March 11, 2014
The Coalition's Direct Action is part of a short-term political manoeuvre that helped deliver power to the conservative parties. It is not a long-term policy position to deal with climate change. Their long term policy position is to defend the fossil fuel industries, and to push for push for greater fossil fuel consumption even though the market for conventional generation is effectively dead. This position involves hostility to the renewable energy industry.
Australia is investing tens of billions of dollars building new assets to promote fossil fuels, be it in LNG, coal, the Galilee Basin and the Abbot Point port infrastructure even though the demand for coal in China and India is declining. China, the biggest consumer of coal, is placing a cap on coal consumption whilst imported coal from Australia is too expensive for India.
Committing to the economic primacy of fossil fuels, particularly coal, may well result in stranded assets and asset write downs. In the Australian market energy consumption continues to fall while renewable energy development rises. This is driving down wholesale market prices and eroding the value of coal and natural gas plants.
The fundamental structural change in the electricity market that is underway that is undercutting the traditional utility business model. And the utilities, fossil fuel generators and state governments that own the old electricity assets (eg., WA, Queensland and NSW) do not like the declining profits.