Thu Sep 17

Morrison signs up to the gas gospel, but the choir is not in tune

Written by The Conversation

If Labor were threatening to build a power station, the Liberals would likely be screaming “socialists”.

As for a Coalition government contemplating such a thing — well, to say the obvious, it hardly fits with the Liberals’ stated free market, private enterprise philosophy. But hey, neither does the hyper-Keynesian support package to cushion the economy through the pandemic.

Only a few within its own ranks would dispute the government’s COVID mega spending, whatever the ideological contradiction. And they’re keeping their voices to private whispers.

The gas power plant is another matter, and it will be fascinating to see how the debate plays out if the threat turns into reality.

The threat is part of the go-with-gas policy unveiled by Scott Morrison this week, spruiked as driving a “gas-fired” recovery, especially for manufacturing. This sounds suspiciously like a three word slogan that promises more than it is likely to deliver.

But Morrison has signed up to the church of gas, whose pastors include Nev Power, chairman of the prime minister’s COVID-19 commission and Andrew Liveris, the head of its (now defunct) manufacturing taskforce, which delivered a pro-gas report. Morrison this week referenced his discussions with Liveris at Kirribilli House.

Much of the gas plan is broad and aspirational at this stage. But the threat is specific enough, and Morrison adopted a grim, school teacher tone when he delivered it in his speech at Newcastle unveiling the policy.

He said the electricity sector must lock in by April investments to deliver 1,000 megawatts of new dispatchable energy to replace the Liddell coal-fired power station before it closes in 2023. Or else. The government-owned Snowy Hydro was working on options, Morrison said.

Going back to Malcolm Turnbull’s time, the government conducted — and lost — a bitter battle with AGL over the planned Liddell closure. It exerted maximum pressure on the company to extend the life of the station, or alternatively, sell it, but to no avail.

The gas policy, especially the threat, hasn’t gone down well — with the energy sector or environmentalists. And it’s come under criticism from experts and even within Coalition ranks.

The Australian Energy Council, representing investors and generators, warned the spectre of a government gas generator could put off private investors.

Environmentalists are against gas anyway, whoever produces it, because it is a fossil fuel and therefore has emissions, albeit not as bad as coal.

The Nationals Matt Canavan, who not so long ago was resources minister, says if a new power station is to be built in the Hunter region it should be coal-fired.

And the director of the Grattan Institute’s energy program, Tony Wood, says the government’s claim that 1000 megawatts of new dispatchable capacity is needed isn’t supported by the advice from its own Liddell taskforce.

More generally, Wood argues the idea of a gas–led recovery “is a mirage”.

He says east coast gas prices are unlikely to fall to very low levels and anyway, even very low prices would not stimulate major economic activity. “Investing in more gas infrastructure in the face of climate change looks more like a herd of stampeding white elephants,” is Wood’s blunt assessment.

“Gas is very likely to have a role for some time to balance solar and wind. This role will be important but diminishing in volume and the pace of change will be determined by the relative economics of gas versus storage technologies and hydrogen.”

Some see the government’s big takeup of gas as a way of walking away from coal, without fanfare. The government denies this, but it would fit with Morrison’s middle-course pragmatism.

That pragmatism is reflected in the week’s other major energy announcement, for $1.9 billion investment in new and emerging technologies to lower emissions.

Morrison explicitly spelled out the government’s view that renewables, notably solar and wind, have boomed commercially and can take care of themselves.

The policy looks both backwards and forwards.

Backwards, with its support for carbon capture and storage (CCS) which — leaving aside its problems as a technology — is an encouragement to fossil fuels.

Forwards, by extending support to a wide range of technologies of the future.

Critics don’t like the proposed expansion of the remit of the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC) beyond supporting renewables.

If the government can get the legislation through the Senate, these bodies would be able to back a wide range of projects, including CCS.

The government is also clinging to its Emissions Reduction Fund, which has had trouble attracting proposals. It plans to reform the fund’s processes.

Taken as a whole and leaving aside the arguments about their efficacy, this week’s decisions have a clear political element. They are relatively risk averse within the Coalition, the threatened power plant notwithstanding.

Energy has been such a fraught area for the government that Morrison is very aware of juggling the conflicting forces within his ranks.

The internal coal lobby, spearheaded by Canavan but wider than him, will continue to mutter. The crunch will come when the government’s feasibility study for a Queensland coal-fired power station is finished. But putting gas at the centre of the picture will reassure some in the Coalition who remain deeply suspicious of renewables.

The Liberals in seats where climate change is a big preoccupation may or may not find enough to sell in this week’s packages. They can emphasise the “transition” nature of gas — Morrison described it as “a stable transition fuel” — and talk up the support for emerging technologies.

But they will confront the counter argument that the government is not doing enough or proceeding fast enough on climate change.

Meanwhile, Labor struggles with its own energy and climate policies, which caused it such problems last election, when it had dual or confusing messaging in the country’s south and north and lacked costings.

Post election, the spectrum of Labor thinking on these issues has been exposed, and resources spokesman Joel Fitzgibbon, who takes many of his cues from his NSW coal seat of Hunter, frequently speaks out.

Like Morrison, on energy and climate policy Anthony Albanese will be seeking to position himself somewhere in the middle ground for the election. He’ll look to being to the left of the PM — but not way out on a limb.