Let profits stay here to benefit Australians

Finally, we are really seeing what privatisation of our energy providers can lead to. Electricity companies (increasingly under foreign ownership) are using the tactic of shutting down power generators to trigger an energy shortage. This necessitates government intervention, forcing them to restore generation. This, in turn, entitles these companies to generous compensation, paid by the government. A neat trick indeed.

If these companies are prepared to use the Australian population as hostage in their extortion racket, it is time we had a change in mindset about ownership of our energy resources and generation.

For a start, how about a serious resources rent tax on all resources. Then consider a return to state-owned and controlled energy companies. The old State Electricity Commission of Victoria did a splendid job. It also paid dividends back into government coffers, as opposed to profits going offshore.

Let the profits from power generation stay in Australia for the benefit of all of us.
Anne Kaufman, Ringwood East. June 16 2022

Privatisation of the electricity is going well, isn’t it?
Richard Edlin, Camberwell

The lights are off and everyone is at home.
Francis Bainbridge, Fitzroy North

Would our energy crisis have occurred if we had maintained the SEC and not privatised our energy sector? We’re reaping the rewards of our free(ze) enterprise economy.
Luigi Soccio, Daylesford

Editorial. The Age, 17 June 2022

If anything good has come out of this week’s energy crisis it is the realisation that our electricity market is no longer fit for purpose – that after years of inaction we have finally been found out. The question is: what, exactly, can be done?

It’s well known now that the crisis - which threatened blackouts across the eastern states and will no doubt be felt in our energy bills in coming months - was the result of a “perfect storm” of unlikely factors. Among them was the jump in coal and gas prices caused by the war in Ukraine; the east coast cold snap; floods at coal mines; maintenance outages at half a dozen major coal-fired power stations; some complex machinations in the national energy market; and, an unlikely villain, clouds, which reduced the generation of solar energy.

What we learnt in the meantime was how fragile the national network has become. Coal-fired power plants, the workhorses of the system, are getting older, and underinvestment in their upkeep shows up in failures and long repair times. The gas generators that take over some of their load are now hostage to international price spikes, and supply from renewables, though cheap, is intermittent. All of this has prompted extraordinary interventions from the national regulator to keep the lights on.

As business columnist Stephen Bartholomeusz wrote this week, none of this should have come as a surprise. It’s the result of “more than a decade of neglect, political impasses and the internal wrangling and consequent inertia within the Coalition government that was in power for most of that period”.

Those on the right are clinging to the old playbook, with Opposition Leader Peter Dutton claiming the crisis occurred because the power industry had been “spooked” by the ALP’s plans to promote renewables “too quickly”. Nationals leader David Littleproud floated nuclear power (a debate we perhaps should have again, but which will not solve today’s pressing problems).

Prime Minister Anthony Albanese, meantime, is clearly hoping the electorate blames the previous government, telling Sunrise on Friday “you can’t fix 10 years of inaction in just 10 days”. Yet the blame game will quickly grow stale, especially if there are further threats to our power supply. We want somebody to talk about solutions.

Short term, government and regulatory intervention in the free market, while a little alarming, is clearly necessary. The Australian Energy Market Operator this week showed it at least works as a mechanism of last resort, when it first capped the price of electricity, then directed recalcitrant suppliers to generate power, then suspended the spot market entirely.

The NSW government, meanwhile, has been granted emergency powers to secure supplies of coal if necessary. And talks continue about our gas exports, with an “agitated” federal Industry and Science Minister Ed Husic telling the ABC on Friday we should consider a domestic gas reserve, as has apparently been implemented successfully in Western Australia.

In an ideal world, governments should not be meddling in the business of wholesale energy production. Rather, they should provide a workable and stable framework into which the industry generators can supply.

Coal is back in the spotlight but it remains a twilight industry, according to Tony Wood, energy director at the Grattan Institute, who told this masthead, “There was no point at which building a new coal-fired power station could have solved the problem. And, of course, it would have become a stranded asset pretty quickly that was outcompeted by cheaper renewables.”

Meddling with our gas exports risks harming our international reputation and would impact export income. And the regulator doesn’t want to be giving orders to producers for any longer than emergency conditions dictate.

Longer term, as we have argued previously, and as various market players agree, there is no reason why the bulk of our power can’t come from renewables – solar, wind, hydro – backed up by batteries, hydrogen (once we work out how to do it) and, for the time being, gas. Only in this way can Australia meet the government’s commitment to reduce carbon emissions by 43 per cent below 2005 levels by 2030.

The major hurdles are not so much generation, but transmission, storage and stability. The technology to make this happen are either here or just around the corner, including large-capacity batteries and hydrogen. What we now need is a comprehensive plan to reach the goal of a greener, cheaper energy system. This will include a re-engineered grid that can cope with the shift in generation and a timetable for closing coal-fired plants to give producers, retailers and regulators more certainty about investment.

Anna Collyer, chair of the Energy Security Board, said on Friday that the recent crisis should only accelerate our move to renewables. This was echoed by Fortescue Metals Group chief executive Elizabeth Gaines, who reflected: “The mistake would be if [the crisis] just incentivises more investment in fossil fuels, when the opportunity for a clean-energy transition is here.”

It is now Albanese’s job to create the environment – and quickly – to make that happen.

In an ideal world, governments should not be meddling in the business of wholesale energy production. Rather, they should provide a workable and stable framework into which the industry generators can supply.

Coal is back in the spotlight but it remains a twilight industry, according to Tony Wood, energy director at the Grattan Institute, who told this masthead, “There was no point at which building a new coal-fired power station could have solved the problem. And, of course, it would have become a stranded asset pretty quickly that was outcompeted by cheaper renewables.”

Meddling with our gas exports risks harming our international reputation and would impact export income. And the regulator doesn’t want to be giving orders to producers for any longer than emergency conditions dictate.

Longer term, as we have argued previously, and as various market players agree, there is no reason why the bulk of our power can’t come from renewables – solar, wind, hydro – backed up by batteries, hydrogen (once we work out how to do it) and, for the time being, gas. Only in this way can Australia meet the government’s commitment to reduce carbon emissions by 43 per cent below 2005 levels by 2030.

The major hurdles are not so much generation, but transmission, storage and stability. The technology to make this happen are either here or just around the corner, including large-capacity batteries and hydrogen. What we now need is a comprehensive plan to reach the goal of a greener, cheaper energy system. This will include a re-engineered grid that can cope with the shift in generation and a timetable for closing coal-fired plants to give producers, retailers and regulators more certainty about investment.

Anna Collyer, chair of the Energy Security Board, said on Friday that the recent crisis should only accelerate our move to renewables. This was echoed by Fortescue Metals Group chief executive Elizabeth Gaines, who reflected: “The mistake would be if [the crisis] just incentivises more investment in fossil fuels, when the opportunity for a clean-energy transition is here.”

It is now Albanese’s job to create the environment – and quickly – to make that happen.

‘Lights on’ must be Energy Security Board’s priorityEDITORIAL

• 12:00AM JUNE 21, 2022

A few years ago, when Adani was struggling to gain approval for its coalmine in central Queensland, Australians were appalled reading about life in parts of India where households were struggling without reliable power. It seemed unimaginable then that a resource-rich, advanced country such as this could face the prospect of blackouts and an energy crisis. In keeping with its raison d’etre, the Energy Security Board has made the right call in rejecting demands for fossil fuels to be cut from its draft ­capacity mechanism. It was essential that coal- and gas-fired plants did not exit the power grid before replacement renewables and storage generation were in place, the board decided.

The board exists to meet consumers’ needs. It was established by the nation’s energy ministers in August 2017 to provide “whole-of-system oversight for energy security and reliability to drive better outcomes for consumers”. Most, but not all, Australians will agree with the board not ruling out gas and coal. Simon Holmes a Court, whose Climate 200 group helped sponsor the teal independents at the federal election, says the mechanism should focus on storage to back up renewables. “The sooner we expand storage, the sooner we can close existing coal and gas. Anything that prolongs the life of coal and gas must be rejected,” Mr Holmes a Court said. But at what price to households and businesses? And surely not until the reliable storage of renewables is able to carry the nation’s baseload power demand?

Under the ESB capacity mechanism, generators would be paid for guaranteeing standby supply to meet ­demand, helping to avoid a repeat of the current grid suspension. As federal Energy Minister Chris Bowen says, the states will implement the capacity mechanism in a way that “is suitable for their particular purposes and needs” in line with a nationally agreed emissions reduction trajectory. Victorian Energy Minister Lily D’Ambrosio, for instance, wants fossil fuels excluded from the mechanism. But the ESB also warns the state faces a threat from a renewables drought – extended periods of low wind and solar – that could lead to a “significant and sustained gap” between demand and clean-energy generation.

Which raises an interesting question about the approach of other nations committed to cutting greenhouse emissions. Japan, for instance, which is scaling back its reliance on coal, is including gas and more efficient coal-fired power plants in its energy plan to 2030, as well as nuclear power. It is not alone. Faced with its own potential power crisis over Russian gas supplies, Germany is planning for the European winter, looking to use coal-fired power stations that would have been idle this year and next as reserve facilities. The precautionary measures are to remain in place until March 2024, cutting German reliance on Russian fossil fuels.

Australians support the transition to renewable energy. But they expect reliable power, including in peak times during cold snaps and heatwaves, at a reasonable price. They face paying hundreds of dollars a year more on power bills when new rates start on July 1. Given concerns over prices, the Australian Competition & Consumer Commission audit of energy companies’ profits and margins as part of a probe into soaring energy bills is timely.

Nor does the public want to see Australian companies disadvantaged. Mining, chemical, transport and energy companies, which operate 97 of the 215 biggest-emitting facilities in the nation, have warned the Albanese government against adopting a “one-size fits-all” safeguard mechanism amid concerns they could be left behind by international competitors. Climate change action across trade-exposed and energy-­intensive sectors, under Labor’s 2030 plan to slash emissions by 43 per cent, is expected to take some industries longer as they adopt new low-emissions technologies.

Power bill reality to bite amid climate symbolism EDITORIAL

• 12:00AM JUNE 18, 2022

After days of theatrics and virtue signalling over climate action, at least Anthony Albanese’s apparent walking away from Labor’s pledge to cut power bills for families and businesses by $275 within three years is realistic. Asked on Friday if he could deliver on his power bill promise, the Prime Minister said: “We are dealing with a circumstance which is a direct result of a failure to give business the certainty that they needed to invest … People want to end the climate wars. They want to move on and to make sure that we get better outcomes going forward.”

Faced with potential blackouts during the cold snap, what most people want is certainty that the power will stay on, now and in the steaming summer in a few months, and that home and small-business power bills will not soar to painful heights. Less irritating symbolism from politicians and other players would be welcome. On Thursday, Mr Albanese, flanked by Climate Change and Energy Minister Chris Bowen and stakeholders from business, trade unions and energy groups, signed an emissions reduction plan of 43 per cent by the end of the decade. The target is higher than the 26-28 per cent target proposed by the previous government. “Today, Australia turns the climate corner,” Mr Bowen boasted. While organisations such as the BBC lauded the government for moving out of the “naughty corner” on climate, many Australians wait with some trepidation to see the costs and practical effects.

Given the east coast’s energy malaise, they wonder what will change in their homes and businesses. Mr Bowen insists “the problem is there is not enough investment in renewable energy and storage” rather than needing to extend the life of coal-fired generators. The flaw in that argument is that Australia has achieved record levels of spending on solar and wind energy in recent years, claiming one of the highest take-ups of rooftop solar in the world. If renewables are to plug the gap, investment in storage is vital. But it is up to the industry, and to Mr Bowen and the government, to show Australians it can carry the nation’s baseload energy demands with backup from gas and other sources.

NSW Premier Dominic Perrottet took a constructive stand after national cabinet, affirming he was “absolutely committed” to working with gas giant Santos to get the Narrabri project off the ground. Mr Perrottet’s predecessors should have done so years ago. Better late than never. Victorian Premier Daniel Andrews remains “very, very proud” of not having fracking in Victoria and has maintained the state’s moratorium on gas exploration. But, he said, if an attractive proposal were put forward “there is nothing ruling that out”.

However much Mr Albanese wishes otherwise, the climate wars are far from over. He can implement his 43 per cent reduction plan without legislation and will likely need to do so. Greens leader Adam Bandt has indicated his party will join with the Coalition in rejecting the target in the Senate – for different reasons. The Greens claim the target is not big enough and will “mean the death of the Great Barrier Reef”. Nor is it enough for the teals. Fortunately, they have no power in the lower house. Mr Albanese is correct when he says the Greens failed to learn from their 2009 opposition to Kevin Rudd’s carbon pollution reduction scheme, ushering in more than a decade of problems. They want to be a protest party.

What the public is angrier about, however, is that a First World nation, with some of the world’s richest energy resources, is turning itself into a basket case. Greens and teal supporters may cheer for more penance. But without effective, pragmatic solutions from a wealth of options, families, businesses, jobs, revenue, living standards and, ultimately, the security of the nation will suffer painful consequences.

Why is the Coalition allergic to renewables?

Kathy Willcox

When in power, the Coalition government avoided its national and global responsibilities to act on a transition to renewables. It poured billions of dollars into subsidising fossil-fuel companies, it promoted the fiction that emissions could be offset by the failed carbon capture and storage, and it assured us (in 2020) that gas would lead the country to “recovery”. Strangely, since the electorate has shown a deal of understanding about these matters by voting, in many instances, in favour of ″⁣greener″⁣ policies, many in the Coalition continue to try to promote (non-renewable, unsafe and expensive) nuclear.

Tim Smith, outgoing state Liberal MP, says, “Any serious opposition or government must at the very least put nuclear energy on the table” (The Age, 12/6). Why must they? His federal counterparts, having failed to attend to national energy security for a decade, continue to push yet another unpopular idea.
Why so allergic to renewables?
Fiona Colin, Malvern East

Ditch the other plastic pests
We have made progress with banning plastic bags and straws (terrific) but there are other insidious plastic pests. Those tiny plastic sachets of tomato sauce! I see them discarded everywhere. There must be billions floating in the ocean by now. If you are ″⁣of a certain age″⁣, you will remember when a squeezy bottle of sauce on the shop counter got the job done.
Chris Lemm, Emerald

The link between nuclear power and weapons
Peter Dutton’s push for Australia to develop a nuclear power industry raises the hugest red flag for peace activists. The nuclear fuel cycle for nuclear power is necessary to produce plutonium-239 and uranium-235, essential for the manufacture of nuclear weapons. That connection between nuclear power and nuclear weapons has always been kept well hidden by governments. In fact, the UK’s first nuclear power stations were built primarily to provide fissionable material for nuclear weapons during the Cold War.

The argument that nuclear weapons sustain peace is disproved by Russia’s blackmailing threats of a nuclear war for its invasion of Ukraine. It is now urgent for world peace and life as we know it that all nations, including Australia, join the 61 state parties that have already signed and ratified the Nuclear Weapons Ban Treaty. That issue should be on the table well before any discussion of our beautifully sustainable energy-rich Australia considering an opaque, hierarchical nuclear power industry.
Jennifer Gerrand, Carlton North

Stop demonising forestry industry
It’s time to stop demonising the forestry industry, and keep forestry workers safe. In Scandinavia and North America, forestry and timber production is rightly seen as an important part of the climate solution. Sustainable forestry produces the only renewable resource used in building and construction – timber.

Concrete and bricks are produced through energy-intensive processes and result in materials that, unlike timber, do not store carbon and are not bio-degradable. Forestry is the only industry with net negative carbon emissions. That is, the replanting of harvested forests captures and stores more carbon as new trees grow, while the harvested timber continues to hold the carbon it has captured.

The Australian National Greenhouse Accounts April 2021 show that in 2019 forest land (including harvested and replanted forests) had net negative carbon emissions of 54,651 million tonnes. Harvested wood products had net negative emissions of 4815 million tonnes. VicForests reportedly harvests (and replants) around 3000 hectares a year – just 0.4 per cent of Victoria’s total forest area. It seems that when it comes to “accepting the science” in relation to climate change, it is a very selective exercise for some.
Graeme Russell, Clifton Hill

Gas still has a role
In March 2021, retiring chief scientist Alan Finkel confirmed why renewable energy adoption would need a natural gas buffer to help phase out coal-fired generators. Despite objections from many fellow scientists, this appears to be a most pragmatic option. Many people, sitting in their gas-warmed homes right now, will agree.
Andrew Smith, Leongatha

OPINION

Our energy crisis has been a decade in the making. Don’t expect a quick solution

16 June 2022

The chaos and dysfunction in the national electricity market this week flows from the collision of a number of unexpected events with long-term vulnerabilities. It was, however, eminently foreseeable and therefore an indictment on policymakers over a very long period.

There was a series of largely unrelated issues that led to this week’s unprecedented decision by the Australian Energy Market Operator to suspend the spot market for wholesale electricity and take control of the generation sector, enabling it to decide who should supply power into the grid and when.

The catalyst for the invoking of AEMO’s emergency powers was its own decision to impose a cap on prices of $300/MWh after spot prices skyrocketed.

Gas-fired generators, and some coal-fired plants (which need prices above $400/MWh to break even) withdrew from the market, creating a shortfall of supply relative to demand, and forcing AEMO’s hand.

In taking control of supply, AEMO will now compensate the generators for any losses, a cost that will inevitably be borne by consumers.

That might describe the events of this week but it doesn’t explain why they happened. The answer lies in a complex confluence of events, here and offshore, overlaid on some long term structural developments within the market.

Globally, pandemic-reduced investment in oil and gas production; a surge in demand for energy as much of the world has emerged from the worst of the pandemic and, more recently, Europe’s desperate efforts to secure new sources of supply after Russia’s invasion of Ukraine have sent prices soaring.

Locally, about a quarter of the capacity of Australia’s east coast coal-fired generators has been offline for either planned or unplanned maintenance.

• 12:00AM JUNE 21, 2022

I get flashes of Don Quixote when I see Chris Bowen in front of windmills explaining away our energy problems.

Barry Simpson, Noosaville, Qld

The idea that renewable energy is the cheapest form of power is a bit like using “Mexican overdrive” to save fuel consumption. You might save fuel when going downhill. But at the bottom of the hill you have to start the engine again to go up the other side.

Terry Jessop, Killcare Heights, NSW

The other day I saw fuel at 222.2 and was reminded of that famous line from cricketing legend Richie Benaud, when he called the score of 2 for 222. I never thought I’d see the day the price of fuel would resemble a pretty decent cricket score. In these difficult times, some humour, albeit fleetingly, is still better than none.

Neil Hunter, Morley, WA

Why do I keep misreading “outages” as “outrages”?

David Morrison, Springwood, NSW

Nation’s energy policy has us freezing in our homes

• 12:00AM JUNE 13, 2022

Paul Kelly mentions in his column the fact that “nothing can stop the hefty escalation in power bills this winter” (“The make-or-break job”, 11-12/6). As I try to type this letter with fingers frozen, although there is a gas heater alight, I am feeling angry that our country, rich in minerals, coal and gas, has come to this parlous state. I know there are elderly people, still in bed, trying to keep warm, because they are afraid to heat their homes. I have heard them on radio complaining of the cold at this present time.

Labor is blaming the former government for the energy problems, but it was the Gillard government that eschewed gas reservation policy in 2012. We have our gas and coal being sold all over the world, but we have a shortage at home. It is time for people to wake up and rebel, because if not we will freeze in winter and fry in summer, when we are not permitted to use our coal or gas for energy purposes.

Lesley Beckhouse, Queanbeyan, NSW

The more governments meddle and spend billions of dollars in areas best left to the private sector, such as the energy market, the less of the budget pie is available for essentials including defence, drought and flood mitigation, health and education. An association between government subsidisation of renewable energy and declining living standards is looking increasingly apparent.

The nation is facing $1.2 trillion of gross debt and forecast deficits of $224bn across the next four years, yet billions continue to bleed from state and federal finances by propping up inefficient and unreliable renewable energy, which itself does nothing towards improving industrial productivity or growth.

Labor’s plan to spend $20bn to connect more renewables to the grid represents yet another misallocation of resources, with no guaranteed benefits but with opportunity costs equivalent to 150 new city hospitals. Governments should get out of the energy market and allow companies to build nuclear power, HELE coal and gas plants to grow the economy and save the taxpayer billions.

Ron Hobba, Camberwell, Vic

In addition to Ticky Fullerton’s two questions (“This is the electricity crisis we had to have”, 11-12), perhaps the third question is: Why wouldn’t the Coalition join with Labor to pass a bill to amend the current prohibition of nuclear energy federally and in those states that have such prohibition to allow for the trial of Small Modular Reactors?

The fourth question is: If the nation is unable to store and deliver the energy produced by renewables in future years what will happen then? Doesn’t it makes sense to, at the very least, trial SMR technology to see if it could solve the long-term energy issue?

Peter Sjoquist, Wahroonga, NSW

As Chris Kenny says, Anthony Albanese and Penny Wong deserve credit for wasting no time in strengthening ties with our Indonesian and Pacific Island neighbours (“Team Albo off to a flying start on foreign affairs”, 11-12/6). But they need to pull back from their climate change rhetoric because, as Kenny points out, China’s actions over the South China Sea and in the Pacific pose a far more pressing dilemma.

With the nation engulfed in an energy crisis the last thing we need is Albanese talking up more ambitious climate goals and promoting renewable energy as if it’s the cavalry on its way to save us.

No amount of wind and solar can dig us out of the hole we are in. The sooner the Albanese government accepts this fact, the quicker the path will be cleared for our coal-fired power stations to get on with their job of delivering the cheap, reliable power the nation desperately needs, and the sooner Albo can resume what he appears to like doing most: making his mark on the international stage.

Dale Ellis, Innisfail, Qld

The energy and gas price flare-up has some people saying there’s “sovereign risk” in imposing windfall taxes on profits or mandating that Australians get first go at gas that generates billions for offshore entities (“No quick fix for structural issues in the energy market”, 11-12/6). The flip side to sovereign risk is sovereign power. Scott Morrison only cracked a whip after losing power. Albanese and his team would do well to crack the real whip of sovereign power early, even if just gently, to remind the fossil fuel mega-corps who this country is being run for.

John Godfrey, Nar Nar Goon, Vic

Our energy crisis is soluble, given some political spine

• 12:00AM JUNE 10, 2022

The letter from Dale Ellis (9/6) regarding our energy crisis scared me so that I choked on my breakfast.

What scared me was that these issues – all of them – have been around for years and yet none of our governments, industry groups, corporations or anybody else has had the intelligence or drive or guts to see the inevitable crisis coming and do something about it before it became a crisis.

I note that Western Australia is the only state bright enough to reserve a percentage of its gas supplies for local use, and you wonder why the more populous states could not have followed suit, as it is plain common sense.

Perhaps if all components of governments looked towards co-operating with each other we, who elected them, might benefit rather than put up with the constant bickering and mud-slinging.

Peter Sherlock, Bellevue, WA

Most impressive are the obvious skills of TV networks’ make-up departments.

Recent viewings across most channels featuring federal Resources Minister Madeleine King and NSW Energy Minister Matt Kean – promoting the urgent need to ramp up coal-fired electricity production – without a trace of any egg on their faces

Michael Saul, Scarborough, Qld

There is a very simple way to reduce the cost of electricity – remove the parity pricing model introduced by former treasurer Paul Keating. It is the height of irrational thought to price coal and gas domestically produced at the same price as international markets.

This is why oversee countries and companies can buy gas and coal cheaper than Australian electricity producers.

Governments should stop whingeing as though the price of electricity is out of their control and do something to fix the problem now.

Wayne Brown, Queanbeyan, NSW

The solution for the provision of cheap electrical energy to Australia, arising from the recent huge increases in coal and gas demand, has been recognised by the new federal government with a call to keep coal-fired power stations from premature closure.

It is a mixed blessing that black coal and gas are in great demand throughout the world, with prices for feedstock going through the roof, with one exception.

This is for brown coal that cannot be transported internationally and consequently has a value purely dependent on the low cost of delivering it to an adjacent power station.

The use of high-efficiency, low-emissions technology is already feasible, even though the Victorian government cancelled a ready-to-go HELE pilot plant designed by the Herman Research Laboratory.

Brown coal from the enormous reserves in the Latrobe Valley can provide, with minimal delay, the most cost-effective environmentally responsible supply of baseload electricity to the east coast grid until such time as nuclear power can come on line.

Dr Colin M Barton, former principal research scientist CSIRO, Glen Waverley, Vic

Robert Gottliebsen (“Victorian politicians are to blame for gas shortage”, 9/6) has described the massive gas reserves in Victoria’s lignite.

Importantly, he mentions the “enormous reserves of low-cost, non-fracked onshore gas that, uniquely in the world, can be carbon neutral”.

It is not widely recognised that, compared with black coal in the northern states, brown coal in Gippsland is clean. The “dirtiness” stems from it being around 70 per cent moisture. Rather than burn the lignite, which means driving off the moisture first (with higher carbon dioxide per megawatt electricity than black coal), the by-product water from the gas extraction can be used for much-needed irrigation.

In addition to the wealth of gas that would be available to satisfy today’s east coast demands, proven technology exists to convert the massive resources of coal to oil.

Together with the gas, such processing would have made the Gippsland region a major energy export hub on a scale similar to the North West Shelf without having the climate impact of burning the coal.

While the move to renewables is necessary, oil and gas will remain a part of the world’s energy mix for quite some years.

John Kempler, Rose Bay, NSW

Putting price on carbon won’t put pause on blackouts

• 12:00AM JUNE 23, 2022

Rod Sims (“The two big flaws driving our power crisis”, 22/6) has done great work on energy policy and has been one of the few sane voices in public service on the topic. However, his claim – that a lack of an Australian carbon price has caused the current energy crisis – does not stack up. Europe has had a carbon price for over a decade and they face an energy crisis at least as bad as ours. If carbon prices prevent blackouts, why are Germany, Italy, Austria and The Netherlands all rushing to reopen coal-fired plants right now?

Senator Matt Canavan, Yeppoon, Qld

Australian households and industry are suffering unaffordable or no power because of this fantastic notion that renewables such as solar and wind can suddenly replace fossil fuels.

Clearly they can never be as reliable; European nations such as Germany have belatedly acknowledged that. France has enough nuclear power to export.

Meanwhile China and other countries are busily building more coal-fired power plants to burn our coal. Why do we have to go cold and watch our manufacturing disappear? This madness has to stop now.

Helen Leach, Bendigo, Vic

Who am I to disagree with competent Rod Sims, but his “bigger picture” to solve “the two big flaws driving our power crisis” is not a price on carbon.

The bigger picture is that Australia should already have modern HELE (high efficiency, low emissions) coal-fired power stations and be building more. It should have started a domestic nuclear industry 20 years ago and be among the forefront of nations with modular power reactor technology.

Australia should have taken security of supply out of the hands of state governments and already developed its extensive onshore and offshore gas fields as they have already complied with our world class and stringent environment and safety laws.

And yes, Australia should be using solar panels and wind turbines wherever they are economically more feasible than the above three power sources. However, using panels and turbines manufactured in Australia would have considerably improved the competitiveness of our industry. And before anyone screams “emissions reduction” and “Paris Agreement”, and if negating anthropogenic climate change is so critical to our survival, show me evidence that very major polluters such as China and India are reducing their emissions. In fact, show me tangible evidence of any country that is not manipulating the emissions rules to suit itself, and is prepared to damage its economy and security by paying anything but lip service to the emission reductions religion.

Peter M. Wargent, Mosman, NSW

No, Jane Bieger (Letters, 21/6), climate change is not just a “hypothesis”. The causal relationship between carbon dioxide and climate change has been understood by scientists since 1856 and accepted science since 1893, but more importantly was first proven in a laboratory in 1977 by Exxon Petroleum, an achievement that they are happy to boast of.

This work was replicated by our own CSIRO two years later and details published in The Greenhouse Effect by Professor GI Pearman, then CSIRO head. It is correct that models and forecasts that have been published since 1893 have not been accurate as they have consistently understated the rate of global warming.

Barry Harrod, Fig Tree Pocket, Qld

Rod Sims suggests a carbon tax and concentration on producing more LNG is the way to go to solve the electricity crisis.

The electricity crisis can be resolved using current technology that will keep the grid stable until further developments occur without the need for a carbon tax, nor extensive searches for new sources of natural gas.

First, there should be a program to phase out all the existing coal-fired power stations and replace them by HELE stations.

Second, we should make better use of the sun’s energy that does not impact on the stability of the electricity grid by options such as solar water heaters. These reduce electricity usage, emissions and electricity bills. They are simple heat exchangers made from copper and can be made here, creating jobs. They also have a long life and do not lose performance, so do not need subsidies to make them viable.

R. Watson, Sunnybank Hills, Qld

A market not worthy of the name: state capture to blame for energy crisis

Having gained massive power through political influence, fossil fuel companies decided to abuse that power to the point where the electricity market broke down.

BERNARD KEANE

JUN 16, 2022

We’ve seen it with the big banks, we’ve seen it with the Crown and Star gambling empires, and now we need to see it with fossil fuel companies — the moment the corporate abuse of power achieved through state capture becomes so egregious that a reckoning is required and significant change is delivered.

In their quest to exploit the unreliability of coal-fired power and high energy demand, electricity generators up and down the east coast so relentlessly gamed the rules of the now-suspended National Electricity Market (NEM) that they made it impossible to continue to operate.

But they’re also responsible for the long-term disaster left after nine years of inaction and climate denialism by the Coalition — an electricity generation system hopelessly underfunded and stuck in the early stages of the necessary transition to renewables.

Those nine years of failure, ameliorated only by Malcolm Turnbull’s desperate attempt to drag the Coalition closer to reality — an effort that cost him his prime ministership — were fully bought and paid for by fossil fuel companies. The coal miners, the gas exporters, the coal-fired power generators, the frackers. They bought delay and obstruction of decarbonisation, the killing of the highly effective carbon price the Abbott government inherited, the Coalition’s war on renewables, the defeat of Turnbull’s energy plans, the “gas-led recovery” and the “CoalKeeper” tax.

The result is a “market” not worthy of the name, which operates to gouge households and small businesses while gas and coal exporters make out like bandits — in the case of gas exporters, while paying virtually zero tax.

A transition with the handbrake applied

If a business-as-usual policy response was untenable yesterday, it’s far more so today after the Australian Energy Market Operator (AEMO)’s suspension of the NEM. To the imperatives of climate, national security and economic opportunity, the task of keeping the lights on now requires a dramatically accelerated decarbonisation of our electricity supply.

The crisis also illustrates that, despite the fulminations of many on the left, privatisation has played no role in our electricity sector woes. It is Queensland, where state-owned power generators Stanwell and CS Energy dominate the market, that has seen the biggest price rises. Price rises have been lower in NSW, which sold its generators nearly a decade ago, and price rises in South Australia and Victoria, privatised in the 1990s, have been lower still — though that also reflects the dominance of renewables in SA and the lack of brown coal exports in Victoria.

It turns out that it doesn’t matter whether a power generator is state-owned or privately owned, it will still seek to game the system to maximise profits at the expense of households and small businesses. And ironically, the intervention of AEMO has rendered that entire debate irrelevant, by effectively asserting government control of generation capacity.

Fossil fuel companies have brought it on themselves with their relentless efforts to distort public policy, prevent decarbonisation and rip off Australians. AEMO and governments shouldn’t be in any hurry to restore the operation of a broken NEM.

Analysis / Energy

Energy Security Board admits CoalKeeper will keep coal — just not ‘intentionally’

The Energy Security Board insists a capacity mechanism isn't about propping up coal, but admits that's exactly what could happen.

BERNARD KEANE

JUN 20, 2022

It seems only a stake through the heart will kill CoalKeeper, the Angus Taylor-era proposal to force households and small businesses to prop up lethal, emissions-intensive, coal-fired power stations despite economic inviability.

The Energy Security Board (ESB) today released its “high-level consultation paper” on the design of the proposed “capacity mechanism” intended to assure reliability by guaranteeing sufficient capacity in the electricity market — although the paper notes that the National Electricity Market (NEM) “has performed well against its reliability objectives since the NEM started”. A capacity mechanism would not address soaring electricity prices driven by international market forces, and it cannot guarantee against unplanned outages that have occurred repeatedly across coal-fired power generators.

Evidently aware that the tag “CoalKeeper” has stuck to the proposal, the paper goes out of its way to assure the reader all is well. “For the avoidance of doubt, the purpose of a capacity mechanism is not to extend the lifespan of ageing coal generators,” it says, insisting that the “structural challenges” of coal-fired power can’t be fixed via the capacity mechanism.

ESB chair Anna Collyer goes further in an op-ed today, saying “in the past, the concept of a capacity mechanism has been dubbed ‘coal-keeper’. It is a catchy line, but it is not the intent. The intent is to design a tool that provides more certainty around dispatchable capacity — that is capacity that can respond to a dispatch signal on demand.”

Except, in the fine print of the discussion paper, the ESB admits that it will indeed function as CoalKeeper:

Participation of both new and existing capacity could allow better coordination of entry and exit decisions at lower overall cost. Auction prices revealed through the proposed centralised auction processes should reflect the costs to capacity providers of remaining in, or entering, the market. For example, a capacity provider may decide to factor in refurbishment or retrofitting costs into their bid [emphasis added], and if this is cost-competitive against new capacity, then customers receive the reliability benefit of this asset remaining in the market.

A number of stakeholders have pushed hard for the exclusion of existing capacity from the mechanism, which would prevent existing fossil fuel generators from benefiting from the scheme. The ESB has rejected this — despite existing capacity like old coal-fired power plants being well past the point of returning their cost of capital, and thus potentially having an advantage over new capacity from which investors would be seeking a return on investment.

The nearest the ESB comes to addressing this is allowing that there may be some form of special pricing for new capacity in bidding in the “capacity market”.

Nowhere in the ESB’s paper is there any recognition of the urgent need to shut down coal-fired power from the perspective of emissions abatement and of the hundreds of people who die as a result of exposure to coal-fired power every year. There is only the de facto recognition that states like NSW and Victoria simply won’t cop coal-fired power being protected, with the suggestion they can “opt out” of applying the mechanism to coal.

Even less convincing is Collyer’s assurance that this won’t involve higher costs for consumers.

The ESB is aware of concerns that a capacity mechanism could cause customers to pay more for the same level of service. This is not the intent, and will be avoided through careful design … The intent is not to provide an additional revenue stream, but rather an alternative revenue stream.

Working through the paper in search of an explanation for how this will happen doesn’t yield much other than that it will be addressed through “careful design”, as if previous generations of energy bureaucrats haven’t “carefully designed” the current rules that saw generators gouging consumers until last week’s market shutdown. The ESB appears to suggest it might be achieved if the market price cap would be lower in the presence of a capacity mechanism, but the only assurance is that it will “ensure customers pay no more than is necessary”.

The ESB feels its assurance about the “intent” behind CoalKeeper is sufficient to placate concerns about consumers being forced to prop up coal. You’d be hard-pressed to find anyone who thought the intent of the NEM was to enable such egregious gouging that the whole market had to be shut down, or that the intent of powerful fossil fuel companies was anything other than to manipulate the major parties and regulators to keep them operating. The intentions of bureaucrats have nothing to do with it.