Teals offer Albo’s cowards an energy exit

Albo’s cowards aren’t doing shit about the energy war-profiteering:

Federal Energy Minister Chris Bowen just spoke to the media after a meeting with his state counterparts.

They have agreed to three points of action that he says won’t deliver immediate relief to the current soaring energy prices, but will help Australia in the long-term goal to decarbonise the energy grid.

The ministers, advised by expert agencies, agreed to expedite development of a “capacity market”, which would force retailers to pay generators to invest in power projects that could quickly be called on when the wind wasn’t blowing and the sun wasn’t shining.

The Australian Energy Market Operator will be granted new powers that enable it to store gas to help prevent the current shortages that have sent energy prices spiralling in recent weeks.

All states and territories have committed to reduce emissions in their power grids and hit net-zero emissions by 2050, and Bowen said the ministers all agreed to develop a national transition plan to coordinate and guide their journey to decarbonise the energy grid.

“We need more transmission. We need more renewables we need more storage,” Bowen said.

He backed the Australian Energy Market Operator’s road map, known as the integrated systems plan, which sketches out how the transition would take place.

“Now we have the integrated systems plan in Australia which was which is a world’s best practice document in relation to energy train electricity transmission, about poles and wires and big transmission across the country,” Bowen said.

Jeez, how badly thought out is that? Let’s buy gas when it’s off the charts expensive to address some future crisis while making this one worse.

At least the capacity mechanisms makes more sense. At current prices, gas firming power is nearly four times more expensive than renewables plus battery:

Levelised Energy Costs comparison

So pushing retailers to include the purchase of more power storage is good.

But, as the above prices show so clearly, that was going to happen anyway. What we need is regulation to fix failed markets in the short and medium term. The Teals emerged late yesterday to talk sense:

Incoming Wentworth MP Allegra Spender has clashed with Australian Workers’ Union boss Daniel Walton about the need for government support to help lift gas supply to ease the energy crisis but they have found common ground on the need for action like a windfall tax on oil and gas producers to help struggling consumers.

Ms Spender told the Credit Suisse Australia Forum that the “supernormal” profit being made by gas producers because of extreme events such as the Ukraine war were coming at a price to consumer bills and jobs.

“It fails that social licence piece and it fails the pub test,” Ms Spender said of the profits.

“Australian consumers will go, ‘well, why is it that my power bills are going like this? It’s all coming from Australia.’”

She called for “strong responses from the gas companies and from government”, with “all options on the table”.

“I’d get those people together and have very robust and constructive discussions right now.”

Mr Walton, national secretary of the AWU, said the east coast gas market had “fundamentally failed”, saying Shell last week offered gas at $100 a gigajoule, while AGL is offering more than $40/GJ for customers automatically transferred from failed NSW gas retailer Weston Energy.

“We’ve seen extraordinary gouging going on,” he said, adding he had been told of manufacturers paying an extra $100,000 a day for gas, and of some in Newcastle shutting off production during parts of the day because of the electricity wholesale price.

“We have said for a long period of time, that the big gas companies, multinational gas companies … are never going to agree to give up anything other than maximum profits.

“I simply don’t subscribe to the view that we should just cop that as a nation and say, no worries, well, just let them do that.”

…Woodside Energy’s head of new energy Shaun Gregory said the Petroleum Resource Rent Tax already acted as a levy on super-profits and joined other petroleum industry bosses in warning against “kneejerk” reactions that would harm stability for investment.

Woodside can be forgiven for thinking this is all so very new. It only just joined the east coast gas cartel by acquiring BHP’s share of the Gippsland JV with Exxon.

But we are seven years into the gas crisis, Mr Gregory, and the super-profits tax that miners wrote for themselves via the RSPT resolution doesn’t do squat.

As for Ms Spender’s idea, it will work to effectively shield the local economy from international prices so long as:

  • the super-profits tax is recycled as energy subsidies for end-users;
  • it includes coal as well as gas.

I wouldn’t call it a tax, either. It’s a Ukraine War Equalisation Levy (UWEL) that takes the war windfall and gives it back to those being gouged. An “equalisation levy” won’t frighten Albo’s cowards quite so much, either.

Notwithstanding that, a UWEL could be better than domestic reservation, if it benchmarks oil and gas profits to pre-Ukraine war prices.

That would raise a lot more dough than just the domestic energy gouge. It would take some of the export windfall as well and that would be a terrific national interest outcome.

I can’t see Labor having any trouble with the senate on such a proposal. Greens and Teals would embrace it.

Only Albo’s cowards are the problem.

Houses and Holes
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Comments

  1. Huge gas-fail for David Speers just now, over at ABC. Parroting the lame lines that Albo is “holding firm”, there is no “quick fix”, and it’s all about the “transition to clean energy”. Come back, Allegra, all is forgiven?

    • Well, honestly think the gas company executives should be charged with treason. If this was a different country, then they would have been threatened with disappearance.
      I understand that they have a duty to their shareholders, but not at all cost. Gas users will go out of business and industries will close. From food production to just about anything that is a high user of energy and not hedged.
      We live in a physical world and not a financial market(virtual). If the government says they are unable to act immediately, then you have to ask who is in control of the country then. If the gas companies don’t want to cap the prices they sell into the domestic market at say 2, 3 , or whatever number times the cost of production and they need the government to take action, then the government should act.
      Not next month or January next year, they need to act immediately.
      Think I’ll go and fill up the freezer again, just in case, that is even though I’m in WA. Just about everything we buy in supermarkets come from the east coast. See some shortages on the horizon again…. make sure you have a few years worth of toilet paper.

  2. Ronin8317MEMBER

    While good in theory, the chance of super-profit taxes being collected in the next few years s still zero. The court system will see to that.

    Here is a fun idea : Russia uses tax havens like Cayman Islands extensively, why not sanction Caymans Island for supporting Russia? Forget about collecting tax, Australia can nationalize a lot of companies in the name of ‘supporting the war in Ukraine’.

    • Why does it have to be a super profits tax. Why can’t we just legislate an export levy – xbps on revenue. Failing that an “administrative fee” per kj under the guise of user pays (for infrastructure, oversight, environmental make good, etc)?

      • BadaBingMEMBER

        They were pretty quick to introduce laws to push a metal straw into your arm, or you’ll loose your job aka no jab no job. That seemed “easy” for them.

        How is this different? Either they can make laws, or they cannot.

        That a law has commercial consequences was no issue previously.

        • Absolutely true.

          Government creates laws and citizens and companies made of citizens obey those laws.
          It is generally a good idea for government to make few and simple laws and not change them frequently. But looking around I don’t see that has happened. Therefore adding another few energy laws is a no-brainer.

  3. In the past we had accepted solutions for participants that ignored their social license. Stoning, lynching, hanging, crucifying’s, castrating. our grand parents weren’t the shy wall flowers we’d like to imagine. They had solutions and weren’t afraid to act.
    Personally I wouldn’t take a bullet for any of the Santos executives, they know full well what they’re doing and they’re laughing at us, figuring that we don’t have the nads to apply yesterdays justice to today’s thieves.

  4. If ever Labor had the political capital to do something, this is is.

    As to this idea from MB:
    “the super-profits tax is recycled as energy subsidies for end-users;”

    I’m ok with this if the subsidies extend to grants/low interest loans for people to do PV/battery/other stuff to improve storage/generation/efficiency.

    Like what the NSW Govt did with Empowering Homes, but then stopped any further rollout (booo!!!!)
    And kinda like what Brighte does.

  5. Please stop posting fake nameplate comparisons and do some basic math. Coal/nuclear can produce energy 95% of the time. Solar max out at 25% while new wind is less than 15%. So you need to install 5-6 times the nameplate capacity, plus huge battery storage to meet demand. Its also notable that these BS comparisons never mention coal generation without a carbon tax. Maybe one day H2 electrochemical storage will make non-despatchable green energy viable when cheap fossil fuels become expensive, but they need revolutionary tech to even compete with existing nuclear, let alone something like thorium.

    • TheLambKingMEMBER

      Please stop posting fake nameplate comparisons and do some basic math. Coal/nuclear can produce energy 95% of the time. Solar max out at 25% while new wind is less than 15%. So you need to install 5-6 times the nameplate capacity, plus huge battery storage to meet demand.

      You just don’t get it.

      You can make reliable systems out of unreliable and unpredictable parts. The Internet (tcp/ip) creates reliable applications (tcp) over unreliable transport (ip) – we use the same protocols to send data to space ships flying past pluto. It does this by buffering (storage) with ‘store and forward’ mechanisms – building lots of storage buffers between interconnects. The buffers in the power grid are batteries, hydro & (as a last resort) gas peaking plants. Build big enough buffers (and enough interconnects) and you can get a 100% reliable grid with only solar and wind generation. The sun shines over enough of the east coast every day to generate enough power

      The chart above gives you the cost of the components. What AEMO have to do is to provide the engineering to build in the storage and interconnects (which they have done with their step change Integrated system change plan https://aemo.com.au/-/media/files/major-publications/isp/2022/draft-2022-integrated-system-plan.pdf

      Have a look at https://www.rethinkx.com/energy they have models of isolated systems using just solar+wind+batteries (including snow locked New England) and require 3-4x generation and 48 hours of battery storage. Australia – with large diverse regions connected via interconnects and large hydro would only require 2x generation with less than 24 hours of battery. The numbers above halve for battery and solar by 2030.

        • drsmithyMEMBER

          Why hasn’t it been done yet?

          Why hasn’t nuclear power been deployed everywhere yet if it’s so awesome ?

          • At least nuclear has been deployed in a lot of places in the last 50-100 years and it’s proven to be able to supply reliable electricity. Of course the reason its been stunted is largely due to the same sort of environmentalists who now screech about climate change.

            The battery/pumped hydro/wind/solar hasn’t been deployed on a national scale anywhere as far as I know.

      • I keep hearing about all this wonderful stuff that can be done with energy.

        OK fine. Do it. Show me where it has been done. Then start doing it here.
        I’m not saying that it cannot be done. I am asking why has it not been done yet?

        • drsmithyMEMBER

          For the last nine years we’ve had a Government acting to prevent expansion of renewable energy, and aiding fossil fuel industries in doing little other than extracting as much as possible to sell.

          An energy industry stacked with thinking along similar lines as made it even worse.

          The problems here are almost entirely political, not technical.

      • Well said Mr Lamb.

        Unfortunately our fellow bloggist Robert is a committed RWNJ.

        As those of us of reason logic and science come to slowly understand, you cannot take the stupid out of these people.

  6. Generational political opportunity being missed by the ALP.

    I’m sure they think they’re thinking of and weighing so many of the right considerations; but I really don’t think they’re weighing this energy-fix opportunity properly…we’re talking 10+ years of cred for just ‘putting Australia first’ by reserving gas and coal…it should be such a no-brainer.

    As for market shocks and reputation – I know I keep saying it, but the shock would be temporary only, and if we leave the reservations in place the market has nothing to further worry about, especially given that the context is so extreme.

    • drsmithyMEMBER

      Imagine the elevator pitch:

      “We have the opportunity to reverse inflationary short-term cost of living pressures, drive investment to secure Australia’s long-term future with cheap energy and appear to be standing up to multinational companies who have been taking the piss paying no tax while banking megaprofits for years”.

      “What’s the downside ?”

      “Those same multinationals will make a song and dance about somewhat diminished profits for a few quarters.”

      “Hmmm.”

  7. Diogenes the CynicMEMBER

    There will be no system risk from doing this. It is all in their heads.

  8. They think this will go away towards the end of the year, it won’t. When Russia is in the place it wants to be militarily and they find out the weaknesses in their fortress economy they intend to cut off European countries that station missiles targeted at them completely. This will keep LNG prices high for the foreseeable future while Europe de-industrialises and spill back onto our internal gas market.

  9. “I can’t see Labor having any trouble with the senate on such a proposal. Greens and Teals would embrace it.”
    They may yet do something. The major problem as I see it is the power of the pro-LNP press and the business interests they protect. There are obvious political risks.