The key message from Josh Frydenberg is that subsidies for renewable energy are coming to an end.
There is no Clean Energy Target in sight in Frydenberg’s plan for a new policy by the end of this year. The phrase does not get a single mention in his new speech on the way ahead.
In a key argument, the Energy Minister argues that the cost of building wind and solar power has more than halved in recent years.
He does not rule out more subsidies explicitly, but the clear suggestion is that renewable energy generators are now at a point where they can stand on their own two feet. This is exactly the message from Coalition backbenchers who are sceptical about the Renewable Energy Target and any CET to continue the subsidies after 2020.
This should be no shock. The government has been cooling the talk about a CET for months.
Malcolm Turnbull lent some support to the concept of a CET when it was recommended by chief scientist Alan Finkel in June but there was no decision to endorse it. As the government has been saying for weeks, if it wanted to embrace the CET it would have done so by now.
Expect something with the bland title of an “energy investment framework” instead. Loaded words like “clean” and “target” will be missing.
Finkel is not saying the solution must be a CET. “The critical thing is not that there’s a Clean Energy Target per se, but that there’s a tool that enables the operators to ensure that the atmospheric emissions trajectory is delivered,” he said on Monday morning. The government will argue that its framework will do exactly that.
Frydenberg makes a vital point about the cost of renewable power. “Globally in the past seven years, the cost of wind-powered generation has more than halved. Domestically, solar PV costs have dropped more than 50 per cent,” he says.
This means the government’s policy will not focus on making renewables cheaper but making all energy more reliable. Security of supply will be given more priority than potential to reduce emissions.
Another important point is the timeline for a decision.
“It is against this backdrop of a declining cost curve for renewables and storage, greater
efficiencies that can be found in thermal generation and the need for sufficient dispatchable
power in the system that we are considering the Finkel Review’s 50th recommendation to
which we’ll respond before the end of the year,” Frydenberg says.
This is a long way short of delivering a full policy by Christmas. The response could be a draft paper. The government has to navigate the debate on same sex marriage and the High Court decisions on the citizenship of Barnaby Joyce and others before it can deal with energy. There is no incentive for Turnbull and Frydenberg to rush the decision with their volatile party room.
The time frame for legislation is even more uncertain. Bill Shorten argues for a deal on a CET but he only promises bipartisanship on a deal he will never be offered. He does not, and perhaps cannot, offer to shake hands on the deal the Coalition would like to make instead.
This means parliament is headed to an impasse where the Coalition puts forward a framework that Labor and the Greens dismiss as inadequate. The policy will struggle to get support from Pauline Hanson’s One Nation, let alone others on the Senate crossbench.
The divide on energy will run all the way to the next election.