June 4, 2019 / 9:58 AM / 16 days ago

Column: Australia's energy, carbon policies remain a deadlocked mess

LAUNCESTON, Australia (Reuters) - There has been no shortage of fighting talk about Australia’s lack of cohesive energy and carbon policies in recent weeks, with the only certainty being the combative rhetoric makes a lasting solution more of a fantasy.

File photo: A coal ship waits to be loaded at the port in Gladstone, Queensland, Australia. REUTERS/Daniel Munoz/File Photo

Australia is the world’s third-biggest exporter of energy behind crude oil heavyweights Saudi Arabia and Russia, thanks mainly to its status as the biggest shipper of coal and liquefied natural gas (LNG), as well as being the third-biggest supplier of uranium.

More than a decade of political infighting and conflicting policies also means that Australia has some of the world’s highest retail electricity prices, and may end up importing LNG to its populous southeastern cities - a seemingly odd situation for such a giant exporter of the super-chilled fuel.

The latest salvo in the country’s war of words was fired last week by Resources Minister Matt Canavan, who blasted oil and gas companies for supporting a carbon pricing system.

Canavan was re-appointed resources minister by Prime Minister Scott Morrison in the wake of the shock federal election victory of his conservative Liberal-National coalition government.

The opposition Labor Party, which favours stronger action to combat climate change, had been tipped to win a victory to end six years of coalition rule, but instead fell just short in the May 18 vote.

Canavan used an address at last week’s annual gathering of Australia’s oil and gas industry to call for an end to industry support for a carbon price, saying only “loud Australians on social media” supported such a position.

“We have now had four elections where the Australian people have rejected such a policy and perhaps it’s time we all listen to the democratic wisdom of the Australian people and seek to tackle the issue of climate change through other means,” Canavan told the conference in Brisbane on May 30.

The election reference is to victories by the ruling coalition last month, in 2016 and in 2013, as well as the last Labor government, which ruled in minority from the 2010 election until its defeat three years later with the support of independents.

It’s fair to say Canavan has a point that there has never been a strong electoral mandate for a carbon price, or even for more robust policy action to reduce emissions.

But equally, the last four federal elections have all been exceedingly close, with even Morrison gaining only a two-seat majority in Australia’s 151-member lower house of parliament.

The previous coalition government had a one-seat majority when elected in 2016, but this was lost during its term after the loss of former Prime Minister Malcolm Turnbull’s seat in a by-election, called after his resignation following his ousting by his own parliamentary colleagues.

The point Canavan is missing is that there is equally little evidence of strong support for the coalition’s more modest climate goals, which centre around reducing emissions by 26-28% of 2005 levels by 2030.

The Labor Party adopted a policy of a 45% cut by 2030, as well as more emphasis on renewable generation and the phasing out of coal-fired power, which currently accounts for about two-thirds of Australia’s electricity.

POLICY PARALYSIS?

The issue for business is the lack of a bi-partisan policy on energy and carbon emissions, and the almost complete lack of hope that such a policy can be crafted.

While Canavan and the ruling coalition are buoyed by their election victory, business leaders recognise that there will likely be a Labor government at some time in the future, and possibly as early as 2022 when the next federal election is due.

Chief executives are cognisant of the likelihood that eventually a carbon price is likely, and that public concern over climate change is likely to increase in coming years, rather than diminish.

However, politicians in Australia have to deal with a relatively short three-year electoral cycle, and the focus is almost always on creating jobs.

The planned Carmichael coal mine in Queensland state is a case in point: Coalition support for the controversial mine is viewed by analysts as one of the reasons they were able to take rural seats away from Labor in the state.

Labor was conflicted over the Adani Enterprises venture, torn between the promise of high-paying mining jobs and anger among progressive urban voters over the climate consequences of building what would be the world’s largest new coal-mining project.

The problem for companies operating in Australia is that they are being forced to take long-term investment decisions without any long-term policy certainty.

The opinions expressed here are those of the author, a columnist for Reuters. 

Editing by Kenneth Maxwell

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