Turnbull’s power plan won’t cut bills or help the climate

The Turnbull government’s new energy plan, the National Energy Guarantee (NEG), is simply an effort to keep coal plants operating as long as possible.

The Coalition needs all the state and territory governments to sign on, and also has to get the plan through its own party room.

Turnbull remains hostage to the coal fanatics and climate deniers on the hard right of the Liberal Party. So the main thrust of the policy is to put a stop to any new renewable energy.

To justify this, they are trying to pretend the NEG will reduce power bills.

The Energy Security Board, which drafted the policy, claims power prices will be $550 a year lower over its first decade. Only $150 of that is actually attributed to the NEG—the rest is a result of, “the connection of new renewable energy projects… in coming years”, it admits.

But the claims about the NEG’s effect on power prices have been widely questioned. As Giles Parkinson put it at Renew Economy, “it is all based on modelling that is either incomplete, not released, or complete nonsense.”

Bruce Mountain, of the Victorian Energy Policy Centre, also expressed doubt, noting that the plan, “predicts not a single megawatt of additional generation, renewable or not, with the [policy], than without. How then can it predict wholesale prices to be 35 per cent lower?”

If the government was serious about cutting energy prices it would reverse privatisation. A separate report the ACCC released in July shows how the free market experiment in electricity has failed. Power prices across Australia have doubled on average in the last ten years.

Beginning in the 1990s, most states moved to privatise the power industry and introduce competition between rival electricity companies. As economist Tim Colebatch has written, “the more privatised a city’s electricity system is, the more its prices have risen”.

The ACCC pointed to “market manipulation” by big companies like Macquarie Generation and AGL, and misleading and confusing deals offering “discounts” to customers, among other factors.

But predictably the ACCC’s blind faith in the market stopped it from arguing to break up the big companies or reverse the disastrous experiment with privatisation.

Climate change

The NEG shows that Turnbull has abandoned any serious effort at tackling climate change. It simply adopts the overall emissions reduction target of 26 per cent set when Tony Abbott was Prime Minister, agreed at the Paris climate summit.

Even before the NEG comes into effect, 97 per cent of this target will already be met.

The NEG will actually increase emissions initially, according to the Energy Security Board modelling, with no further reductions until 2028-29 when a further coal power station reaches the end of its life.

This has no credibility as a climate policy. Power generation is by far the easiest place to reduce Australia’s emissions. Unless it does more than its share of the load, Australia won’t reach its overall 26 per cent reduction target.

And that’s leaving aside the fact that the Climate Change Authority called for Australia to reduce emissions by between 45 and 65 per cent by 2030.

Labor under Bill Shorten, as well as the state Labor governments, want a higher target and are threatening to veto the plan. Energy Minister Josh Frydenberg plans to lock the target in for at least five years, on the eve of an election.

Renewable energy

The NEG completely fails to deliver what is needed—a plan to transition Australia to 100 per cent renewable energy.

The real issue in energy policy is how to replace the country’s aging coal power plants—and how soon to shut them down. No one is going to invest in a new coal power plant, because “the cost of coal is always going to be more than the cost of wind and sun”, as the Energy Security Board’s Kerry Schott put it.

The NEG does next to nothing to increase the use of renewable energy. From 2022, a year after it comes into force, new renewable energy projects would come to a complete stop.

The transition to renewable energy will cost money. But with the costs of wind turbines, solar power and battery storage continually dropping, a government plan for their rollout instead of leaving it to the big energy companies could reduce the costs.

There is no reason we have to pay for this on our power bills. This effectively imposes a flat tax like the GST.

The government should set a fixed cost for power, and meet the costs of new power plants through taxing the rich.

It’s time for a power industry that’s run in the interests of ordinary people and the environment, not boosting the profits of big energy companies.

By James Supple


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