Natural gas could transform Victorian energy and agriculture

October 12th, 2017

“At last there are glimmers of hope on the energy price and supply front.”

So said experienced and highly respected business and economics commentator Robert Gottliebsen in The Australian newspaper this week.

Why?  Because he has detected a change in the way politicians are responding to rising energy prices and the gas-supply crunch facing Australia’s East Coast.

The biggest example was this week’s about-face by the Victorian Opposition, which has vowed to allow natural gas development – currently banned by the Andrews Government – if it wins power in next year’s State election.

A move to develop abundant gas reserves in the State’s east and west had the potential to transform Gippsland and western Victoria into a “drought-proofed agricultural and energy region — rare in the world”, Mr Gottliebsen wrote.

 “Unemployment will slump and the local farmers will be much richer.

“And there is no danger to the underground aquifers. “

Mr Gottliebsen was among a number of respected thinkers who contributed to the national debate this week.  He was more optimistic than some.

Others, including non-political economic reform leaders Fred Hilmer and Gary Banks discussed the shortcomings of current energy policy settings and the importance of bringing more gas supply into the system.

Economic  reform leaders of the 1980s and 1990s, Professor Fred Hilmer and Professor Gary Banks  agreed that a blackout like that experienced in South Australia last year may be needed to shock the NSW and Victorian governments into action.

Lamenting many years of energy ‘policy paralysis’, Prof Hilmer (business leader and 1990s competition policy reformer) and Mr Banks (inaugural chair of the Productivity Commission), made the wry observation that summer blackouts in Sydney and Melbourne might trigger some hard, honest  appraisal of the situation.

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

“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 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,” he said.    

Highly successful Bluescope Steel CEO Paul O’Malley was also firm in his commentary, when presenting at his company AGM this week.  People were being misled into thinking that more wind and solar power would solve the energy cost and reliability problems, he said.

“Australia can’t afford to focus only on future initiatives and possibilities – the Finkel recommendations, renewables only, the future smart technologies – because they aren’t here yet,” Mr O’Malley said.

“Australia must have baseload power for Australia’s everyday life and its economy to run in an orderly manner.

“At some point in the future, renewables will step in to being a baseload energy capability, but they are not today and I do not believe they will be for a good 10 years, if not longer.”

Mr O’Malley  also pointed to Australia’s sliding international competitiveness, a topic we touched on last week.

 “If Australia is to retain its economic competitiveness, it also must focus on the basic stuff — that is fundamental baseload energy that powers our homes, factories, schools and hospitals,” he said.

Mr Gottliebsen appeared to agree with Professors Hilmer and Banks on the detrimental effect of zealous subsidies for renewable energy – but with a more optimistic outlook.

“While the politically correct class in our society argues that renewable energy targets are essential regardless of cost and reliability, a few politicians are now talking to ordinary people,” he wrote.

“The politicians then discover that in the real world reliability and cost must be part of any low carbon solution.

“Setting the target without knowing the full costs is just as crazy as banning gas in Gippsland. The people who pay the price of these silly political games are low-income voters and small business.”

Prime Minister Malcolm Turnbull appears to be hearing the message.  This is what he had to say this week:

 “There has been too much sloganising, too much politics, too much ideology and, frankly, too much idiocy.

“We’re not going to make the same mistakes that were made in the past.”

Prime Minister, we hope you are right.

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