hydro expansion happening the government had to buy it back and fund it itself.

  4. we could retire half of coal power plants just by implementing some real efficiency measures (not pointless foil insulation and pink batts) but double glazed windows and energy efficient water heaters and other appliances

    • how much do double glazed windows help when houses don’t have eaves, and there isn’t a singe tree to be seen for miles in the new concrete jungle housing estates, or vertical slums?

      • Yup! But the double glazed windows at the Aluminium smelter or fertilizer factory are really going to make a difference. C’mon get with it here. Form a circle, join hands with us, and we’ll all sing Kumbaya. It’s all so beautiful.
        (not having a crack at you doc – I think I am just totally pissed off this morning at all the monumental stupidity and idiocy. JohnR tells me to have a cup of tea and maybe that’s a good idea))

  5. By the way, while I’m on the subject. The costs of Gas are just one of the costs of running a gas fired power station. There are a few other MINOR matters – Capital that is being way under-used ; labour that spends most of its time sitting on its ar$e while they wait for the word that it’s too damned hot for the solar panels or too cloudy. That’s it’s freezing cold across Southern Aus and the wind doesn’t blow. The price of gas might end up being a really minor factor in the cost of turning out electricity.
    And this is all for what??? Saving the planet???? Bwahahaaaaaaa!

    • ErmingtonPlumbingMEMBER

      Well nothing Australia does will “Save the Planet”.
      Our 25 million population is a minuscule Percentage of the Global Population and falling as a percentage.

      What happens in China, India, Africa and the Islamic world will decide how far Human induced Climate change will go over the coming decades and centuries.
      Even Europe and Nth America cutting carbon emissions hard will do little to offset the Growing demand for engery from the Billions of new Consumers being minted by the Globalised Economy every decade.

      I “get” and support our symbolic participation by reducing our Carbon emissions and how as a first world/Western nation we probably should be “leading by example”.

      So what example should we be setting?
      If indeed our species survival, or at least the survival of Civilization, is dependant on Clean Energy production why are we placing responsibility for this in the hands of Private, Democratically unaccountable, profit seaking Coporations?
      Surely our very survival should allow for the turning on of the Printing presses of the Sovereign state!
      If 22 trillion can be “Created” out of thin air to prop up Share prices, with QE why not to save the planet!
      Gotta be a better form of economic stimulus than QE, lower interest rates or K Rudd 900 dollar cheques.
      Just rebuild the entire energy infrastructure of our nation, using Australian sourced materials and labor and keep it in public ownership (legislation should be written to only allow privatisation via National referendum)
      It’ll take decades to build and train up and employ 100s of thousands of Australians,…maby over a million if we really got those Printing presses running white hot!
      The usual Fiscal discipline can remain for most of the rest of the economy/Market ensuring we dont end up like Venezuela or the weimar republic.
      Some may say such a move to Nationalise Our Energy Market would make us a “Socialist” Country but we’ve been running a mixed economy of Semi Socialist and Capitalist instutions for over a century but the pendulum has swung to far to the Capitalist Right thanks to Neoliberalism, this iscwhy we cant get Shyte done.
      American right wing media are howling that if the US gets universal health care like Our Medicare they will turn into a Socialist Venezuela,…why hasn’t that happened to us here in OZ? Or the UK?

      If your really serious about “Saving the Planet” from carbon emissions, but dont support Nationalisation of Energy Production and distribution,…then your full of Shyte.
      It might not be because you are ignorant, …just indoctrinated.
      The solution to this problem Is actually easy,….the only hard part is cutting out the money grubbing 0.1 % who want to keep it “Too expensive”

    • Don’t worry Flawse, the invisible hand of the market already has the solution to this problem.
      New power stations simply won’t be built until their is sufficient demand to keep all new power stations occupied at 100% capacity for 90%+ of the time. There may be some minor inconveniences for the populace at large, like rolling blackouts as we are starting to see in summer but it’s all good. I figure when rolling blackouts are happening on 75% of days, that will be about the time to start building a new power station.

  6. The level of debate around energy is really sad in Aus. Assuming several GW of coal capacity shuts down over the next decade we need several GW of storage/gas/demand response/nuclear/new tech to replace it. Wind and solar are irrelevant unless you can guarantee some minimum level of generation at all times (definitely no for solar and close to no for wind – SA still drops close to 0 at times with 2GW installed!). Why is this critical point ignored amongst the partisan pro/anti renewable argument?