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Issue #1452      28 April 2010

Coal, power privatisation and the future

Part 2

The NSW government is determined to privatise the state’s electrical power generation system. Although prevented from doing so at two ALP state conferences, the government is proceeding to privatise the system’s retail organisation. A future Liberal/National party government would privatise the entire system at a moment’s notice.

The Keneally government has offered subsidies for installation of household photovoltaic solar electricity panels, for a limited period. Otherwise, it has allowed the private sector to establish a virtual monopoly on power generation from renewable sources and has maintained its rigid commitment to coal as an energy source for its power plants.

One minor exception is the tiny thermal solar pilot plant built several years ago at the government’s Lidell power station, used as the experimental basis for a huge new solar thermal power plant near the US city of Los Angeles.

Private firms are taking over renewable energy power generation. One corporation is developing the geo-thermal (“hot rocks”) power generation plant in the Cooper Basin. New privately-owned wind power stations are also appearing in many country areas.

The government has established no parameters for construction of wind farms, and farmers who live near them often suffer from the deep, repetitive and highly disturbing noise of their operation. Nevertheless, clean renewable energy is certainly the way of the future for power generation, along with co-generation, localised power grids and other measures to utilise power more efficiently.

However, at the moment Australia has the world’s worst per capita emissions. Almost half of our carbon emissions come from the coal-fired power stations that provide most of our electrical energy, and much of that energy is lost in transmission over the vast national grid.

It therefore stands to reason that the state governments should be introducing new state-owned renewable energy power generation systems.

But they aren’t. Despite the lip-service paid by the various Australian governments to dealing with climate change, they have not reigned in power generation carbon emissions.

Former opposition energy spokesman Ian MacFarlane once predicted: “There will never be another coal-fired power station built in Australia.” But that’s not true either, because the NSW government now intends to build two new coal- fired power plants.

The ETS fiasco

An emissions trading scheme (ETS) is supposed to impose increasingly heavy pollution permit costs on high-emission industries. The Rudd government’s ETS will eventually impose some cost penalties on the corporations that operate coal-fired power facilities (whether public or privately owned), but they will try to off-load the bill to consumers by way of higher rates.

Those increases would, of course, be entirely unnecessary if the government rapidly introduced renewable energy generation for its own power plants. As the renewable energy power came on stream, government energy authorities would begin to amass surplus credits, which the owners of the remaining coal-fired power stations, or other polluting industries, would be forced to buy in order to remain in business.

But that’s not the case. Nor will the Rudd government’s emissions trading scheme have much effect, because it’s based on the threadbare ambition of a five percent reduction in emissions by 2020, and it grants the biggest polluters major concessions in the initial period. The coal and metal processing industries have shouted protests at the ETS, but they’re not at all worried because it’s so ineffectual.

The rate rise motivation

The state governments will attempt to pass on to consumers any cost increases that their coal-fired plants incur under the ETS. The NSW government’s foreshadowed electricity rate increases give some early indication of this. However, given the pathetic penalties imposed on big polluters under the ETS, the scale of the rate increases (up to 64 percent in the long term) are remarkably out of proportion.

In fact, the primary motivation for the increases is not just dealing with the petty financial wrist-slapping of the ETS, but getting ready for another stab at privatisation of NSW power. In anticipation of this, the government is setting the state’s power rates at the point of profit maximisation (the Holy Grail of capitalism), rather than a reasonable level that consumers can afford, in order to make the power generation facilities an irresistible target for a future purchaser.

Fortress status quo

The NSW government is committed to retaining coal as the sole energy source for its power plants, as long as they remain in public ownership. A recent edition of the ABC’s Four Corners program revealed that the government has bluntly refused to order a scientific study into the very high incidence of lung diseases and cancer among people living near the Hunter Valley open-cut coal mines.

That is not surprising. Such a study would inevitably link these mines with ill-health, with the implication that they should cease operating, as happened with Australia’s former asbestos mines.

In view of the terrible threat posed by climate change, a further implication would be that combustion of coal, and the mining of coal itself, should be phased out. The world is heavily dependent on Australia’s coal exports, so adoption of such a policy at federal level would provide a tremendous global impetus for adoption of sustainable industrial practices.

Retrenched coal industry workers could – and should – be given preference for employment in the new renewable energy industries as part of a national government “green industry” program.

Existing manufacturing industries that currently rely on coal should also be converted to using other energy sources. It is not scientifically correct to say we wouldn’t have steel or cement without coal. Manufacturing those products requires heat, which can be obtained from many sources, not just coal. (Cement can also be made by a process formerly used in the Soviet Union, which requires very little energy at all).

However, given their close ties with the mining and metals industries, there’s no way that either of the two major parties would contemplate any limitation on coal mining. And that is why it is crucial for the Australian people to dump those parties in favour of left and progressive coalitions in coming elections. 

Next article – The Wage Increase-Price Increase Myth

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