How the government is digging itself into a hole

While the Turnbull government trumpets the success of its “energy guarantee”, business makes what plans it can for a renewable future

The climate-energy debate continues to confound with its endless detours, allegations, subterfuges, spin, deception and downright lies.

A fortnight ago we learned that global carbon emissions are again rising steeply. About that same time, environment minister Josh Frydenberg boasted in these pages that “the Government is making a real difference” in the global battle against climate change. Who is he kidding?

The fact that the Council of Australian Governments meeting in Hobart last week was celebrated as a step forward simply showed the depths to which this depressing and debilitating slanging match has brought us.

This COAG energy meeting was a very limited affair. Western Australia and the Northern Territory weren’t part of the discussion because they’re not in the “national” electricity market, and Queensland was absent because of its state election, leaving just five jurisdictions in play.

Frydenberg had a small win when Victoria’s Labor government voted with Liberal states (NSW and Tasmania) to give majority support to the government’s “National Energy Guarantee” – which might be a good name except that it’s not national and it guarantees nothing.

Frydenberg said after the meeting that South Australia and the ACT “had their say today, and they lost”. But it’s looking more and more as if no-one is a winner.

From the little we have to go on, the main benefit of the scheme as it stands is to keep the cross-party discussion going. It will have little impact on carbon emissions, offering no encouragement to invest long-term in large-scale renewables.

That would seem to be the plan. In every government statement about the NEG – including Frydenberg’s ahead of last week’s meeting – cutting emissions comes a poor third behind lower prices and reliability.

Ironically, the NEG’s neglect of renewables, which are now the cheapest new generation option, severely compromises its chances of keeping prices down. And it provides no benefit to Tasmania, South Australia and the ACT for their current heavy uptake of renewable energy.

In any event, while affordability, security and reliability are all highly desirable, they divert attention from Australia’s failure to address the single overarching imperative in the entire climate-energy debate, which is to end the burning of fossil fuels as quickly as possible.

The energy business recognises the international consensus that cutting coal generation is the lowest-cost path to big emissions cuts, which is why generators are shifting away from coal into renewables. It’s also why multiple analyses of our energy future point in one direction only.

One such study is by the Australian Council of Learned Academies, which brings together our best and brightest in science, technology and engineering, humanities and social sciences to consider the big questions.

Last week it released an expert panel’s detailed analysis of the vital role of energy storage in meeting the demands of Australia’s electricity sector out to 2030 and beyond. The panel consulted with a wide array of key players and experts from over 80 government, company management, finance, research, not-for-profit and industry groups, listing a formidable array of Australian centres of academic research in energy storage. To which I would add the University of Tasmania’s innovative Centre for Renewable Energy and Power Systems headed by Michael Negnevitsky.

The ACOLA team advised that increasing reliance on renewable energy required Australia to focus heavily on developing and deploying storage technologies, notably batteries and pumped hydro but also including molten salt and silicon, ammonia, hydrogen and compressed air.

The report examined three different renewables scenarios – 35 per cent of total generation by 2030, 50 per cent and 75 per cent – and used standard market models to assess energy storage needs for each, estimated to cost between $3.6 billion at the low end and $22 billion at the top.

It envisaged that a lot of the energy storage load will be taken on by households buying battery storage, which the report found would steadily increase as knowledge of local storage options and their economic advantages became more widespread.

“There is a latent demand for storage,” the report said. “Almost 60 per cent of people surveyed preferred a scenario comprised of a higher renewables mix in 2030, and nearly three-quarters of this group preferred that energy storage, rather than coal and gas, bolster grid reliability.”

“The quickest way to get to a difficult future is to start now,” said chief scientist Alan Finkel in introducing the report last week. Having grasped the essential nexus between climate change and fossil-fuel economics, business has embraced that basic truth.

So have state governments, and that is now translating into some serious innovation in new renewable generation and storage. Regardless of the NEG, that trend will only strengthen over time.

None of this was of any consequence to senior Tasmanian Liberal senator Eric Abetz, who dismissed the ACOLA report as “eco-evangelism” at the expense of household budgets.

Abetz and colleagues are digging themselves into a hole. If the government can’t find a way out, that hole will become an increasingly lonely place.