AUSTRALIAN farmers hope critical recommendations in the Finkel review of national energy policy can help terminate the decade long ‘climate wars’ and reverse the current trend of escalating on-farm electricity costs.
Last Friday, Australian Chief Scientist Dr Alan Finkel handed to COAG the report from his expert panel’s independent review which was first commission in October last year.
The report’s findings ignited an immediate debate on whether its suggested Clean Energy Target (CET) can deliver on various urgent reform needs like lower greenhouse gas emissions combined with reliable and affordable energy supply.
“Ongoing uncertainty is undermining investor confidence, which in turn undermines the reliable supply of electricity and increases costs to consumers,” the report said.
Dr Finkel said the National Electricity Market (NEM) was 5000 kilometres long, spans five states and one territory and had more than nine million metered customers.
“It’s essential that we get it right,” he said.
“If we adopt a strategic approach, we will have fewer local and regional problems and can ensure that consumers pay the lowest possible prices over the long term.”
The report’s blueprint will aim to deliver four key benefits to reform the NEM: future reliability; increased security; rewarding consumers; and lower emissions.
National Farmers’ Federation (NFF) President Fiona Simson said the Finkel report “certainly can’t just end up on the shelf” because Australia’s current electricity system was “untenable”.
Ms Simson said energy was a “huge cost” for farmers, whether they were irrigators, livestock producers or any other type.
But she said currently, there was a virtual policy vacuum with the current Renewable Energy Target due to end in 2020 but nothing beyond it.
“We’ve had all sorts of talk from all sides of politics about what they particularly want but in the mean time we’ve seen blackouts in SA and we’ve seen electricity costs absolutely escalating across Australia and particularly for farmers,” she said.
“We’ve seen spikes in tariffs and price hikes of 40 per cent plus – it was time for the Finkel review and time to put some sensible options on the table for government to consider and we think that’s what Finkel has delivered.”
Ms Simson said the NFF’s policy priority focussed on a market based mechanism that was “technology neutral” and Dr Finkel had “certainly given some good options for there to be a very sensible discussion around energy policy, going forward”.
“What most business groups stated and what we all supported, prior to the review, was something that could receive bipartisan support and would see us make this transition from largely fossil fuel powered to lower emissions energy, in a sustainable and affordable manner,” she said.
“Certainly it’s looking like there’s the beginnings of some good discussions across government at the moment.
“From what we’ve read so far the review focusses on incentives to move more towards sustainable, affordable and reliable electricity, which is a good thing and it’s more about carrots than sticks, so we won’t talk about the climate wars.”
Ms Simson said 2020 was the date the NFF was “shooting for” to see “real reform” implemented in response to the Finkel review but conversations on its various suggestions like the CET must happen “urgently”.
“We badly need investment in the electricity and energy sector – people can’t afford to keep paying these astronomical hikes and we’ve seen farmers dusting off their old diesel generators again,” he said.
“Clearly the urgency amongst farming communities is certainly paramount so something needs to happen now.
“Our policy is around a market based mechanism and Dr Finkel has put several of those on the table that are worthy of consideration.
“Whatever we decide on, it’s essential that it can receive bipartisan support and can actually transition us to a more affordable and reliable electricity system in the very near future – that’s what we need.”
NFF member Farmers for Climate Action said the Finkel report’s recommendation of 28 per cent emission reduction for the electricity sector was “inadequate” and could shift the responsibility for reducing pollution to other industries, including agriculture.
But the gorup’s CEO Verity Morgan-Schmidt said the report was a “step forward” in resolving the stalemate surrounding energy policy but was disappointed modelling did not call for stronger reductions in emissions from the energy sector.
The Finkel report’s executive summary said Australia’s electricity system was in transition and there was no going back from the “massive industrial, technological and economic changes facing our electricity system”.
“We are at a critical turning point,” it said.
“Managed well, Australia will benefit from a secure and reliable energy future.
“Managed poorly, our energy future will be less secure, more unreliable and potentially very costly.
“Governments have made commitments to a lower emissions future but the pathway is blocked by uncertainty about how to get there.
“If we don’t take immediate action, or even if we continue as we have been, Australia risks being left behind.”
The report said the reliability of Australia’s future electricity system would be underpinned by an orderly transition that integrated energy and emissions reduction policy and governments must agree on and implement a mechanism as soon as possible.
“All governments need to agree to an emissions reduction trajectory to give the electricity sector clarity about how we will meet our international commitments,” it said.
Prime Minister Malcolm Turnbull said governments would now consider the report “very carefully” and provide responses while consulting with each other.
He said the CET mechanism had a number of “very strong virtues” with one being that it was “technology agnostic” in providing incentives for lower emission technologies, not simply incentives for zero emission or for renewable technology which the current RET does.
“I think it has a lot of merit and as I say we will look at it very favourably but we will be considering it carefully, considering the Finkel Review with the care and respect which the hard work of the panel warrants,” he said.
Mr Turnbull said under the CET mechanism proposed by Dr Finkel, there was no barrier to building a coal fired power station.
“Under his approach, there is a benchmark that would be set, an emissions level and new generation which came under that, would receive, depending on how far they came under it, a portion of a certificate,” he said.
“So if there were zero emissions, they would receive a full certificate, if they were half that benchmark, perhaps a gas plant or clean coal coal-fired power station with carbon capture and storage, they might receive a portion or half of it.
“It’s proportionate - but that’s an incentive for new generation, it doesn't prevent somebody building a new coal fired power station.”
Opposition leader Bill Shorten said Labor wanted to see the energy system “crisis” and lack of action on climate change and ‘climate change wars’ of the last 10 years finished.
“How to handle the lack of climate policy in this country, and the Finkel report will be the Prime Minister's biggest test since he rolled Tony Abbott,” he said.
“What the Australian people want to see is that their interests are being put first, not the factions of the Liberal Party.
“The Labor Party is prepared to carefully consider the Finkel report, and we are prepared to put the national interest and even compromise on some of the gold-standard changes we think need to be made just so we can stop arguing about climate change and do something to restore investor certainty for jobs, and doing something about the wholesale electricity prices.
“But in return for bipartisan support, Mr Turnbull is going to have to be fair dinkum.
“He is going to have to stand up to the cave dwellers of the right wing of his party and face them down.”