Conquering energy’s fog of jaw

Keith Orchison, Principal, Coolibah Consulting

Keith Orchison, Principal, Coolibah Consulting

Seeing through the “fog of jaw” is tough but necessary if Australia is to get on top of its energy policy problems and attract a good share of the global capital looking for a safe investment haven.

One of the major domestic propaganda messages in Britain during World War 2 was “loose lips sink ships”. Its purpose was to prevent gossip about sea transport reaching the Nazi enemy.

In Australia today, it might be an idea to borrow and convert that slogan for the good of the nation’s energy interests; perhaps something like “loose lips sink strategy”.

Looking back over the seemingly endless electricity and gas rows of the past two years between both vested interest advocates and partisan politicians, one might also be tempted to convert another military saying; perhaps we should talk about the “fog of jaw”.

Certainly the jawboning about energy has reached a point where it’s hard to see how we can emerge from where we are in good order to align durable, effective energy and carbon policies.

While electricity and gas sectors have many different issues to tackle, they are also joined at the hip in a number of areas and both are seriously affected by a lack of focus on strategic directions by the mainstream parties.

The critical factors are leadership, a lack of accountability by governments for actions they pursue or fail to pursue and demonstrated incapacity to make decisions about energy security, affordability and sustainability in the long-term interests of consumers as a whole rather than for narrow political advantage.

The University of Queensland Energy Initiative recently accused the body politic of pursuing “simple soundbite solutions” rather than resilient policy and the evidence that this is right is all around us in the increasingly frustrated comments of investors and consumer NGOs.

The Energy Policy Institute of Australia (EPIA) has laid the responsibility for this situation at the feet of the nine first ministers and called for them, via the Council of Australian Government, to hold to account their energy ministers, meeting as the CoAG Energy Council, for developing a long-term energy vision.

The Energy Council’s next meeting is in early December and it will have reports on energy market strategic directions (from the Australian Energy Market Commission) and market governance (by a panel chaired by Michael Vertigan) before it.

EPIA is urging the governments to go beyond “cosmetic improvements” in governance to pursue policy directions that are derived from a bipartisan process after engagement with industry and the community.

Beyond this, the institute suggests that a “transparent, accountable and appropriately resourced institutional mechanism” be established to provide “methodical, transparent and regular” review of the energy vision over the long term.

EPIA is not alone in pointing out that there is a large amount of global capital looking for good places to invest that are becoming increasingly hard to find in the current international environment.

The copious mineral resources within Australia’s borders make this country an obvious destination for such investment if only we had better-designed policies, a more efficient regulatory set-up and a less combative relationship between trade unions and business.

Unfortunately, as a nation, we spend too much time arguing amongst ourselves and too little searching for the “energy vision” held out as a goal by EPIA and others.

The most recent energy white paper talked well about technologically neutral policy settings, recognition of the need for investment certainty and the avoidance of unnecessary government intervention – getting nine governments to actually sign up to deliver on this seems as far away today as it did when the paper appeared.

In its discussion paper on its strategic directions task, the AEMC observes that energy markets in Australia face growing pressure from an increasingly diverse array of internal and external influences.

The Energy Council members, it says, must focus on greater collaboration to ensure the markets can evolve to meet these challenges. Exactly so, but this was also true last year and the year before.

Read more of Keith’s commentary at coolibahconsulting.com.au

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