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an interminable conversation 5: the RET, Mike Cannon-Brookes, and Big Gas issues

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Jacinta: So I’ve heard of this thing called the Renewable Energy Target (RET) – in fact I first heard about it years ago but I’ve paid little attention. Tell me more.

Canto: There’s a government website, the Clean Energy Regulator site, which purports to explain everything. Here’s the briefest statement about it:

The Renewable Energy Target is an Australian Government scheme designed to reduce emissions of greenhouse gases in the electricity sector and encourage the additional generation of electricity from sustainable and renewable sources.

Of course they have much more to say, in positive-speak, about it all, but a wee footnote at the bottom caught my attention:

In June 2015, the Australian Parliament passed the  Renewable Energy (Electricity) Amendment Bill 2015. As part of the amendment bill, the Large-scale Renewable Energy Target was reduced from 41 000 GWh to 33 000 GWh in 2020 with interim and post-2020 targets adjusted accordingly.

I believe the ultra-conservative Tony Abbott was PM in 2015, and the Fossils were calling the shots, as Marian Wilkinson’s The Carbon Club relates. Anyway, it’s a certificate system based on megawatt hours of power generated, and the rather pathetic target was apparently reached, based on approvals of large solar and wind installations, in the second half of 2019.

Jacinta: That’s something perhaps, but the IPCC wasn’t particularly impressed. The Clean Energy Council’s website, Ecogeneration, has boosted the achievement, describing the RET as ‘the most successful emissions reduction policy of all time for Australia’s electricity system’. But it hasn’t had any competition! And ominously, Kane Thornton, CEO of the Clean Energy Council, is quoted as saying ‘the industry doesn’t need new subsidies, we just need certainty’, etc etc, which contradicts everything I’ve heard from Saul Griffith, Mike Cannon-Brookes and others… we’ve been subsidising the fossil fuel industry forever, haven’t we? It’s rebuilding our manufacturing base that needs subsidising. Renewable energy has already become the cheaper option, but we have no EV manufacturing here and only one PV manufacturer.

Canto: Interesting Mike Cannon-Brookes interview in the Financial Review, which introduces the term ESG to me. This stands for Environmental, Social and Governance, perhaps in that order, as factors to be considered in any investment. Which all sounds v positive. And he’s very positive about ESG, which is a positive thing.

Jacinta: Yeah, apparently he’s a billionaire. How the fuck do people become billionaires? Why is it ever allowed?

Canto: Yeah, obviously it’s not just about working hard, like the Congolese in the diamond mines, and various slave populations over the centuries, whose only reward was death. Nature just ain’t fair. Herr Cannon-Brookes is co-founder of a company called Atlassian, which I’ve never heard of. Nor have I heard of their major products, such as Jiro and Trello, which are used by ‘teams’, but I don’t think they play soccer.

Jacinta: Sounds like they’re in the business of business, which is certainly none of our business.

Canto: Yeah, it’s probably all about digital environments. We’re about 40 years out of date. We need to stop reading books, paper is so 20th century.

Jacinta: Anyway, getting back to renewable energy …

Canto: Well this interview with Cannon-Brookes, he sounds pretty sincere, for a billionaire. They’re just people I suppose. If a bit weird. He’s very positive about renewables, and running his business that way, and pretty honest about the issues – like offloading the problem onto others, as he admits to having done, and facing that issue squarely. You know, like Australia exports coal and gas, and doesn’t take responsibility for the emissions. Like Norway.

Jacinta: They don’t have to take responsibility, the way the current system works. Apparently, as of July 2020, Australia became the world’s biggest gas (LNG) exporter, overtaking Qatar. That’s from the Climate Council. It’s hard to keep track of all these organisations. Anyway, Australia was exporting about 80 million tonnes of LNG per year two years ago. According to the latest, it was 77.7 MT (in 20-21 financial year). The article said it has ‘retained its crown’ as the world’s largest exporter. Shouldn’t that be a dunce’s cap?

Canto: So many people are late in getting with the program. By the way, China has taken over from Japan as our number one LNG buyer – adding to our problems with that fascist government. In any case the argument would be – and I’ve heard it stated in a public forum – that we owe our wealth as a nation to these exports, and by extension, to our trading relation with China. .

Jacinta: Well, it’s interesting that the price of gas is rising domestically. Presumably this has something to do with so much of our gas going offshore? And renewables, though growing, are hardly ready to fill the domestic energy gap, right?

Canto: So this is all new stuff to get my head around, but a ‘Bloomberg Green’ video linked below has it that the Australian Competition and Consumer Commission (ACCC) has produced an interim gas report, a forecast for 2023. It predicts that the supply of gas for next year will fall short of demand by about 56 petajoules – 3% of total demand. This doesn’t sound like much, but with rising gas prices… Anyway the ACCC is recommending that the federal government bring into force the ‘Australian Domestic Gas Security Mechanism’, pressuring LNG exporters to reserve some of those earmarked exports (70 to 75 percent of production) for the domestic market. Now, some 11% of those exports aren’t covered by long-term contracts – they’re available for those as bids for them, and there might be a few countries bidding, considering the global situation.

Jacinta: Hmmm, sounds like a seller’s market, with impoverished buyers, including domestic ones. So the idea is that the government can intervene to force gas exporters to sell some of their stuff here, with reduced profits?

Canto: Yes, but whether they do is a question. The video goes on to talk about Australia’s new emissions reduction target of 43% on 2005 levels by 2030, with the aim of net zero emissions by 2050. Interestingly, the Bloomberg economist says that while it’s good news to get clear targets after years of nothing much, the targets are still a bit weak. Most notably, only 3% of passenger vehicles sold last year were EVs, and with no manufacturing here in the foreseeable future, the chances of EVs reaching 89% of sales by 2030 – Labor’s target – are surely minuscule.

Jacinta: Yes, but all the other cars purchases would be overseas-made vehicles, wouldn’t they?

Canto: Hmmm, so there might have to be legislation to favour EV imports, as well as plenty of infrastructure… And a turnaround in public attitudes, which I don’t presently see.

Jacinta: Returning to gas, the Australia Institute, which appears to be a left-leaning public policy think tank, has a critique of our gas exporters in another, very brief, video. It just advises turning our backs on gas tout de suite. Forget reserving gas for the domestic market – which might involve something more or less in the form of a bribe to the exporters. Instead, electrify everything, of course. More pronto than pronto, to make up for a lost decade of relative inaction. They describe it as a gas export crisis, in which domestic prices are soaring because so much of our gas is going offshore. A win-win for the gas companies.

Canto: So, is this the situation? Gas companies are in the business of profit. They sell gas overseas, even at the expense of the domestic market, because they can, because they’re owned by private individuals, they can sell to the highest bidder. And If this means gas is scarce domestically, and in high demand, because we’ve become dependent on gas, we haven’t been weaned off it, the gas companies can make another killing on the domestic market? They’re holding us to ransom, so to speak?

Jacinta: Oil and gas companies in the US as well as in Australia are making huge profits currently, due to scarcities caused by war, embargoes and such…

Canto: The Australian Domestic Gas Security Mechanism was designed to ensure sufficient domestic supply, but it’s not very efficient, and the domestic supply target is too low. Some state governments, notably Western Australia, have a higher domestic reserve, but of course what we need is to switch to renewable-based electric as quickly as possible, to get out from under the control of the fossil fuel barons.

Jacinta: Are gas companies subsidised here?

Canto: Do koalas shit in the trees? Renew Economy has a scathing article about this, posted today. It describes companies like Santos recording super-massive-record profits this year, and the term ‘war profiteering’ is mentioned. This has also been at the expense of the domestic market. Here’s a quote:

Santos categorically stated its project would not affect the domestic market because it would not buy gas out of the domestic market. But that is exactly what it has done. Santos bought large volumes of gas out of the domestic market in the first half of 2022, forcing domestic prices above export prices in the last six months. These actions have generated super profits, gouged from domestic gas consumer and forcing up domestic electricity prices to unaffordable levels. Santos has broken its approval conditions and IEEFA calls on the government to cancel their export licence.

The IEEFA, for our info, is the Institute for Energy Economics and Financial Analysis. Bruce Robertson, who wrote the Renew Economy article, has a similar piece on the IEEFA website. The thing is, the domestic reserve could be raised, and made non-negotiable (it isn’t at present) without having much of an effect on these windfall profits. As it is, gas companies are largely ignoring existing reserve requirements. The ACCC has the capacity to prosecute but apparently has no intention of doing so. They’re also doing nothing to tackle these companies’ collusion re price-fixing and tax avoidance. There’s something rotten about all this. Clearly we’re not going to wean ourselves from gas as quickly as we should, but we certainly shouldn’t be pumping up and sending off ever more of the stuff.

Jacinta: Well, yes, considering that the aim is to electrify everything, and people are starting to get on board with this, that means no new gas fields, so what are these companies going to do with these massive extra profits, other than line the pockets of CEOs and their immediate underlings?

Canto: Well, there will still be offshore markets for the foreseeable, so keep on despairing. Two months ago, the Sydney Morning Herald ran an opinion piece by Tony Wood of the Grattan Institute, arguing for a ‘windfall profit tax’ considering that some importers are paying ‘more than four and up to 10 times the contract prices’. The Federal Treasurer, Jim Chalmers, isn’t interested. And so the rich get richer, for the time being….

References

https://www.cleanenergyregulator.gov.au/RET/About-the-Renewable-Energy-Target

Marian Wilkinson, The Carbon Club, 2020

RET reached ahead of 2020 target

https://www.afr.com/policy/energy-and-climate/mike-cannon-brookes-on-esg-agl-and-why-australia-needs-no-more-gas-20220616-p5au3b

What the frack? Australia overtakes Qatar as world’s largest gas exporter

https://www.upstreamonline.com/lng/australia-remains-worlds-top-lng-exporter-but-it-could-lose-its-crown-this-year/2-1-1147625

Santos windfall: Australia is swimming in subsidised gas and we’re giving it away

https://ieefa.org/resources/why-government-must-break-eastern-australias-gas-cartel

https://www.smh.com.au/national/all-australians-should-share-in-record-profits-from-overseas-gas-sales-20220608-p5aryk.html

 

 

Written by stewart henderson

August 17, 2022 at 11:16 pm