Let me explain how you can inflict long-term damage to a prosperous country in ten easy steps.
Yes, that’s what Australian state and Federal governments have done. And each step at the time looked good to well meaning politicians – its just that they did not understand the implications of what they were doing and did not link their decisions to what others were doing.
Last week Alan Kohler and I wrote from different angles about what was happening in energy.
Over the weekend, I suddenly realised that if you combined our points and add in a few other decisions we were watching a kind of vandalism taking place that no one can now stop.
So here are my nine very sad Australian steps:
Allow three massive LNG plants in Gladstone to export all the coal gas available in the nearby area and take some from the Cooper basin.
The state and Federal politicians who allowed this to happen did not understand the implications to the nation – they thought they were merely creating jobs and export revenue.
While this was true, the concentration of construction activity in one place boosted construction costs, stopping other projects and the over utilisation of the immediate gas reserves held by the exporters had national ramifications.
Effectively stop the exploitation of coal gas reserves in NSW on understandable environmental grounds.
Given what we had done in Queensland, this ensured that our most populous state would be short of gas later in the decade or, at the very best, be forced to pay close to export parity for its gas—about twice the current price.
Introduce a carbon price to encourage electricity production to move from coal to gas. Then reduce the long-term carbon tax which lowers the incentive to make a switch.
The combination of the first three steps means that we will need to burn lots of brown coal for the foreseeable future.
There is no point in buying out the brown coal generators because there is either not enough gas to enable them to be replaced with gas generators or the gas is too expensive.
