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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

gaming the energy market « Previous | |Next »
September 7, 2012

The Gillard Government has made a right mess of reducing the greenhouse gas emissions of the fossil fuel industry as part of the shifting to a low carbon economy.

The contracts for closure to secure the closure of 2000 MW of Australia’s dirtiest power stations like Hazelwood and Playford was part of the Clean Energy Future package. It was there because the carbon price agreed to by the Multi-Party Committee on Climate Change was never going to be high enough to retire our most polluting power stations; therefore an additional mechanism was required.


The Clean Energy Future package aimed to secure the closure of a handful of power stations while paying these same power stations $5.5 billion in compensation. Our dirtiest power stations were to be given a $5.5 billion compensation package for loss of asset value. $1 billion in cash payments has been paid in 2011-12.

The other compensation was handing out free permits to dirty industries like brown coal. Currently, these generators receive 94.5 per cent of their pollution permits for free — meaning they only pay one twentieth of the true price for carbon in this country.

These power stations are not going to be closed down.Thankfully Contracts for Closure is being ditched because the owners of the coal-fired power stations were asking too much for their ageing assets. They should never have been compensated in the first place. The Gillard Government has shown some sense in walking away.

On the other hand, these fossil fuel power stations are actually better off due to all the compensation. The system has been gamed by the power of vested interests in the fossil fuel industries. So why not make the coal plants pay the full price of their carbon permits? Why not invest the money in renewable energy--into large-scale solar power with thermal storage?

| Posted by Gary Sauer-Thompson at 4:26 AM | | Comments (6)


So the Gillard Government was using one pot of money to keep coal power stations running, and another pot of money to pay for them to close?

$5.5 billion can buy a lot of renewable energy.

Around 2010 the Coalition used to talk about paying to close brown coal fired plants and build gas fired plants in their place. They've changed their tune.

The brown coal-fired power stations can now apply for compensation (ie grants) to reduce their emissions.

The ALP government stood face to face with a hostile greenhouse mafia, they eyeballed each other with stern faces.

And the ALP blinked, dropped its eyes and slunk off tail between the back legs [note the date -May 2008].
Since then we have seen virtual abject surrender to the wants of the greenhouse lobby.
That was more than 4 years ago when Rudd was PM [not that I'm blaming him individually, it was pretty clear that Cabinet was complicit], when the ALP was riding high on a post election crest,high in the polls, when the public expected action on carbon pollution.
Since then its been all bad news.
Rather than fight the entrenched power of the polluters the government tried to bribe them so they would be nice to the government. Naive. Silly. Weak.
You don't pay bandits not to raid, thats a lesson King Aethelred the Unready did not learn.

the biggest threats to the business model of the coal-fired generators are:

(1) lowering demand – caused by changing consumption patterns – and;

(2) increased capacity from renewables such as large scale wind and solar.

The coal-fired generators will go after the renewable energy target --have it removed.

According the chairman of the Australian Energy Market Commission, John Pierce, and the chief executive of the Australian Energy Market Operator, Matt Zema the $5.5 billion compensation was needed to make sure Australians' lights were kept on as the carbon tax hit.

Ross Garnaut argued that the generators did not need anything like the $5.5 billion in cash and free permits they were eventually awarded.

Looks like Garnaut was right.