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How governments have destroyed the world’s most efficient energy market

By Alan Moran - posted Thursday, 30 March 2017


President Trump has issued his Executive Order “Promoting Energy Independence and Economic Growth”, which rescinds much of the climate change agenda of the Obama Administration. 

It requires all government agencies to review, with the intent to remove within 180 days, regulations potentially burdening the development and use of oil, gas, coal and nuclear energy.  The Order immediately revokes power sector carbon pollution standards, the banning of mining, (including fracking for gas), on Federal lands and the methane emission standards which vastly increased coal mining costs.  The order disbands the Interagency Working Group on Social Cost of Greenhouse Gases and withdraws the $36 per tonne of CO2 guideline cost.  

The order has met with howls of anguish from the usual quarters.  Among the most extreme the Washington Post predictably said it puts the planet on a dangerous pathand GQ said it will put us all under water.

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Such ill-informed commentary is easily dismissed as ravings of an ideologically blinkered Trump-loathing media. 

Yet to be determined is whether or not the US will formally pull out of the Paris Agreement and consolidate the effects of the Executive Order. 

The contrast between this facilitative approach to fossil fuel mining and use with the disastrous policies being implemented by Australian Governments could not be greater. 

The nation’s energy policy is in the hands of ideological tyros.

At the federal level Malcolm Turnbull is running the show with the equally green evangelist, his Departmental Secretary Martin Parkinson.

At the state level, we have a Victorian Government desperately promoting wind, to match Greens policies in the hope of retaining threatened inner city seats, while also killing coal, conspiring with the Liberals to close down gas supplies and otherwise using the electricity supply system to provide favours to key support groups.  And in South Australia we have a Premier who has drunk deeply from the well of Commonwealth subsidies, declared his jurisdiction at the cutting edge of the global renewable movement and, in denial of the evidence, is desperately trying to demonstrate the wisdom of this.

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Electricity supply.

In a statement plumbing the depths of credibility, the electricity market manager, AEMO, maintains that  the closure of Hazelwood will not compromise the security of the Victoria electricity system nor the broader National Electricity Market (NEM) next summer.  Looking around it says that there are adequate supply sources available to cover the loss of Hazelwood’s 1600 MW of reliable baseload power.

Hazelwood’s closure takes out 11 per cent of the Victorian-South Australian capacity of fossil and hydro availability, 19 per cent of the total if the now short supplies of gas are excluded.  Hazelwood’s closure, having already triggered a doubling of the average wholesale price, places supply on a knife edge, especially when the 2900 MW of wind is not available.

In its final analysis of the events leading to the September 2016 South Australian black-out, AEMO re-affirms that the failure of the wind generators was the cause.  It argues that there are measures that can be taken to mitigate this.  Among these are payments to consumers to lower demand at crucial times and re-engineering the grid to accommodate the policy-induced reduction in fossil fuel energy.

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Unashamed self promotion: my latest book CLIMATE CHANGE: Treaties and Policies in theTrump Era, is now published and if not in your local book shop available on Amazon et al and direct from the publishers Connor Court.



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Alan Moran is the principle of Regulatory Economics.

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