DOORSTOP: 10/10/17

February 10, 2017






MARK BUTLER MP, SHADOW MINISTER FOR CLIMATE CHANGE AND ENERGY, MEMBER FOR PORT ADELAIDE: Thanks for coming out this afternoon. The experience here in Adelaide yesterday afternoon and evening, where it was again well over the old century mark or 37 and a half degrees well into the evening with no load shedding, no forced blackouts for South Australian households and businesses demonstrated that the events of Wednesday were a product of a mistake made by the federal regulator reporting to the Federal Government not to ensure that all of the gas-fired generation available in South Australia was switched on at the right time. It is now very clear that this was a failure of the federal regulator rather than anything to do with the generation mix in South Australia. There was always sufficient gas-fired generation to cover the extraordinary spike in demand for electricity that came with the extreme heat event that South Australia experienced over the course of Wednesday and Wednesday evening.


The Grattan Institute, one of the leading national think tanks in energy policy, Tony Wood the head of that institute said this morning that either there is something wrong with the rules of the National Electricity Market or the federal regulator is interpreting them wrongly. Either way there is no rational explanation for the fact that there was a gas-fired generator in Port Adelaide sitting idle while the federal regulator that reports to Federal Minister Josh Frydenberg was forcing blackouts on as we understand it, 90,000 households and businesses around Adelaide.


This extreme heat event has been moving across the continent and New South Wales, and ACT are today at the epicentre of this extreme heat event and we urge, as I’m sure all authorities urge, people of those jurisdictions to take account of the risks posed by heatwaves. There are bushfire risks; there are health risks particularly to vulnerable people; the aged and disabled. We urge people to look out for their neighbours and their colleagues who might be at risk during this very extreme heat event.


JOURNALIST: (interrupts)


BUTLER: If I could also just finish talking about the impact in New South Wales. What we also know from the federal regulator is that there is a very significant spike in demand expected in New South Wales and the ACT; and there is likely to be a shortage of electricity supply in New South Wales. It’s worth mentioning given Malcolm Turnbull’s obsession with renewable energy around these questions, that there is no jurisdiction in the world as far as we understand that has a higher share of its electricity generated from coal than New South Wales. New South Wales is a jurisdiction with much better interconnection with Queensland and Victoria compared to South Australia, and is almost 90 per cent coal-fire generated yet it is likely to be hundreds of megawatts short of electricity supply over the course of today. 


It is already being reported that Tomago, the very big aluminium smelter in the Hunter Valley which uses about 10 per cent of New South Wales electricity supply, the equivalent to almost one million households has been ordered this afternoon to engage in a series of shutdowns of its operations which would be the equivalent of forcing blackouts on more than a quarter of a million of New South Wales households and there is still, in spite of even that drastic action being forced on New South Wales, there is still the possibility of further load shedding or further blackouts forced on New South Wales households and businesses beyond that very significant action.


So it is quite clear that there is a broad, systemic challenge facing Australia’s energy system and it is quite clear also that it is time for the Prime Minister to stop his obsession with renewable energy, and his new found fetish for coal-fired generation and start a serious discussion in the Parliament, with big energy users, with the electricity industry and State Governments about how we are going to get through these challenges and build an electricity system that is fit for purpose. We stand ready to do that. We thought that there was a glimmer of hope to do that in December, when the CSIRO, the Chief Scientist, the Energy Markets Commission, and all State Governments recommended to the Federal Government that they adopt an emissions intensity scheme. We said that if the Government was willing to do that we would sit down and cooperate with them on it and for the first time in many years there would be substantial bipartisan energy policy in this country that had broad support across the business sector and State Governments. Instead Malcolm Turnbull, when we extended the hand of bipartisan support, chose to slap that hand away and has spent the last six-months politicising renewable energy and coal. It is time to stop that politicising, Australia faces a serious energy crisis now and it is time for serious action from the Federal Government.


JOURNALIST: Today’s inquiry into the actions of AEMO, is that long overdue? I mean obviously we have had problems in South Australia for a long time.


BUTLER: It’s increasingly clear that the national electricity market is not fit for purpose. This was a market that was designed in a different era, before the end of the last century when our electricity system looked very different to the way in which it looks now, and will increasingly look into the future.


You don’t just hear this in South Australia. I hear very clear messages from the electricity industry and broader business groups that the National Electricity Market needs to be reviewed so that its rules reflect the emerging trends in electricity which is more distributed generation, the coming storage revolution, all of these things don’t reflect the assumptions that underpin the rules when they were built in the 1990s. We’ve said this for 12 months, other business groups have said it as well, it is time to review the National Electricity Market. It showed on Wednesday as the Grattan Institute said; “either the market rules simply are wrong or the independent federal regulator, (who reports to the Federal Minister) is simply not applying them properly.”


JOURNALIST: How does Labor plan to reach its 50 per cent target, is it more of an aspiration?


BUTLER: There are different views around the industry about how it is best to reach the target. The Energy Markets Commission and the Climate Change Authority for example have said that the best way to de-carbonise our electricity sector and move away from such a heavy reliance on coal-fired generation, one of the heaviest certainly in the developed world, is an emissions intensity scheme.


That is as I said the scheme recommended by pretty much everyone in the industry and all expert bodies. We’ve said that we are more than willing to sit down and see that scheme legislated as a bipartisan energy policy. We are happy to take the advice of expert bodies that say that is the model for decarbonising electricity whilst also giving investors’ confidence so that they can build the new generation that we need for the future. The reason why we are experiencing these challenges across the nation is that more than three quarters of our existing generators are operating beyond their design life. They need to be replaced but the big companies, the banks and the lenders simply won’t put money on the table to build new generation if they continue to have this politicising around energy policy, rather than a stable policy framework.


Thanks very much everyone.