February 14, 2017






SABRA LANE: In Canberra the call for the politics to be put aside in discussing Australia’s energy policy and securing the national grid has been ignored. It is a pity that the hot air generated in the debate can’t be tapped because it would power the nation for years to come.


To discuss electricity and the issues, I am joined on the line by the Federal Opposition’s Mark Butler, Shadow Minister for Climate Change and Energy. Mr Butler, thank you and welcome to AM.




LANE: Imagine you are the Energy Minister today, what would you do right now to ensure Australian’s don’t have to go through another week like the one we have just had next summer?


BUTLER: We had a very comprehensive policy we took to the election. The first thing was to undertake a thorough review of the national electricity market because I think we’ve seen a very broad recognition over the events of last week that the market rules simply aren’t working for the 21st century. Not just for South Australia but for states across the nation, so we need to redesign those rules. We would also have put in place an emissions intensity scheme which would finally send a long-term investment signal to the electricity industry about renewing our infrastructure. One of our very serious challenges we face here is three quarters of our coal and gas-fired generators across the nation are operating beyond their design life. They simply need to be replaced over the next 10 or 15 years. You can have a debate about whether they should be replaced with new coal-fired generators or renewable energy but what you do need underpinning that debate is a long-term investment signal and that is an emissions intensity scheme.


LANE: You need a long-term signal but the thing is right now we have problems on the grid. The Hazelwood plant in Victoria closes next month, there will be more insecurity in the national grid as a consequence of that. What is your solution to provide extra stability now?


BUTLER: Well as I said we need new generation built and the problem is the industry currently –


LANE: But that is not going to happen this year is it?


BUTLER: It can happen this year. There is going to be significant new generation built. But what we are finding at the moment is these old generators (Hazelwood was built in the 1960s) are closing with no planning and very little notice. Particularly the privatised generators, where the nation is left waiting for an announcement from a board of directors on the other side of the world, about a very important piece of infrastructure. We need a planning framework about how these things shut down, what the impact on the system is, what the impact on local communities: the workers, and the local economy is going to be; but also how we are going to replace that infrastructure which is inevitably going to keep closing over the next 10 years as it reaches well beyond its design life.


LANE: It will keep closing like you say and Hazelwood goes next month. There is nothing there immediately; Victoria will have the instability that South Australia has had. Again, can you think of a solution right now, not a plant that can be constructed from today; is there a solution right now?


BUTLER: Well you need better interconnection between the states. I think we’ve learnt that lesson. We need better interconnection particularly between South Australia and the Eastern States; but New South Wales relied very heavily over the weekend and on Friday on massive amounts of power being imported from Queensland and Victoria. So we need to think about whether that system is working properly, whether the market rules: the rules through the generators bid into the system are working for consumers not just for these big privatised companies that bought these businesses in the 1990s. But as I said the most urgent thing we need is a long-term investment signal that the industry can start planning on now, to start to build the new-generation of infrastructure. That was the scheme that was recommended to the Government and to all State Governments by the CSIRO, the Energy Markets Commission, the Chief Scientist, all of the industry, back in December and Malcolm Turnbull walked away from it. We think –


LANE: And Professor Finkel is working on a plan that will be delivered to the Government later this year –


BUTLER: That is right, and that will deal with a whole lot of issues about how the market works. But what everyone in the industry and among big business groups agree upon is that you need something like an emissions intensity scheme at the centre of our electricity policy over the coming years. The sooner you get it, the sooner we can introduce investor certainty so we can start building the new infrastructure for the 21st century.


LANE: What the power experts also agree is that gas, and more of it domestically is crucial for the transition from coal to renewables. How are you convincing your state colleagues to lift moratoriums on gas exploration or development?


BUTLER: Well I think there is a very serious debate to have about gas development –


LANE: There is, last week in Victoria your state colleagues legislated to extend bans.


BUTLER: And there was a bipartisan position around that. I think there is a challenge for both Federal parties to have a mature discussion about how we ensure that there is sufficient supply of gas, not just for electricity, and it will be incredibly important over the coming couple of decades; but also for industry that is facing a very severe supply shortage coming its way in the next 12 months. We recognise that this is a very important national issue. We took a national interest test to try to ensure that more of Australia’s gas development goes to the domestic market rather than simply shifted overseas. But you are right Sabra, across the country there needs to be a much more mature debate about how we ensure that gas is developed in a way that has community consent.


LANE: Just quickly, is the Australia Energy Market Operator (AEMO) up to the job. Do you wonder why it gave New South Wales a couple of days of warning about power problems and South Australia got very little warning?


BUTLER: I think there are very serious questions about that and I think there are very serious questions about the rules which AEMO and the other electricity agencies are expected to enforce and to apply. So I do think there needs to be a root and branch look at this, but certainly the feedback over the last 18 months I’ve got, not just from the electricity industry but from big energy users as well is that the electricity market that was designed back in the 1990s is no longer fit for purpose. It needs a very significant review. Now, Alan Finkel will be looking at a lot of those issues –


LANE: And he makes those same points.


BUTLER: That’s right and that is a review in which I think people have very high levels of confidence. But we do need a much more constructive approach from a Government that really has no electricity policy other than to build new coal-fired generators.


LANE: Mark Butler, thank you very much for talking to AM.


BUTLER: Thanks Sabra.