The Politics    Wednesday, June 22, 2022

Market reset

By Rachel Withers

Image of AEMO chief executive Daniel Westerman (left) and Minister for Climate Change and Energy Chris Bowen, June 22, 2022. Image © Dean Lewins / AAP Images

AEMO chief executive Daniel Westerman (left) and Minister for Climate Change and Energy Chris Bowen, June 22, 2022. Image © Dean Lewins / AAP Images

The energy market suspension will end tonight, but just how much of a political reset will this crisis prove to be?

The Australian Energy Market Operator (AEMO) will tonight commence a staged lifting of its unprecedented market suspension, as it warns that long-term challenges remain. Speaking alongside Energy Minister Chris Bowen, AEMO chief executive Daniel Westerman said the operator would be closely monitoring the market over the next 24 hours, and would also be undertaking a “detailed investigation” with the aim of preventing another shutdown. Westerman made clear, however, that the transition to renewables is the long-term solution, adding that while global commodity prices had played a role, renewables are the thing that will “delink us from international price shocks”. Prime Minister Anthony Albanese, speaking in Tasmania, echoed those sentiments, telling reporters that the future is renewables. “The market has spoken,” he added, hitting out at the previous government for its failure to bring on more supply, despite promising to do so back in 2019. The market operator may have spoken, but it’s still not clear whether the Opposition has heard. Just how much of a political reset will this crisis prove to be?

Not much of one, it seems, with the Opposition continuing its attempts to blame Labor for the crisis at hand. Today it was deputy Liberal leader Sussan Ley, who appeared on Sky News to deny that the Morrison government was at fault. (Ley, after all, approved multiple coal mines as environment minister.) According to Ley, the new government – which has been in power for all of a month now – has accelerated the transition in a way that has pushed up prices, while the Coalition had gotten the rate just right. Nationals leader David Littleproud, meanwhile, backed Liberal leader Peter Dutton on emissions-reduction targets, adding that his party wouldn’t support Labor’s more ambitious 2030 goal. (Both party leaders seem to be ignoring the increasingly vocal urgings of the remaining moderate Libs.) “The big hand of government doesn’t have to come in and legislate,” Littleproud told Guardian Australia. “Australians are doing this, the marketplace is doing this,” he added, a curious remark considering the effects of a clear marketplace failure that have dominated the past week’s news.

It’s increasingly obvious that the Coalition will not be learning any lessons, whether from the election or the energy crisis, preferring instead to take shots at the new government. But are there also lessons in this for Labor, should it choose to hear them? As John Quiggin writes in The Conversation, the current crisis actually presents an opportunity to end “the failed experiment of the national electricity market”. The market, he notes, has failed to do any of the things it was meant to do, and has now failed to deal with the supply crisis. The government should resist the temptation to “slap on another patch and restore ‘normal’ market conditions”, writes Quiggin. It should instead return the grid to government ownership and operation, with a guiding principle of decarbonisation.

It seems unlikely, however, that Labor will seize the moment: it barely seems able to take the opportunity to slap taxes or regulations on exporters (Industry Minister Ed Husic’s warnings to gas companies are ringing rather hollow), or to turn around and admit that the Scarborough gas project, which is now being challenged in the Federal Court, is not the answer to the crisis in which we find ourselves. Meanwhile, as Greens leader Adam Bandt argued on Monday, the proposal to include coal and gas in the new “capacity mechanism” being put forward by the government’s Energy Security Board would mean “rewarding the companies that have been holding us to ransom”. The Greens are calling for a total rewrite.

The energy market has had a major reset over the past week, following an unprecedented intervention from the market operator. It remains to be seen whether energy politics will undergo a similar reset, or whether Labor will have the courage to take unprecedented interventions of its own. It won’t be easy, of course, with an Opposition that remains stubbornly incapable of a refresh (even after changing the curtains). But this week has shown that a major intervention is possible, and Australians may just have the appetite for a new kind of energy environment.

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Rachel Withers

Rachel Withers is the contributing editor of The Politics.

@rachelrwithers

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