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The market is not abandoning coal, the government is forcing the market to abandon coal

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Australians are constantly told that banks, electricity markets and buyers are all turning away from coal and gas because it’s too expensive or the buyers just don’t like it anymore. It’s bullshit.

It is the Government that is applying direct pressure on coal and gas while it gives wind and solar a free ride. There is a sneaky, hidden piece of legislation called the Renewable Energy Shortfall Charge that is enforced by the Clean Energy Regulator (CER).

It forces your electricity company to buy a percentage of all of their electricity from wind and solar complexes. If your electricity company buys too much coal or gas fired electricity, they have to pay to buy green credits (generation certificates) off wind and solar generators or they will be fined.

Like slowly boiling a frog, the percentage of wind and solar your electricity company is forced to buy has been ratcheted up from 0.65% in 2001 to 18.64% this year. The increases are only accelerating.

So remember when anyone tells you “the market” is abandoning coal that it’s a lie. It’s only the government that’s choosing to abandon coal.

Transcript

Senator Roberts: I want to get help with an issue that constituents want to understand and so do I; I don’t understand it. It has relevance to the primacy of energy costs in the budget. I’m hoping to get into a relatively complex area and get your evidence or confirmation on how the renewable energy shortfall charge, under the Renewable Energy (Electricity) Act, works. Perhaps you could bring anyone to the table who has expertise in that.

Mr Parker: Sure. Mark Williamson has the expertise.

Senator Roberts: Thank you, Mr Williamson. I will try to step my way through the legislation here, and you can pick me up where I’m wrong or missing something. The renewable energy shortfall charge applies to liable entities?

Mr M Williamson: Correct.

Senator Roberts: Which is defined in sections 35, 31, 32 and 33, and essentially talks about entities that make a wholesale acquisition of electricity.

Mr M Williamson: Yes. For simplicity, these are typically electricity retailers.

Senator Roberts: Retailers.

Mr M Williamson: Yes.

Senator Roberts: Wholesalers?

Mr M Williamson: The electricity retailers are typically the liable parties.

Senator Roberts: Okay; they are the liable parties because they sell it to the end user.

Mr M Williamson: Correct.

Senator Roberts: Okay. Thank you. That’s great.

Mr Parker: Or large users, people directly purchasing electricity.

Senator Roberts: So large users who buy direct can also be facing these charges.

Mr Parker: Correct.

Mr M Williamson: Correct.

Senator Roberts: Can I get you to explain who the liable entities for the renewable energy shortfall charge are in simple terms—again, retail or large users?

Mr M Williamson: I need to frame and explain the renewable energy target for you. It sets an obligation on these retailers or large users who are buying direct to surrender to us each year a certain number of large-scale generation certificates and small-scale technology certificates. Those amounts are based on percentages set each year in regulation by the minister. Effectively, if you’re an electricity retailer, you take your acquisition of electricity in megawatt hours, you multiply it by those percentages and that tells you the number of certificates that you need to surrender to us. If a liable entity does not surrender the certificates or surrenders fewer than they should, that makes them liable for the shortfall charge.

Senator Roberts: So it’s not power generators and not wholesalers; it’s just retail and large consumers, as Mr Parker said.

Mr M Williamson: Correct; and they’re only liable for the shortfall charge if they do not surrender enough certificates to us to meet their renewable energy target liability.

Senator Roberts: Can you talk me through the large-scale generation certificates that you just mentioned.  What are they and what is the effect of surrendering them for that company?

Mr M Williamson: Large-scale generation certificates are issued for each accredited power station that’s from a renewable energy source.

Senator Roberts: Solar or wind, for example?

Mr M Williamson: Correct. Hydro, as well, is quite common. They get a certificate for every net megawatt hour of generation. Those certificates can be used on the demand side to equip liability, so they can be sold to electricity retailers or big users, or they can be voluntarily cancelled to prove the use of renewable energy. For example, you may have heard of the GreenPower scheme. That operates in a way that businesses who want to have more renewable energy use proven, other than just the statutory renewable energy target, can buy and cancel large-scale generation certificates.

Senator Roberts: So a coal-fired power station would not get them?

Mr M Williamson: That’s correct.

Senator Roberts: Definitely not. Solar and wind would. And purchasers must buy at least 18.64 per cent right now of solar or wind power or hydro.

Mr M Williamson: Effectively, that’s the case. I think that percentage you’ve mentioned is the renewable power percentage and so, yes, those electricity retailers or big users multiply their electricity acquisitions by that percentage. That tells them the number of certificates that they have to cancel to us.

Senator Roberts: I’ve got some figures in front me about the renewable power percentage. I’ll just go through them. In 2001, it started—so that’s 22 years ago—and it was just 0.24 per cent, about a quarter of one per cent. Then it went up in the following year. You mentioned that this is a ministerial directive.

Mr M Williamson: The minister sets these percentages, based on calculations that we do each year, but the actual targets are set in the Renewable Energy (Electricity) Act. A certain number of gigawatt hours of generation each year was set in the act. That got to the target, which is 33,000 gigawatt hours, which is set in the legislation from 2020, and that same number continues to 2030. That 33,000 gigawatt-hour target was reset in mid-2015 by parliament. In the early stages of the scheme, there was a table in the act that set the numbers that dictated where that percentage would be set.

Senator Roberts: Is that table in section 39(1) of the act?

Mr M Williamson: I’d have to ask the general counsel to try to find the right part of the legislation.

Senator Roberts: While we’re waiting for confirmation, in 2001 it was 0.24. In 2002, the following year, it was 0.62, and it had slow increments, mild increments, until 2010. It took 10 years to get to 5.986 per cent. Then, from 2011 onwards, it rose, in 11 years, to 18.64. So it was 5.6 per cent in the first 10 years and there was a 13 per cent increase in the next 11 years.

Mr M Williamson: These were legislated increases. That was the way that the scheme was designed.

Senator Roberts: I want to understand this. First of all, I’ve focused mainly on the climate, because I haven’t found anyone who can give me the science that proves the need for this. But I haven’t focused on the energy, and that’s where I want to go in the future. That means resolving some of the complexities. I want to no-understand this because we always hear that it’s the market that’s forcing coal-fired generators out and that one likes coal. Yet it appears to me, with this renewable energy shortfall charge—a fine, if you like—that it’s actually the government forcing the retail sellers and the end users to buy wind and solar energy or, essentially, they’ll be faced with this fine. Is that correct?

Mr M Williamson: The construct of the scheme is that the retailers should buy the certificates. The shortfall charge is only where they do not choose to or are unable to get the certificates that they need. So it’s the default mechanism. But the way the scheme works is that the retailers should get in and be buying renewable energy. That should bring through more renewable energy, and that’s the way the scheme works.

Senator Roberts: It appears deceptive from one perspective. I’m not accusing you of doing that, but it appears deceptive from one perspective, hidden in the complex legalese. Have you ever advertised to the public that the government, through you, is forcing retail purchasers and large-end users to purchase more and more wind and solar?

Mr M Williamson: We don’t do specific broad community education, but all of this is regularly published; it’s published by other bodies, such as the Australian Energy Regulator and the Australian Energy Market Commission. It is generally well known that there’s an obligation on the electricity retailers. As I said, a lot of electricity users are choosing to buy GreenPower and to go further than the minimum statutory target.

Senator Roberts: What we have is a consumer faced with a choice of buying electricity. If they don’t buy an adequate amount or proportion of solar and wind, they will have to pay a charge in addition to the subsidies that the solar and wind producers are getting.

Mr M Williamson: No. The obligation is set with electricity retailers. There are a lot of electricity retailers. In a competitive market, they should source the certificates at the best price they can and have the lowest level of input cost for the renewable energy target.

Senator Roberts: My point, Mr Williamson and Mr Parker—you can correct me or confirm—is that, in my opinion, now that I’ve had it clarified, this is the most significant intervention in the electricity market that the government has ever conducted, and not just this government but previous governments as well. By ministerial directive via legislation, they’re ratcheting up the percentage of renewable electricity that every electricity buyer has to buy, or face a fine over the course of 20 years.

Mr M Williamson: Let me clarify, again, that the underlying numbers that lead to those percentages are locked in the act, so parliament took a decision to lock those numbers in. We do complex calculations to convert that to a percentage and they are put to the minister. The act sets out the things that the minister must consider. This is all set in legislation that was passed in parliament.

Senator Roberts: Thank you for affirming that yet again. My mistake: I thought I said ‘in the act’, but maybe I didn’t. Doesn’t this confirm that solar and wind are much more expensive? We’ve all been hearing the fluff that says people are going away from coal because it’s more expensive. Solar and wind get subsidies; plus, if somebody buys coal-fired power, the retailers or large-end users can be up for a charge. Doesn’t this really confirm that, without subsidies and without a throttle on the coal-fired competition, wind and solar are too expensive?

Mr M Williamson: Not in my view; I wouldn’t agree with that at all.

Senator Roberts: On what basis?

Mr M Williamson: There are incentives in the form of those large-scale generation certificates that go to the generators.

Senator Roberts: The solar and wind generators?

Mr M Williamson: Correct. Effectively, who benefits often depends on the nature of power purchase agreements between those solar and wind power station operators and the retailers. But, in essence, the numbers—if you look at the Australian Energy Market Operator’s Quarterly Energy Dynamics report, every time that wind and solar are setting the price in the wholesale electricity market, the prices are very low and, in some cases, in negative territory. It’s quite clear that, in fact, wind and solar are driving down wholesale electricity prices, which are also an input to retailers and to all of us as consumers.

Senator Roberts: I would say that’s an aberration. What’s happening is that coal is actually being forced out by the governments—I say ‘governments’ plural—and it’s a direct market intervention in addition to the subsidies. The subsidies enhance solar and wind; the charge slams coal.

Senator McAllister: Senator Roberts, in your questions just now and, indeed, yesterday, you mentioned subsidies. Are there any particular subsidies that you’re interested in? I think it’s been challenging sometimes for witnesses to engage with your questioning, because you don’t name them and I’m just unclear what it is that you’re referring to.

Senator Roberts: Subsidies on solar and wind.

Senator McAllister: Issued by whom?

Senator Roberts: Federal government, state governments.

Senator McAllister: Is there a program in particular that you’re seeking information on?

Senator Roberts: No, I don’t have any one in mind in particular.

Senator McAllister: I see. Please go on.

Chair: Senator Roberts, I’m going to wind you up as well. We can come back to you, if you need.

Senator Roberts: I’d just make the point that the market is not abandoning coal; the government is forcing buyers to not buy coal. That’s the point.

Chair: Thank you for your statement.

Senator Roberts: Thank you very much, Mr Williamson, for clarifying.

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North Australia Gutted by Government Mess

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Transcript

[Marcus] Malcolm Roberts, good morning to you, Malcolm?

[Malcolm] Good morning, Marcus, how are you doing?

[Marcus] I’m okay. First thing first. I wanna play you something back from a couple of weeks ago when you and I had a discussion on this radio programme, are you ready?

[Malcolm] Yes, I am.

[Marcus] Okay.

[Malcolm] Trump is in the box seat, he knows what he’s doing.

[Marcus] All right, you wanna bet me a bottle of wine on this? Australian wine.

[Malcolm] I definitely do but not yet, I’m very happy to send you a bottle of Stanthorpe wine if you win, but Trump is still in the box seat, mate.

[Marcus] Oh, Malcolm.

[Malcolm] Trump is coming home.

[Marcus] Hang on, Malcolm, Malcolm, Malcolm. No he’s not in the box seat.

[Malcolm] Yes, I haven’t seen the other, any headlines tonight, but he has got a process in play that’s been done before in the United States, it’s been upholding the constitution, it’s all proven and that’s underway and it will be unfolding in the next few weeks.

[Malcolm] I’m serious, Marcus.

[Marcus] I know you are, that’s the worry.

[Malcolm] I love the bet but I’m serious.

[Marcus] All right, let’s get on to some other issues. The Northern Australian agenda, the Torres Straits, Horn Island, Thursday Islands, Senate Select Committees on the Government’s agenda for Northern Australia in a nutshell, not going anywhere and deeply disappointing. What are the issues preventing development in Northern Australia, Malcolm?

[Malcolm] Have a listen to these, energy prices, property rights and land tenures, infrastructure, water, transport, telecommunications, a hopeless jumble of government services, all three layers of the government that’s state, federal, and local are not working together, there’s massive duplication, massive waste, huge gaps in service delivery. Now those things are occurring right throughout Australia.

And so how can we expect a development of productive capacity here in the North where there’s low population and lack of infrastructure, when the Southern areas of New South Wales, the rest of our country are being gutted by the same things, the destruction of productive capacity. And so what we’re really seeing up here, I mean, you, you’ve got problems in New South Wales I understand with ferries and trains that are built overseas and we have the same.

In Brisbane Queensland, we’ve had trains built overseas by both the liberal and labour governments in the past, they’ve come here with faults in them that had to be fixed. We have the ability, we just have lost the productive capacity because our governments, state and federal have destroyed that productive capacity.

[Marcus] I heard something, yeah, sorry, Malcolm, I heard something really interesting yesterday. In Victoria, and I know that Dan Andrews has copped a fair bit this year, trying to keep his constituents safe, but in Victoria to their credit, they have public transports, whether it’s buses, various trams, whatever, running around saying, “Proudly manufactured in Victoria.” Why is it that in Victoria, they can make their trams and their trains and their public transport infrastructure there but in New South Wales, in Queensland, we cannot.

[Malcolm] Well, I wonder how old those trams are because you know, our productive capacity is being destroyed over the last few decades, Marcus and I just wonder how long, how old those trams are. They still got the ability to make those trams? I don’t know. And you know, Victoria lost the Ford production facilities for cars, they’ve lost the Toyota production facility for cars, had lost various General Motors facilities, we haven’t got that productive capacity anymore. And so Victoria has done a very bad job.

Victoria has shut down it’s large power stations, which now make it vulnerable and dependent on New South Wales. I mean, this is a mess, our whole country and it’s a security issue, and it is a dead set security issue.

[Marcus] JobSeeker, my understanding from some stories floating around this morning, again, JobSeeker is blown out. In relation to costs, it’s gonna cost our economy billions of dollars more. I don’t know who’s doing the maths or the accounting treasury, but again, we see that job seekers, JobSeeker, the federal government’s plans through COVID 19 will end up costing more in the longer term.

[Malcolm] One of the things we have to start facing is the reality that state and federal governments have made a mess of the coronavirus, real mess of the way they’ve handled it. And I’ll give you some examples about JobSeeker in a minute up here in Queensland and especially in the North. But you know, Taiwan, Marcus have done by far the best job in the world, they’ve had no decrease in their economy, they’re bubbling along at the same rate as normal.

Our economy has been smashed and same with most economies. Taiwan, what they’ve done is they’ve tested people rigorously, they’ve traced people and they’ve quarantined people. They have isolated the sick and the vulnerable. We have shut down everyone. I mean, that is not the way you handle a pandemic. Now, initially, because it looks so bad because remember the people dying in Italy, we had to do something like that.

So we said to the government, “There is your open cheque, “just go for it, “do whatever you want.” That’s what we need to do when under such a crisis. When we realised, and we, but we said to them, “We’ll come looking for you “and holding you accountable,” when we realised that it wasn’t as bad as thought and then the total number of deaths in many countries around the world has not increased, the age deaths in Australia is lower than in the past years, so the total deaths have not increased, it’s not been what we’ve, what we were afraid of and that’s welcome news, the government hasn’t changed the tact.

And we’re still locked where we were until very recently locking down people. And we’re now, the coronavirus is still out there, we haven’t got a plan for managing the damn thing, and we’re still being managed by the Coronavirus. Victoria is still doing that. So what we have to do is actually look at what’s going on and come up with the plan. Never has the state or any federal government come up with the plan, never.

[Marcus] All right, the UK Climate Ambition Summit, we know that Scott Morrison was refused, well, basically, our nation is in the cold and all of these summits, you and I will disagree on the reasons why we’ve been cheating our way through our Kyoto agreements now for all- God, probably the best part of the last decade. But you and I differ on this, but just your thoughts on it.

[Malcolm] Well, it’s just another gabfest. The fortunate thing is that unlike all the other gabfests, there isn’t a huge transport demand pushing all these leaders together and producing carbon dioxide, which I know is got no problem, but they’re producing a hell of a lot of carbon dioxide to get to where they’re going and nothing comes out of it of any good.

And what we see is the United Nations pressuring nations to increase their carbon dioxide cast, which is insane, there’s no data to drive that, and Scott Morrison is now being pushed, and I think he’s relented and he is no longer going to use the Kyoto credits, that John Howard, stole, John Howard’s government, stole these credits, stole farmers’ property rights to get those credits, now we’re not even gonna use them. So we’ve got farmers owed somewhere between a hundred and $200 billion worth of compensation, or we need a restoration of their property rights right around the country.

[Marcus] Yeah.

[Malcolm] And so what we’re seeing is that the UN drove that stupidity from John Howard’s government, drove the state government in New South Wales and Queensland in particular to decimate their farmers, no compensation paid, and now we can’t even use them?

I mean, this is insane. And China’s commitment under these UN agreements is zero. They will continue in not only at their current levels of carbon dioxide output, they will continue increasing them. And so what they’ve got is their productive capacity continuing to grow by using our coals for their steel in the construction

[Marcus] Well I don’t know whether they’re gonna use, they’re going to use our coal considering what we’ve heard in the last week, Malcolm?

[Malcolm] Well, I think they will have to get back to it because they use coal for power generation, which is thermal coal exports. They’re about half of Japan’s intake of coal from Australia. Japan buys about almost $10 billion worth of coal from Australia, thermal coal for power stations, and China only buys 4 billion, but the key is in the metallurgical coal exports from Australia.

India has, buys $10 billion worth of coal, China just a fraction under that 9.7, Japan $7.4 billion worth. China needs our coal because our metallurgical coal for steel-making markets is the best in the world.

[Marcus] All right, I just want to move on to trade with China. It’s not getting any better, you know, we know that we’ve got a number of tariffs and a number of blockades if you like placed or put in place by Beijing, we’ve got Barley exports, we’ve got tariffs on other major exports including now, as I mentioned just before, the possibility that our coal will sit idle off the coast of China and not be allowed into the country. When is it gonna stop and what can we do about it, it’s not getting any better?

The reason China is picking on us I believe is that we have been very, very weak to ourselves. I’m not talking about standing up to China anyway, I’m talking about the Chinese are a totalitarian dictatorship, they are bullies. They’re being very subtle in the way they’re bringing people into the fold around the countries, through their belts and roads initiative, which Victoria has signed up to.

But what they can’t see, a bully always picks on the weakest first and the most vulnerable. Now China sees Australia as being allied with the United States. But China also sees Australia wrecking our own productive capacity. They see Australia kowtowing to UN agreements, ceding our sovereignty, giving up the control of our resources, the control of our productive capacity in this country.

China has said to the UN, “To hell with you lot, “we are going to continue our industrialization, we are ceding our jobs. we’re actually sending our jobs to China as we destroy our productive capacity. The Chinese also see us exporting coal and burning coal at very high cost in this country because of artificially inflated regulations that have destroyed the price of coal in this country, coal fired power.

And so what China is saying is we’re destroying ourselves. We’re subsidising the Chinese to build expensive renewable energy, solar, and wind in this country, which is destroying our electricity network even more, and then we’re seeing, they’re seeing us see that and they’re saying, “These people are contradicting “their own sovereignty, “they’re destroying their own values. “These people don’t know “what the hell they’re doing. “They have weakened their right.” And that’s what they’re doing. They’re sending us a very strong signal, “Get your house in order.”

[Marcus] And the human face of this, of course, 66 ships, 500 million to a billion dollars worth of coal currently sitting idle. We’ve got a thousand seafarers stuck out there. I mean, they’ve got families but hopefully, there’ll be some sort of a breakthrough. We need cool heads to prevail and I mean, I see, I tend to agree with you Malcolm, I can see, I can’t see China holding out for much longer.

[Malcolm] You know, it’s a very good point you’ve raised though the human face of it, but it’s true, but they’re not players in the trade dispute, the victims. Many haven’t been allowed to disembark apparently for about 20 months due to COVID, Marcus I think and the maximum time legally for seamen to be at sea is 11 months. The situation is deteriorating apparently for physically and mentally for these people.

There’s a limited supply of food and medicines and so, yeah, good on you for bringing up the human aspect. These people are caught in the middle and they’ve done nothing wrong.

[Marcus] All right, just wanna finish with lobster seafood. I mean, that’s how I plan on, well, look, to be honest, I plan on washing down a bit of lobster and a couple of prawns and some crab over Christmas with the wine you’re going to send me, but tell me, how can we help out our rock lobster industry?

[Malcolm] Marcus, the election date will be settled when the vice president, Mike Pence selects the candidate, selects the votes in

[Marcus] All right, so

[Malcolm] On January 6th

[Marcus] I’ll be having

[Malcolm] That will be A new year celebration

[Marcus] A new year one I like it, fair enough. All right, but let’s talk lobsters, mate.

[Malcolm] Yes, it was predicted that customers would eat more than 35 tonnes of lobster this year compared to just six and a half tonnes in the previous year. But now apparently, you need to get in early, there’s a limit of four per person I’ve been told. They’re now a bargain at $20 each because the Chinese are not taking our lobsters, so what we’re saying is get into the lobsters and go for it. Now I’m not a lobster fan, I prefer the Queensland mud crab, best seafood you can get,

[Marcus] Fair enough.

[Malcolm] But that’s my deal, but yeah, grab, go for the lobsters and wash it down with some Hunter Valley wine or some Stanthorpe wine from Queensland and enjoy your Christmas.

[Marcus] And shop Australian over Christmas too. And that’s something that Pauline and I talked about on the programme on Tuesday, we need to ensure that we buy up as much Australian wine as much Australian seafood and beef and support Australian industries during this time.

[Malcolm] So right, thank you very much for, for reminding us of that, Marcus. And I’d like to wish you and your family a very Merry Christmas and happy new year

[Marcus] Thank you.

[Malcolm] And the same to all your team, Justin and everyone, and all your listeners, a very happy new year and a very Merry Christmas.

[Marcus] You too, mate. We’ll talk again in 2021, we’ll finally settle the issue of Trump V Biden and I look forward to, I dunno a case or a bottle of something from you Malcolm.

[Malcolm] If Mike Pence goes away, I think he will and the constitutional precedence then I think you’ll be sending me a bottle of the wine, mate but if I’m wrong, I’ll be very happy to send it to you.

[Marcus] All right, mate, great to chat to you. Thank you so much for your time this year, we’ll catch up again in 2021.

[Malcolm] Look forward to it, thanks very much, Marcus and Merry Christmas.

[Marcus] All right, you too, mate. There he is, Malcolm Roberts, One Nation Senator, and look obviously, you know, me and a number of my listeners don’t always agree with everything Malcolm comes up with. But he does talk sense on, I think when it comes to things like industrial relations, reform, our trade issue with China and all these sort of stuff. I think he’s a little more moderate on that than say Scomo and his mob are, and I just enjoy Malcolm, my chats with him. We, we’re not always gonna agree. But gee that wine, will taste nice.

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