#AceNewsReport – Apr.12: In July last year, Energy Minister Angus Taylor was given an advance copy of a report to be published by the Australian Energy Market Operator (AEMO), which did not support the government’s position on gas:
Government accused of pressuring experts who questioned its gas-fired recovery plan: ‘Four Corners understands the minister called then-chief executive of AEMO, Audrey Zibelman, and in a heated conversation, pressured her to change the report’s conclusions, which were unfavourable to gas’
ABC News: updated Yesterday at 9:55pm
- The government has pushed ahead with a gas-fired recovery despite international pressure to lower emissions
- Energy Minister Angus Taylor rejected claims he pressured a top bureaucrat to change report conclusions on gas pricing
- Mr Taylor denies his department chief urged another top energy expert to resign
AEMO manages and maintains the country’s electricity and gas systems.
AEMO refused to do so.
Ms Zibelman, who left AEMO in December last year, could not be reached for comment.
The minister did not deny the conversation took place but his office told Four Corners “it [rejects] the premise there was undue pressure being exerted on AEMO” and that it was seeking to understand the modelling used by AEMO, which it saw as being at odds with other market modelling.
Despite international pressure to reduce the use of fossil fuels, the federal government has been pushing ahead with its controversial plan to increase the amount of gas in Australia’s energy system.
It’s not the only instance where the government has been unhappy with the views expressed by the agencies tasked with regulating and overseeing the energy system.
Four Corners has learned the government became so frustrated by the refusal of the head of the Energy Security Board (ESB), Kerry Schott, to support its position on gas that the Energy Minister’s departmental secretary called Ms Schott and urged her to resign.
Ms Schott says the conversation was private but conceded she is always under pressure.
Mr Taylor denies his department chief asked her to resign.
The ESB is tasked with ensuring the security and stability of the electricity grid into the future and works with state and federal governments.
Justification for gas recovery plan disputed
The centrepiece of the government’s gas-fired recovery plan is a proposal to build a new gas-fired power plant in NSW and underwrite new gas pipelines.
In NSW, four out of the five coal-fired power stations are set to close in the next 15 years, including the Liddell power station in the Hunter Valley.
The federal government is convinced gas is the best way to replace the loss of electricity those closures would cause and is seeking to impose a solution that NSW says it doesn’t need — a new gas-fired power station, funded by the taxpayer if necessary.
One of the government’s justifications for this new power plant is that when the Liddell power station closes, the market will face a shortfall of 1,000 megawatts of electricity which will need to be sourced elsewhere.
This is disputed by key energy bodies, the ESB and AEMO.
AEMO says the shortfall will only be 154MW.
NSW Energy Minister Matt Kean also disputes the figure, saying “I’d like to see where they got their 1,000MW of gas that was needed.'”
Mr Taylor told Four Corners that AEMO has ignored the potential impact on future electricity prices, saying its figure only relates to how much electricity is needed to make the system reliable.
He says extra gas-fired electricity in the system is needed to make that energy more affordable.
“There’s two things we have to worry about here with losing a major piece of capacity … We know from our own modelling, if there’s not a significant piece of capacity replacing the loss [of Liddell] then there’ll be upward pressure on prices.”
Electricity generation is primarily a state responsibility and although they all need gas to a certain extent now, the states are looking at how they can move beyond gas as fast as possible.
The NSW Coalition government’s energy response has been to aggressively fast-track renewables.
“Those people defending old technologies are the equivalent of defending Blockbuster in a Netflix world,” Mr Kean said.
Mr Kean’s solution is an ambitious plan to encourage private investment in batteries and renewables.
“Let’s get the facts on the table. Using gas to create electricity is a really expensive way to do it. If you’re interested in driving down electricity prices, then you’d be mad to use gas,” Mr Kean told Four Corners.
“New South Wales energy policy is determined by engineers, experts and economists, not ideologues.”
New South Wales is not the only state looking to leapfrog the federal government’s vision of a gas-fired recovery.
The Liberal state government in South Australia is also betting the future on batteries and says it will be 100 per cent net renewable by 2030.
Accusations government task force dominated by gas interests
In April 2020, a task force was created to ensure the manufacturing sector’s recovery from the pandemic.
The head of this task force was Andrew Liveris, a former chief executive of one of the world’s largest gas users, Dow Chemicals, and a current director of one of the world’s largest oil and gas companies, Saudi Aramco.
Joining Mr Liveris on the manufacturing task force were seven men — all manufacturing experts and all with diverse energy interests.
A majority also had significant stakes in the gas sector, either through their business or member base.
Last May, the manufacturing task force submitted its final report to the COVID commission.
The report has never been made public, but Four Corners has seen it.
It recommends the acceleration of new gas field developments and the use of taxpayer funds to underwrite new gas infrastructure, including pipelines.
Energy finance analyst Bruce Robertson, from the pro-renewables think tank IEEFA, believes the make-up of the task force determined the outcome.
“If I made it up of carpenters, I’m sure they would have said, ‘House-led recovery looks pretty good. Why don’t we build a whole lot of houses and employ a whole lot of tradies?’ If you give the COVID commission to a whole lot of gas executives, that’s the answer you’re going to get.”
When contacted, task force members told Four Corners “where [any conflicts of interest] occurred [they] removed themselves from those parts of the discussion”.
In September, Prime Minister Scott Morrison declared the pursuit of a gas-fired recovery, embracing many of the task force’s recommendations and a promise to deliver cheaper gas.
“When Andrew Liveris sat down with me at Kirribilli some time go, and working with him through the COVID commission, said, ‘You want to change manufacturing in this country? You’ve got to do it with gas. You’ve got to do it with gas.’ And Angus [Taylor] has taken up that challenge and this is what we’re talking about today,” Mr Morrison said at the time.
Within the task force, there was some concern about its fixation with gas.
Paul Bastian, then-secretary of the Australian Manufacturing Workers’ Union, wrote to the Prime Minister saying the union did not believe the federal government should underwrite the price of gas and that investment in gas could result in so-called stranded assets.
But Mr Liveris believes the federal government is right to push for a gas-fired power plant in NSW.
“I think they’re going to have a whole lot of unhappy voters here in Sydney when that power plant gets built on just renewables … This large battery idea is going to be a very expensive power price,” he told Four Corners.
Government gas policy at odds with global momentum
In the six months since the federal government announced a gas-fired recovery from the COVID-19 pandemic, global momentum has moved towards discouraging a greater use of the fossil fuel.
In March, the European Union’s parliament voted in favour of a Carbon Border Adjustment Mechanism which would impose a tariff on products being sold into the EU according to the amount of carbon involved in making them.
Gas could be one of the sources of carbon pollution that will attract this tariff.
Also in March, the newly formed US Biden administration announced it would consider a carbon adjustment fee which would likewise apply to incoming goods.
Both pledged to produce net zero emissions by 2050.
This means Australian goods such as steel and chemicals could face an effective carbon tax.
The Australian government has no net zero emissions target and has promised to increase the amount of gas in the electricity and manufacturing sectors, saying it will boost jobs.
Mr Liveris said the government should commit to a 2050 target.
“I think we should stop beating around the bush. I mean, we should declare. I’m a big fan of that,” he said.
“There’s many things that this current government’s doing that I’m agreeing with, but we should put our target out there now.”
Zoe Whitton, an executive director at Pollination who advises multinational investors on climate change and energy transition, said investors were worried about trade sanctions which might apply to Australian goods produced using fossil fuels.
“If the Australian economy is more emissions-intensive … we suspect … all of the manufacturers or exporters in that economy will become more vulnerable to a price on the border of the EU and potentially on other regions like China and the US, eventually, than they would otherwise be,” she said.
“So if you increase the emissions intensity of the Australian system by putting gas-fired power instead of renewable energy, then you might find yourself bearing that cost across all of your investments.”
British Prime Minister Boris Johnson will host the upcoming G7 meeting in June and is said to have signalled a strong desire to focus on carbon tariffs. Prime Minister Scott Morrison has been invited to attend as a special guest.
Australia risks being left behind
For more than a decade, the debate around climate goals and energy politics has caused division in Australian politics.
Now technology is advancing faster than anyone had anticipated and many fear that prolonging the use of fossil fuels will discourage investment in new technology and see Australia lag behind the rest of the world in the rapidly emerging new energy age.
Mr Kean said the choice was very clear.
“We can either get ahead of the curve, and can continue to create jobs and drive prosperity, or we can be left behind,” he said.
But the government remains firmly committed to a gas-fired future.
“Gas will help and is helping to drive more for affordable, reliable energy in this country. It can help us to bring down emissions. It’s the perfect complement to intermittent renewables as the former chief scientist, Alan Finkel, has told us,” Mr Taylor said.
#AceNewsDesk report …………..Published: Apr.12: 2021:
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