Issue 47, January 2009

Pricing warning

As if Australian generators did not have enough on their hands in the new Year of the Carbon Charge, the national energy regulator has given them a front page finger wagging in the Australian Financial Review over “inappropriate” rebidding practices in the national electricity market.

Australian Energy Regulator chairman Steve Edwell claims there is “an increasing trend towards aggressive, strategic rebidding” across the NEM and warns the regulator will be even more on the outlook for anti-competitive behaviour.

The comment drew a National Generators Forum response that its members took the NEM rules “very seriously” and would comply with them and an inevitable Energy Users Association grumble that price spikes are “indicative of too much market power.”

The AER reports that market prices exceeded $5,000 per MWh 76 times in 2007-08 compared with 55 times the previous financial year.  The NEM price cap is currently set at $10,000 per MWh and regulatory inquiries are automatically triggered when the spikes exceed $5,000.  Edwell says the AER has “a number” of inquiries currently underway, but refused to talk about them to the Financial Review.

While varying bids in the NEM to a higher price under changed circumstances is permitted, the market rules require generators to bid and rebid “in good faith.” The AER has extensive information-gathering powers to enable it to investigate potential breaches of the rules.

In a commentary on the market published last year, the regulator observed that the NEM was more stable in 2007-08 than the previous financial year, with notable exception of record prices in South Australia during a 15-day heatwave last March when an administered price cap was applied for the first time in the market’s 10-year history..  “However,” it went on,” the market has tended to trade at higher prices in 2007 and 2008 than in previous years, which may be indicative of the exercise of market power during periods of tight supply and demand.”

White paper at year end

The CoAG Ministerial Council on Energy says the Rudd government’s energy white paper – successor to the Howard government’s “Securing Australia’s energy future” review of 2004 – will be released at the end of this year.

The government announced the white paper in September last year and described it as a key priority for the resources and energy portfolio overseen by Martin Ferguson.

The MCE ministers, who will be able to participate in its development, say it will provide “a comprehensive, integrated framework of long term policies and actions to ensure cleaner, adequate, reliable and affordable energy through to 2030.”

According to the MCE, the paper will canvass energy exploration and development, energy conversion, transmission and distribution, consumption, investment and trade, energy technologies and services plus capacity building and skills development.

The federal Department of Resources, Energy and Tourism adds that the government “intends to ensure the provision of supplies to meet an expected 44 percent increase in energy consumption by 2030.”

The government has set up a consultative committee that includes eight business CEOs and senior executives, two industry association CEOs, the new head of CSIRO, Richard Bolt, head of the Victorian Department of Primary Industry, and Matt Zema, incoming CEO of the Australian Energy Market Operator, under the chairmanship of DRET’s Drew Clarke, currently secretary of the department until John Pierce, the former NSW Treasury secretary, arrives in March to replace departed Peter Boxall.

DRET is also engaged in a national energy security assessment to feed in to the white paper process. This is looking at strategic security issues in liquid fuels, natural gas and electricity supply in three periods: now to 2013, the 10 years to 2018 and the 15 years to 2023.

Both it and the promised white paper have to deal with the twin challenges of energy adequacy, reliability and affordability on the one hand and reduction in energy-related greenhouse gas emissions on the other.

Miners fang ETS

The Minerals Council of Australia has been first out of the blocks for business this year in resuming criticism of the proposed emissions trading scheme. 

Many Australian companies will be “paying tens or hundreds of millions of dollar in ETS permit costs every year,” the association warns. “Nearly 90 percent of mineral exports will be subject to the full impact of permit costs.”

The bottom line, it says, is that “billions of dollars” of annual higher costs will be borne by local producers of commodities such as coal, iron ore, gold and uranium while their overseas competitors face no such burden, “at least not for a decade or so.”  The Australian export coal sector, it claims, will have to cough up $5 billion in the first five years of the ETS program.

The ETS, it adds, lacks flexibility and is ill-suited for the current global economic downturn where minerals demand is contracting, prices are falling sharply and competition for international market share is more intense than ever.  Moving fast in Australia without a global agreement on carbon constraints, it asserts, will see energy-intensive industry adjust by shutting down or moving out – and doing so without access to technological solutions “simply imposes a tax on the most competitive part of the economy.”

The MCA argues that Australian business is being asked by Rudd to pay the world’s highest carbon costs – 18 times higher between 2010 and 2014, it claims, than those faced on average by a counterpart in Europe.  Under the recent Brussels deal negotiated by then EU president Sarkozy, it points out, average European companies will not have to buy all their permits until 2027. Under the Rudd approach, it says, 70 percent of permits will be auctioned. “No comparable scheme anywhere else auctions more than two or three percent.”

The lobby group says an average Australian firm emitting a million tonnes of carbon dioxide a year will face costs of nearly $100 million between 2010, when the scheme is intended to start, and 2014. An EU firm with the same greenhouse gas profile, it claims, will pay less than $6 million in the same time frame

The Minerals Council says energy-intensive, trade-exposed Australian businesses will have to buy between 10 and 40 percent of ETS permits from July next year while their European counterparts will not need to buy any until 2020.

The MCA calculates that Rudd’s aim of cutting Australian emissions five percent below 2000 levels by 2020 requires cuts of 80 million tonnes of greenhouse gases in the first three years of the scheme – and will require emissions in 2020 to be 250 Mt a year below their projected levels without carbon constraints.  This is roughly the 2006 emissions from national electricity supply and transport use.

The MCA represents exploration, mining and minerals processing sectors that employ 130,000 people in Australia and provide half of national exports.

The Australian Greens leader, Bob Brown, meanwhile, has described the Rudd government approach as “weak” and “a global embarrassment.”

Following the money trail

The Australian Conservation Foundation’s advisers, research firm Innovest, claim that seven generation operations will receive the lion’s share of the $3.87 billion to be allocated as emissions trading compensation over five years from 2010-11 under the electricity sector adjustment scheme.

According to Innovest, the largest amounts in compensation will flow to Hazelwood ($990 million), Yallourn ($738 million), Loy Yang A ($677 million), Loy Yang B ($344 million), Gladstone ($152 million), Bayswater ($131 million), Liddell ($130 million) and Northern ($103 million), a total of $3.26 billion.  The first four, claimed to be receiving $2.74 billion, are privatised Victorian brown coal generators.

The largest recipients of ESAS assistance by ownership over five years, the consultants assert, will be International Power with $1.15 billion, CLP Power with $738 million, the NSW government with $396 million and AGL Energy and Tokyo Electric Power (each with $220 million).

Innovest also claim that the six largest energy-intensive, trade-exposed industries – aluminium smelting, cement, steel, alumina refining, LNG and petroleum refining – will receive just over $2 billion of the $2.8 billion in assistance to go to EITEs in 2010-11, the first year the trading scheme is intended to operate.

Incentive for efficiency

Professional services consultants Deloitte say the Rudd government’s proposed emissions trading system provides Australian businesses with a multi-billion dollar incentive to pursue energy efficiency more strongly and to reduce their exposure to a carbon price. “Greenhouse gas emissions in Australia now come with a price tag attached.”

Deloitte sustainability partner Chris Wilson says company boards and executives must now realise that carbon emission costs are a new item on the corporate balance sheets. Many businesses, he adds, have not yet taken the steps required under the new national greenhouse gas and energy reporting scheme (NGERS) to establish robust and verifiable emissions data and energy consumption for each financial year. 

“Businesses need to improve their understanding of their carbon liability,” he urges.”Without accurate, auditable emissions and energy use data, it will be impossible for them to comply with the forthcoming carbon reduction scheme and to design an effective strategy to exploit opportunities and provide resilience in the face of change.”

Meanwhile the CoAG Ministerial Council on Energy, which is to hold a special meeting early in 2009 to discuss emissions trading and other carbon-related policies,  has pointed out that heating, ventilation and air-conditioning systems in Australia consume nine percent of electricity supply and result in the annual production of 22 million tonnes of greenhouse gases a year. Pursuing efficiency in this area alone offers substantial abatement and cost savings for business, it says.

Subsidies accelerated

Prime Minister Kevin Rudd has announced that grants from the federal government’s $500 million renewable energy subsidy fund are to be accelerated.

Rudd says $100 million will be made available in the current financial year and the rest in 2009-10. The fund is aimed at reducing the cost of demonstrating and deploying new renewable technologies and is considered by geothermal and solar project investors to be a key support mechanism.  The fund includes allocation of $50 million to subsidise the expensive deep drilling required by the geothermal projects.

Word of Rudd 2

Delivering the federal government’s critical emissions trading announcement speech to the Press Club in Canberra – as a last-minute replacement for Climate Change Minister Penny Wong – Prime Minister Kevin Rudd, whose speeches are watched carefully because he writes much of them himself, has said that his primary objective has been to get the climate change policy balance right.

The government, he says, has set out to both reduce carbon emissions and support economic growth.

Rudd says the government aims to encourage business to reduce emissions, use revenue gained through permit sales to help industries to pursue change and to retain jobs while also assisting households by not requiring many to meet the full cost burden, and to provide a market incentive to support its subsidies for renewable energy and carbon capture and storage.

He has committed the government to spending “every cent” of the revenue it raises from emissions trading on the transition to a lower carbon economy.  His “climate change action fund” will hand out $2.15 billion over five years to support businesses and communities in addition to the $3.9 billion to be paid to coal-fired power stations most affected by carbon costs and about $6 billion to go to energy-intensive, trade-exposed industries.

The government expects to raise $11.5 billion initially from auctioning permits.

$billion wind farm

The Mount Gambier-based regional newspaper, The Border Watch, reports that farmers in South Australia’s Woakwine Range region are seeking investors in a 600 MW wind farm, involving the construction of 300 turbines in a proposed $1 billion project.

The area is already home to the Babcock & Brown Lake Bonney wind farm – a $600 million project with 99 turbines – and International Power’s 46 MW Canunda project at a cost of $92.5 million.

The proposed Robe Wind project spokesman, Michael McCourt, is reported by the paper as saying that 30 farmers with properties covering 52 km of the range have banded together to seek renewable energy investment.

The area on SA’s eastern borders is regarded as one of Australia’s prime wind resources.

Connecting new power

Queensland government-owned high voltage network firm Powerlink says that it will provide connections from 1,320 MW of new power plant to the State’s electricity grid by the end of next year.

Powerlink says work is underway to connect ERM’s 450 MW NewGen coal seam methane plant at Braemar, Rio Tinto’s 160 MW cogeneration plant at its Yarwun alumina refinery near Gladstone, Origin Energy’s 560 MW Darling Downs coal seam methane plant and the company’s 150 MW Mt Stuart 3 jet fuel-fired generator near Townsville.

The State government says that annual electricity consumption in Queensland has grown by more than 29 percent since 2000 and that demand in its populous south-east region is now more than in South Australia. About $4.7 billion has been invested in new generation in the State this decade.

Meanwhile, in Western Australia work has begun on a 330 MW gas-fired power station at Neerabup. Built by NewGen, the plant will provide peak power at a cost of $420 million.  It is expected to be ready to be commissioned by the end of this year.  WA’s Independent Market Operator predicts that the State’s maximum demand will grow at an average of 3.9 percent a year up to 2017-18.

Waiting for nukes

The Australian newspaper reports that interviews by ALP polling company UMR Research reveal that one in five people believe “most” of Australia’s electricity will be provided by nuclear power before 2030.

The polling shows that one in four of those interviewed expected solar power to meet most national electricity needs in 20 years and 10 percent opted for wind farms. Less than a quarter of those polled expected coal to be the main source of Australian power supply in 2030.

These perceptions are so far out of alignment with practical reality that they must represent a headache for the Rudd government going in to a 2010 federal election that the Greens are already declaring will be a “national referendum” on climate change policy.

The significance of the polling is that UMR are considered by the Canberra Press Gallery to be “Kevin Rudd’s radar,” kept out of the public gaze, unlike the Howard government’s pollsters, who were constantly in the media’s eye. The company has worked on most of the ALP’s State and federal campaigns of the past decade.

The revelation of the polling details has brought a cheer from Ziggy Switkowski, the Australian Nuclear & Science Technology Organisation chairman, who headed an inquiry in to the prospects for nuclear power for the Howard government in 2006 – a report that the ALP under opposition leader Kevin Rudd endlessly used at the last federal election to run scare campaigns about the possible sites for nuclear power stations. 

Switkowski claims that there will be a “major change” in attitude to nuclear power in Australia in the near future when it becomes apparent that the greenhouse gas reductions proposed by the Rudd government cannot be attained without recourse to nuclear plants.

Former Energy Minister Ian Macfarlane, now the opposition spokesman for the portfolion, reacted to the UMR poll by calling on Rudd to acknowledge that renewable energy cannot meet his goals.

Post the Poznan pow-wow

The trouble with mainstream media coverage of events is that they often have the attention span on a goldfish in a bowl. Poznan? How very 2008. Don’t look to them at this remove for any serious analysis of what took place – after all they have a silly season to service, bloodthirsty sharks to pursue and the sad, inevitable holiday accident carnage to fill the available news spaces.

So now that the delegates of 180 countries, the NGO hangers-on, the business lobbyists and the kids dressed up in bear suits have gone their separate ways – and the halfway point has been passed in the two-year post-Bali “Roadmap” process – what are the lessons from Poznan?

Frivolously, it can be said that one lesson is that Hell knows no fury like a mayor whose city has been maligned as “bleak” and “polluted” and  “grey.”  The mayor of Poznan has busied himself post-conference writing letters to newspapers complaining about the adjectives and apologising for the fact that leaves fall off trees in his part of the world in the depths of winter. Poznan, apparently, is a leader of ecology among Polish cities, which get 90 percent of their electricity from coal-fired power stations, most more than 30 years old.  Let’s leave that one right there.

Not quite so frivolously, it seems that that the key point most commentators and not a few delegates took away is that change in the US presidency this month is the single most important factor in how the world’s nations will address a new global warming treaty in Copenhagen next December.  They should have travelled on to Brussels perhaps -- speaking of grey cities in winter – and listened to Stuart Eizenstat addressing a conference there.

Who the heck is Stu Eizenstat?  Oh, just Bill Clinton’s former deputy secretary of the Treasury and Al Gore’s lead negotiating official (aka the one who did the actual work) at the Kyoto meeting.  Eizenstat points out that (1) it is unlikely the new US administration can pass emissions trading legislation before 2010, (2) that will make it difficult for Obama to negotiate a new treaty at Copenhagen, and (3) the feelings evident in the US Senate 95-0 vote against the concept of a Kyoto agreement (which ensured that Clinton never took the treaty anywhere near senators for ratification in the rest of his time in office) “have not dissipated.”

In this context, just bear in mind that roughly half the American states rely on coal to fuel up to 80 percent of their electricity supplies.

“When it comes to drawing up (US) domestic laws on capping emissions, the issue will be cost, cost, cost,” says the veteran bureaucrat, “and emerging economies will need to agree to reduce their emissions.”

Others are pointing out that Obama’s starting point in energy and environmental policies is not “rescuing the climate” but “making America a global energy leader.” That’s the title of the relevant chapter of his policy manifesto.  It is not his policy, they say, to get the US back in to line with the EU, but to take the reins of negotiation to make sure any agreement corresponds to American interests. His priorities, they add, are “clean coal,” biofuels, nuclear power and “clean cars.”  The European greens, who are “dancing around strewing rose petals in his path,” they suggest, are in for a huge shock.

Comment from non-official American conservatives attending the Poznan meeting underscores this perspective. The entire focus of the UN discussions, it is being argued, is to redistribute wealth around the globe through technology transfers and investment subsidies.

Meanwhile, the apathy and unwillingness of many in wealthy societies to change their lifestyles is a particularly sore point in the developing world.  A recent poll of 12,000 people in 11 developed nations showing that less than half were prepared to make lifestyle changes to reduce emissions is held up as an example of hypocrisy.

What is actually needed, the serious analysts are saying, is that the UN members have to agree on a mid-century goal for emissions reductions and a target for 2020 (probably only for the OECD nations) plus some form of commitment to a reduction in emissions growth by the developing countries (critically China, India, Brazil, South Korea and Mexico) as well as Russia – which has to be linked to a process for transferring technology to the industrialising nations along with a very large amount of money to fund low carbon investment. (The UN has estimated that $US50 to 80 billion annually is needed to fund abatement and adaptation projects.)

And this now has to be cut and dried within 11 months – given the pace at which negotiations have proceeded since 1992, this may not be all that easy!  As the prolix, and sometimes tearful,  Yvo de Boer, the UN’s lead bureaucrat in the process, put it on leaving Poznan: "I don’t think that where we are now it’s going to be foreseeable to produce a fully elaborated and comprehensive agreement in Copenhagen.”

(And by the way 2010 will see mid-term Congressional elections in the US and 2012 the next presidential election. While Kevin Rudd has to go to the polls in 2010 – can you see him agreeing to target a 25 to 40 percent cut in Australian emissions by 2020, as the IPCC and the environmentalists are arguing is necessary?)

De Boer’s boss, Ban Ki-Moon, says the challenge is to draw up a treaty by December that is “balanced, inclusive and comprehensive.”  The negotiations, Ban acknowledges, are “difficult.”

One of India’s leading social and environmental commentators, Sunita Narain, who attended the Poznan conference, says the developed world has increased its emissions 14.5 percent between 1990 and 2006 while pressing industrialising countries to embrace abatement. She accuses the “rich countries” of preferring to “pay, bribe and cajole” others to make the cuts for them.

Narain is particularly harsh about what Australia and others see as one of the advances at Poznan: moves to reduce deforestation in tropical areas because it contributes an estimated fifth of emissions.  She accuses the West of failing to understand that the forests are the habitats of millions, who need to be helped to plant, protect and manage the forests to support their economies and lifestyles, not to be prevented from “degrading” them by their own governments in return for payments (which will not flow through to the poor) from developed countries so that Western emissions can be “sunk.”

She condemns the Rudd government as “gutless.” To the extent that her views reflect Indian society leadership perspectives, this does not augur well for negotiations later this year.

Meanwhile former UK politician Chris Patten, the last British governor of Hong Kong and now chancellor of Oxford University, is warning that diplomatic efforts to achieve a new treaty could be wrecked if rising unemployment flowing from the global economic downturn leads to an outbreak of trade protectionism involving Europe, the US and China. The economic and environmental agendas “could collide fatally,” he says.

Perhaps the last word should be left to one of the NGO commentators, who noted that, in Bali, when negotiations looked like falling over, 40 key ministers stayed up all night to nut out the “Roadmap” – but, at the same point in Poznan, most sent their officials to the closing negotiations while they went to a farewell party.

EU ‘cuts and runs’

What a difference a year makes.  This time last year the European Union was standing on the high ground declaring it would reduce greenhouse gas emissions to 20 percent below 1990 levels by 2020 while meeting 20 percent of its electricity needs from renewable energy in this time frame.  It would go further, Brussels declared, and commit to a 30 percent cut if there is a global agreement on a new Kyoto-style treaty.

The big breakthrough was going to come by phasing out free allocation of emissions trading permits, starting in 2013.

So what was decided by the leaders of the 27 EU nations, chaired by France’s Nicolas Sarkozy, meeting in Brussels while the Poznan UN conference was getting under way?

For a start, emissions intensive industries, including coal-burning power suppliers,  will not be subjected to buying all their permits in auctions from 2013.  The eastern Europe members of the EU, led by Poland,  will need to buy only 30 percent of their permits, starting in four years. 

The EU has conceded a cut of 20 billion euros a year from its planned sale of permits and the western EU members will give their eastern counterparts large subsidies to shift from coal.

Most importantly, the countries can achieve almost three-quarters of the 2020 abatement target by activity outside the EU borders. One of the leading drivers of this arrangement was German Chancellor Angela Merkel, who said she could not “support the destruction of German jobs” through carbon leakage.

“This is not quite the third industrial revolution trumpeted at the start of the year,” said WWF sardonically. “The target sounds nice, but (the new arrangements mean that) EU emissions will be reduced only four or five percent by 2020.”


Brits face blackouts

The chief of Britain’s National Grid Company says that the country must build more power stations or endure regular electricity shortages in the next decade.

Steve Holliday has warned that Britain’s peak power requirements on present consumption trends will exceed available generation by 2015.

The country, he says, needs to spend 100 billion pounds on new generation and augmentation of the high voltage network. National Grid is currently investing three billion pounds a year in in extending the transmission system, in part to deal with new renewable generation,  and replacing aged assets.

Cost and reliability

Australian Energy Regulator chairman Steve Edwell has responded to angst over higher electricity bills in NSW’s Tweed shire, which is contiguous with the Queensland Gold Coast, by pointing out that consumers facing rising costs will benefit from a more reliable and secure network.

The draft network determination for NSW government-owned Country Energy by the AER will see prices increase by $100 a year.  Edwell says Country Energy and the other two government-owned networks in NSW need to spend $15 billion over the next five years on augmenting their systems – up from $8 billion outlayed over the five years to 2009.

The AER’s final decision will be made in May.

The networks’ lobby organisation, the Energy Networks Association, ended 2008 railing against the AER’s draft decision about the cost of capital, calling it “out of touch with reality.”  ENA says networks, including the high voltage systems, are currently spending about $4 billion a year on capex and face a decade of much higher outlays to meet power demand.  It claims that the proposed rate is going to cost it members $350 million a year “at a time when they are struggling to deal with the largest international disruption to lending for decades.”

The AER has argued in turn that, while current debt conditions are “far from favourable,” the network businesses are insulated from market volatility, can still access finance from banks and will not be affected by the rates decision until after 2011.


Coolibah’s Keith Orchison now has a blog, entitled PowerLine, on the Business Spectator website at


The sustained abuse that has greeted the Rudd government’s white paper on emissions trading is both gratifying to some of us – because it pays back the Prime Minister and key ministers for creating outrageous expectations about greenhouse gas abatement, even if there was not a global economic crisis -- and an indication of the great difficulty that will be encountered in the Senate this year and at the federal polls in 2010 in establishing a sensible and productive outcome.

While watching Rudd reap what he has sown is superficially good fun, the reality is that the political fabric – which has covered the sensible, conservative middle ground of Australian society for decades – has been badly ripped in getting to this point.

A new high or low point was reached in the first week of January when the global warming clan’s icon, James Hansen, a leading NASA scientist in the US, wrote a public letter to president-elect Barack Obama warning that Australian coal exports are “contributing to the earth’s destruction” – this country accounts for seven percent of world black coal consumption -- and labelling coal-fired power stations “factories of death.”

It is perfectly obvious that environmental radicals in Australia have sought Hansen’s intervention as part of their flat-out campaign to change the proposed ETS legislation in the Parliament during this year, to drive Rudd to a greater abatement commitment at Copenhagen in December and to lay the ground for a “referendum on climate change” (see above) at the 2010 federal election.

Thanks to his own efforts – and those of Penny Wong, Wayne Swan and the consultant-who-won’t go-away,  Ross Garnaut – the Prime Minister and his government are now firmly wedged between important segments of the business community (see above) and the Greens and their fellow travellers, who it must be acknowledged are a growing political force.  The days when they could be dismissed politically as “Balmain basket weavers” and “fairies at the bottom of the garden” are well and truly passed; in our preferential voting system, with compulsory attendance at the polls and a large number of marginal seats, the 10-15 percent of the vote the Greens can command is no joke for the mainstream political parties.

As is so often the case, now that the issue has turned feral,  Rudd is confronted by a number of awkward staging posts on his way to the next election – the Senate committee review of the ETS legislation, the actual votes in the Parliament, the meeting of global leaders that the UN Secretary-General intends to call in September on this issue and the two-week gabfest at Copenhagen, which will be merely the centrepoint of several months of dire reports and speculation on our (and the planet’s)  imminent demise. 

Every extreme weather event will be used to beat him with his own stick and every proposal to build a fossil-fuelled power station (which includes gas) or not to throw more public money at costly renewable power options will be a new battleground.

I mentioned in the last commentary that one of my favourite cartoons was drawn by the brilliant Low, an Australian artist of great skill from decades ago. It shows a pair of 1920s workmen on a collapsing building site scaffold. The lower one, clinging to the higher man’s trousers, held up by desperately-stretched braces, is yelling “Stop laughing, this is serious.” The perfect metaphor for this situation.

Paradoxically, the political party really now in the gun in the short term is the Liberal Party. (Quite what the Nationals may do in the Senate is anybody’s guess and that probably includes Barnaby Joyce’s guess.) How will the Liberals vote in the upper house?
The federal Liberals have before them the lesson of Barry O’Farrell’s approach to the New South Wales electricity privatisation debate: only the 2011 State election will tell if he brought off a brilliant manoeuvre in pulling the chair out from under Morris Iemma.

The short-term media abuse O’Farrell received is already a distant memory as the Rees government totters from one disaster to another.  Will Malcolm Turnbull be tempted to try something similar in the Senate over emissions trading?

In situations like this the national interest tends to play a distant second fiddle to politics, but that interest – and the jobs of large numbers of Australians – is very much at stake..

The nuclear card remains to be played again, too. The UMR research (see above) suggests that the widely-held perception since the last federal election that this issue is dead and buried politically is wrong. 

Again, the challenge of how to proceed falls on Turnbull as much as on Rudd  – a shift down this path has ramifications for Australian energy supply that make the debate over solar power and wind farms a sideshow and it is politically very difficult.

The issue of the potential of heat mining – geothermal power – needs to be given a far higher profile in the energy debate, too. At present it waits on the sidelines for a government to decide to take decisive supporting action, without which the large upfront development costs for baseload, zero emissions power may prove an insurmountable hurdle.

The Rudd government, given its mandate from the last election, is entitled to promote development of a carbon-constrained economy – how well its white paper, a document a year in the making, has produced a plan to pursue this goal is open to strong challenge.

One of the problems is that the amount of attention and urgency focussed on the emissions trading policy and the relatively low focus on the energy security white paper (see above), now apparently only deliverable late this year, have created a huge cart-and-horse issue.

Good policy management would have seen both available together. In this respect, Rudd, whose ultimate responsibility is to oversee efficient government, is guilty of  poor judgement and the Federal Coalition should be giving him hell for his failure.

By pursuing foolish rhetoric on global warming at the polls and early in their time in government, Rudd and his team have created their own political potholes.

If the rest of us could afford to leave them floundering on that damaged path, many no doubt would – but the nation needs  a real solution to this dilemma, not one drawn from the script of “The Hollowmen.”

This is going to be a long and bumpy ride; getting the political cart and the horse in the correct position and filling in enough of the potholes to make the road passable, given the present situation, will require great skill – and now not just from Rudd & Co.

Keith Orchison
10 January 2009

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