Few contributions to the energy debate have been less helpful than that of Christiana Figueres, the former UN climate chief and international purveyor of smugness.
Figueres spoke at a Sydney city council event last week with Lord Mayor Clover Moore in a session billed as “a conversation about how entrenched inequality, rising populism and political instability are contributing to an uncertain future”. While in town Figueres dropped in at the ABC’s 7.30 studio to make some condescending remarks about Australia.
“Maybe it’s because we’re Down Under that things are somewhat upside down,” Figueres sneered.
“Because most governments are actually moving to lessen their dependency on coal … They understand any new coal is going to be a stranded asset very soon.”
There are few assets more stranded than a wind turbine on a still day, but international climate gurus have little patience for such details. We are three years away from “crossing the threshold”, Figueres told Leigh Sales. “We have a very, very short window of opportunity.”
Someone should tell these people we’re over it: thawing tundra; hockey stick graphs; inconvenient truths; lumbering furry seal-munching assets stranded on floating ice — the whole damn lot.
The tipping point in the energy debate occurred on September 28 last year when the lights went out in South Australia. A technological threshold had been crossed; when intermittent power sources account for 43 per cent of energy capacity, the grid becomes unstable.
The not-insubstantial task of restoring sanity falls to Josh Frydenberg, the hapless minister on whom Malcolm Turnbull has bestowed the portfolio from hell.
Nothing the Environment and Energy Minister can do will unscramble the rotten egg he has inherited. We might wish that the renewable energy target had never been hatched; we might wish that Kevin Rudd’s cabinet had stood up to his moral vanity; we might wish that Tony Abbott had the authority to knock it on the head; we might wish Labor would put the national interest first and support its abolition in the Senate.
But Frydenberg simply has to find the least bad way out of this omni-shambles.
He should forget about appeasing the likes of Figueres, who will accept nothing short of shutting Australia down. A withering editorial in the Guardian Australia and an ABC RN Breakfast interview with a surly Fran Kelly would be signs that Frydenberg was on the right track.
The job won’t be done until the renewable energy mafia squeals. Coal and gas need to be dealt back into the pack, which means reducing the comparative advantages the RET bestows.
Think of a renewable energy certificate as a fine that is sending coal-fired generators to the wall while sweetening the business case for wind and solar, encouraging more to be built and destabilising the grid even further.
How this profoundly regressive arrangement helps reduce the “entrenched inequality” that Moore likes to rail against is a mystery. The RET has spawned a financial investment instrument that is bought and sold to make a few people richer. The share price of Infigen Energy, an offshoot of the failed investment company Babcock & Brown, has grown by 200 per cent in two years.
The cost of the REC, however, ultimately falls to the consumer, especially the poorer ones.
The latest Household Expenditure Survey shows that the poorest Australians spend 8.8 per cent of their disposable income on household fuel and energy, while richest spend just 2.4 per cent.
The hypocrisy of the compassionate class takes your breath away. On one page The Sydney Morning Herald wails about the plight of the vulnerable, on the next page it’s slamming them with demands to increase the RET.
If there were a prize for most heartless headline of the year, Peter Martin’s column in the Herald last Saturday would have to be in the running. “Get real,” it read. “Electricity isn’t that expensive.”
No word — obviously — in Martin’s column about the jobs being lost because of high power prices. Perhaps it is because energy-stressed sectors employ a disproportionate number of blue-collar workers. Few graduates take up careers in steel fabrication.
Freezing the RET at the present level of 23.5 per cent will do little to ease the short-term burden, but it will at least send a signal that renewable energy must stand — or crumble — on its own two feet. The renewable sector must be made to carry the cost of its own instability instead of passing it on to mugs like us.
As things stand, energy distributors are forced to buy in baseload at absurd spot prices while the wind and solar kings sit around their idle generators and count their profits. Why should the taxpayer have to pay for unfeasibly large batteries from a US billionaire because of the failure of highly subsidised renewable energy plants to provide electricity around the clock? The Finkel review says that should change.
The operators of new generators essentially will be contracted to provide power 24 hours a day. Making up for the shortfall will be entirely up to them. They can use batteries, fast-response gas or build hundreds of giant hamster wheels; we just don’t care. All we ask is that they fulfil their contracts by delivering power when its wanted.
Naturally the renewable sector will be indignant, but giving the producers the responsibility for intermittency works perfectly well in other sectors of the economy — soft fruit, for example.
Strawberries, like wind power, were once a product in fickle supply, at the mercy of the elements and other capricious forces. Then the big supermarkets stepped in and demanded long-term contracts. It spurred investment in technology and experiments with new varieties. The installation of growing tunnels allows year-round production as far south as Victoria. The producers are happy, the shelves are stocked and consumers can gorge themselves for $1.50 a punnet.
Call it, if you like, the greenhouse effect.
Nick Cater is executive director of the Menzies Research Centre.