Government junks plans to encourage use of low-emission sources for electricity
CANBERRA, Australia—The Australian government returned coal to the heart of its energy policy, after blaming blackouts and rising power bills on a too-aggressive rollout of renewable sources and a surge in gas exports.
Prime Minister Malcolm Turnbull on Tuesday junked a plan promoted by the country’s chief scientist, Alan Finkel, to require power producers to generate a minimum portion of their energy from low-emission sources by 2020.
The change sets lawmakers against power companies, which want to phase out aging, costly coal plants in favor of wind farms and solar panels as costs of those technologies fall. It also worsens tensions between the center-right government and environmentalists, a relationship already strained by Australia’s repeal three years ago of laws putting a price on carbon emissions.
The coal industry is a major employer, but use of the fuel for 60% of Australia’s electricity—though down from 80% a decade ago—contributes to the country’s ranking among the world’s worst per capita polluters.
Mr. Turnbull is betting that the new energy policy will constrain soaring household power bills and boost voter support for his government, which opinion polls show is much less popular than the center-left Labor opposition.
“This is a national energy guarantee that will ensure that we have affordable power, that is reliable and which will keep the lights on,” said Mr. Turnbull, pledging no new subsidies or taxes for renewable energy.
Paul O’Malley, chief executive of BlueScope Steel Ltd., the country’s largest steel producer by volume, said the plan “retilts the playing field—so affordability and reliability needs are considered equally with environmental needs.”
Energy policies have been a flashpoint in Australia for a decade, helping fuel a series of leadership coups. Since 2007, when lawmakers began considering phasing out coal-fired power stations, no Australian leader—left-leaning or conservative—has managed to serve a full three-year term. One contributor to the instability has been discontent over energy costs, which Australia’s competition regulator said this week had risen 63% over the period.
In August, a report by industry analysts Carbon + Energy Markets’ MarkIntell found Australians pay the highest electricity prices in the world, up to three times as much as American households, though the country is an energy exporter and on track to be the world’s biggest producer of liquefied natural gas.
The country’s increasingly partisan climate wars have unfolded even as momentum has grown to address climate risks from greenhouse-gas emissions. Energy companies including Exxon Mobil Corp. , Royal Dutch Shell PLC and Rio Tinto PLC have supported emission targets agreed in Paris two years ago and ratified by more than 160 nations.
Mr. Turnbull recently tried to pressure AGL Energy Ltd. , one of Australia’s biggest power generators and retailers, to put off the planned 2022 closure of its oldest coal-fired power plant. He has also advocated so-called clean-coal technology as an alternative to renewable sources, but most power producers say it isn’t competitive.
The government’s new plan aims to avoid a repeat of blackouts like the one that hit 90,000 homes around the city of Adelaide in February. As temperatures rose above 105 degrees Fahrenheit, a local power plant couldn’t get enough gas to meet the additional demand, and sources such as wind and solar couldn’t fill the gap.
The government’s new plan will drop a clean-energy target proposed by Chief Scientist Alan Finkel in favor of forcing power companies to offer a set amount of reliable energy provided by coal, gas or even hydro, available to households at all times. While the plan would also require companies to offer low-emission energy, lawmakers said it would boost fossil generators until renewable energy output became more reliable.
The plan would also prevent any price on carbon or emissions trading in an Australian market, but sets up a confrontation with resurgent Labor opponents who have promised a national target for 50% of power generation from renewable sources by 2050.
“People talk of ending the climate wars, but it takes two to tango,” Resources Minister Matt Canavan said, after Labor declined to offer immediate support.
Mr. Turnbull said Australia wouldn’t follow the Trump administration and walk away from the Paris climate agreement, which sets a target of reducing greenhouse-gas emissions by 26% to 28% from 2005 levels by 2030. In June, Mr. Turnbull said he was disappointed by the U.S. withdrawal from the Paris pact, which aims to limit global warming to 2 degrees Celsius (3.6 degrees Fahrenheit).