Doomed Planet

When Liberals Gussy Up in Green Drag

The advice to governments from the Energy Security Board (ESB) recommendations on the post 2025 electricity market has brought howls of outrage from the renewable energy sector. Wind and solar electricity suppliers, who already get half their revenue from subsidies, were hoping for more of the same.  The ESB does envisage additional subsidies in the form of transmission lines to link remote supplies but the centrepiece proposal is a “capacity” payment to generators.  This rewards those generators able to be dispatched by the market manager, as opposed to relying on the weather to make them available.

The ESB policy proposal was motivated by fears that the breakneck increase in supply of inherently intermittent and unreliable electricity from wind and solar is making more traditional supplies unprofitable and forcing their closure.  Under present technologies, traditional supplies are essential for system security.

Even in the present “energy only” electricity market, retailers have very strong incentives to take out insurance against the non-availability of the wind/solar supplies they have contracted.  Without such insurance, an electricity retailer is obliged to cover supply shortfalls on the spot market.  This can entail buying electricity at $15,000 per Megawatt hour to cover demand for which they receive payment of only $300 per Megawatt hour.  By providing capacity when it is needed, retailers’ insurance contracts reward dispatchable plant – especially hydro and fast-start gas plant but also coal, albeit to a lesser degree because it is less flexible.

The ESB has taken the view that this contracting is inadequate, partly because there are limits to how long very high prices are permitted to prevail. In addition, traditional plants featuring heavy generating machinery provides “system strength”, which is unpaid for and which as wind/solar supplies increase, the market manager must increasingly buy.

Ironically, although wind and solar interests have been quick to dub the new measure “coalkeeper”, it is being proposed precisely because of the inadequacies of wind and solar generator supplies.  Hence, to the extent that it increases revenues to other supplies, this constitutes a further subsidy to renewables!

In Australia and across the world, market controls over energy in response to fears of emissions bringing about climate change have come to dominate politics.  While leftist and green parties solidly support carbon taxes or subsidies to renewables, the politics of climate change and renewable energy is causing a kaleidoscope of policies on the right. Among major developed countries, the US, post-Trump, is alone in seeing conservatives opposing support for renewables or penalties to hydrocarbons.   

In Germany, with an election pending, all parties with the exception of the newly formed Alternative for Germany (AfD), with 11 per cent support, back carbon tax variations, while France’s right is wall-to-wall in favour of more carbon abatement.

In the UK, David Cameron championed carbon emission restraints, thereby  offering a modern example of a conservative successfully stealing his opponents’ policies.  “Dishing the Whigs” was the strategy that Conservative leader Benjamin Disraeli employed a century and a half ago in his 1867 Reform Act.  This adopted his opponents’ policy by increasing the number of eligible voters by 88%. Though applauded, the strategy failed and Disraeli lost the next election. As UK Conservative Party leader from 2005, David Cameron campaigned on the Labour Party agenda favouring wind and solar (“vote blue to go green”) and became Prime Minister in 2010.  Prime Minister Boris Johnson, though once opposing green subsidies, has maintained the policy.

Australia is more nuanced. The Commonwealth, desperate to avoid further damage to the electricity supply, is seeking to avoid further penalties on coal and instead is financing pie-in-the-sky solutions like batteries, pumped storage, “green” hydrogen and carbon capture and storage. The hope is that this will offer sufficient credentials to withstand pressures for more carbon taxes at November’s climate summit in Glasgow.

In NSW, the Liberals, many reliant on funding from renewable energy interests, led by Energy Minister Matt Keen, are introducing additional subsidies for wind and solar. The Victorian Liberals, similarly influenced by renewables funding, have sought to double down on the ALP’s green policies.  They propose a new $350-400 million subsidy for augmented transmission to deliver renewable energy contracted by the state government’s power purchases.

In South Australia there is little of substance dividing Labor from the Liberals.  Subsidies coupled with the state’s wind resources mean it now has the greatest dependence on wind in the world.  Desperate to export surplus supplies (all of which are subsidised) and get security when the wind doesn’t blow, South Australia is championing new transmission links which consumers will be forced to finance.

The risks to conservatives in adopting amplified versions of their rivals’ energy subsidy policies were demonstrated in Western Australia earlier this year.  The Liberals, campaigning on more extreme green policies than the ALP, were left with just two out of 59 seats in the lower house.

For political parties representing those favouring smaller government and lower taxation, adopting the opposite measures severely dents credibility with electors, especially with the party’s base. Me-tooism on climate policies by the ostensibly conservative Liberals risks loss of support to One Nation, the Liberal Democrats and others, possibly including the Canavan wing of the Nationals.

Alan Moran wrote the chapter “Current trends and perspectives in Australia” in Local Energy Markets edited by Tiago Pinto et al and recently published by Elsevier

7 comments
  • pgang

    Very well said. Also very depressing, but what isn’t these days?
    This sums it up nicely.
    ‘In Australia and across the world, market controls over energy in response to fears of emissions bringing about climate change have come to dominate politics.’ It speaks to how far democracy has fallen under meaningless, rudderless, humanist control.

  • rod.stuart

    Trillions have been wasted on concepts resting on the foundation of the CO2 myth. While anyone with an interest in the process we call science understands that there is no empirical evidence that non-condensing gases affect the weather, the myth persists on the basis that radiative properties of some gases provide some sort of magical mystical elevation of temperatures beryond “black box” notions.
    But now, that apalogue is completely blown out of the water by advances in radiative physics. The cover is blown on the “Greenhouse Effect” fairy tale.

    The Impact of CO2, H2O and Other “Greenhouse Gases” on Equilibrium Earth Temperatures :: Science Publishing Group (ijaos.org)

    Greenhouse Saturation Research Could Kill The “Climate Emergency” | PA Pundits – International (wordpress.com)

  • Peter Marriott

    Very good Alan and two good comments. rod.stuart has some very good technical points there.

  • Ian MacKenzie

    Primitive peoples believed that the way to control weather and the climate to ensure their crops thrived was to make offerings to the gods in order to placate them. Then, about 300 years ago, the Enlightenment in the West convinced us that climate and weather was beyond our control, difficult to predict and that the way to deal with it was to prepare as best as we could, with means as varied as an umbrella or flood levees. In the new century, in a reversion to the primitive, we’ve convinced ourselves that we can control weather and the climate. The political Left has seen this as an opportunity to advertise their virtue by sacrificing cheap reliable power. The centre Right has seen it as an opportunity to enrich themselves through harvesting subsidies. Our voting choices have been reduced to the mortal sins of either pride or greed. It seems human folly knows no bounds.

  • rod.stuart

    “In a key milestone on the road to harnessing fusion power, Lawrence Livermore laboratory announced this week that it had extracted energy from an object the size of a lemon pip at the rate of 10 quadrillion watts (joules per second), albeit for only 100 trillionths of a second. That’s roughly 500 times faster than the entire human population consumes energy.

    The experiment is a reminder that the energy density achieved when atoms merge is vastly greater than anything in a lump of coal, let alone a puff of wind. It is also far bigger than can be achieved by nuclear fission and much safer too: no risk of meltdown and with much less high-level radioactive waste. ”

    https://www.rationaloptimist.com/blog/the-radical-potential-of-nuclear-fusion/

  • John B Good

    Just think -if more ordinary Australians were able to comprehend the machinations of those various forces that are destroying our version of Western Civ, and could be bothered to do something about it, the Libs would not have slid so far left-green.

  • gilmay97

    When industry starts each morning massive power drag-downs occurs — people awaken, turn on heating/cooling, electrical appliances — in evening they cook their diner — when businesses open every morning massive load occurs — when electric trains roll off and climb gradients hauling thousands of tons massive load occurs: Where will the BASE-LOAD power come from, triple AAA Pen Cells? It is sad that fluoride ingestion has done co much brain damage to people they cannot understand their own demise through their stupidity (The Lancet, the fact that fluoride is NOT for teeth is now official. (Neurobehavioural effects of developmental toxicity. February 15, 2014. http://dx.doi.org/10.1016/S1474-4422(13)70278-3)) Read the report yourself.)
    Former Power Station Steam Turbine Drive

Post a comment

You must be logged in to post a comment.