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Thursday 26 October 2017

Turning NEGative to Positive

The reactions to the National Energy Guarantee (NEG) have been wild and predictable. Criticism from both sides would have you believe that this balance of condemnation indicates a good compromise. Not so! Being half right and half wrong is not a winner. Especially in today's milieu. Positive comments by many in the commentariat may make Turnbull feel good in the short term, but the ultimate question is - "is it good for the people?" While in the first instance the electorate take their cues from the media and their hangers' on, ultimately it is the hip-pocket. Unfortunately, in all probability the hip-pocket barometer predicts this policy failing, as the NEG by itself will not provide any immediate increase in supply, the only way that prices will come down.

It seems Mr Turnbull has missed a golden opportunity to force a clear wedge between the LNP and Labour/Greens. By trying to please everyone he has washed away the potential policy differentiator that could have reversed the slide in his governments poll numbers. This is lamentable.

But the game is not yet done!
The ALP are in a quandary. Should they take opportunity to abandon their ridiculous 50% renewables target, and agree to the NEG, softening the blow by claiming it is some sort of 'carbon tax'? Or should they, as the Green-Left would have it, persist with their 50% target insisting it is not only achievable but is the only responsible course of action in a heating planet?

In today's vernacular the Gov's reaction should be "whatever". Let the ALP/Greens vacillate.
If they don't accept the NEG the Gov. can argue they have tried to provide a sensible middle-of-the-road policy targeting both 'despatchable' power and meeting emissions targets, while the ALP is driven by an ideological emissions policy responsible for world-leading electricity prices and intermittent supply. How would that play out in electorates that are likely to have power shedding or even blackouts this summer! Even if the ALP accept the NEG to try to wrong-foot Turnbull and escape their own terrible renewables position, the government has options. Indeed very good options. In either case the NEG has brought a sensible foundation into the energy debate. If you want continuous supply and to meet the emissions targets you need to have constraints/incentives to cover both components of this equation. It allows the government to put targets aside for the time being and to up the ante by launching a campaign to drive down electricity prices. It can do this by focusing on  increasing supply.

There are many ways the government can approach this, but here are a few; -
  • The government could directly enter the gas market through a newly established Gas Bank. The Gas Bank would purchase gas reserves from the market when prices are low and sell them when spot prices are high. This would work to smooth price spikes and put downward pressure on prices. It would have the indirect effect of energy suppliers also purchasing reserves to ensure their prices are optimal. All in all raising competition in an otherwise stalled market.
  • The government could build several gas fired power generation plants. This again would re-introduce a differentiator between ALP who would naturally reject such a proposition. Such a rejection would be ideal for the next election. With Labor you are stuck with high and increasing prices while the LNP we would ensure prices would go down.
  • Use a nationwide media campaign to name-and-shame those state governments that have banned gas exploration. The ads should highlight the consequences of such bans on supply and prices. In short, put the blame where it belongs on short sighted thinking by state governments. The Victorian ALP government should be singled out for its ridiculous ban on conventional gas. The same pressure should also be applied to NSW gov. where projects are being held up.  The masters of blame-shifting, the State governments, would be forced to justify their roles in limiting supply. It is easy to blame the Feds for everything but a bit more difficult when indisputable facts are flashing on TV screens. No doubt the ALP would attack the gov about wasteful advertising, but once again the LNP would be seen to be working to decrease electricity prices while the ALP was trying to prevent such measures.
  • As a separate media campaign the government should try to shed some light on the use of fracking to generate gas. Despite widespread evidence to the contrary there seems to be a widespread belief, only in Australia mind you, that fracking is dangerous to the environment. The same environmentalists who use scientific consensus as a rationale for their climate change policies are unwilling to accept scientific consensus on the safety of fracking.  The government could go some way to redress these beliefs by simply presenting just the facts. Yes the ABC our public broadcaster should do this, but alas I hold out no hope for objectivity and balance there.
  • Finally, the government should try to redress the problem that farmers do not own the rights to minerals under their land. This makes farmers natural enemies of miners. How else could the environmentalists have sold the idea that fracking is dangerous to your farm land. In the US where land owners' rights extend underground there is widespread fracking without significant ecological problems. This last strategy would entail changes to laws that may be difficult to get through the senate. But just imagine the support from farmers for such a move. It may be sufficient to pressure the intransigent senate into acquiescence.
No doubt any of the above would cause instant and loud opposition from the ALP/Greens. That is expected and welcome. It serves to differentiate the ALP/Greens' policies from the LNP. It demonstrates that the LNP is on the voters' side in trying to lower electricity costs while the ALP/Greens are preventing this from happening. Nor does it matter if some of the policies require legislative action that does not pass the senate. Those proposals can become issues for the next election.

Now that NEG has been released it is tempting for the government to sit back and let it percolate. However since NEG does not really address soaring electricity prices, sitting back is not an option. It is now time for action.There are many winning strategies available if Turnbull has the will and the cojones.

Alas history says no, but one lives in hope.

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