- by Anna Pha
- The Guardian
- Issue #2012
Cape Grim Tasmania. Photo: Ian Cochrane – flickr.com (CC BY 2.0)
Australia is on the brink of a total collapse of its domestic energy market amid a crisis that has been decades in the making. If the Australian Energy Market Operator (AEMO) had not stepped in last week and suspended the market, the whole of the east coast of Australia and South Australia would have faced power outages.
The capitalist myth that private sector markets are more efficient and cheaper has been exploded once and for all. They are not. When they fail governments have to step in and pick up the pieces. It is criminal that Australia with its vast land mass and surrounded by oceans is dependent on fossil fuels for energy. It is also criminal that Australia, the largest liquid natural gas exporter in the world faces gas shortages.
Workers and their families, already struggling to meet basics in a cost-of-living crisis, are about to be slam-dunked by a large hike in gas and electricity prices in July. A colder than average winter is compounding the situation.
Stock markets are falling and fears of an impending global economic crisis are well justified. All the ingredients are there.
Prices continue their upward trend. Rising interest rates are putting stress on mortgagees and landlords paying off loans are set to recoup the cost of higher rates. Supply chains are jammed creating shortages and the lifting of mandatory masks and other safety measures have seen a surge in COVID cases resulting in labour shortages.
Energy is integral to every aspect of life whether it be households or businesses. The price hikes will feed inflation as businesses seek to restore their profits or even, in the case of some small businesses, become economically unviable.
With or without sanctions on Russia and global gas shortages, there would have been a crisis at some point in time. The domestic factors are overriding. The causes of the present energy crisis are multi-faceted:
Failure to carry out just transition with continuing heavy and unnecessary reliance on dirty, greenhouse gas emitting fossil fuels, with governments that have not lost their thirst for dirty political donations at the expense of the needs of people and the planet.
Privatisation of power generation began under the Kennett Coalition government in Victoria in the early 1990s. Privately-owned, for-profit generators add a layer of profits to costs for consumers. Energy is an essential service which has been commodified with private profit, not people’s needs the primary driving force in its generation, distribution and sale.
Lack of planning by governments with “free markets” chasing biggest profits, and anarchic operation of plants opening and closing of generators regardless of domestic needs.
Coalition government as a roadblock to investment in renewable wind farms and storage.
Ongoing expansion of coal and gas mining and the former Coalition government’s “gas-led” road to reducing greenhouse gas emissions instead of government investment in renewables, and as if gas was not an emitter.
Failure to invest in renewables by the federal and most state governments despite the urgent need and them being cheaper.
Coal-fired power station outages with gouging of the system by creating artificial shortages that drive up prices even higher. Outages are also occurring because the power stations should have been closed.
Outdated transmission infrastructure unfit for purpose. Lines and poles are not being properly maintained as private companies cut staff and casualise their workforces.
Renewable Energy Target was watered down by the Abbott-led Coalition government.
Promotion of gas exports with no provisions to meet domestic needs, except for Western Australia (WA) where gas companies are obliged to reserve seventeen per cent of production for the domestic market. Australia is the largest gas exporter in the world, with private corporations such as Santos and Chevron profiteering from global shortages. Domestic pricing is pegged to the international market.
Small retailers priced out of the market as they could not pass on the full cost of wholesale prices to consumers.
What is to be done? The Energy Security Board in a draft paper released last week is proposing a scheme that would see fossil fuel generators paid – by taxpayers of course – to keep operating or remain ready to step in when required as a guarantee of stability to the system! It is called a “capacity mechanism,” but is more commonly and accurately referred to as a “coal keeper.”
Climate Change and Energy Minister Chris Bowen indicated support for such a scheme at the recent meeting of state and territory energy ministers. Victoria and the ACT have indicated they are not in support of contributing to such a scheme.
Apart from it being a misdirection of funds propping up fossil fuels, the proposition fails to address the causes of the crisis. It is yet another measure to extend the life of coal mining and could even be used as an excuse to open new mines. Clearly not what to do.
Origin has announced plans to bring forward its closure of Eraring by seven years to 2025 and AGL is looking at closing for Bayswater between 2030 and 2033 and Loy Yang A between 2040 and 2045. WA’s two remaining state-owned, coal-fired plants are set to close before the end of the decade with the state government committing half a billion for the employment of displaced workers.
BHP plans to close its Mount Arthur mine in 2030, fifteen years ahead of its scheduled end of life after failing to find a buyer for it.
NO MORE FRACKING
Santos, the company that ripped billions out of Timor Leste, is the latest to submit plans to explore for fracked gas in the Liverpool Plains in the North West of NSW – one of Australia’s most productive food bowls. It also has plans to frack near Aboriginal communities in the Northern Territory and drill just off the Tiwi Islands.
“Santos should be toxic to associate with, in the same way tobacco companies are. But Santos’ PR strategy of sponsoring local events to buy public support is one of their strongest tools for furthering their agenda,” Kelly Albion from 350.org said.
It is not the only energy monopoly with plans to open new gas and coal operations. Any government with an ounce of integrity would ensure they are still born.
These companies pay little or no tax on the profits of this toxic industry as they rip out the resources owned by the people of Australia and destroy Indigenous heritage and the environment and propel climate change.
The privately-owned fossil fuel power generation stations are free to determine when they close and when they have outages to milk the market. Governments do not decide.
The national (excluding WA) energy grid is in a state of crisis and disrepair. It cannot handle peak loads, or the increasing input from renewables. It needs a complete redesign and modernisation.
The poles and wires have not been properly maintained by private sector contractors. They are cowboy operators, undermining wages and working conditions, casualising workforces, while operating with little or no accountability.
Feed-in tariffs – the rebate credited to your electricity bill – for excess energy created by solar panels have been shrinking. Some electricity retailers have stopped paying them altogether, discouraging consumers from going solar. If they do not have battery storage, households are limited to using solar energy during the daytime.
The closures will see thousands of workers displaced and in need of training and jobs.
In April this year the Electrical Trades Union (ETU) launched “A Blueprint for Better, Cleaner Jobs”. The union commissioned the report from the progressive think tank Per Capita because of the absence of a plan to transition workers and communities into good jobs in a growing renewables industry.
The report indicated that more than 450,000 jobs could be created in the coming decades under a national renewable energy plan. “We have the opportunity now to create a national plan for the thousands of workers in dozens of regional communities which currently rely on fossil fuel sources for their jobs and economic prosperity,” ETU Acting National Secretary Michael Wright said.
The ETU is in a struggle against some of the multinationals constructing wind and solar projects over their industrial relations practices. In one instance in Queensland 230 casual workers were sacked without notice. Local qualified workers are pitted against backpackers for “casual jobs” with long hours.
“Uncoordinated unilateral plans have led to insecure and unsafe work and sudden disruptions like overnight closure announcements leaving thousands of workers in precarious employment or worse, unemployed with no future job prospects,” ETU National President Troy Gray said.
The report’s recommendations include the creation of sector specific industry plans; targeted incentives in renewable energy zones; kickstarting a research revolution; and restoration of TAFE funding to pre-2013 levels.
Addressing climate change is the absolute priority. There is no time to waste. Support for workers and local communities is integral to a just transition. No worker should be worse off. New projects will be required where communities are located.
Communities and trade unions must be consulted on retraining and investment in new industries and storage of energy as part of a just transition. This just transition is urgent. Free training in TAFE or university should be offered, while continuing to receive their previous income. Governments must come to the party on this.
The energy sector is far too important to be owned and controlled by the anarchic private sector. Their only interest is profits, more profits, and ever larger profits. The sector should be nationalised. Its infrastructure redesigned to handle renewable inputs and modernised.
Not a cent more should be ploughed into fossil fuel subsidies.
Existing gas, oil and coal operations should be wound down as quickly as possible with the interests of workers and communities protected. Energy prices will plummet – wind and sun cost nothing.
Government investment in research and development of new technologies for renewable energy and storage, and for manufacturing must be increased, accompanied by an increase in TAFE and university funding. Australia could become a world leading exporter of renewables.
Government subsidies and other incentives must be made available to households, small businesses and farmers. For example, small towns and other centres could have their own wind farms or solar banks with storage for the local community and feed-in the excess to the grid. In Scotland where such projects exist, communities use the profits for local programs.
Planning is key to a rapid and just transition – of the grid and of community infrastructure.
It will cost money. Billions could be raised by slashing the military budget including the nuclear-powered submarines and the ending fossil fuel subsidies. In the end it will pay huge dividends for people’s pockets and health, for the environment, for Indigenous heritages, and importantly in tackling climate change.