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If Australia’s energy policy debate was a theatre production, it would be labelled ‘high farce’.

Throwing $60 billion to the sun and the wind, destroying a grid which was renowned for not only its expanse, but its reliability and sending power prices from the very bottom of the league table, all the way to the very top, might sound like the work of deranged or scurrilous thespians. Except, this is the considered and deliberate work of successive Liberal/National and Labor/Green Federal governments.

The seriousness of what is, otherwise, a tragic comedy hasn’t been lost on Gary Banks and Fred Hilmer. Banks and Hilmer are elder statesmen of economic policy, and responsible for some of Australia’s most important and lasting economic reforms.

They are aghast at what has happened to energy policy in Australia and are astonished that Australia is the only G20 Country with legislation prohibiting nuclear power.

On these pages, we have repeatedly advocated for nuclear power; simply because it ticks the three essential power generation boxes: security, reliability and affordability. For those fretting about carbon dioxide gas, nuclear power is the only stand-alone generation system that ticks the emissions-free-generation box, too.

Here’s what Banks and Hilmer think about Australia’s infantile obsession with wind and solar power, and what this Country should do about it.

Scale back Paris emissions commitment: Banks, Hilmer

The Australian

Adam Creighton

11 October 2017

Two of Australia’s most respected economic reformers have urged the government to scale back its commitment to the Paris emissions-reduction agreement and revive a market-based mechanism to curb greenhouse gases, suggesting the renewable energy target is damaging the country’s competitiveness.

Lamenting at least a decade of reform paralysis, Keating government adviser Fred Hilmer and Gary Banks, the inaugural Productivity Commission chairman, said they had all but given up on rational reform in the energy market. They were now left to hope that blackouts in Sydney and Melbourne this summer inject sense into what they saw as an increasingly dishonest policy debate.

Professor Banks sympathised with Australians who were “bemused” about rising power bills amid claims of a low-cost, renewable-energy future

“The notion that there’s a trade-off, that we can’t have it all, that there’s no free lunch, that’s not been made clear to the public,” Professor Banks said. “In fact when you look at it, we’ve ruled out all the least-cost ways of transitioning to a low-emission economy … we’ve ruled out nuclear and essentially ruled out gas too.

Australia is the only G20 country with a legislative prohibition on nuclear energy.

Professor Hilmer, whose report for the Keating government unleashed a wave of pro-competition reforms in the 1990s, including helping to form the national electricity market, said blackouts this summer “would be great” to refocus the energy debate.

He and Professor Banks are both frustrated with state bans on gas ­exploration. “I can’t believe the problems (with fracking) are all that real; otherwise the US would be committing suicide,” Professor Hilmer said.

He suggested claims about the capacity of new batteries to store renewable energy had been exaggerated. “We need a blackout in South Australia when the new battery is going,” he said. “You can look at the sun shining and say renewable energy is cheap but it doesn’t solve storage. These huge batteries — half an hour’s power for Adelaide, or not even.”

In an allusion to South African billionaire Elon Musk’s plan to build the world’s largest battery in South Australia, Professor Hilmer said: “To say you have cheap power ‘most of the time’ is a ­disaster.”

Professor Banks, now a professorial fellow at the Melbourne Institute after 15 years leading the Productivity Commission, said Australia was getting ahead of other countries, notably the US, in pursuing low-emissions targets, to its economic detriment.

“We have to go back to start to look at whether we’ve signed up to something that for our economy is too tough,” Professor Banks said.

“Not only are we choosing to transition to low emissions at a high cost, which is the RET or RET Mark II, we’re doing it over a compressed timeframe.”

In June the Turnbull government reaffirmed Australia’s commitment along with more than 100 countries to reduce emissions by at least 26 per cent by 2030 from 2005 levels.

Brendan Lyon, head of Infrastructure Partnerships Australia, which hosted the discussion with The Australian this week, said: “Paris is the hair shirt and we’ve popped on a straitjacket too.”

The comments will increase pressure on the Turnbull government, which has appeared divided on energy policy since the wake of blackouts in South Australia last year, to reject chief scientist Alan Finkel’s recommendation in June to introduce a clean energy target that would mandate a rising share of low-emissions energy provision after 2020.

Professor Hilmer and Professor Banks said the quality of analysis and modelling of energy policy, including in the Finkel review, had not been transparent, rigorous or comprehensive enough. “We’ve been cursed with multiple objectives,” Professor Hilmer said.

Professor Banks suggested the Productivity Commission should and could have made “a much bigger contribution” to the development of energy policy.

On Monday Energy Minister Josh Frydenberg hinted the government might not replace the Renewable Energy Target, which will require 33 terawatts of renewable energy generation by 2020, arguing wind and solar power were increasingly viable without support. The prospect of further blackouts when AGL’s Liddell coal-fired power station in NSW closes in 2020 has increased attention on national energy policy.

Professor Banks said Australia had ­ignored a 1991 report — the first of its kind for a developed country — by the Productivity Commission’s forerunner, the Industry Commission, which had laid out the best way to wean the economy off fossil fuels. “It was clear: it had to be an economy-wide (approach), not fixated on particular greenhouse gases, and use market instruments to ensure least cost abatement occurs,” he said. “Here we are 25 or 26 year later and we haven’t done any of those things.”

Professor Hilmer, who was a vice-chancellor of the University of NSW and Fairfax chief executive, questioned whether a government would be “brave enough to (tell voters): actually let’s stop and start again because we’re hurting this country by making it high cost”. Reform was easier in the 1990s, he said.

“We had a ‘burning platform’, now there’s complacency,” he said. “Second, we had bipartisanship; now we don’t even use the word. Third, we had strong leadership by prime ministers.”

The Turnbull government has struggled to implement the successor to Professor Hilmer’s 1993 ­National Competition Policy: Ian Harper’s competition review, released in 2015 under Tony Abbott.

The Australian

Cutting emissions raises costs and lowers security

The Australian

Editorial

12 October 2017

By dint of deliberate policy action the politicians have conspired to create an energy pricing and supply crisis in our energy-rich nation and now have come up with a novel solution. They call it demand management. Rather than offer what we have come to expect in the First World — being supplied with power when we need it at an affordable price — the government is encouraging us to limit our consumption.

It is so keen to cut demand that it will spend taxpayers’ money on pilot schemes through the private and public power companies of Victoria, South Australia and NSW to offer financial incentives for households to curb their electricity use. People will be paid not to use power — to switch it off — at times of peak demand such as on hot summer days when most airconditioners run. Smart devices might turn coolers down or off to win rebates on power bills in the same way some energy-intensive factories receive payments to shut down during peak periods.

This is what we have become: one of the largest exporters of energy (through coal, liquefied natural gas and uranium) is so hellbent on boosting and subsidising renewable energy to cut carbon emissions that we now have grave concerns about the rising cost of power and possible shortages, and will pay people not to use electricity. It may be time for the Yes, Prime Minister scriptwriters to come out of retirement. Or perhaps Samuel Taylor Coleridge could be reworked into the Rime of the Ancient Coalminer with power, power, everywhere but not a switch to flick.

Malcolm Turnbull and Energy Minister Josh Frydenberg have been mulling over energy policy for most of the year, particularly since Chief Scientist Alan Finkel handed down his report in June. Yet still we wait for official word on whether the government will adopt Dr Finkel’s key recommendation of a clean energy target — something former prime minister Tony Abbott has railed against and the government has been crab-walking away from. “There has been too much sloganising, too much politics, too much ideology and, frankly, too much idiocy, and we’re not going to make the same mistakes that were made in the past,” Mr Turnbull said yesterday. Yet the major errors, such as the carbon tax and renewable energy target, have been government interventions and the only proposed solutions are more interventions. As a nation, through actions of federal and state governments, we have inflicted economic self-harm, eliminating our natural economic advantage of cheap and plentiful energy.

Two of the nation’s leading non-political economic reformers, Fred Hilmer and Gary Banks, told our economics correspondent Adam Creighton yesterday that it might be time to wind back the nation’s emissions reductions target under the Paris Agreement, or at least make it subservient to the priorities of cost and reliability. “Not only are we choosing to transition to low emissions at a high cost, which is the RET or RET Mark II, we’re doing it over a compressed timeframe,” Professor Banks said.

The Prime Minister, on the other hand, remains committed to the target (which was agreed under Mr Abbott) and insists we can have our cake and eat it. “You’ve got to make sure that you keep the lights on, people can afford to keep them on, and you meet your emissions reduction obligations,” he said. However, it seems clear that this trifecta — aimed at solving the energy “trilemma”, as Mr Turnbull refers to it — cannot be achieved. Meeting the emissions targets is undermining the cost and security objectives.

Still, we wait, as Mr Turnbull keeps “working through this very complex area very carefully” to finalise a policy. His leadership nemesis Mr Abbott is stepping into the policy vacuum and Labor leader Bill Shorten is promising to go even further and faster down the perilous emissions reductions path.

In South Australia the Labor government is spending $550 million trying to remediate its renewables-dependent network and the Liberal opposition has additional costly plans to do the same. This is our glimpse into an energy future where no one will need to be paid to power down their appliances because it will be too expensive to switch them on, or the electricity will be out anyway.

The Australian

With wind power output nothing but pure chaos, demand management is about the best that these lunatics can come up with.

When your power generation system depends on whether the sun is up and/or whether the wind is blowing, but not too hard, the only response available is to simply tell power consumers to “go to hell”.

Not many businesses would survive by putting their customers’ needs dead last. But, somehow, electricity supply is different; once the sun and wind get to make the call.

One retort STT saw during the week was a suggestion that, instead of turning down their air conditioners or turning them off at the behest of nervous grid managers or pious politicians, householders and businesses should do precisely the opposite.

By cranking up their air conditioners and dialling down their thermostats to sub-Antarctic levels, collectively, power consumers will engineer mass load shedding events across whole States.

The political science behind such a move is as crude as it is brilliant. By plunging themselves, and all of their compatriots along with them, into sweltering darkness, the proletariat, as a whole, gets to experience the inevitable, Stone Age consequences of attempting to run on sunshine and breezes.

Remember, that the statewide blackouts and mass load shedding suffered by South Australians has always been about collapses in wind power output – the infamous 28 September 2016 blackout, because the wind blew too hard and turbines automatically shutdown.

Gary Banks and Fred Hilmer are right. All Australians need to experience the kind of blackouts which South Australians have come to expect as part and parcel of their miserable lives.

Perhaps a rebellious and collective use of air conditioners during this coming Summer’s first heat wave will do the trick.

Welcome to your wind powered future!