Australian news, and some related international items

Turnbull govt’s National Energy Guarantee inadequate and confusing

Hard to overcome the impression that energy plan guarantees only more confusion  Peter Hannam

It is notable that as late as two days before Australia’s energy ministers gathered in Hobart, the Turnbull government was still hoping to secure in-principle support for its national energy guarantee.

“Expecting us to sign up was a ridiculous proposition,” Lily D’Ambrosio, Victoria’s energy minister told Fairfax Media, adding there was a “massive pushback” against such undue haste.

So it’s perhaps no wonder the resulting COAG communique was unusually thin.

Indeed, the first pass at modelling the vaguely outlined policy was only completed and shared a few days earlier. Modelling can be made to do almost whatever you want it to do. That’s especially the case when the modeller – in this case, Frontier Economics – wasn’t commissioned to compare outcomes for other schemes.

 South Australia and the ACT tried to have the Energy Security Board – which is supposed to answer to all COAG members but so far has served as chief cheerleader of the guarantee – expand the next stage of modelling to consider other options.

While on the face of it a reasonable request, the bid stirred anger from at least one other state because Josh Frydenberg, the environment and energy minister, would never have got such a proposal near his partyroom for approval.

More number crunching in any case may not be the answer – at least, not until the design of the two elements of the guarantee to curb emissions and boost reliability are better defined.

A better approximation of the market distortions caused by relying on the electricity retailers to carry the guarantee obligations – rather than generators, as other programs such as an emissions intensity scheme, would require – may also reveal smaller savings for consumers than being touted.

Closer scrutiny of the guarantee modelling to date only fans doubts.

As South Australia’s Tom Koutsantonis notes, renewable energy schemes of Victoria and Queensland have largely been ignored, while the massive Snowy 2.0 pumped hydro scheme that hasn’t passed a feasibility study is assumed as operating.

The emissions trajectory also falls far short of what has otherwise been projected for the electricity sector – an industry that accounts for about a third of Australia’s carbon pollution.

As Dylan McConnell of Melbourne University notes, the modelling to date has been based on sector emissions for the National Electricity Market, totalling 1352 million tonnes of carbon-dioxide equivalent for 2021 to 2030.

Separate work by the government’s Climate Change Authority last year, however, projected electricity sector emissions of 1600 MT of CO2 for the whole 2020-50 period, and included Western Australia and the Northern Territory in that total.

Compared with the Authority’s work then, the national energy guarantee would leave less than two years’ of current power sector emissions for the entire 20 years after 2030, he says.

It really does look like there’s a lot more work to be done.

November 24, 2017 - Posted by | AUSTRALIA - NATIONAL, energy, politics

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