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energy politics « Previous | |Next »
July 5, 2011

An official leak from the Gillard Government says that, as a result of the deliberations of it the multi-party climate change committee, it is putting together a $3 billion energy package. This aims to promote clean energy, pay for the closure of Australia's dirtiest brown coal-fired power plants in Victoria (Hazelwood?) and South Australia (Playford?) and avoid systemic failure of electricity supply in southeast Australia.

Gary Sauer-Thompson, Electricity Pylons, Port Adelaide, 2010

This energy package is the initial step away from the the political failure of 2009 to 2011 and is the beginning of an ongoing attempt to address the consequences of the market failure to price greenhouse gas emissions in order to reduce our reliance on fossil-energy based technologies. The energy package is a positive when the exclusion of petrol from a carbon price is a big negative.

It appears that there will be a clean energy finance corporation with a fund of $2bn to invest in renewables? Clean coal? There will an energy security package that will provide coal-fired power generators with a line of credit and loan guarantees to continue operating, since coal-fired power generators are faced with devaluation of assets, losses of equity for shareholders and an inability to borrow because of the carbon tax.

A large part of the debate has been about the main problems of electricity generators in losing asset values, being unable to borrow funds and avoiding financial risks and market failures (ie., limit the risks of power disruption).

Like the Greens I baulk at paying funds raised from the carbon tax to allow the brown coal industries to continue. They are the polluters and they should pay for their greenhouse gas emissions. The electricity market can handle the adjustments that have to be made without big handouts of taxpayers' money. However, the Latrobe Valley is under particular threat, with unemployment likely to rise significantly.

Rather than scarce funds being spent on compensating the shareholders (in Sydney or Hong Kong or Paris) it should be spent on supporting innovation to build the economy of the future, and providing tax cuts and improved benefits for Australian households.

If geosequestration, the capture and storage of carbon in geological structures, doesn't work and so brown coal cannot become a low emission energy source, then it will lead over time to reduction of brown coal in energy production. Will that lead to a closure of the coal -fired power stations?

| Posted by Gary Sauer-Thompson at 10:41 AM | | Comments (10)


The great hope for the Gillard Government is that the pricing of greenhouse emissions, which has done so much to bring Labor down, will also be the mechanism for restoring the Government through a carbon tax.

It looks as if the exclusion of petrol from the carbon tax by labor was in exchange for the Greens $3bn Energy Fund.

Labor celebrates a step back (excluding petrol) whilst the Greens celebrate a step forward (Energy Fund). Labor's political survival depends upon it selling the carbon tax. The legislation will pass in spite of the Coalition's their campaign of tactical destabilisation through constant censure motions in Question Time.

Although solar has huge potential to deliver affordable and secure energy, and can play a significant role in the decarbonisation of our economy, Labor Ministers have argued that the feed in tariffs programme has become an expensive measure that needs to be controlled; and that they are adding to the cost of increase in electricity bills.

Solar power remains too expensive in the short term is their baseline position. Hence the slash and burn policies.

So what will happen under the Energy Fund?

It is expected that under Australia's carbon pricing package that will be released on Sunday the export industries will probably get a similar number of free permits as they were offered under the Rudd government's scheme in 2009. Will it be more?

There will also be money for power plants---$17billion?--- and gassy coal mines--around $1.5 billion. There will be a special deal for the steel industry, with free permits and other measures to give almost total compensation in the initial years,

Much of this assistance simply reflects the influence of these industries over policy.

Treasury modelling will show that under an indicative $20 carbon price, coal exports and production, although lower than without a tax, would still double during the next 40 years.

In spite of this the coal industry is preparing an all-out fight against the ''Clean Energy'' package to be released on Sunday. Their talking point is that the carbon tax is a ''wealth redistribution exercise'' that will cost jobs---3000 jobs will disappear in NSW alone!---but not reduce greenhouse emissions.

The steel industry is going to be protected for some years ---as a pay off to the AWU secretary and Labor Right powerbroker Paul Howes.

Labor is talking up the future of coal as very bright indeed. King Coal rules under Labor. Nuclear waits in the wings.

Andrew Wilkie, the MP for the Hobart seat of Denison, has the deciding vote in the House of Representatives on the carbon tax. The southern half of his electorate is one of the greenest constituencies in Australia, while the northern half is traditional working-class and once solid Labor and sympathetic to Abbott's fear campaign.

According to The Australian Wilkies' official position is this:

I support, in principle, the government's move to put a price on carbon, but the settings must be right. People on low incomes must be properly compensated; high-emission, trade-exposed industries such as the zinc works in Hobart must be fairly treated. Tasmania's potential to be an important source of carbon offsets must be accommodated; there must be a high level of investment in renewable energy sources; and Tasmania's existing reliance on hydro-electricity must not be disadvantaged

It's a classic Tasmanian hand being played.

The coal industry has talked about the industry threatened demise due to a carbon tax. It has outlined the solution to its problem---carbon capture and storage--yet it has done little to create a low carbon product.

It is spending little money on research and development into CCS – the technology that can guarantee its future growth beyond the next decade.

carbon capture and storage (ccs) may not be realistic solution for the coal industry to clean up its greenhouse emissions. It may well be a waste of money --hence the lack of investment in the ccs technology to rival technologies such as solar and geothermal.