TUESDAY, 24 OCTOBER 2017
MARK BUTLER, SHADOW MINISTER FOR CLIMATE CHANGE AND ENERGY, MEMBER FOR PORT ADELAIDE: Testimony from Senate Estimates over the course of the last 24 hours has confirmed what a complete shambles the process to rush out the Prime Minister’s latest energy announcement was. The Department of Energy has confirmed that it has no paperwork about how this policy would operate. It has been unable to do any analysis or any modelling. Sections of the Department with responsibilities for carbon emissions and for energy provision both have said they have no analysis about whether this policy is workable and how it would operate.
We’ve also had confirmed from a range of agencies over the last 24 hours, agencies that have statutory responsibilities in this area, that the first they knew about the Prime Minister’s announcement was when they turned the TV on. The Climate Change Authority, for example, has parliamentary statutory responsibility for policy in this area of climate change and energy. They were not consulted at all.
The Clean Energy Regulator regulates the renewable energy market, but again was not consulted at all about this latest announcement. ARENA, the Renewable Energy Agency that has responsibility for the development of renewable energy resources in this country again was not consulted at all about this policy.
We’ve also had evidence confirmed from the Department of Energy about what everyone understands from this policy but Malcolm Turnbull seeks to hide from his own Coalition Party Room. That is, if this policy goes through it will inevitably set a price on carbon. It will inevitably lead to the market pricing the emissions reduction obligations that are set out in this policy, which is a price on carbon.
Can I also just respond to the latest, tired old beat up on the front page of The Australian newspaper this morning. The Australian newspaper presents this story as somehow new. If the reporter had done his research he would have discovered that News Limited tried to kick this story along back in February through another one of its newspapers in Queensland. The problem with this story is that it reflects modelling of a policy that no one has ever supported. There have been lots of different electricity policies over the last 12 months. Malcolm Turnbull is up to his third in just one year. But the policy on the front page of The Australian, as far as I’m aware, does not reflect a policy that anyone has been advocating in this energy debate.
The very big difference between Labor’s policies, the Government’s policies and the modelling on the front page of The Australian is the modelling assumes that the policy would be internationally linked and would start with a carbon price of $69 per tonne of carbon in 2020. Now I don’t know if Malcolm Turnbull is proposing a carbon price of $69 a tonne in 2020, but I can tell you the Labor Party isn’t.
If The Australian was interested in modelling about the Emissions Intensity Scheme idea that the Government was advocating until December last year, the Energy Markets Commission, the CSIRO, and others have modelled that scheme, the sort of scheme that Labor and the Government were advocating in 2016, and showed that an Emissions Intensity Scheme which operates in a closed market, not internationally linked, without the sort of the carbon price The Australian newspaper is talking about, would lead to power prices being up to $15 billion lower over the course of the next decade.
JOURNALIST: When you say the modelling has been done, for example you have a 50 per cent renewable energy target as policy in 2015, what have you done specifically to ascertain what cost it would be?
BUTLER: The trouble is the Government keeps changing the goal posts. Up until December last year the Government, the state governments, Liberal and Labor alike, the industry itself, the Business Council, the National Farmers Federation and Federal Labor was supportive of an Emissions Intensity Scheme. That was a model developed by the Energy Markets Commission and as I said there was significant modelling around what the impact of that would be on power prices, on power reliability, and on emissions. The Government then dropped that in December.
Then there was a process to develop a Clean Energy Target, a process headed up by the Chief Scientist and again there was substantial modelling done about what that sort of a scheme would lead to; the Chief Scientist’s panel concluding that a Clean Energy Target would be the lowest, or the best model, from a household power prices point of view.
But then earlier last week, the Prime Minister decided to back away from that in spite of the consensus that the Clean Energy Target had developed. Now the Government has moved the goal posts yet again and has done no modelling itself on these new goal posts, on what its own policy would lead to, regardless of what the emissions reduction target would be.
With all due respect we’ll wait and see whether the Government is able to model its latest version of an energy policy, as I said the third in less than 12 months.
JOURNALIST: You’ve had the broad parameters of your policy for a while, so you are saying that $69 isn’t accurate what price on carbon effectively do you think you can put on an EIS?
BUTLER: What we do know is that substantial amounts of our electricity generation infrastructure are going to be due for closure over the next decade or decade and a half. I think everyone now accepts, the Minister for Energy said as much over the last couple of weeks, that the cheapest way to replace our ageing infrastructure is going to be with new renewable energy. Now modelling will differ according to the mechanism. That’s why it was important to develop a consensus around an Emissions Intensity Scheme or a Clean Energy Target. But the Government is not able to come up with any modelling. They are not able to provide any real analysis about how this mechanism, that was announced last week, would operate. The Department confirmed over the last 24 hours it has done no work on that analysis. So with all due respect, we will wait and see what the Government’s modelling of their scheme would lead to. Then we will be in a position to talk about our ambitions.
JOURNALIST: But you don’t know how much yours would cost?
BUTLER: We’ve said quite clearly, the replacement of Australia’s electricity infrastructure is an inevitability over the coming decade or decade and a half. Now the Prime Minister’s latest announcement appears to indicate, although we have no modelling, but it appears to indicate that he intends to prop up old coal-fired power stations over the next decade or two, and potentially even see the building of new coal-fired power stations and strangle the renewable energy industry. What we have said, what the industry has said, and what the Minister even conceded over the last couple of weeks is the cheapest way to replace our ageing infrastructure that was built in the 60s and 70s is with new renewable energy. That will be the best outcome for households and businesses and the best outcome in terms of delivering on our Paris targets.
JOURNALIST: What ratio of international carbon credits would be needed under your policy?
BUTLER: Let’s wait and have a look at what the Government’s modelling says. They were the ones who only in the last week have reintroduced the idea of carbon credits into the electricity debate. It was this Government that removed any ability for Australian businesses to trade in international carbon trading arrangements. So with all due respect again, let’s wait and see what the Government says about its new policy announcement which includes potentially carbon trading.
JOURNALIST: Just focusing on yours, you have had your policy parameters in place for a couple of years. Do you have any alternative suggestions for an effective carbon price other than $69, what work has been done?
BUTLER: Our suggestion would be let’s not have the Government keep shifting the goal post every six months. It’s a bit hard to model policies when the Government shifts the assumptions every six months. Every time a consensus builds around different models and different policy parameters, the Emissions Intensity Scheme last year, the Clean Energy Target over the course of this year, the Government runs scared. The Prime Minister runs scared from a bit of opposition from Tony Abbott, changes the rules and shifts the goal posts entirely. So a bit of the stability in this debate would allow people to start to model different outcomes, and model different ambitions in terms of renewable energy. Let’s bear in mind it is a week since the Government upturned the Chief Scientist’s recommendation that had attracted consensus across the board.
JOURNALIST: Your policy has been set for quite some time; you wanted an EIS, the emissions reduction figure and renewable energy target. That hasn’t changed. You’re talking about shifting the goalpost, what have you done on your policy?
BUTLER: Ours has been the one consistency in this debate. You could model it according to an Emissions Intensity Scheme, you could model it according to a Clean Energy Target, but you can’t model it against a thought bubble. That was confirmed by the Department last night. No analysis has been done of this latest announcement by the Prime Minister.
JOURNALIST: But why not model it against an EIS if that is your policy?
BUTLER: You can see modelling against an EIS against a whole range of different targets done by the AEMC, by the Climate Change Authority and others. Not the model that was presented on the front page of The Australian today, which reflects a policy, which as far as I am aware reflects a policy that no one in Australia has advocated. But let’s wait and see what the Government’s modelling of the latest version of their energy policy is and then we will be able to have a debate about whether Australia wants a renewable energy future or wants to embrace Tony Abbott’s vision of a coal-fired future for Australia.
JOURNALIST: Just on that other modelling then what would you say is the effective price on carbon will be, contrary to $69, under your plan?
BUTLER: What the AEMC modelling showed about an Emissions Intensity Scheme, which has been rejected by the Government and has not been a part of the national debate for almost 12 months now. But what the AEMC modelling did show was that power prices would be up to $15 billion lower under that sort of a closed market than they otherwise would be.
JOURNALIST: So what does that put the price of carbon on?
BUTLER: It doesn’t have a price on carbon in the sense people are assuming from the front page of The Australian because it is a closed market where the electricity generators effectively trade with themselves. There is no exposure to consumers to that sort of model. Now there are different models and, as I have said, I think we all accepted when the Prime Minister took the Emissions Intensity Scheme off the table in December last year because Tony Abbott objected to it, we had to move onto something else if we had any prospect of achieving some consensus and bipartisanship. We thought that was the Clean Energy Target. This was the Prime Minister’s own Chief Scientist with a report he himself commissioned that attracted consensus across the political spectrum and also across industry. But last week he changed the goal posts again. It’s very difficult for households and businesses to follow this debate when the Prime Minister continues to change the goal posts every six months or so because Tony Abbott kicks up.
JOURNALIST: The industry seems to think this policy will create certainty though so shouldn’t there be some consensus here?
BUTLER: I think we saw last night that this was a thought bubble. The Department has no paperwork on this. Agencies with statutory responsibilities, parliamentary responsibilities to advise the Parliament and Government on these matters were not consulted at all; the Climate Change Authority, the Clean Energy Regulator, the Renewable Energy Agency, this has been a rush job by the Prime Minister to deal with Tony Abbott and his Coalition Party Room. It’s incumbent on the Prime Minister to start to do serious work on this if he expects it to be taken seriously.
I understand what businesses are saying about the need for consensus. We’ve been working hard on this, we’ve shifted our position twice in the last 12 months in an attempt to try and develop a bipartisan position with the Government. We shifted to an Emissions Intensity Scheme, then we shifted to a Clean Energy Target and because of some pressure from Tony Abbott, Malcolm Turnbull keeps removing any prospect of consensus on this matter and shifting the goal posts.
JOURANLIST: Are you sure the modelling on the front page of The Australian was internationally linked?
BUTLER: Yes. There is an international link and the assumptions were on a carbon price of about $69 in 2020. This was not a policy that Labor had ever advocated. I’m not sure it is a policy that anyone I’m aware of has ever advocated.
JOURNALIST: Doesn’t an internationally linked price though just give you another option to reduce emissions rather than lock you in to any sort of international price?
BUTLER: There are a range of different forms of international linkage but the critical issue that drove the price of this particular model that drove the front page of The Australian was the assumption of a carbon price of $69. Now where they got that from I don’t know. There is not a carbon price even approaching that operating anywhere in the world. All I can say is the models that were on the front page of The Australian bear utterly no relationship to any policy that Labor has ever advocated. Thanks very much everyone.