November 8, 2012
The Gillard Government's Energy White Paper--Australia’s Energy Transformation-- is being published in the context of massively rising power bills, falling wholesale prices and reducing demand for electricity. What we have is market failure.
An energy policy debate should be about how best to re-design the electricity market institutions to achieve an integration with climate policy goals: cheaper prices for consumers, reduced greenhouse emissions and the emergence of a low carbon economy.
However, the energy white paper appears to equate the supply and, demand and use of electricity with energy security, the exploitation of natural resources and mining policy. The bureaucratic blurb reads:
The 2012 Energy White Paper sets out the Australian Government's strategic policy framework to guide Australia’s energy transformation to a cleaner and more productive energy economy. The central objective of the Energy White Paper is to provide the settings to deliver secure, reliable, clean, competitively priced energy to consumers; while building our national wealth through the safe and sustainable development of our energy resources.
Thus the white paper rules out the domestic nuclear power option, but supports increased uranium mining, and supports growth in the mining and export of of fossil fuels, especially coal and gas. What has the mining and export of of fossil fuels---uranium coal and gas--got to do with energy policy? Isn't this harnessing and exploiting natural resources to enhance Australia's prosperity an indication of developmentalism?
The Energy White Paper is about digging up as many fossil fuels as possible as quickly as possible to make as many billions as possible. That has to do with, and contradicts, the aim of taking climate change into account.
Secondly, the biggest defect of the National Electricity Market is its complete absence of policies to reduce emissions, even though electricity generation is the source of over 35% of Australia’s emissions. Environmental sustainability and climate change mitigation are not included in the objectives of the National Electricity Law. The inference is that dealing with greenhouse gas emissions is not an objective of energy policy in Australia.
Thirdly, the objective of energy policy in Australia is for the national electricity market to provide accessible, reliable and competitively priced energy for all Australians. Clean and sustainable energy is something that is added on from the outside, because it is not written into the legislation and rules that govern the national electricity market.
Consequently, renewable energy and reducing emissions is a constraint on the market because the objective to provide accessible, reliable and competitively priced energy for all Australians through an open and efficient market with good, intelligent regulation. For energy policy makers the market has a fundamental role in delivering the energy future, and they are adamant that their focus should be on “economic” efficiency and on keeping environmental considerations out of the rules and operation of the electricity market.
The Green's on the Senate Select Committee on Electricity Pricing addressed this issue. They recommendated that the National Electricity Objective be re-written to include an environmental objective and an objective that there are no regulatory barriers to demand management, energy efficiency and distributed generation.