Australian news, and some related international items

Former liberal leader John Hewson urges Turnbull govt to switch to a bright renewable energy future

Australia-solar-plugWith our natural assets of solar and wind, and our capacity to educate, innovate and adapt, we can lead the world and enjoy genuine new “Jobs and Growth”.

If Malcolm Turnbull flicks the switch to renewable energy, a bright future will dawn, The Age,  John Hewson, 10 Nov 16

The transition from fossil fuel-based power to renewables is inevitable if Australia is to meet its Paris commitments on emissions reductions.

It is irresponsible, it could be said immoral, for government to play short-term politics around this, as the Howard/Abbott/ Turnbull governments have done, attacking the renewables industry and the ALP/Greens for seeking to facilitate and accelerate this transition.

Irresponsible, for example, to blame renewables for the recent blackout in South Australia, where an extreme weather event brought down that state’s transmission system, such that it didn’t matter how the power was generated, it simply couldn’t be transmitted, and to score political points around the recently announced closure of the Hazelwood brown coal-fired power station.

It is not to say that there are not problems with renewables relating to capacity and the “intermittency” of supply, but these are being addressed rapidly as technology is developed for cost effective heat and battery storage, and so on.

The fundamental question is: just how long will it take? How many more extreme weather events, and Hazelwood-style closures, will have to occur before government develops a longer-term energy policy and a transition strategy?

How many more jobs will need to be lost, how many more businesses and industries will need to close, how many more new businesses and new jobs will need to be squandered, how far will they let power costs rise, before they act? 

It is essential to provide this longer-term policy certainty for business to make the necessary longer-term investments that will ensure the government’s now three objectives – of energy security, low emissions and low energy costs – are achieved.

Clearly government needs to redefine and reconstruct as a matter of urgency the so-called national electricity/energy market, essentially starting with a blank sheet of paper. The existing NEM was built around an old, since abandoned, British system that didn’t contemplate possibilities such as effective storage, distributed distribution and an accelerated transition to renewables.

More broadly, government, especially one that promises an “innovation and ideas boom”, can lead the inevitable technology revolution fundamental to this transition by leading the change in attitudes and confidence, educating the electorate and business, streamlining essential planning and approval processes, encouraging/maybe funding research and training, and facilitating finance from “seed capital assistance” (say ARENA) through to full project finance, and so on.

Finance is a key ingredient. Our banks are still stuffed to the gills with fossil fuel/climate exposures, and so too are many of our super funds. The latter also manage some $2 trillion in investments with very little actually flowing into renewables and energy efficiency and alternative technologies. They don’t have the necessary skills/experience for technology/project assessment in these areas, let alone the “risk appetite”.

Government can provide an important lead here. If government can ditch the simplicity of its obsession against “debt”, separating its budget into recurrent and capital, it can pursue “balance” in its recurrent budget while issuing and using debt to fund economically and socially viable infrastructure.

I have long advocated an “infrastructure bond” to accelerate the finance of what should be an essential “infrastructure revolution” across this country. A focus of this could be a “Green Bond”, which could be fundamental to the transition to a low emissions power industry.

In the current and prospective economic climate, with a AAA credit rating and historically low global interest rates, government could guarantee and pitch (say) a 30-50 year bond at a very low coupon (say about 3 per cent), the proceeds being held (outside consolidated revenue) in a new “renewables fund”. It could be managed by the Clean Energy Finance Corporation, which has well-established experience and a reputation for successful investment in this sector.

This bond would be attractive to a host of global institutional investors, super and pension funds, sovereign wealth funds, central banks, insurance companies, and endowment funds, and provide a “fund-of-funds” opportunity for our super industry to increase its exposure to this sector. It could also be designed to include “mums and dads” and SMSFs.

The CEFC could allocate these funds as debt or equity, and in partnership with global banks and other private financial institutions, to facilitate a range of viable projects and dramatically accelerate the transition to a low emissions society.

Projects would need to be independently assessed and ranked by (say) a revamped and much more transparent and accountable Infrastructure Australia, according to globally accepted best practice, financial assessment criteria and processes.

With our natural assets of solar and wind, and our capacity to educate, innovate and adapt, we can lead the world and enjoy genuine new “Jobs and Growth”.

John Hewson is a professor at the Crawford School of Public Policy, ANU, and a former Liberal opposition leader.


November 12, 2016 - Posted by | Uncategorized

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