Issue 246, October 2025
If the month just ending demonstrates anything about Australian energy issues it is that talk is cheap — especially when posturing at the United Nations — but it isn’t soothing the nerves of back-home consumers or lessening the pressures on their finances, especially in high-employment areas. The core news for September was the Prime Minister declaring the nation’s emissions reduction target for 2035 is now “62 to 70 per cent” — a substantial shift up from 43 per cent by this decade’s end, a goal that may not be achieved on the present outlook. The real cost of either target continues to be highly contentious — modelling done a year ago, but only now published, for the Business Council asserts that winning the emissions cuts from the industrial, electricity and resources sectors over the next 10 years will require up to $530 billion of new capital investment. What’s not known (at least not publicly) is how much of this outlay will need to be stumped up by taxpayers — and whether, when failure to deliver on the goal looms in the early 2030s, the government of the day will reach for a carbon tax. There is another possibility, of course, that the 2035 goal will become easier to reach because of heavy de-industrialization between now and then……….
"Setting a national emissions reduction target is akin to making a New Year’s resolution” — economist Judith Sloan.
"The immediate future looks clear: even more meddling in the economy in the name of emissions reduction; much higher government spending to attempt to achieve this outcome; higher electricity prices; de-industrialization, as the big players simply give up, and; more trampling of the rights of people in rural and regional areas” — Sloan.
"If Australia is to achieve a credible emissions reduction target, we need to energise the private sector by providing the appropriate incentives for emission reduction” — Rod Sims, University of Melbourne professor of applied economics. "This requires a price on carbon so that those using fossil fuel pay for the damage their products do to the environment and the government gains necessary funding to remove the effect of the transition on consumers and the budget.”
"The target range that’s been set is ambitious and there is a pathway to achieving it that will require significant capital investment, major reform and exceptional collaboration between the public and private sectors” — Business Council CEO Bran Black.
“Reaching the lower end of the range will be difficult” — Innes Willox, Australian Industry Group CEO. "Delivering 70 per cent will only be possible with favourable tailwinds from technology, global markets and the right policy settings.”
"Setting an emissions target is a balancing act. It has to be ambitious enough to motivate us to achieve what we otherwise couldn't. But it also has to be feasible enough not to de-motivate us with its cost or sheer impossibility” — Willox. “The government’s chosen target range is a big lift.”
"In charting a path forward, we must have honest and pragmatic conversations which acknowledge that there will be trade-offs in seeking to achieve the objectives of economic prosperity, energy security and environmental protection” — Balaji Krishnamurthy, president, Chevron Australia. "Good governments and responsible companies understand that over-emphasizing any one of these can result in unintended consequences.”
BlueScope Steel CEO Mark Vassella is warning that Australian manufacturing will continue to shrink — endangering the Albanese government’s “Future Made in Australia” policy.
In a newspaper commentary at the end of September, Vasella said this outcome will mean the loss of strategic industries that produce basic products such as steel, fertilizer and building products, and higher energy costs for all households.
He renewed earlier pressure for both a policy change to reserve a proportion of east coast gas supplies for domestic use and the introduction of a pricing mechanism that "allows manufacturers to remain internationally competitive and invest in decarbonization.”
His comments came as the Manufacturing Australia lobbying group representing the country’s largest manufacturers launched a national campaign calling on the Albanese government to fix the “broken” east coast gas market and deliver fair prices for local industry. It says that, despite Australia being a major LNG exporter, manufacturers here pay up to three times more than their competitors overseas.
Ben Eade, CEO of Manufacturing Australia, told media that “we are staring at an enormous sovereign risk” unless the domestic gas supply issue is resolved.
The main body representing small energy consumers is calling for another review of power regulation.
In a media interview, Brendan French, CEO of Energy Consumers Australia, declares: “There’s no doubt that the regulatory system for energy is confusing and in need of significant overhaul, not least to fundamentally shift responsibility for ensuring good consumer outcomes from consumers to energy providers.
“The core issue is that, for most of us, energy contracts and tariffs are confusing, intimidating and hard to compare – and yet the obligation to hunt down the best deal rests entirely with the consumer.”
ECA points to recent research "revealing further symptoms of disengagement from the energy market: 30 per cent of consumers don't know what type of electricity tariff or plan they have and 77 percent don't even know or aren't sure what a tariff is.”
French says: "says the issue of energy customers not switching to better offers arises from a broader and deeper place, with energy retailers trying to grab market share from other retailers rather than enticing new customers with dependably competitive offers.”
In ECA's view, putting the onus on energy customers to continually be on the lookout for the best deal is a sign of a market not working in the interest of the people it is meant to serve.
"The constant churn, and the marketing costs that underpin it, are a cost that all customers ultimately bear," French says. "Only those who can afford the time, have the skills and access, and maintain their interest, will get the benefit. We don't think a healthy market should require customers to do all the work.”
ECA is also focussing on the market cap for wholesale power prices, which, it says, periodically allows levels in the NEM, serving 10 million east coast customers, to “soar to the highest levels in the world.”
Under the cap, spot electricity prices can rise to as much as $18,600 a megawatt hour, or $18.60 a kilowatt hour, it says. Since 2019, the cap has risen from $14,500 per MWh and it is set to jump another 16 per cent to $22,800 from July next year.
ECA says the measure is failing to entice new generation capacity, which is being underpinned by government subsidies in almost all instances. "Since 2012, all of the new large-scale generation that's been built in the national electricity market has relied upon significant support from government.” Despite this apparent failure, it asserts, the cap is rising at a steep rate and imposing more and more costs on consumers, "who eventually have to wear its effects in the prices they pay to retailers."
The association queries whether the cap is still serving its stated purpose.
A leading figure in the US and international energy policy debate, former Obama energy secretary Ernest Moniz, has warned Prime Minister Albanese and Climate & Energy Minister Chris Bowen that they are “asking for trouble” if they do not weigh power security and affordability with climate change action.
Security, affordability and emissions reduction all have to be balanced to ensure a once-in-a-generation switch to renewables is balanced in a national economy, he says, adding: “If you don’t consider all of these dimensions at the same time, you’re just asking for trouble and I believe you will delay the clean energy transition.”
Speaking at an annual conference on energy staged by The Australian newspaper, Monitz, a physicist, also weighed in to the local nuclear debate, saying that saying small modular reactors should be considered as a pathway to green energy. “Micro-reactors could be extremely useful for isolated communities and, in particular, isolated industrial enterprises such as mining – which is obviously a very important industry in Australia that could benefit from the decarbonization.”
Commenting on the address in an editorial, The Australian says: "despite the repeated claims that renewable energy is the cheapest option, the Reserve Bank is warning consumers to get ready for higher energy prices in the first quarter of next year, with $6.8 billion of rebates or $150 of household bill support to be shut down by Christmas.”
Alinta Energy CEO Jeff Dimery has told The Australian’s energy conference that households could face a bigger than expected increase in their electricity bills – if every planned transmission project proceeds – because of the cost of building major infrastructure.
Dimery says a much higher percentage of energy bills will relate to network charges than has been seen historically.
He adds that policymakers should re-examine assumptions underpinning the nation’s energy roadmap, including the Australian Energy Market Operator’s blueprint for the construction of tens of thousands of kilometres of new high-voltage transmission lines.
“The track record of major infrastructure projects in Australia, whether they’re gas, renewables or storage, is that it’s devilishly hard to deliver them on time, given the regulatory complexity that we face,” Shell Australia chair Cecile Wake says.
Speaking at The Australian’s Energy Nation forum, Wake asserted that this complexity plus construction hurdles threatens the Albanese government’s aim to have renewables at 82 per cent of power supply by 2030.
“We need projects that are successful, that are delivered on time and that continue to attract multiple waves of private capital,” she added. "Better regulation – that is both effective and efficiently administered -- is required to create an environment conducive to sustained investment over time."
Wake said: "Not only does Australia need more than $3 trillion of energy investment to get to 2050, it also needs political will and community support to get over the line.”
A Senate submission by “independent engineers, scientists and professionals” declares: "It is time to put power system engineers back in charge of designing our national grid and to prioritize cost and reliability.”
A Senate select committee on "Information Integrity on Climate Change and Energy, to inquire into the prevalence and impacts of misinformation and disinformation which relates to climate change and energy” was set up at the end of July and is due to present its report next February.
A submission from 13 engineers, scientists and professionals calls for “urgent action to establish proper, independent external accountability on AEMO, similar to that which is in place for civil aviation.”
It adds: "The critical need for system reliability demands proper system design oversight and certification before approval to proceed. Effective accountability will be a big step towards eliminating misinformation and ending policy development on the fly.”
The submission also says: "CSIRO’s GenCost reports have been used as a cornerstone for justification of current energy policies. If CSIRO wishes to live up to its own billing that ‘GenCost represents Australia’s most comprehensive electricity generation cost projection report’, it needs to heed its own warnings of limited suitability and expand its cost estimation capabilities to include whole-of-system whole-of-life approaches for both the AEMO design and realistic alternatives.
"Such an approach by independent experts has already indicated that total system capital costs to the economy for AEMO’s renewables- dominant plan are twice those from alternative grid designs – completely the opposite to endless claims that wind and solar are the cheapest form of electricity generation.
"An external CSIRO advisory board could provide better future guidance, and face-to-face reviews with outside experts, would result in far more credible reports. This would also be a big step towards eliminating misinformation – provided truly independent board members and external reviewers are appointed.
"CSIRO, as an agency of government, must also be given a costing mandate beyond just supporting existing government policies to tell truth to power.”
The submission argues: “The honest basis for evaluating total capital costs of the NEM transition is the full whole-of-system, whole-of-life cost to the economy.”
The latest federal government statistical report for electricity generation shows that coal remains the dominant source of supply in three States — New South Wales, Victoria and Queensland — providing 56 per cent of production in each during 2024.
The Department of Climate Change & Energy adds that last year gas accounted for 83 per cent of Northern Territory generation, 59 per cent of Western Australian generation and 24 per cent of South Australian generation.
Renewables accounted for 95 per cent of generation in Tasmania and 74 per cent in South Australia, with hydro power being dominant in Tasmania and other renewables dominant in South Australia.
It says coal now makes up less than 50 per cent of Australia-wide generation.
However, analyst Leith van Onselen, in a commentary at the end of September, declares that the shutdown of South Australia's baseload coal power plants has left the State largely reliant on costlier sources, including gas, batteries and diesel, raising its average wholesale electricity rates.
He says: "The high costs of building renewable transmission have also been capitalised into retail power bills. The end result is that South Australians pay the highest electricity rates in the country - 49 per cent higher than the average of the rest of the NEM.”
South Australian Premier Peter Malinauskas, speaking at The Australian newspaper’s Energy Nation conference, has emphasized the vital role of gas in the energy mix.
Malinauskas said: “For the sake of the economy and our decarbonisation aspirations, our nation needs a lot more gas, and we need it urgently.”
He stressed the need for Santos’s long-delayed Narrabri gas project in NSW, repeatedly stalled by legal challenges and regulatory delays, to proceed.
He told conference attendees: “The eco-purists who fill Instagram with screeds demanding an end to gas production should be careful what they wish for. And for the rest of us, are we going to let energy policy in our country be determined by the socials or by the science?”
He added: “Batteries have got an important role to play within the stabilization of the grid and we shouldn’t dismiss or discount their role — but ultimately, for the big scale, battery technology alone is not going to be able to firm the grid in the way that is necessary, which is why you’ve got to have gas generation.”
As items in this and recent past newsletter issues underscore, the contrast between the federal government’s energy and climate postures and the concerns of the manufacturing sector could hardly be greater.
Barely a week goes by now without some part of the national media featuring (a) leading manufacturers wringing their hands over energy costs and (b) new Pollyanna-ish statements on renewables and on emission reduction from the government via Chris Bowen and Prime Minister Albanese.
As BlueScope Steel managing director Mark Vassella put it in an op-ed in the Australian Financial Review, the east coast gas market is “broken” and, if it is not fixed soon, the outcome will be the loss of strategic industries and thousands of jobs making the products that are "the basis of everything we do – including steel, fertiliser, and building products.” And, he added, it will mean even higher energy costs, "which will be felt by every Australian household.”
This the real world for Australians, not the make-believe one of pursuing local net zero ambitions on the basis of modelling that keeps getting a towelling for (I’m being polite) misguided views on the part of policymakers and their advisers.
That there is a case to be made for action locally to reduce carbon emissions and make the supply of electricity and gas secure and affordable should go without saying — but this constantly gets tangled in the web of assertions and aspersions (eg “denialism”) that are being flung around in the political arena and in some parts of the media, both pursuing the green market (voters on the one hand, readers and advertisers on the other).
As an exasperated Judith Sloan wrote in The Australian newspaper in early September, “the (government) figure of 43 per cent (emissions reductions by 2030 on a 2005 baseline) is very unlikely to be met – it’s only five years away. The one scenario that would make this possible is a series of closures of emissions-intensive factories – refineries and smelters, in particular – as well as the additional closure of some coal-fired power plants.”
She went on: “The slow roll-out of wind and solar installations and the delay to increasingly costly transmission connections underpin this prediction. The fact that offshore wind is dead in the water – excuse the pun – means there will be no projects in that category that come on stream by 2035, let alone 2030.”
And she asserts: "a higher penetration of renewable energy will lead to higher prices, which will significantly crimp economic growth.”
If this Cassandra-like view is borne out, the 2026-2035 outlook for our national economic health is a far from happy one. And the time available for effective changes of direction is mighty slim.
Back in August, a former senior ALP figure, Joel Fitzgibbon, giving the Sir John Crawford memorial address in Canberra, lashed out in these terms: “The current climate abounds with greenwashing, rent-seeking, unrealistic targets and ultra-optimistic views about emerging technologies”. He added: "We need to adjust, recalibrate and broaden our course of action.”
Another former senior Labor figure, Jennie George, who led the ACTU and served as an MP, went still further in an op-ed on 27 September, focussing in part on something I find particularly egregious about the federal approach: "Our economy can’t be powered by intermittent, weather-dependent renewables, nor are they the cheapest form of energy when whole-of-system costs are included. That’s why the government refuses to release full costings. Without the billions in taxpayer-funded subsidies and relief packages, Labor’s transition would have collapsed by now, and it still may. It’s magic pudding economics and it’s not sustainable.”
As she declares, "The billions spent and misspent in pursuit of Labor’s plans remain shrouded in secrecy. It’s in breach of the public’s right to know.”
And: "It’s never too late to put our nation’s interests centre stage. Energy is the economy and energy security is national security. Only a strong economy can secure our future prosperity.”
Keith Orchison
30 September 2025