As Kean’s comments demonstrate, Australia’s state governments are moving on, too. Including Liberal ones.
Consider four of the developments in the real world – the digital world of Kean’s metaphor, as opposed to the vintage-model videotape – in Australia in just the past four days.
On Tuesday, the world’s biggest mining company, BHP Billiton, announced its plans to sell off all its thermal coal mines, the type of coal burned to make electricity, within two years. It’s also selling down some of its other carbon-intensive assets and has committed to net-zero carbon emissions from its operations by 2050. Executive pay is now linked to meeting the firm’s emissions targets.
On Thursday, the National Farmers Federation announced its members had voted to adopt an economy-wide policy of net-zero carbon emissions by 2050. The peak farm industry body has long been one of the most politically conservative lobbies in the land. “There is a huge potential for Australia to be a global leader in low-emissions agriculture,” said the NFF president, Fiona Simson. Some farm sectors are well ahead in cutting their own emissions – the red meat industry has committed to net zero by 2030.
On Friday, the big Australian insurance firm Suncorp announced it would no longer invest in, finance or insure any new oil and gas ventures. That’s on top of its policy banning dealings with new thermal coal. It has pledged to phase out all its thermal coal exposures within five years.
Also on Friday, it was reported that Australia’s biggest electricity generator, AGL, had lodged planning documents disclosing its first concrete steps towards shutting its coal-fired Liddell power station in 2022. The big Liddell generators in NSW’s Hunter Valley are almost 50 years old. The plant is past its useful life. AGL, Australia’s No. 1 emitter, has committed itself to net-zero emissions by 2050. It, too, will link executive pay to meeting its emissions target.
New renewable energy projects are placed to take over Liddell’s workload of making electricity, according to the Australian Energy Market Operator.
All of these outfits – BHP, the Farmers Federation, Suncorp insurance, AGL energy – have been mainstays of the status quo and part of the infrastructure of the carbon-based economy. They are not early movers. Far from it. They are laggards. Even some of the world’s biggest fossil fuel companies, including BP and Shell, and the world’s most rapacious Wall Street financiers such as Goldman Sachs and JP Morgan were ahead of them in announcing big commitments to cut emissions and begin moving away from coal and oil.
These businesses are the foundations of the carboniferous age. They recognise they face a question of commercial survival. BP’s chief executive, Bernard Looney, said: “We are aiming to earn back the trust of society. We have got to change, and change profoundly.”
And it’s not just trust, not just the social licence to operate. You can’t make a mighty carbon capitalist repent of his ways unless his billions are directly threatened. And they are threatened by price competitiveness.
In much of the world, but especially here: “In Australia, renewables are by far the cheapest new source of bulk generation,” says a Sydney-based energy analyst for Bloomberg New Energy Finance, Lara Panjkov.
“All the big oil companies, the big car companies, the big utilities are hedging their bets,” observes Giles Parkinson, founder and editor of Australia’s Renew Economy website. “Each one is going to split itself into two companies – one good, one bad, one dirty, one clean. The dirty ones will gradually die and the new ones will take over unencumbered by their dirty pasts.”
Parkinson points to the market capitalisation of electric carmaker Tesla. It’s the most valuable US car manufacturer of all time. And it’s now valued at three times the combined market cap of all three biggest US automakers, GM, Ford and Fiat Chrysler. Tesla isn’t the only one that makes electric vehicles – all the big three are working on multiple EV models too. But Tesla is the only one that does not make petrol-powered cars.
Australia has lost a decade courtesy of Canberra. The Australian transition started pretty well. For a while, both major parties accepted reality. Recall that John Howard and Kevin Rudd both went to the 2007 election committed to a carbon emissions trading scheme.
The bipartisan consensus was broken by the partnership of Tony Abbott and Barnaby Joyce. They skilfully created a fantasist populism. As a political manoeuvre, it was brilliant. Each used the issue to take the leadership of his party and to bring down a Labor government. Two Labor governments, actually.
Scott Morrison exuberantly embraced their style, holding aloft a lump of coal in the House of Representatives. It probably helped him win last year’s election.
The Morrison government knows that it must move on, but it has so far moved very slowly, cautiously and stealthily. It has enabled the states to get on with multi-billion-dollar renewables plans, for instance, but remains inert on its own policies.
Labor, recovering from the trauma of last year’s election, has yet to decide its policy for the next. But in the interim its Hunter Valley MP Joel Fitzgibbon has embarked on a one-man campaign to force Labor to dump its energy and emissions policies to move closer to the government’s.
Labor is most unlikely to follow his lead. He’s re-litigating the last election. But, like Abbott and Joyce from the other side of the chamber, he’s marking out his own populist political brand at the expense of his party. And the future of the country. And it’s driving many in Labor crazy with frustration.
In the real world, Australia’s lost decade now presents it with a set of urgent problems. First is keeping the lights on.
“There’s a big problem in NSW,” Matt Kean explains. “It took NSW 60 years to build the existing power grid. All the generators, all the substations, all the poles and wires, everything. In the next 15 years, four of the five existing power stations will close. It has nothing to do with climate change. These are old pieces of machinery.
“I’m going to have to replace the majority of that in 15 years. It’s huge. And we have fiddled while the whole thing burned. Sitting on our hands has failed for the last decade.”
What of the argument that only coal or gas can make up the looming shortfall in reliable electricity? It’s flat wrong:
“Our analysis,” says Bloomberg NEF’s Panjkov, “suggests that co-locating renewables and batteries can be attractive for the provision of new dispatchable power. Today we estimate that approximately 711 megawatts of new renewable energy plants with paired storage have secured financing.”
Everyone knows that Tesla built a “big battery” in South Australia to help with back-up power. Did you know that France’s Neoen is proposing to invest $3 billion in a solar and wind project in South Australia with a battery 10 times the size of Tesla’s? The technology is moving on apace.
The other problem is economic survival. Kean again: “Take climate change out. There are global megatrends moving. If you are still producing goods high in carbon intensity, you won’t be able to export,” a reference to the move for countries to impose trade tariffs on carbon offenders. “Can you imagine the impact on our national prosperity if we can’t trade? Certain politicians are screaming and shouting the populist line but the reality is it’s holding our economy back.”
So this presents Australia with urgent problems, but also urgent solutions. As the country looks to emerge from the COVID-cratered economic disaster it’s now in, renewable energy presents tremendous opportunity.
Australia’s renewables, properly exploited, offer the cheapest power source on the planet. The eminent economist Ross Garnaut said this week: “Investments over the next few years will have to make economic sense in the low-carbon global economy of the future. The good news is that there is immense opportunity for profitable investment to build a prosperous place for Australia in that future world economy. The prize from post-pandemic reconstruction is huge.”
Enormous amounts already have been invested in the sector, but the pace is faltering. Kean is frustrated with the Morrison government’s renewables policy constipation under Energy and Emissions Reduction Minister Angus Taylor: “Industry needs certainty. Right now, people won’t invest. They need to know the RET [renewable energy target] won’t be ripped up. They need a long-term energy policy so they can have confidence when they invest.”
The RET system, invented by Howard and extended by Rudd, has been essential in driving renewables projects. But the existing RET expires this year. Beyond that, all is darkness. Everyone waits for Angus Taylor to shed some light.
“We need to demonstrate true leadership,” says Kean. “Change is coming and the community relies on us to ensure they can get cheap electricity that’s also clean. It would be better if there were a national framework to co-ordinate all of that.”
True leadership. Now that would be a very valuable asset.