Climate change is sometimes presented as a matter of belief. But climate change is a matter of science that can be easily explored on the IPCC website. Some 97% of the world’s climate scientists writing in peer reviewed scientific journals agree that human activity is driving global warming.
For more than a decade Australia has failed to implement well thought out evidence based policies to transition to a low emission economy.
One of the results has been a dysfunctional electricity energy market. But also poor policy and competition policy contributed to the establishment of dominant electricity power providers, AGL, Origin and Energy Australia (owned by CLP Holdings Hong Kong, controlled by the Kadoorie family), a result of the aggregation from the sale local state power generators. In about 1995 the NSW Carr Government appropriated the Peel Cunningham County Council (PCCC) and all its assets (Tamworth City Council bought their current Chambers from PCCC for about $4 million) and aggregated it with Country Energy and then the State Labor and Coalition governments sold them off to AGL, Energy Australia and Delta and other smaller operators. This has led to a situation where it appears that these dominant operators’ derive excess (monopoly or oligopoly) profits.
It has been asserted by some that the blackout in South Australia (SA) in 2016 was a result of green energy. As determined by the Australian Electricity Market Operator (AEMO) report, a storm destroyed SA power lines. The SA interconnectors from Victoria to source backup electricity from that State also shut down to protect itself from damage, as did wind turbines, and separated from AEMO at 4.16 pm on the 28 September 2016. Its backup generators did not have sufficient time after the failure to start up.
Australian gas producers have advised that they have 105 petajoules of uncommitted gas that can meet the estimated short fall on the eastern seaboard in the next 12 months, so there is not a current emergency gas shortage.
There is another failure of public policy. Australia, with Qatar, is the largest gas producer in the world. Australia has allowed the producers to sell most of the gas overseas and set the local gas price at ostensibly the export price and failed to reserve gas for local use, as the USA has. Qatar has levied a 35% royalty and raised $22 billion per year. Australia has raised about $800 million a year from the Petroleum Resource Rent Tax (PRRT). The value of royalties paid to the States is not clear but it seems Queensland received a total of $33 million in 2016. Western Australia has apparently paid subsidies to the North West gas shelf companies of about $8 billion.
Norway has established a sovereign wealth fund of $1 trillion, funded mostly from its share of the North Sea oil, on the back of good public policy.
Given that there is not a gas supply emergency, there is no immediate urgency to develop the Santos CSG at Narrabri, the due process of environmental and other assessments ought be allowed to continue. There are substantial questions to be answered, as evidenced by the 23,000 submissions lodged against the project. If Santos is able to put in place appropriate environmental safety measures then it is possible the project could proceed. But one of the major risks, contamination of the ground water in the Gunnedah and Great Artesian Basin, would cause irreversible damage to that water supply, and would probably permanently impair agricultural production across a potentially wide area.
The current position of the Australian gas market and electricity supply is the result of more than a decade of poor policy formulation and implementation by State and Federal governments of all sides, and is contrary to the best interests of Australia and its citizens.