Shared from the 10/2/2021 Financial Review eEdition

Global energy crisis a wake-up call: Taylor


Federal Energy Minister Angus Taylor said the global energy crisis was a ‘‘wake-up call’’ for countries that wanted to dive headlong into renewable energy on the path to net zero emissions by 2050 without having proper back-up generation.

As the UK, Europe, China and North America deal with a raft of energy challenges – from soaring gas prices, fuel shortages and increased demand as economies emerged from the COVID-19 pandemic – Mr Taylor said it provided some valuable lessons going into international climate talks in Glasgow next month.

He said Australia already had its ‘‘wake-up call’’ a few years ago with reliability issues in South Australia – which was pushing in renewables at the same time as closing down coal and gas-fired power stations – and the closure of the Hazelwood coal plant in Victoria, which threatened grid stability.

‘‘We received our wake-up call. And we’re determined not to have a third one with Liddell [AGL’s coal-fired power plant in NSW closing in 2023],’’ Mr Taylor said in an interview with AFR Weekend.

‘‘Other countries are getting their wake-up call now. You have to have affordable, flexible, dispatchable generation in your system if you have lots of renewable energy coming in.’’

Mr Taylor said Australia had now struck the right balance between a surge of wind and solar projects, but ensuring there was enough dispatch-able generation like coal and gas to keep the energy grid stable.

This had been made possible by a raft of reforms in the National Electricity Market including the controversial capacity mechanism which critics claim is designed to keep coal and gas plants in the grid for longer.

Mr Taylor warned of the consequences of prematurely trying to shut down key industries such as coal and gas.

‘‘There are some who want to shut down these industries overnight. Look around the world about what happens when you cut supply lines,’’ he said.

‘‘It is simply not economically or politically sustainable to do so. If you lose balance you pay for it – you can’t have more renewables without dispatchable generation. That’s a hugely important lesson. We observed that early in Australia but we are observing it around the world now. It’s a lesson we can’t afford to forget.’’

The global energy crisis is set to boost demand for Australia’s exports of coal and gas – amid record prices – as well as provide opportunities for new industries such as hydrogen and carbon capture and storage technologies.

‘‘If we can deliver that for our customers – and we intend to – that will be good for Australia’s economy and global emissions and good for our customers,’’ he said.

With Prime Minister Scott Morrison under pressure to be seen to do more on climate change while at the same time placating pro-coal Nationals in the party room, Mr Taylor said Australia was committed to net zero emissions.

‘‘We want to make sure we can do it in a timely way but we’re not going to sacrifice people’s electricity bills, business viability or the reliability of our energy supplies to do it,’’ he said.

Mr Taylor confirmed the federal government would release an updated emissions projections as well as a long-term pathway before the COP26 talks in Glasgow. But he remained coy as to whether Australia would boost its 2030 target of 26 to 28 per cent reduction on 2005 levels by the end of the decade.

‘‘Every country has pressure to find ways to bring down emissions. It’s completely understandable but the important thing is you have to deliver,’’ he said.

Carbon Market Institute chief executive John O’Connor said the Morrison government needed to provide more detail on the pathway to net zero by 2050 before the Glasgow summit.

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