Issue 241, May 2025
With the federal election days away and little clarity on the likely outcome, although a number of the media commentators believe it could be a hung parliament, energy issues, and especially costs, remain front-line topics for politicking. If the result is as tight as some predict, energy policy could also play a key role in ALP haggling with Greens, Teals and independents over formation of a government.
"The economics of natural gas supply would not normally feature front and centre in an election campaign, yet the soaring cost of electricity in Australia has opened up a new seam in debates over who will form a government in May’s vote” — London Financial Times.
"Peter Dutton will use new figures claiming households and small businesses have been hit with an extra $22.5bn in costs under Labor power price rises as he moves to ignite a Coalition fightback against Anthony Albanese’s nuclear energy scare campaign” — Geoff Chambers, chief political correspondent,The Australian newspaper.
"Australians are suffering from the worst cost of living crisis in a generation, with households and businesses paying amongst the highest energy prices in the world” — claim by the Liberal Party in federal election social media.
"Across the east coast alone, by June next year Australian households will have cumulatively spent an extra $18.6bn and small businesses $3.9bn as a result of Labor’s power price rises” — Coalition energy spokesman Ted O’Brien.
“Prices are higher than we’d like” — federal Climate & Energy Minister Chris Bowen at the National Press Club.
“Bowen carried a lot of lead in his saddlebags in his debate with O’Brien on the energy transition. The Albanese government’s pledge to reduce power prices by $275 has proved to be a bust and the Reputex modelling on which it was based has been junked. This leaves the government short on having a solid foundation for its renewables only, business as usual approach” — Graham Lloyd, environment editor, The Australian.
"Australia is facing some really urgent challenges regarding our energy system. It is critical that all sides of politics move beyond slogans and political point scoring, to providing detailed plans on how we meet the fine balance of reliability, affordability, and carbon reduction. The technology exists: there will be winners and there will be losers. What's lacking is the honest and detailed discussion about how to move ahead as a society” — professor Glenn Platt, University of Sydney.
"Regardless of who wins the election, Australia’s 43 per cent emissions reduction target by 2030 will be difficult to achieve unless there is a change of pace, but the political reality playing out in the election campaign is very different, with the overriding focus on the cost of living, and the usual emphasis on electoral tactics rather than long-term strategies” — professor Frank Jotzo, Australian National University.
"As we hurtle towards election day, it's easy to get lost in the detail or the spin from the major political parties — but when it comes to energy policy, there is a stark difference, a clear choice on how we end our reliance on fossil fuels” — Sam Hawley, ABC Radio National.
"Peter Dutton and Anthony Albanese have both vowed to stick to their stances on nuclear power regardless of the election result” — ABC TV News.
"When it comes to energy policy, there are many difficult, unanswered questions about Labor’s insistence that Australia will one day be powered with intermittent renewable energy” — Nick Cater, Menzies Research Centre.
“Wise decisions about energy, like any other area of policy, are impossible without a proper understanding of benefits as well as costs” — Cater.
In the middle of the election campaign, the Centre for Independent Studies has asserted that the debate between the ALP and the Coalition about the energy transition is demonstrating “a serious lack of actual understanding of how much all of this is going to cost.”
Interviewed on Sky News, CIS senior policy analyst Zoe Hilton argued the Australia Energy Market Operator has the resources and capabilities to accurately cost the ALP government’s renewable energy plan, but the integrated systems plan it has released “doesn't include all of the costs”.
Hilton said Australians should “definitely expect more price increases” if more and more intermittent generation is added into power grids. “The more variable renewables you have in a grid, the more storage you need and the more transmission you need, and all of that is very expensive,” she added.
Hilton said the biggest issue with the AEMO modelling is that "it assumes all of the federal government's targets are going to be met and they find the supposedly cheapest way of meeting those targets.”
She declared: "They just assume that 82 per cent renewables by 2030 is going to be met. But if you ask any serious energy expert, they will tell you that that is incredibly unlikely — even those who are very pro-renewables — and will say there's just no way we can get to 82 per cent renewables by 2030.
“The workforce constraints are just too extreme. We would have to triple the number of electrical engineers by 2030. You can't get that many people trained in this time. And that is from AEMO's own workforce report. So they know that this plan is incredibly difficult to achieve, and probably impossible.”
The Australian Energy Council has called again for “policy certainty that endures election cycles.”
CEO Louisa Kinnear says this is essential "to ensure the right investments can be made at the right time as ageing thermal assets like coal-fired generation are retired over the next decade.”
In a commentary published during the federal election campaign, the AEC declares power prices “will not come down as a result of current election announcements.”
Kinnear writes: "Promising incremental bill reductions to consumers off the back of political interventions is inherently risky. The sheer scale of the energy transition means these interventions are unlikely to be enduring or significant enough to result in lower prices over the longer term and distracts from the more targeted initiatives needed to support vulnerable customers experiencing long-term hardship.
"If I had a dollar for every time an energy market model was used to justify a policy announcement or claimed energy bill reduction, I could retire by now. Models are important and insightful when used for the right reasons. But they are inherently wrong. This is because all forecasting models do the impossible – they attempt to predict the future, based on a series of assumptions made at a certain point in time. Assumptions which will never be fully realised. If I had found an energy model that accurately predicted energy prices into the future, I could retire. But I’m here writing this, so clearly that hasn’t happened yet either.”
She adds: “The amount of thermal generation needing to be replaced over the next decade is so significant that we are unlikely to see energy prices go back to where they were ten (or even five) years ago. There is a cost to replacing these assets (and building the transmission infrastructure to connect new assets), regardless of what type of generation we are replacing them with.”
Kinnear says: "Our challenge to the next elected government is to continue some of the good progress made to date on renewables (doubling down on wind in particular), stay the course on the wholesale market review, consider market-based approaches to incentivise gas supply and generation and work with industry to support better coordination of energy generated from rooftop solar systems in ways that work for all customers.”
One of Australia’s leading law firms, Herbert Smith Freehills, in a review of Coalition and Labor energy proposals for the election, has declared: “The energy transition will not be cheap under either policy.”
Freehills adds: “The reality is likely to be that electricity in Australia is going to become more expensive in the short term whichever party wins. The key issue will be just how much more expensive.
“There is considerable uncertainty about exactly how much either policy will ultimately cost, especially if the modelling or implementation timing assumptions cannot be met. The more important assessment may be the level of confidence that can be had about whether either party will be able to actually achieve its policies in the timeframes required.”
The firm says that cost discussions also need to consider the cost of getting policies wrong. “Failure to develop replacement generation in time, and of unreliable generation until we get there, will just contribute to even higher electricity prices.”
Freehills also observes: “While each party continues to support Australia achieving net zero by 2050, they offer quite different paths to getting there. They also offer materially different emissions reduction profiles to 2050. They use different assumptions, including Australia’s future electricity use, and are based on modelled costs that are uncertain and open to criticism on both sides. The choice between them (to the extent energy policy determines voting preferences) is likely to come down to which policy individual voters believe is more credible and likely to be achieved in the timeframes required.
“The stark difference between the policies means that little can be borrowed from the other, except potentially for Labor to adopt a greater focus on gas in its generation mix and to provide additional support for gas production and generation.”
The main lobby group for energy consumers is calling for a strong focus on the “energy burden.”
Brendan French, CEO of Energy Consumers Australia, says lower income households are paying a much higher share of their income on energy and, unlike those with more capital, they are finding it more difficult to participate in and benefit from the energy transition.
"Consumers who can install rooftop solar, battery storage, and efficient, electric appliances and cars can see massive benefits in the transition and they are rightly looking for a return on that investment.
“But renters, those in apartments and those with low-incomes—who collectively represent half of all Australians—don’t have the same ability to buy and use this new tech. These consumers are already doing it tough in many circumstances, and they are the ones who will need the most assistance to take part in and receive an advantage from the transition.
“Balancing the needs of these two groups will be the great policy challenge of the transition, in my view. If we can forge the right kind of social compact between these contrasting obligations, it will say a lot about how positive the future can be; if we can’t—and we end up with an indentured energy divide—then it will say something else entirely.”
And French asks: “Why should only owner-occupiers benefit from the energy transition, when nearly half of Australians live otherwise?”
He is calling for minimum energy efficiency standards for all rental properties, mandatory disclosure of energy efficiency ratings at point-of-sale or lease for all homes and businesses and much improved appliance labelling.”
He adds: "Given the pretty average state of much of Australia’s housing stock—I’m told we’re at an average of 2 stars out of 10—imagine how we could turbocharge the transition if we could match energy efficiency incentives with universal access to consumer energy resources! We might even save ourselves the huge cost of having to add so much new capacity into the system.”
Lobbying group Australian Energy Producers launched the result of a tri-electorate poll on support for the use of natural gas in mid-April in an intervention in the federal election campaign in Queensland.
The poll of some 2,500 voters across the three electorates found that more than 80 per cent of them see a role for gas in Queensland’s energy mix, with around 58 per cent seeing a long-term role.
More than 60 per cent of the polled voters also believe the natural gas industry is important to the State’s economy.
Australian Energy Producers chief executive Samantha McCulloch says the results show Queenslanders "understand the critical role of gas for the State’s economic prosperity and energy security."
McCulloch adds that “Queensland runs on natural gas, which provides 20 per cent of the State’s primary energy needs, contributes $25 billion a year to the State economy and supports more than 57,000 jobs.”
The JWS Research poll surveyed more than 800 voters in each of the federal electorates of Brisbane, Griffith and Ryan, each held by Greens MPs.
It found that 58 per cent of voters across the seats oppose the Greens’ policy to ban all new gas projects in Australia and only one in five support it. It also found 57 per cent support Queensland’s gas industry with fewer than one in five not supporting the industry.
The poll also found that cost-of-living and energy affordability are the biggest issue for voters in the three seats.
Well, here we are — but where are we?
Journalists and analysts closely following the 2025 federal election are more and more persuading themselves that the outcome is likely to be a hung parliament.
I am writing this newsletter a week before polling day and the pundits’ perceptions are trending towards what The Guardian newspaper proposed at the end of March: "For the first time in living memory Australia is going into an election campaign facing not just an outside chance, but a strong probability, of a hung parliament.”
To form government without the crossbench, either the Coalition or the ALP needs 76 seats.
Late in the election campaign this is looking unlikely — and an agreement to govern between Labor and the Greens would bring in a policy re-arrangement that is making those who think the present state of the energy transition is more than a bit problematic blench.
In witness thereof I note some trenchant comments in April by Innes Willox, CEO of the Australian Industry Group.
Speaking at a forum in Ballarat, Willox declared: “If our political leaders don’t talk up the need for change to make us globally competitive, productive and innovative and have the courage to pursue deep and meaningful reforms, our national discussion is doomed to be framed by falling living standards and decreasing business competitiveness.”
And he added: “Energy prices have also become prohibitive, with the gas prices paid by Australian manufacturers rising a staggering 52 per cent since 2021.”
Willox also turfed in this character assessment of the competitors in the election: “We are mid-way through the formal election campaign, but it is a campaign that really has been running since 2 January. Some commentators say it is the worst campaign in living memory. While that is debatable, it certainly is so far the longest, perhaps least inspiring, and most frustrating election since the last one in 2022. They don’t seem to be getting any better. No matter where you or they sit on the political spectrum, there is a distinct lack of ambition at play here and an unwillingness to address the big structural issues and rapidly changing circumstances we face.”
Keith Orchison
28 April 2025