According to the Investor Group on Climate Change Australia’s conservative Liberal-National government needs to put a price on carbon to unlock new investment in the electricity sector and drive an orderly transition to low-emissions power sources.
The group, which represents major institutional investors in Australia and New Zealand, has used its submission to the review by Australia’s chief scientist Dr Alan Finkel to argue that the government’s oft-repeated concerns about network reliability, energy affordability and emissions reductions will be addressed if concrete steps are taken to unlock new investment.
The Guardian reports the investor group has joined a host of other organisations in arguing that the government needs to put a price on carbon and adopt a technology-neutral approach in planning new energy infrastructure to ensure the grid is up to the task of supplying reliable base load power and producing emissions reductions consistent with Australia’s Paris Agreement commitments.
It warns that policy and regulatory uncertainty is now the key barrier to investment in Australia’s electricity sector “across all energy sources and technology types”.
The advocacy comes as the Climate Council releases a new report arguing that the heat Australia experienced this past summer demonstrated the energy grid was unable to cope with escalating extreme weather.
“Climate change is worsening the impacts from heatwaves and hot weather and is putting a strain on critical infrastructure,” the new report said.
“This summer alone has shown the vulnerability of the electricity grid to heatwaves, with power outages during peak times in South Australia during a severe February heatwave, while New South Wales narrowly avoided widespread outages several days later.”
The report noted that in just 90 days, more than 205 records were broken around Australia this summer, with the state-wide mean temperature the hottest for New South Wales since records began, with temperatures 2.57 degrees Celsius above average, and Brisbane and Canberra recording their hottest summers on record.
The report argues that the only viable approach to slowing and eventually halting the increasing trend of heat-related extreme weather is to “rapidly increase the uptake of renewable energy and to phase out all forms of coal-fired power plants, as well as phasing out other fossil fuels”.
On Tuesday the National Farmers’ Federation reversed its once vociferous opposition to carbon pricing, using its submission to the Dr Finkel’s review to call for a market-based mechanism to secure clean and affordable energy.
The NFF’s stance mirrors calls for consideration of a market mechanism from Energy Networks Australia, the retailer EnergyAustralia, the electricity provider AGL, the Climate Change Authority, the Business Council of Australia and the CSIRO.
The renewed activism around carbon pricing or a market mechanism to reduce pollution and drive efficient investment decisions in the national electricity market stands at odds with the decision of the LNP government of Prime Minister Malcolm Turnbull, once an advocate of carbon pricing, to rule out such measures last December.
The energy and environment minister, Josh Frydenberg, initially signalled the government would look at the desirability of an emissions intensity trading scheme for the electricity sector as part of its scheduled review of its Direct Action climate policy, but he reversed his position after key government conservatives voiced their objections.
The man conducting the energy review, Dr Finkel, gave implicit support for an emissions intensity scheme in his preliminary report, saying it would integrate best “with the electricity market’s pricing and risk management framework” and “had the lowest economic costs and the lowest impact on electricity prices”.
The Clean Energy Finance Corporation has also used its submission to Dr Finkel’s review to argue Australia needs “a stable bankable policy framework to promote investor confidence and capital availability and reduce risk”.
Senior executives from AGL Energy told a Senate committee on Tuesday the main issue causing problems with reliable energy supply in South Australia was “dysfunction” in Australia’s gas market, not too many wind farms making the grid unreliable.
Richard Wrightson, AGL’s general manager of wholesale markets, told Tuesday’s hearing the problem was so dire the company was contemplating building its own LNG hub in Queensland to help secure reliable supplies.
