Turnbull outlines energy policy as prices surge

The Sydney Opera House and the city's financial district lit up at dusk. Power shortages and spiralling energy prices in some Australian states have led to growing anger particularly over the fact that the country is a major energy exporter.
The Sydney Opera House and the city's financial district lit up at dusk. Power shortages and spiralling energy prices in some Australian states have led to growing anger particularly over the fact that the country is a major energy exporter.PHOTO: BLOOMBERG

Australia wants power companies to provide reliable supplies of affordable energy

Australian Prime Minister Malcolm Turnbull yesterday unveiled a wide-ranging national energy policy that will demand companies provide a reliable supply of affordable energy, following growing concerns about soaring gas and electricity prices.

Releasing his long-awaited energy plan, Mr Turnbull revealed that his ruling conservative coalition would abandon existing government subsidies for renewable power projects from 2020.

Instead, power companies would be required to provide reliable supplies of energy and allowed to choose which sources of power they want to use.

Mr Turnbull rejected calls to impose minimum levels of clean energy – or a clean energy target – but said the companies must produce efficient power that would ensure Australia meets its global emissions targets.

“These guarantees will ensure there is a place for all power sources in the nation’s future energy mix – solar, wind, coal, gas, batteries, pumped hydro,” he said.

But the decision to reject a call by Australia’s chief scientist to introduce a clean energy target prompted criticism from the opposition Labor Party and renewable energy advocates.

Labor’s energy spokesman, Mr Mark Butler, accused the ruling coalition of trying to “destroy renewable energy”.

Professor Kenneth Baldwin of the Energy Change Institute at the Australian National University was quoted as saying the new policy “does not impose the true cost of greenhouse gas emissions on fossil fuel generation”.

Mr Turnbull’s plan comes amid power shortages and spiralling energy prices in some states, which have led to growing anger particularly over the fact that the country is a major energy exporter.

Australia is poised to surpass Qatar as the world’s biggest supplier of liquefied natural gas even as it faces looming domestic gas shortages and blackouts.

Local electricity prices have soared over the past 10 years, with prices more than doubling during that period in the states of New South Wales, Victoria and Queensland.

The Australian Competition and Consumer Commission has warned that surging price rises could lead to closures of factories and businesses as well as job losses across the country.

“Electricity prices have nearly doubled on top of inflation in most parts of Australia over the last decade, based on a variety of different factors,” the commission’s chairman, Mr Rod Sims, told The Straits Times.

A global survey by the World Economic Forum released last week found that energy price shocks were rated the leading risk facing Australian businesses. Of 136 countries, Australia was the only one where energy prices were ranked as the main cause of concern.

The situation has become so dire that the federal authorities have taken the extraordinary step of announcing plans to pay customers to turn down their air-conditioning, heating and ventilation during peak periods to avoid blackouts.

The A$36 million (S$38 million) scheme, including funding from New South Wales, will involve trials of smart thermostats or remote devices which can monitor power use. Customers will receive A$25 or movie vouchers or free electricity on weekends each time they reduce energy use during peak periods.

“The energy saved can then be directed to help stabilise the grid when and where it is needed,” Environment Minister Josh Frydenberg said last week.

The main problem – according to the government and most experts – is that the bulk of the nation’s gas is being sold offshore, leaving the domestic market starved.

In attempting to shore up the local gas supply, Mr Turnbull has threatened to limit gas exports. He held meetings last month and this month with the heads of the country’s largest gas exporters – Santos, Shell and Origin Energy – and secured an agreement from them to boost domestic supplies.

Australia’s annual liquefied natural gas sales are expected to reach 74 million tonnes in the year to June 2019, with Japan, China, South Korea and Singapore as the main buyers last year.

To secure local energy supplies, Mr Turnbull has also urged state governments to remove their curbs on further extraction. But the states have been resistant because of concerns about the impact on the environment and farming.

A version of this article appeared in the print edition of The Straits Times on October 18, 2017, with the headline 'Turnbull outlines energy policy as prices surge'. Print Edition | Subscribe