November 4th 2017

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Articles from this issue:

COVER STORY National Energy Guarantee: lots of smoke, but no coal-fired power

EDITORIAL Popular revolt against the ideology of globalism

CANBERRA OBSERVED Paris still rules in the party room

ENERGY Renewables and gas conspire to push up prices

ENVIRONMENT Climate change did not cause California fires

ELECTRICITY Consumers will wake up only when there are blackouts: economists

ECONOMICS Something new under the sun from China

NATIONAL AFFAIRS Abbott gets brickbats for exposing house of straw

NATIONAL AFFAIRS Australia is far from fulfilling its potential

TECHNOLOGY Aussie scientists 'write' with adult stem cells

75TH ANNIVERSARY NCC: new challenges, kind of new adversaries

MUSIC All around the beat: the essential drummer

CINEMA Happy Death Day: Deja vu with a sharp edge

BOOK REVIEW Traditions under threat fight back

BOOK REVIEW Journey to freedom


ENERGY Coal-fired power needed to restore economic growth

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Consumers will wake up only when there are blackouts: economists

by Peter Westmore

News Weekly, November 4, 2017

Two of Australia’s most respected economists, Gary Banks and Fred Hilmer, have warned that Australia is facing a crisis over electricity supplies, but that the public will only wake up to it when faced with blackouts, which could come as early as this summer.

"Time for that energy debate!"

Their remarks were reported in The Australian, and followed a discussion chaired by Brendan Lynn, the head of Infrastructure Partnerships Australia, with the economists.

They said that in an increasingly acrimonious climate, it might only be blackouts in Sydney and Melbourne, Australia’s largest cities, which would inject sense into what they described as an increasingly dishonest policy debate.

Professor Banks in particular criticised claims that there was a low-cost renewable energy future.

“The notion that there’s a trade-off [between renewables and rising power prices], that we can’t have it all, that there’s no free lunch, has not been made clear to the public,” he said.

“In fact, when you look at it, we’ve ruled out all the least-cost ways to transition to a low-emission economy … we’ve ruled out nuclear and essentially ruled out gas, too.”

Professor Hilmer, a former head of Fairfax Media, was the architect of the National Competition Policy, including the establishment of the national energy market, so has a long-standing commitment to market solutions to Australia’s energy problems.

He made the tongue-in-cheek remark that it would be great if blackouts occurred, as it would refocus the energy debate.

Both men deplored the bans on gas exploration in several Australian states, including Victoria, NSW and South Australia.

Poor quality report

They also criticised the report by Australia’s chief scientist, Alan Finkel, into Australia’s energy market, saying the quality of analysis and modelling had not been transparent, rigorous or comprehensive enough.

The Finkel Report, released in June 2017, has been put forward as a blueprint for Australia’s future energy policy, with almost all of its recommendations adopted by both the Coalition and Labor.

The two economists pointed out that Australia’s commitment to greenhouse-gas reductions at the Paris Climate Conference put the economy at risk.

Professor Banks said Australia was pursuing emission targets that were far above the commitments of comparable countries, including the United States.

“We have to go back to the start to look at whether we’ve signed up for something that for our economy is too tough,” he said. “Not only are we choosing to transition to low emissions at high cost, we’re doing it over a compressed time frame.”

Although the Federal Government has said little directly about the risk of blackouts, Federal Minister for Energy Josh Frydenberg has announced incentives to people in NSW, Victoria and South Australia to cut power use during peak periods when blackouts are most likely to occur.

Mr Frydenberg announced what he called a “demand response” plan, under which businesses and private consumers will be given incentives to cut power use during peak periods, potentially saving up to 200 megawatts of power.

The $30 million plan “will involve installing remote monitoring and control devices in commercial and industrial businesses – such as cold storage – to curb energy use during extreme peaks”.

“Thousands of households will also be invited to voluntarily conserve their energy use under the pilot projects in exchange for incentives such as rebates on their power bills,” he said.

“Demand response works by providing a financial incentive to energy users to conserve their energy use during times of peak demand. The energy saved can then be directed to help stabilise the grid when and where it is needed.”

The impact of soaring electricity prices on consumers has been reflected in a rising number of electricity disconnections, which in Victoria rose 140 per cent between 2009 and 2016, 122 per cent in SA, 90 per cent in New South Wales, and lower rates in other states which have more generous supports for people struggling to pay their bills.

Paul O’Malley, the retiring head of one of Australia’s largest manufacturers, BlueScope Steel, said that his company’s cost of electricity was triple what it paid in the United States, where the company also operates.

He estimated that soaring gas and electricity prices had risen by $7 billion over the past two years, and will go even higher. He called for the establishment of a national strategy to ensure base-load power, at affordable prices, across Australia.

“If Australia is to retain its economic competitiveness,” he said, “it must focus on the basic stuff – that is, fundamental base-load energy that powers our homes, factories, schools and hospitals.

“To have a competitive economy, we need a competitive energy system. And my simple philosophy is, there is an easy fix. We need more gas in Australia and we need to ensure that base-load [power] is available … because without base-load, you cannot have reliable and affordable power.”

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