Judith Sloan doubles down on her gas mates

If sticking with the damaging renewable energy target and committing to a wildly excessive emissions reduction target under our commitment to the Paris climate agreement are not ideological, I’m a monkey’s uncle.

…You only have to think about it for a moment to realise why this is the case. The main effect of the renewable energy target has been to drive out low-cost coal-fired plants, with the increasing proportion of intermittent energy being backed up by high-priced gas.

Let us not forget that the Northern Power Station in Port Augusta was relatively new, having been constructed in the mid-1980s. Notwithstanding an extraordinarily generous offer to the South Australian government by the owners to keep the plant going, Premier Jay Weatherill and his mates from the state conducting a reckless energy experiment (his words) declined. There was 520 megawatts, now blown up.

And when we look at the other coal-fired plants that have exited, there was very little attempt by their owners to revamp them for them to continue to operate. There is an element of Kelly’s axe in all these plants, but the disincentive of the RET and other “green schemes” has meant that large slabs of low-cost electricity have simply disappeared.

…Then there is gas that is deemed to be the villain of the piece because gas is setting the price of electricity much more than was the case. In 2014, gas set the price 9 per cent of the time; the percentage is now 24 per cent.

But given the RET specifically excludes gas, was it any surprise that the gas companies would seek another market for their reserves? And it should not be forgotten that most of these new fields would never have been developed had it not been for the lure of export markets that a Coalition government is now doing its best to destroy. (Yes, that’s right — a Coalition government.)

So don’t give me all that cods­wallop about economics and engineering, not ideology. It’s all ideology. Pumping water up a hill is the apotheosis of ideology.

When it comes to electricity, the Turnbull government’s real message is this: you may not like our ideology but Labor’s ideology is worse. We are targeting renewable energy of only 42 per cent by 2030, but Labor wants 50 per cent. Evidently, we should be really scared about 50 per cent, but 42 per cent is just fine and dandy.

Come now, Judith. So all climate change is ideology? There’s no “science” in it at all? That’s effectively your argument. The “green schemes” are working exactly as they were designed to. They’re driving high carbon-emitting power out of business. That’s science at work, Judith, not ideology.

The decarbonisation plan – yes, that’s what it was – was not based upon ideology. It was based upon the science of climate change. Are there doubts in it? Yes. But there’s more than enough evidence to suggest that it is a vital risk management exercise to decarbonise. After all, it’s an asymmetric bet. If the science is right and we ignore it then we’re all dead.

The decarbonisation plan was to allow gas to substitute for coal as the “birding fuel” for base load power while renewables caught up. It would be working a treat if the gas reserves had not been sold off mid-stride to everyone else that was trying to do the same thing. And they were sold off on the basis of a lie, a lie no less than from the very firm where Judith Sloan was previously a director, Santos:

As Santos worked toward approving its company-transforming Gladstone LNG project at the start of this decade, managing ­director David Knox made the sensible statement that he would approve one LNG train, capable of exporting the equivalent of half the east coast’s gas demand, rather than two because the venture did not yet have enough gas for the second.

“You’ve got to be absolutely confident when you sanction trains that you’ve got the full gas supply to meet your contractual obligations that you’ve signed out with the buyers,” Mr Knox told ­investors in August 2010 when asked why the plan was to sanction just one train first up.

“In order to do it (approve the second train) we need to have ­absolute confidence ourselves that we’ve got all the molecules in order to fill that second train.”

But in the months ahead, things changed. In January, 2011, the Peter Coates-chaired Santos board approved a $US16 billion plan to go ahead with two LNG trains from the beginning….as a result of the decision and a series of other factors, GLNG last quarter had to buy more than half the gas it exported from other parties.

…In hindsight, assumptions that gave Santos confidence it could find the gas to support two LNG trains, and which were gradually revealed to investors as the project progressed, look more like leaps of faith.

…When GLNG was approved as a two-train project, Mr Knox assuredly answered questions about gas reserves.

“We have plenty of gas,” he told investors. “We have the ­reserves we require, which is why we’ve not been participating in acquisitions in Queensland of late — we have the reserves, we’re very confident of that.”

But even then, and unbeknown to investors, Santos was planning more domestic gas purchases, from a domestic market where it had wrongly expected prices to stay low. This was revealed in August 2012, after the GLNG budget rose by $US2.5bn to $US18.5bn because, Santos said, of extra drilling and compression requirements.

And guess what? Australia’s east coast gas shortage is today the equivalent of the volumes that are processed through one LNG train.

Loyalty is an admirable trait, Judith, to one’s nation and planet, as well as one’s former colleagues.