Malcolm Turnbull

Yesterday the Prime Minister unveiled an energy policy that earned praise — in, variously, guarded, or more enthusiastic terms — from industry and the press gallery. After months of chaos, division and policy retreat, how did he do it? Here’s a guide:

Vagueness is your friend

While some selected sections of the press gallery were given a briefing on the policy, the rest of us had to make do with a media release less than 500 words long. That’s because most of the important detail around the emissions guarantee and the reliability guarantee don’t yet exist. We only know the framework and broad approach, not the specific detail about how any of this will work, which is still to come. But, it seems, Turnbull decided he couldn’t provide yet another week of policy vacuum for Tony Abbott to play in, so he went ahead before the full detail was ready.

Offer some half-baked savings numbers

Conscious that the first question about any energy policy would be how much it would save households, the lack of detail was always going to be a problem. Solution: drop some “up to” numbers to the newspapers overnight and hope they stick in people’s minds even after they’re revealed to be wildly generous. The government claimed savings of “up to” $115 a year would be achieved (although this was only around $20 a year more than savings under a CET). Except, that “up to” figure would only be achieved some years after 2020, when the policy was introduced. So $115 was an “up to, up to” figure. By the afternoon, the savings were being mocked. Sam Maiden on Sky reported that it was possible the savings would only be around $25 a year, leading to claims they amounted to 50 cents a week. Malcolm Farr noted that the savings in fact were savings off a status quo scenario of rising prices. No one could produce any modelling to explain the savings. Never mind.

Use “independent experts” as human shields

Like Kevin Rudd clinging to Ken Henry during the financial crisis, Turnbull and Frydenberg yesterday were at pains to insist that their policy was based on the advice of “independent experts” of the Energy Security Board, who dutifully flanked the Prime Minister and his minister at yesterday’s media conference (none of them are exactly strong media talent, so the worth of that decision is debatable). The point was to suggest that the government’s position had been reached not out of fear of Tony Abbott, or out of seething hatred of renewable energy, but because the experts had said so.

Who are the Energy Security Board? Well, the big hint is in the name — they’re not the Reducing Energy Emissions Board, or the Ensuring We Can Meet Our Paris Agreement Commitments board. And the board, which is made up of the head of the Australian Energy Market Commission, the Australian Energy Regulator and Australian Energy Market Operator, plus an independent chair, has only existed for two months. Funny how they seem to have devised an entirely new solution for the government’s energy dilemma so quickly…

Dramatically cut back renewables

Under the government’s plan, renewables may make up just 28% of power generation in 2030, and 36% under the most optimistic scenario. Under the Clean Energy Target as proposed by the Chief Scientist Alan Finkel, renewables would have been around 42%. In fact, even under the chaotic “business as usual” scenario modelling by Finkel, renewables would have made up nearly 40% of generation capacity. Indeed, there may be no additional renewable energy capacity built beyond what is driven by the existing Renewable Energy Target, which will cease in 2020. This is basically a policy that plans for renewables investment to grind to a halt.

Scale back on electricity’s contribution to meeting our emissions abatement targets

Despite electricity being our most emissions intensive industry sector with the easiest, lowest-cost path to significant emissions reductions, the plan significantly scales back the contribution the industry will make to meeting the Abbott government’s decidedly unambitious 26-28% by 2030 emissions reduction target. The government has no plan for how other sectors will make the necessary greater, more expensive contribution required. But understand that there are no costless paths to meeting our emissions abatement goals, and if we don’t do it in electricity, will pay more doing it somewhere else. The government just hopes you don’t notice it.

Engage in some definitional slipperiness

The reliability guarantee “will be set to deliver the right level of dispatchable energy (from ready-to-use sources such as coal, gas, pumped hydro and batteries) needed in each state.” Only, as John Quiggin pointed out, coal is not dispatchable. Coal is base load, which is very different. Coal-fired power can be turned on and off — but only over a period of many hours or days. By defining coal as dispatchable, however, the government is effectively providing regulatory protection for coal-fired power.

Allow international permit trading

Once derided as ”money that shouldn’t be going offshore into dodgy carbon farms in Equatorial Guinea and Kazakhstan” by Tony Abbott, international permits will be allowed so that the energy retailers who will be the subject of the reliability and emission guarantees can meet their emissions guarantee without actually sourcing any renewable energy locally — a key reason why local renewable energy investment is likely to grind to a halt

Abandon economic efficiency as a goal on climate

The point of a carbon pricing scheme was never that it was the only way to reduce emissions — it’s just that it was well established that pricing mechanisms deliver the greatest efficiency and lowest-cost outcomes out of any of the range of possible schemes — taxes, renewable energy targets, renewables investment, soil magic, straight regulation. But the government has decided straight regulation is the best way to reduce emissions in the electricity sector, while insisting that it’s really a lot like a trading scheme because it will be up to the big retailers to source dispatchable power and lower emissions power.

And it will be regulation that delivers more market power to AGL, Energy Australia and Origin Energy. How’s that? Aren’t they the targets of the regulation? Yes, but that’s good for them, because it creates even higher barriers to entry for any market entrant in electricity retailing, who will also have to comply with the regulations the government is imposing on retailers. A few days after the ACCC explained how the main cause of soaring electricity prices is the market power of the big three retailers, the government has flagged increasing their market power, in exchange for getting it out of its energy dilemma.