Coal dinosaurs arguing against the Finkel review clearly don't understand it.

Source: DailyClimate

Tony Abbott’s argument ignores the pleas of energy users while there is no evidence to support Craig Kelly’s claims

<!–[if IE 9]><![endif]–>Craig Kelly and Tony Abbott

Craig Kelly says Australia should delay cutting emissions while Tony Abbott has labelled Finkel’s clean energy target a ‘tax on coal’.
Photograph: Mick Tsikas/AAP

Coal dinosaurs arguing against the Finkel review clearly don’t understand it

Tony Abbott’s argument ignores the pleas of energy users while there is no evidence to support Craig Kelly’s claims

Energy and climate is a complex policy area. But the amount of rubbish floating around both from the pro-coal dinosaurs in the Coalition backbench and from similarly inclined commentators is astounding.

The Finkel review recommendation a clean energy target be implemented has been at the core of conservative objections and about 20 Coalition backbenchers spoke against the recommendations in a party room meeting. Many of their arguments have been aired publicly or leaked. Here are some of the silliest.

‘Emissions-lowering policy will push up power prices’

This is the line being run by Tony Abbott and, reportedly, by others including the Victorian Liberal moderate Russell Broadbent.

For a party traditionally geared towards helping businesses make more money, this line of argument reveals the ideological commitment to fossil fuels, which ignores the pleas of energy users everywhere.

The Business Council of Australia, the Australian Industry Group and the Energy Users Association of Australia all agree the lack of policy that puts a price on carbon is pushing up prices by stifling new investment in new generators.

At some point greenhouse gas emissions will need to be eliminated from the electricity sector; investment decisions become much riskier until investors know what the policy is that will drive that.

Finkel noted this in the first few paragraphs of his report. “We quickly discovered that, beyond the cost of gas, uncertainty around emissions reduction policies was pushing up prices and undermining reliability. Our plan removes that uncertainty.”

Submissions from the big “gentailers” – companies that own generators and retail assets – made this point explicitly. Origin, Energy Australia and AGL each made submissions that argued this.

Modelling in Finkel’s report – which backs up earlier modelling – shows instituting any of the emissions-lowering policies he considered would drive down both wholesale and retail electricity prices, compared with doing nothing.

Why commentators and politicians would continue to argue that emissions reductions policies will push up prices, contradicting what energy generators, energy retailers and energy users say – and what all the science and modelling work shows – is a bit mysterious.

‘We should delay action on climate change because it will be cheaper in the future’

The Liberal backbencher Craig Kelly, who is chair of the Coalition backbench committee on climate and energy, said on Radio National on Wednesday that it would be better to “backload” emission reductions closer to when they need to be achieved, because by that time technology will be better or cheaper. In other words, we should delay cutting emissions.

He said: “That will give you the opportunity to actually use a lot of these technologies as they’re developing rather than jump in now and spend billions of dollars in capital investment in some renewable technologies that in three or four years could be redundant.”

But this idea seems to just be completely made up. If the aim is to reach a certain target by 2030, it will be cheaper to get there slowly, rather than to try to do it quickly at the last minute. Sending clear long-term signals to the electricity industry, which invests in assets that last decades, will be less disruptive than doing something at the last minute.

Indeed, that is the plea from industry: set the emissions reduction policies in place now, so that long-term decisions can be made.

As it happens, the Climate Institute modelled the exact question of the relative costs of taking action now, or leaving it to the last minute. The two cases they compared were not those being considered by the Finkel review but they showed convincingly that last-minute action causes large disruptions and comes with large social and economic costs.

‘Coal energy is cheapest’

Despite Finkel’s recommendations making very little dent in coal generation above business as usual, the recommendations have provoked a revolt in support of coal.

Abbott has labelled Finkel’s recommended clean energy target as a “tax on coal” and, on Radio National, Kelly said coal power is still “our lowest cost of electricity generation”.

That’s just not true. If you’re comparing the cost of new-build electricity, coal is the most expensive of all. And if you’re comparing the cost of existing power, that produced from wind or solar is by far the cheapest – often bidding into auctions at zero dollars, since the marginal cost of each watt-hour they produce is virtually nothing.

‘We should allow coal to get clean energy certificates’

As it happens, while it sounds perverse to let coal get clean energy certificates, this doesn’t seem like the worst idea being floated by the pro-coal commentariat.

Under the proposed clean energy target, if the benchmark were set high enough to allow so-called new “high-efficiency, low-emissions” coal power plants to receive clean energy certificates, it wouldn’t incentivise one to be built. Such a plant is clearly not economical to build now and, if it just scraped into the proposed framework, it would receive so few certificates compared to cleaner energy that it wouldn’t change the economics.

Indeed, even if it were set high enough to allow the cleaner existing coal power plants to receive clean energy certificates, all it would likely do is give a boost to gas and help encourage the dirtiest coal power plants to close earlier.