What’s behind the Finkel Review on energy security?

It's time to amplify the call for public ownership and move to 100% renewable energy.
June 30, 2017

Many environmentalists were disappointed, if not outraged, at Chief Scientist Alan Finkel’s Independent Review into the Future Security of the National Electricity Market, released on June 9, which sought to stabilise the existing electricity market.

At the same time, the failure of the privatised and deregulated electricity grid led NSW Greens MP Jeremy Buckingham to call for its nationalisation as the only way to solve its intractable problems.

Four large national environment organisations — The Australian Conservation Foundation, Friends of the Earth, GetUp!, and Solar Citizens — released a joint statement saying: “Finkel was given an impossible task: design an energy system that would tackle global warming but still keep Tony Abbott and the climate deniers happy. The result of Finkel’s mission impossible is a clean energy target that is actually very, very dirty.

“Climate science tells us there is no room for new coal and gas, and our Chief Scientist missed an opportunity to make that clear to the [Malcolm] Turnbull government.”

Environment Victoria's Dr Nicholas Aberle said: “The entire Finkel report is predicated on changing the energy market to reach the Coalition’s weak emissions targets of 26–28% reductions by 2030, which are much weaker than Australia’s fair share of emissions reductions to limit global warming to less than 2°C.”

Impossible mission

Environmentalists have singled out the long lifetime that the review assumes for existing coal-fired power stations, with coal still expected to provide a quarter of the nation’s electricity as late as 2050.

Some other environment organisations and commentators have been less damning, singling out other aspects of the review’s 50 recommendations that are more positive.

It is fair to note that Finkel was given an impossible juggling act to perform. The review had to deliver on not just Turnbull’s climate targets and keeping the climate deniers in the Liberal caucus pacified, but to not upset the electricity industry too much, while maintaining electricity supply reliability and keeping prices down.

Not all of these requirements were stated. Officially, as Andrea Bunting pointed out in Green Left Weekly: “The review was actually about repairing the dysfunctional National Electricity Market (NEM)” not about slashing carbon emissions.

A different view is that the review is about restoring the federal government’s authority to run the NEM as it sees fit. Even this level of intervention has some on the right fretting.

David Blowers of the centre-right Grattan Institute think tank has criticised the government’s response to the Review recommendations as a “reversion to central planning” — damning words if you’re a free marketeer.

Restoring its authority is on the federal government's political agenda. Labor state governments have angered the government with renewable energy targets in excess of the federal target and, in some states (principally Victoria), restrictions on gas industry fracking and new unconventional gasfields.

Emphasising these fears, nationwide anti-fracking campaign group Lock the Gate said the review’s “criticism of government moratoriums on unconventional gas ignores observed evidence of the damage it inflicts on our food-producing land and local water resources and the unsustainably high cost of unconventional gas as a source of energy.”

Friends of the Earth also suggested the review “appears to be a Trojan horse to undermine state and territory leadership on energy policy”.

Keeping the grid reliable and keeping costs down are of course laudable targets, but appeasing the rent-seeking oligopoly of energy companies that own most of the NEM is not; nor is appeasing the climate deniers in the federal government.

Even on face value, repairing the business-as-usual NEM is hardly a desirable outcome. A rapid transition to a renewable energy grid has been found to be feasible in so many studies now, it would be hard to deny its credibility.

Nationalise the grid

Going to 100% renewables is a lot more complex than just building more wind farms and bolting more solar panels onto roofs. But patching up the existing, coal-centred grid is not a practical road to it either.

When faced with the challenge of a Gordian knot, Alexander the Great (as the story goes) simply cut through it instead of trying to untie it.

Calls are being made to bring the energy sector back into public ownership, which could represent the equivalent course of action in our predicament.

In March, progressive economist John Quiggin called for “renationalising Australia’s electricity grid” and in February South Australian premier Jay Weatherill also threatened to in response to the blackouts.

Buckingham called for nationalisation of the electricity grid on June 23, noting first that privatisation and deregulation have “led to a massive increase in wholesale electricity prices”.

“Households and the economy are now being punished for three catastrophic policy failures: the unregulated move into LNG exports; the privatisation and deregulation of the energy sector; and the failure to have a serious policy for the transition of the energy sector to renewable energy,” he said.

“Privatising essential services that are monopolies, or at best oligopolies, has failed with Australian households paying some of the highest prices for energy anywhere in the world ... We should look seriously at re-nationalising the energy sector to end the profiteering and to ensure a swift transition to clean energy to deal with climate change.”

Federal and state Coalition politicians were quick to blame renewables for South Australia's blackouts, even without significant evidence, and are using that as a tool to push back against Labor’s modest ambitions for renewable energy and to rein in the gas fracking industry.

Whatever the useful points among the many recommendations of the Finkel Review, we should not be blind to its political context and the ends to which it will be bent by Coalition politicians. It’s time to amplify the calls for public ownership and a move to 100% renewable energy, not to keep fiddling with the status quo.

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