February was a month for shocks, at home and abroad, but no real surprises. Like rubber bands stretched to breaking point, signs of approaching disruption were always there.
Consider the state of the Australian energy market. The climate crisis dictates that we ditch coal, oil and gas, quickly. Having watched a rapid take-up of solar and wind energy, supported by cheaper big batteries and smart distribution systems, we should not be surprised when coal-power starts shutting down. But it’s a shock to realise how little substance there is to the government’s strongly expressed support of fossil fuels.
The mayor of Lake Macquarie, Kay Fraser, thought she had a deal with government and industry: a 10-year plan to protect businesses and workers in her region in the shift from coal power to renewables. Last month the 10 years became three, and she got very upset.
Origin Energy and the NSW government agree that Eraring, a massive coal power station on Lake Macquarie, will close in 2025, just two years after another big shutdown, AGL’s Liddell. At least three other major coal plants in NSW and Victoria are now all but certain to close well before 2030.
This is the market doing what markets do, chasing profits and cutting losses. After selling off energy assets to private interests and spending the proceeds, various governments now want a say in what those private interests do, but no-one seems to be listening.
But the NSW Liberal government has found its bearings. Two years ago Matt Kean as energy minister launched his “electricity infrastructure roadmap”, a network of energy hubs aiming for a net-zero 2050 emissions target, and energy companies saw all sorts of possibilities.
The Earring announcement was followed by an $8 billion takeover bid for Australia’s biggest power company, AGL, from cashed-up Canadian asset manager Brookfield (80 per cent) and Grok Ventures, the family company of Mike and Annie Cannon-Brookes (20 per cent). It was aimed at getting AGL to shut down its remaining coal power stations and target net zero emissions by 2035.
Energy minister Angus Taylor was candid enough to admit he knew nothing of the bid before it was announced. Again, no surprise; the Morrison government has never moved in the circles occupied by software developer Cannon-Brookes, who has dedicated his fortune to delivering safer, more sustainable forms of energy.
But on top of all that, iron ore magnate Twiggy Forrest is committing $3 billion to a clean energy hub in Queensland, aiming to shut off Queensland coal production by 2030. Scott Morrison is going to need some fancy footwork to avoid getting trapped, arguing for fossil fuel energy when no-one in the industry wants it.
But fancy footwork is his stock in trade. Energy is a global issue, and Vladimir Putin’s move on Ukraine has implications for the Australian energy scene. The Ukraine war – shaping as a very serious setback for both the global economy and the fight to curb global emissions – might yet work to the government’s short-term advantage.
As fossil-fuel advocates, the most dedicated of the federal Coalition’s coal warriors pale into insignificance alongside the government of Russia. In the multi-faceted Ukraine war, Putin has powerful levers working in his favour – most of them connected to his country’s gas exports.
Through the Covid pandemic, those gas exports have fetched record prices – a real bonanza for the Putin government and the oligarchs who support it. Russia has built up massive holdings of foreign currencies and gold, giving it exceptional power over customer nations. Germany, for one, hesitated before finally supporting strong sanctions.
The war, and especially the sweeping sanctions now being imposed, will doubtless damage the Russian economy, but they will also have an impact on Europe, North America and Australia. The Morrison government’s “gas-led recovery” could feed off record global gas prices and persuade nervous voters that gas is the go for a while yet.
Against that is a growing conviction in the electorate that in the battle against global warming Australia must free itself as soon as possible from all fossil fuels, gas included. The election will test that conviction.
The world’s climate response will be ineffective without leadership from open, transparent, informed, fully participative societies and economies, and these democratic norms are now under assault, not just in Ukraine, Russia and China but throughout the West and right here.
The battle is now joined, the stakes are sky-high, and a clear victory for clean energy is no certainty. But energy heavyweights staking fortunes on it is a good sign that it will happen.