"It won't work and it's going to cost a fortune. It's going to drive a lot of people out of business and cause living standards to decline." That was federal shadow industry minister Alex Hawke, early in November, touting the "dangers" of Labor's target of net zero carbon emissions by 2050.
The Nationals, as the self-appointed parliamentary spokespeople for coal and gas corporations, have long tried to blame crippling power bills on Labor's "excessively rapid" shift to wind and solar. Now the federal Liberals have joined the chorus.
During discussions in mid-November, the Coalition agreed on a range of energy policy positions.
The 2050 target would be scrapped. Emissions reduction would no longer be among the goals of the Australia Energy Market Operator (AEMO), which regulates the electrical grid. Instead, Liberal leader Sussan Ley declared, the heart of the Coalition's plan would be "affordability". What she really meant was "Whatever the coal and gas bosses find affordable".
A Climate Council of Australia report, updated in November, sets out these comparative cost figures for renewables and fossil fuels: "On average over the past 12 months, the wholesale price for power from renewables .... was $72/MWh [megawatts] -- compared to $129/MWh for power from coal and gas."
Meanwhile, 90% of Australia's clapped-out coal plants are slated for closure over the next decade. How do the choices for replacing them stack up? Here's the Climate Council again: "The CSIRO's 2024-25 GenCost Final Report found for the seventh year in a row that renewables (wind and solar) backed by storage and transmission are the lowest-cost new-build electricity generation technologies."
Strangely, even the energy industry bosses, by and large, admit that wind, solar and storage will ultimately be the way forward. This is clear from a recent survey of energy corporation CEOs conducted by the industry's peak body, the Australian Energy Council (AEC).
As an election pitch, the Coalition's position on energy seems a guaranteed loser.
Australians like renewable energy and are putting solar panels on their roofs at a fast clip. But the Liberals and Nationals appear to hope that an all-out campaign to terrify voters, warning of new price hikes and frequent power blackouts, will somehow see the conservative side back in government.
The arguments concerning blackouts are easily disposed of. In South Australia, the renewables industry has boomed during the past decade and, over the 12 months to October, the portion of the state's energy coming from wind and solar reached 75%. But, since 2019, the incidence of "unserved energy" (as distinct from storm damage to local networks and grilled possums) has been literally zero. Seven "big batteries" have helped lend the SA grid world-leading resilience.
When it comes to power prices, of course, the scaremongers have more grist to their mill. As reported by The Guardian, electricity costs rose nationwide by 19% over the three years to September. Without government rebates, the rise would have been 35%. These figures compare with overall inflation of 12%.
Nevertheless, the actual, in-depth story of energy prices over the past few decades torpedoes the Coalition's case, rather than affirming it.
As explained in a recent blog post by finance academic Ian McAuley, real (that is, after inflation) electricity prices changed little between 1980 and 2009. Then came a steep rise, to the point where prices had almost doubled by 2014.
What accounts for the dramatic increase? McAuley points to the privatisation from 2009 of most electricity generating, transmission and distribution.
Privatisation, price gouging
In neoliberal theory, privatised corporations earn their profits through higher efficiency and general cost-cutting, while increased competition serves to reduce prices. But, in practice, any fall in costs is often the result of degrading workers' job conditions. In the case of power prices, the huge rise suggests that the new owners are practising an outrageous degree of price-gouging.
This applies in particular to the electricity retailers, often subsidiaries of large generating and distribution firms.
According to the Australian Competition and Consumer Commission (ACCC), the retail sector accounts for 16% of final electricity prices, including 6% that currently goes to profits. The ACCC also observes that retailers' profits have grown significantly in the last two to three years. Meanwhile, the organisation Choice recently awarded energy retailers its Shonky Award "for pricing tactics designed to confuse".
A much larger proportion of electricity bills -- 39% -- goes to cover "network costs" -- for installing and maintaining the transmission towers, poles and wires that convey current to the final user. Here, the privatisation deal enjoyed by the energy distribution firms has been accommodating in the extreme. McAuley noted that these corporations "are allowed an unjustified generous profit margin to cover their cost of capital".
The third major component of power bills is the wholesale electricity itself, accounting for 38% of the total cost. After rising steeply for the first five or so years after privatisation, real wholesale electricity prices stayed relatively constant for a period. Then, from 2022 intensified moves to block Russian gas deliveries caused a gigantic surge in world gas prices. With Australian gas exported into world markets, local gas prices rose in tandem and, in recent months, have been about twice their 2021 levels.
Spot purchases of gas -- often at mind-bending prices -- are used by Australian electricity generators to ensure supply during periods of peak demand. The gas price explosion would have sent electricity charges for households and small businesses into orbit, had the federal and various state governments not stepped in with rebates.
This relief has kept household energy bills in the past few years within the general range of the past decade. But the rebates are costly and there is no guarantee that governments will pay them indefinitely.
Consequently, there is no evading the need for an accelerated shift to renewables which, at last report, were providing 42% of grid generation. As the SA experience indicates powerfully, 100% renewables is perfectly feasible.
Of course, a complete shift to renewables will entail new investments. Wind and solar often need lengthy new transmission lines. Not surprisingly, fossil-fuel happy energy executives are latching onto facts like this as they plug the case for keeping their clunkers fired up.
"The infrastructure required to do the renewable transition is all far more expensive than anyone expected", one CEO interviewed for the earlier-cited AEC survey complained.
Another warned that costs for network poles and wires in particular were set to "go up and go up by increasing levels".
Switching to renewables will require new pylons and cables. But it is not as though high-tension lines are cutting-edge technology, starting at a high price-point. Transmission infrastructure, like equipment in other industries, needs renewing over time.
So, there we have it. Although the energy CEOs may be resigned to wind, solar and storage ultimately taking over, ousting overpriced gas and reducing prices to the consumer, they are in no hurry. And as they bide their time, sky-high power prices will remain and, with them, opportunities for lavish profit-taking.
Meanwhile, the Coalition will continue to look out for their fossil mates, seeking to hobble the energy revolution for a decade or more. Increasing and catastrophic climate change, caused by fossil fuel pollution, will not even rate.