A Greens-backed bill prohibiting government funding of coal-fired power in Australia would further worsen Australia’s electricity crisis. Government intervention in the energy market has seen electricity prices increase by 220 percent over the last 20 years, far outpacing inflation and wage growth.
Policies that favour renewable energy at the expense of coal and gas have proceeded every major jump in electricity prices. This has been the case with the introduction of the Renewable Energy Target in 2000, its expansion in 2009, the introduction of a carbon tax in 2012, and the signing of the Paris Climate Agreement in 2015. The only substantial drop in electricity prices over the past 20 years followed the repeal of the carbon tax.
Contrary to what green groups would have you believe, coal-fired power cannot be replaced by wind and solar any time soon without major breakthroughs in battery and storage technology. Coal remains one of the cheapest and reliable sources of electricity generation.
This is why there are currently some 256 coal-fired power stations being constructed around the world. This includes 126 stations which are currently being built in China and 33 in India, many of which will be powered with coal exported from Australia.
In contrast, as a result of onerous red tape on the resources sector and subsidies to wind and solar energy, no new coal-fired power stations are currently under construction in Australia, and only three coal-fired units have been built since 2006. This is despite the existence of over 1000 years’ worth of coal deposits sitting beneath Australian soil.
Not only are our unnecessarily high electricity bills a burden for many Australians struggling to heat their homes in winter, they are also crippling businesses. High electricity costs and reduced power reliability has made Australia less competitive and has contributed to private investment falling to a historically low 11.4 per cent of GDP. This is lower than the rate which prevailed during the economically hostile Whitlam era and is a key cause of slow productivity growth and stagnant real wages in the private sector.
All forms of electricity generation should compete in an open and free market without government intervention. When the market is left to its own devices, the technological makeup of the grid will deliver affordable and reliable power in line with the needs of households and businesses.
The bid to ban government funding of coal power is objectionable, not because the government should be funding coal, but because it would further distort the market away from reliable electricity production. The bureaucratic government management approach to electricity has long poured billions of dollars into unreliable renewables and undermined the profitability of coal-fired power.
To address Australia’s energy crisis, the government needs to take a technologically neutral approach to energy production to ensure the market’s ability to deliver affordable and reliable power. This means withdrawing from the Paris Climate Agreement, ending the subsidisation of renewable energy, and not continuing with the Renewable Energy Target beyond 2020 when it is due to end.
Governments at the Commonwealth and state level must also reduce regulation and red tape on the development of coal-fired power stations (such as provisions which allow frivolous litigation), lift restrictions on gas explorations (such as state-based bans and moratoria), and remove the ban on the development of nuclear power.
A policy of technological neutrality where governments do not pick winners in the energy market will ensure Australia can return to being a nation of affordable and reliable energy.