I want to thank the organisers for inviting me to open this ANU Energy Update.
This is an important annual event in the calendar for Australian energy policy.
I congratulate Professor Ken Baldwin and the Energy Change Institute for their initiative in bringing together researchers, policymakers, regulators and industry representatives to discuss issues around energy.
You will be hearing today from the Australian Energy Market Operator and the International Energy Agency – and you will have in depth sessions on the national hydrogen strategy and the future of the electricity market.
For my part, I want to set the scene by talking about the politics of energy and climate in Australia.
It’s not going to be a pretty story.
In an ideal world, energy and climate policy would be driven by the best science, the latest technology, rigorous economic analysis, well-designed regulation and well-functioning markets.
Policymakers would act in the national interest, drawing on facts, data and analysis to devise rational responses to the complex issues that confront us.
Yet for many years in Australia, debates over energy and climate policy have instead been characterised by sectional interest, distortion of the facts, ideology and fear campaigns.
All of this has meant that instead of pursuing sound policies in the interests of all Australians, the government is in a state of inaction, obstruction and delay.
As you know, the energy market in Australia has been bedevilled by a fundamental problem of uncertainty because of the lack of national policy to support new investment in electricity generation.
Beyond electricity, the policy vacuum is also deterring the investment needed to reduce emissions in the transport, industrial and agriculture sectors.
This has been a major policy failure – perhaps the most consequential policy failure of the modern era in Australia.
It’s not a failure which has come about from a lack of information or evidence, from inaccurate data or flawed analysis.
On the contrary, there is widespread agreement amongst experts about the risk posed by climate change and about the policy responses needed to reduce Australia’s carbon emissions at the lowest cost to our economy.
The policy failure has been driven by political failure:
The costs of this failure are being born by Australian households and businesses facing higher prices, risks to the reliability of energy supplies and missed economic opportunities.
These costs will only grow into the future.
For Labor’s part, we do not seek to avoid responsibility for our part in this political failure.
Naturally we believe we are on the right side of this debate.
But we acknowledge that we have made mistakes; one so significant it destroyed a Prime Minister.
In government, we were not able to prevail over those who prosecuted scare campaigns.
And at this year’s election, we put a comprehensive policy on energy and climate before the electorate but were not able to win the confidence of the voters.
As you know in 2009 the Rudd Government introduced legislation for an emissions trading scheme to cap Australia’s greenhouse gas emissions.
Today is the tenth anniversary to the day of the vote in the Senate by the Liberals, Nationals and Greens to defeat the legislation for that Carbon Pollution Reduction Scheme.
The Coalition and the Greens bear a heavy responsibility for the fact that, a decade later, Australia still does not have an effective policy to tackle climate change by reducing emissions.
The two Liberal Senators who bravely cross the floor, Judith Troeth and Sue Boyce, were firm in their support for the CPRS.
This was not a symbolic gesture on their part which would have been reversed if the Greens agreed to vote for the CPRS.
Senators Troeth and Boyce wanted the CPRS to pass.
The myth propagated by the Greens, that if they had voted for the CPRS these two Senators would have remained with the No vote, is just that – a myth.
If the five Greens Senators had voted with Labor, the CPRS would have passed the Parliament.
A carbon price would have been embedded in the economy, reducing emissions in the most environmentally-effective and economically-efficient way, and driving the rollout of clean energy technologies.
Instead, Bob Brown, Christine Milne and the rest of the Greens voted with the Coalition’s climate hardliners, Senators Cory Bernardi, Barnaby Joyce, Eric Abetz and Ian Macdonald, to block the CPRS.
That was a massive error of political judgement.
It has had disastrous and long-lasting consequences for Australia’s ability to respond effectively to climate change.
Australia’s annual emissions are now projected by the Department of the Environment and Energy to climb to 540 million tonnes in 2020 and to keep rising to 563 million tonnes by 2030.
By contrast, under the CPRS Australia’s emissions would have been reduced to 459 million tonnes in 2020.
That is 81 million tonnes lower than now projected, or more than all of the fugitive emissions from the Australian coal mining, and oil and gas production industries combined.
This is because the CPRS’s provisions to increase Australia’s targets would have been triggered by international action in the lead up to the 2015 Paris Conference.
That means that by voting to defeat the CPRS, the Greens voted against cumulative additional emissions reductions of 218 million tonnes between 2010 and 2020 – emissions reductions which would have come on top of the actual outcomes we have seen over the last decade in Australia.
And by voting against the CPRS, the Greens also voted against a mechanism putting Australia’s emissions on a downward trajectory beyond 2020.
Instead, as a result of their actions, we are now on a trajectory which will see emissions rising until at least 2030, according to the Government’s projections.
The rationale given by the Greens for voting against the CPRS was that its emissions reduction targets were inadequate and its transitional assistance for emissions-intensive industries was too generous.
Yet two years later, the Greens voted in favour of Labor’s Clean Energy Future package, which had the same 2020 emissions targets as the CPRS and vastly more generous assistance for emissions-intensive industry.
The Clean Energy Future package provided more transitional assistance than the CPRS for coal fired power generators, the steel industry and the underground coal mining sector.
While Labor’s Clean Energy Future package was in place there were substantial declines in Australia’s emissions and strong growth in investment in clean energy while the economy continued to grow healthily.
The policy was working, but the political damage had been done.
Tony Abbott won the 2013 election on a carbon scare campaign, repealed the Clean Energy Package, and emissions resumed their upward trajectory.
There is no denying that Labor made mistakes in its prosecution of the climate change debate in those years.
We should have gone to a double dissolution election in 2010.
But much of the political momentum Abbott gained on carbon pricing had its origins in that 2009 Senate vote on the CPRS.
As my colleague Mark Butler has written:
“Had the CPRS passed the Parliament in 2009, an emissions trading scheme would likely have been operating for some years before [Tony] Abbott was able to become Prime Minister. And it’s likely that Abbott would not have been able to build a platform to tear down such a large reform after that time.”
Fast forward to this year.
Labor went to the federal election proposing:
Climate and energy policy were not everything in our election loss.
But the way the issue was framed by our political opponents, certainly did cost us electoral support in parts of the country.
Let me be clear: the Government and Senator Canavan in particular flat out lied about our policy.
They misled and scared coal mining communities with the claim that Labor was targeting them in the Just Transition element of our policy.
In fact, our Just Transition approach would not have had a negative impact on any coal mine.
In the current Parliamentary term Labor will review its policies in the light of developments in energy markets and in the wider economy, and international efforts to tackle climate change.
A basic lesson from the last several years is that you can have a first-best policy solution, but unless you earn the confidence of the public you will never be in a position to implement it.
So Labor will review its policies – but not its core values.
As the ALP’s Election Campaign Review has stated:
“A modern Labor Party cannot neglect human-induced climate change. To do so would be environmentally irresponsible and a clear electoral liability. Labor needs to increase public awareness of the costs of inaction on climate change, respect the role of workers in fossil-fuel industries and support job opportunities in emissions-reducing industries while taking the pressure off electricity prices.”
All of those involved in the political failure of the last decade need to engage in honest reflection.
It’s not comfortable.
But if a way out of the impasse cannot be found, future generations will not thank us.
This impasse has been created not only by the Coalition, and by the climate deniers, right-wing ideologues and vested interests who act as a cheer squad for delay and inaction.
Progressive forces must also accept some share of responsibility.
The Greens are a party which seeks to increase its electoral support from progressive voters by attacking Labor on climate change.
We saw this dynamic when the Greens voted against Labor’s CPRS.
We saw it again at this year’s federal election.
The Greens promoted the anti-Adani caravan as an opportunistic tactic to boost their Queensland Senate vote.
Through this exercise, they succeeded in re-electing their Queensland Senator – but they also helped the Coalition to win by retaining marginal seats in central Queensland.
The question for the Greens is whether they place a higher priority on winning votes at Labor’s expense than on supporting action to reduce Australia’s greenhouse gas emissions.
Elements of the environmental movement also bear a share of responsibility.
In 2009 environmental groups campaigned against the CPRS, a classic case of making the perfect the enemy of the good.
As a result, Australia is still in the midst of a “climate war” with no real climate policy and has higher emissions today than under a scenario in which the CPRS was implemented.
In this year’s election campaign, some environmental organisations preferred to pressure Labor to commit to closing down the coal mining industry rather than focussing on the Coalition’s inadequate policies.
Some explicitly defined opposition to the Adani mine as the “sole test” – to use their language – of a political party’s climate credibility.
Now we face three more years of a Coalition Government presiding over increases in Australia’s emissions and with emissions reduction targets that are less ambitious than called for by the Paris Agreement.
For the moment the Coalition may be in the ascendancy.
Yet its decision to politically weaponise climate change rather than to engage in responsible policy-making has come at great cost to Australians.
As a result of the Coalition’s approach, we have:
The Coalition has fostered a divisive and polarised public debate.
A debate where the Minister for Energy and Emissions Reduction is so obsessed with landing a political hit on the Mayor of Sydney that he uses falsified data.
Think about it: a Cabinet minister signed a letter based on a forged document in order to generate a media attack on someone he apparently regards as an “enemy” in the climate wars.
It’s tempting to dismiss this as stupid and petty.
But it is profoundly disturbing in what it says about the Government’s attitude towards facts and standards of Ministerial conduct.
The business community is now understandably frustrated with the political blockage on climate policy.
CEOs bemoan the shortcomings of the political system for the protracted uncertainty over climate policy.
Yet many business leaders helped steer Australia down this political cul-de-sac.
As recently as late 2007 the Business Council of Australia disgracefully opposed Australia ratifying the Kyoto Protocol.
I well recall the gusto with which industry groups like the Electricity Supply Association, the Minerals Council, automotive industry groups, the Food and Grocery Council and even the Housing Industry Association, prosecuted scare campaigns, including advertising campaigns, against Labor’s Clean Energy Package in 2011 and 2012.
And just last year, we saw the irresponsible and demonstrably untrue claim by the Business Council that Labor’s 45 per cent reduction target for 2030 was “economy wrecking.”
The business scare campaigns focussed on the cost of reducing emissions.
But by blocking sensible policies and prolonging confidence-destroying uncertainty, these scare campaigns have only served to increase costs.
The costs now being incurred include:
Perhaps most importantly there are also the lost opportunities for Australia to develop clean energy and low emissions technologies and businesses.
The world is in the midst of a transformation in how we produce and use energy.
This transformation will not come without costs, but it will also deliver significant economic benefits.
The challenge of addressing climate change is too often portrayed as a burden when it can be a substantial driver of investment, new businesses, economic modernisation and the creation of well-paying, skilled jobs.
In no sector is this more the case than in energy.
The rest of the world is embracing the job opportunities associated with the shift to clean energy.
It’s not just investment in cheap and clean renewable energy needed to replace ageing and increasingly unreliable power plants facing closure.
It’s energy storage, distributed small scale electricity generation, virtual power plants and community renewable projects.
It’s demand management, home batteries and the smart technology needed to make a modern energy system work.
And it’s a modern transmission network that connects the best renewable resources to the cities and towns that need more cheap clean power.
Australia’s energy potential is global in scale.
No other country has such high quality renewable resources, whether sun, wind or wave.
We have some of the best researchers and technologists, innovative new businesses and an educated and skilled workforce.
We should be a clean energy superpower, supplying not just cheap clean energy for our families and businesses, but for the world, through green hydrogen exports and other exciting possibilities.
With good policy we can create new industries and new jobs linked to the clean energy revolution, and we can modernise and revitalise existing industries.
At the last election, Labor’s policies to deliver 50 per cent renewable energy and build a hydrogen industry would have created 87,000 direct jobs.
The shift to renewables also offers Australia the opportunity to revitalise manufacturing.
As the world decarbonises its electricity supply, the nations that can transform into manufacturing powerhouses are those with the cheapest energy, which will be the nations with the best renewable energy resources.
We are also well positioned to reap the benefits of mining and processing key inputs for renewables.
Australia is the second largest producer of rare earths.
We have the greatest reserves in the world of iron ore and titanium; the second greatest reserves of copper and lithium; and the third greatest deposits of silver.
These are all crucial materials for clean energy and battery manufacturing.
The energy transition can produce hundreds of thousands of clean energy jobs.
This is not wishful thinking.
It is already happening in other countries.
In the United States there are almost 3.3 million clean energy jobs.
China has over 4 million jobs in renewable energy alone, while the European Union has 1.2 million.
These are the kind of the opportunities Australia can realise.
Now all we need is to find a path out of the political impasse on climate and energy.