Power Play - the politics of Energy policy

Tuesday 10 October 2017
Nic Crowther's picture
Co Editor
The Shaker

The politics of energy took an almost impossible turn for the worse this week. The new low was established as Minister Josh Frydenberg set the stage for the government to walk away from a recommended Clean Energy Target (CET).

In response, Australian business joined in a collective face-palm. Just when it looked like there was some sort of certainty for energy policy, Federal Cabinet was bowing to the pressures of the backbench that demands the abolition of renewable energy subsidies.

This has been a decade-long battle of political ideologies matched that has decimated investor confidence in the energy sector.

 

 

How did we get here?

It’s been 10 years since the dying days of the Howard Government. As the electorate looked towards a new Prime Minister, the incumbent, John Howard, suggested that some sort of emissions trading scheme should be introduced to help reduce the emission of greenhouse gases.

It was a deeply cynical move. Every poll suggested that the Coalition was due for a drubbing, and opposition leader Kevin Rudd promised a much stronger focus on renewable energy and a reduction. As we know Howard was turfed from his electorate and the Prime Ministership, and Rudd would take the mantle. In December 2007, the new PM addressed the UN to warn of “the greatest moral, economic and social challenge of our time.”

Momentum seemed to behind the new government. Two years later, after the Greens refused to support a Carbon Emissions Trading Scheme (CPRS) the policy was dead. Then-opposition leader Malcolm Turnbull was famously tossed and Tony Abbott donned his boxing gloves for what proved to be the most brutal period of Australian politics in living memory.

 

 

The following years

With the CPRS, the new Prime Minister, Julia Gillard, promised that "There will be no carbon tax under the government I lead.” Despite proving to be technically correct, it was political poison as it gave the human- battering-ram on the other side of the dispatch box all the ammunition he needed to further erode the credibility of a PM who had ‘knifed’ her predecessor.

 

 

However, the warnings of the impact on power prices kept coming, and with ever-increasing volume. It was not a so-called ‘carbon tax’ that would hurt families, it was the lack of investment in generation and transmission that meant aging and failing generators and powerlines become increasingly inefficient.

It was simply a matter of supply and demand.

Since then we’ve had the Treasurer bring a lump of coal into parliament, and a full-page ad from some of the biggest businesses screaming for policy certainty.

 


Some of the signatories to the joint statement on energy policy

 

Where to from here?

A Climate Energy Target is the central part of Dr Finkel’s review; the rest of the recommendations involve largely fiddling around the edges.

The problem has been the CET. With the PM grasping on to a slim majority in the Lower House, he’s beholden to the backbench for his political survival. As the conservative side’s loudest voice in support of progressive energy policy, Turnbull is forced to sit on his hands.

 

 

The worst part of all this is that the Coalition has now lost 21 Newspolls in a row. This indicates that a change of government is almost inevitable which signals another potential change in energy policy.

With a lack of political strength to implement his favoured policy, it looks as though business is going to be forced to endure this ridiculous situation until the next election. If Labor wins and pushes for an ambitious renewable energy target, you can bet the fight will be on all over again.

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