[NGW Magazine] Editorial: Australia's About-Turn

Australia’s new Liberal government under Scott Morrison has struck out in an entirely new direction from its predecessor: although it is of the same party as the one it replaced, it has rejected anything to do with climate change if it conflicts with its goal of lower energy prices.

The new government has not got long to act, so it has to win the electorate round early to its back-to-basics energy programme.

Energy and the environment are also now under two different ministers, as they were in the last government-but-one, reflecting their separate spheres of responsibility: affordable, secure energy and environmental concerns tend to be incompatible objectives, as the German experience shows.

Abandoning coal-fired generation will come at a cost, according to a new report. German consumers, as the gas lobby keeps pointing out, but to little effect, have paid $30bn annually for a number of years in order to allow investors in renewable energy generation to cover their costs. Replacing all the coal-fired generation in Europe with gas earlier this decade would have gone a long way towards meeting the bloc’s carbon reduction goals.

That said, the tide is apparently turning at least in Europe, as the price of renewable energy falls and the price of carbon goes up.

Be that as it may, Australia’s new energy minister Angus Taylor, announcing his new role, tweeted late August that he was the minister for keeping electricity prices down – a key objective of his newly-installed prime minister. Indeed, if it were not for the high prices and blackouts of the Malcolm Turnbull government, there might not have been such a strong demand for change at the top.

Surging gas production around the Australian coast and onshore from coalbeds has been liquefied and sent to export markets, on occasion pushing domestic prices in the east coast higher than what the buyer was paying in Asia. Meanwhile Canberra was closing down coal fired plants, creating a shortage of reliable, affordable capacity and blackouts ensued.

This led governments to toy with the idea of slapping export bans on gas where its export would raise domestic prices. The sanctity of long-term gas sales agreements came under threat and some plants saw lower volumes of exports. Resource nationalism was mentioned.

Now with the cancellation of Turnbull’s National Energy Guarantee, the country has turned its back on its plans to formally cut emissions. But Taylor might succeed in his revolution given his reasonable-sounding approach. It is a far cry from the triumphalism of the US president Donald Trump when he took the US out of the Paris Agreement.

“It’s ironic that in a country with an abundance of natural resources – coal, gas, water, solar, wind – we should be in the position we are today,” Taylor said in a speech August 30. “We have to leverage those resources, not leave them in the ground,” he said. His reference too to solar and wind may have helped his cause: there are a number of solutions to the problem, he was saying, including environmentally-friendly ones; and we need to consider as many as make sense.

Among the obstacles in the way of enhanced gas production are state moratoria on coal and gas exploration. Some however such as the Northern Territory with its vast reserves of shale, have recently lifted them and are willing to see more gas production on their land.

The new energy minister was also careful not to come across as a climate sceptic, cast in the same mould as Trump: “For more than 30 years, I’ve shared concerns about climate change and the impact of CO2 on our climate. I’m a lover of the environment, a farmer,” he said. 

Instead he attacked the “economics of so many of the emissions-reduction schemes dreamed up by vested interests, technocrats and politicians around the world.”

Fighting talk. Still, it would be premature to say that his plan to open the gates to fracking in Australia will succeed. True, blackouts are a symptom of a pretty serious problem in an OECD country, and one that could need drastic medicine to put right.

But given the short time he has at his disposal, success is a major uncertainty. Even conventional gas production is not without its risks, as demonstrated by the Groningen field in the Netherlands, where large fluctuations in the production profile have been blamed for widespread damage, if not destruction, of the housing stock on top of the shallow field.

And the major reduction in the field’s output did not send revenues sky-rocketing or bankrupt the state. Instead, the country is moving on with life, greening gas where it can and finding ways to decarbonise the electricity network.

It is also true to say that the days when ministers decreed and the public got on with things obediently are decisively over, at least in democracies. As a glance at an Anglo-Saxon country where fracking is happening, the UK, shows, the public is now a force to be reckoned with, even in matters so dull as energy production, and even when it has the approval of the government.

There are serious questions over the prospects for commercial UK shale gas production owing to the high legal and administrative cost of seeing off the opposition. Counter-intuitively, much of that has been well-organised by non-government organisations in the name of the natural environment. But they have been very successful, for all that. •