How Tony Abbott made the carbon tax work
The Age, 30 June 2014
For six glorious wild and wet days last week, South Australia sourced 67 per cent of its electricity from wind. Needless to say, it’s an Australian record. So fast were the turbines turning from early Monday to early Sunday that the entire national grid sourced an extraordinary 14.5 per cent of its electricity from wind.
The grid spreads from Queensland in the north through South Australia to Tasmania.
With hydro electricity contributing almost as much, the entire arc was making 30.7 per cent of its power without burning fuel. At one point early on Friday morning, South Australia sourced 99.6 per cent of its needs from wind, pushing wind’s share of the national grid to 20 per cent.
That’s how far we’ve come since the introduction of the carbon tax two years ago today. And we’ll go further, thanks to Clive Palmer’s decision to keep the renewable energy target and possibly the bones of the emissions trading scheme
South Australia is about to open another wind farm at Snowtown near the top of the Yorke Peninsula. It’ll be Australia’s second-biggest, producing enough electricity to power 230,000 homes. That’s as many as in Canberra and Hobart combined.
South Australia has mothballed one of its huge, base load coal-fired power stations and operates the other for only six months each year.
None of it would be happening without the renewable energy target and the tax. The target imposes enormous penalties on power companies that don’t source renewably. Using wind is cheaper than paying the penalties. The tax has made coal generators in Queensland and NSW uneconomic.
And it’s done something else, something so strange it only begins to make sense when seen through the prism of politics.
For more than a century, through two world wars and the Great Depression, Australia used more electricity each year than the year before. Then, in 2010, something changed.
Ever since 2010, we’ve been using less each year than the year before. Just as important as switching to renewables, we’ve been switching out of electricity altogether, replacing megawatts with "negawatts".
Energy expert Hugh Saddler of pitt&sherry sees four things at work. (Saddler calculated the wind share figures I just quoted.)
One is energy efficiency programs. Non-political in nature, they’ve required freezers, refrigerators and even light bulbs to perform better. Another is deindustrialisation. Between October 2011 and September 2012, three major users of electricity partially or completely closed down. They are a steelworks, an aluminum smelter and an oil refinery, all in NSW.
Another is rooftop solar. In the statistics, it shows up as grid energy not produced, those negawatts.
Then there’s reason number four, what Saddler describes as an “abrupt change in consumer responsiveness to higher prices after 2010”.
“It is surely not a coincidence that 2009-10 was the year in which the possible effect of a carbon price on electricity prices became a major national political issue, and in which increasing political attention was also paid to the rapid increases in electricity prices already occurring,” he writes in a paper commissioned by the Australia Institute.
Tony Abbott took over leadership of the Coalition on December 1, 2009. Ever since we’ve heard repeated horror stories about electricity prices, retold regardless of the fact that gas and electricity account for just 2.6 per cent of a typical household’s spending (and gas and electricity are about the only things where the price was going to rise).
Saddler’s graphs suggest it is the Coalition’s talk about electricity price rises rather than the rises themselves that changed consumer behaviour. It could be called the "Abbott effect".
Australian Bureau of Statistics data show spending on electricity growing strongly until 2009-10, then barely increasing, despite continuing strong increases in electricity prices.
“It appears that residential electricity consumers have managed to completely offset the effect of higher prices on their household budgets by reducing consumption,” Saddler writes.
When the carbon tax goes this month and is replaced by either an emissions trading scheme with a zero price or nothing, much of that changed behaviour will continue. We are unlikely to rip out the insulation or rip up the solar water heaters and solar panels Abbott helped encourage us to install. With the future of the renewable energy target assured, more and more of our power will be sourced from wind and possibly large-scale solar.
Energy prices will come down in the coming months. Each household will be about $10 a week better off. But there’s no especial reason to think they are going spend that saving on power. We’ve changed and, thanks to the continued presence of the independent Climate Change Authority and the profit-making Clean Energy Finance Corporation, our electricity is likely to be increasingly clean.
Our environment has a lot to thank Palmer for, along with former prime minister Julia Gillard who pushed through the carbon tax and defended the renewable energy target. And Abbott. He made it scary.