Angus Taylor has failed as a politician and energy minister. He should be moved on

Mar 15, 2021

Angus Taylor is a failure as a politician and as federal energy minister.

Since he was appointed by Scott Morrison in late 2018:

First: Relations between the states and the federal government have broken down. That is a failure of politics, not of policy. It’s a sign of a bad politician that he can’t bring a consensus along with him. By contrast, in NSW, state Liberal minister Matt Kean brought everyone along with him for the NSW electricity strategy, except for the party you are basically happy to have opposed to you, namely the “hunters and fishers”. Such a funny, atavistic name.

Second: The federal government has ceded control of the electricity and energy agenda to the states. Because of the lack of credible, or indeed any federal policy, the states have taken matters into their own hands. That’s a failure of politics.

Third:  The federal government has not really backed in the federal bodies that govern the electricity industry, such as the ESB (Energy Security Board), AEMO (Australian Energy Market Operator) and to an extent the AEMC (Australian Energy Market Commission). Not only has it not backed them to the required extent in the public arena, neither has it added the “warm hand of friendship” like industry seminars, the equivalent of A labs, or the general “can do” kind of boss that most employees like to work for. This creates dysfunctionality and is yet another example of bad politics.

Fourth:  With the exception of only the retail default tariff, the federal government has been unable to get any legislation on energy policy passed. UNGI – the Underwriting New Generation Investment scheme – has been a complete failure by any standard. Recent attempts to twist the Clean Energy Finance Corp legislation into something it was never intended to be have also had to be withdrawn. That’s because Taylor has been unable even to get his own party parliamentarians to back him, let alone convincing the 70% of Australians who want more done.

Fifth: The federal government has tried to move its base from talking about coal to getting behind gas. The only group that has been sold on that policy is the federal ALP. The Coalition coal lovers remain disaffected, but if they are “in the tent”, like Resources Minister Keith Pitt, they only grudgingly accept it. If they are outside the tent like Barnaby Joyce and Matt Canavan they just make trouble. The mainstream of the party kind of goes along with the gas thing but it doesn’t resonate with voters, and it’s a complete disconnect with the real world. So my verdict is the “switch to gas” gets a pass mark from a Canberra bubble perspective, but is a dismal failure in terms of selling it to industry stakeholders.

Compared to Taylor, his predecessors Josh Frydenberg and Greg Hunt were relative successes. Under Hunt there was at least a compromise on the RET – the policy might have been inadequate but there was a market-based policy that achieved some results.

Frydenberg ultimately achieved little, but he kept the States and the industry largely onside and the NEG (National Energy Guarantee) went close.

Moving Taylor out of energy could be a circuit breaker

It should be obvious to the Prime Minister, once he gets through his long and growing list of other issues, that from any perspective energy policy is not a success.

It’s one thing to have policy that’s at odds with what most people want. It’s another thing to have little or no policy at all. It means that what you do have cannot even be carried out and in the process, you have ticked off just about every significant stakeholder.

I actually don’t think there is any chance of Taylor being moved, it would just create another disaffected trouble maker and there are plenty of those. Still, just imagine if, for instance, Anne Ruston or even more unlikely Sarah Henderson were given the job. It’s easy to imagine a more consensus approach with some actual tangible results.

Yallourn is closing 4 years early: That’s 9TWh, or 20% of Victorian generation

The early closure of Yallourn surprises no-one. If there is a surprise it’s that the closure is as late as 2028. Indications yesterday were that keeping it going until 2028 requires some government support. Note, that is state government support, the federal government isn’t even in the conversation.

Yallourn now joins the Vales Point, Gladstone cluster

The closure of Yallourn is just the first closure to be announced. As it happens 2028 is right around the time that Vales Point B is strongly expected to close.

Sunset Power gave its strongest signal yet that it will close no later than 2029 when it refused a minor amount of Federal Government UNGI funding. So that’s another 8 TWh, or 1 GW of firming power.

Also around 2029, the Rio Tinto power deal with CS Energy in Queensland – covering the delivery power from the Gladstone Power Station, one of the country’s oldest, to Boyne Island smelter – comes to an end and this would be a natural time to wind that station down.

Even before that, ITK expects that parts of Tarong power station may go into maintenance.

Then four years later there is the pretty much hard closure of Eraring, and 18 months ago when the Energy Insiders podcast interviewed Jeff Dimery, CEO of Alinta, he noted he wasn’t guaranteeing the future of LYB beyond about 2032.

A clue for a clue-less government

So here’s a clue for a basically clueless Federal Government, get out of denial mode and develop a policy that the industry can support to manage the coal closures. Instead of meaningless mouthing off about having enough dispatchable power and treating the Gentailers as enemies, try working with the industry and the States to get a result.

Telling the industry to build gas generation when they can’t see the price signal is super dumb, threatening to build a subsidised Federally owned (by Snowy Hydro) gas generator if the private sector doesn’t contract to lose money by building its own is even dumber.

The spot and contract market may not work as well as it used to, but it’s still perfectly capable of signalling whether there is a need for a gas generator.

But with no carbon price, no obvious supply of cheap gas, the prospect of hydrogen in 10 years time, and with all the existing coal, gas and hydro getting crowded into a smaller and smaller daily window why would you build more supply?

And that’s before we get to Snowy 2 and Marinuslink.

And here’s another clue, for free

The best stimulus for the electricity industry would be an increase in demand. There is not going to be an increase from traditional users.

If anything, the big users of electricity, that is aluminium, coal seam gas pumping and compression, and to an extent, coal mining, are just as likely to reduce as increase over the next 20 years. So what can be done to increase demand?

Well the NSW Coalition is working away on that. Not only is there a $750 million program, but there is a study.

Even without a study, it’s blindingly obvious, that a decent electric vehicle program could increase demand for electricity as well as many other benefits that have been mentioned many times such as better air quality, Australian energy independence, lower emissions, longer vehicle lives, new industries in Australia (and a decline in some old ones such as car servicing).

A decent Federal program would be a great opportunity for the Federal Government to reconnect with the States, because in the area of electric busses, electric taxis, and vehicle registration, parking, tolls the State Government policies are critical.

Meaningless gibberish from Angus Taylor’s office

As we say, the Yallourn closure surprises no one, most electricity consultants have had an early closure of Yallourn in their models for some time. Yesterday, the response from Angus Taylor’s office is that they “would model the closure” to ensure enough dispatchable power was available.

Similarly, after the NSW roadmap was announced by the NSW Government, Angus Taylor’s office wanted to see the NSW Government modelling of the impact.

This reveals the complete headless vacuity in Federal Policy, not only do they have nothing to offer but they don’t even know what’s happening. That’s why no one in the industry takes any notice of what they say.

The only policy the Government has put in place with any meaning is one effectively capping household prices. And by reducing profits that reduces investment.

Nature abhors a vacuum and the policy vacuum has been filled by the States, filled by business and filled by the people.

Still, it’s not enough, in the sense that the Federal Government could do so much more to help business and to help the electricity industry and to help ordinary Australians.

Federal Government “policy” is a political policy, it’s not an energy policy. In trying to build a bridge from the Government’s base to the real world, the Government has moved the conversation only from coal to gas. But coal has not been talked down, and the industry insists coal mining and coal exporting will go on for many years.

But from an economics point of view, from a decarbonisation point of view, from a “being in touch” point of view, and from an industry credibility point of view, this policy is more or less complete garbage.

The Federal ALP has now more or less endorsed the Coalition policy with a few extra words for their “inner city” base. It’s all based around winning votes in a few seats in Queensland.

Those few seats determine which party sits in power. But it doesn’t matter which party is in power, because neither of them has an industry or energy policy worth sending out in an email.

This article was written by David Leitch and republished from Renew Economy 11 March, 2021. Click here to read the original article.

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