Power politics: Energy policy the great divide in Victorian election
Summary: Labor’s promise to ramp up Victoria’s renewable energy target to 50 per cent has widened the policy gulf between the major parties on one of the main election issues.....
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In many key policy areas, this state election has been a battle for the political centre.
On law and order, the Andrews government has brought in harsher bail and sentencing laws and boosted police resources in response to perceptions it is soft on crime.
On transport, the Liberals have observed the popularity of Labor’s big-spending infrastructure agenda and thrown fiscal conservatism out the window, pledging tens of billions for their own road and rail promises.
But on energy policy the difference between Labor and Liberal could hardly be more stark.
On Thursday The Age revealed that Labor had dialled up its renewable energy targets, promising to extend them from 40 per cent by 2025 to 50 per cent by 2030.
The targets have already spurred a rush of private sector investment in new wind and solar projects across the state.
According to the government’s analysis, almost 6000 megawatts of renewable energy is either being built or has planning approval in Victoria.
The Liberals promise to scrap the targets if they win the election.
This would require a vote in parliament, undoing legislation that made Victoria’s renewable energy targets law this year.
Opposition leader Matthew Guy held firm on that promise on Thursday, arguing that the targets would push up prices for consumers at a time when many households are already struggling with higher power bills.
“We believe that a target at a national level is the best way forward,” Mr Guy said.
“You can’t have state-based targets that simply up energy costs in Victoria, but have NSW at a competitive advantage over Victoria.”
There is little national direction on renewable energy policy, however.
Australia has a renewable energy target of 23.5 per cent by 2020, but nothing beyond that date, after attempts to implement the National Energy Guarantee failed and helped to bring down former prime minister Malcolm Turnbull with it.
The Morrison government has since said it will not renew the target, creating a policy vacuum that critics say will stifle investment in new sources of renewable energy and potentially push up power prices.
Clean Energy Council chief executive Kane Thornton said the industry desperately needed state-based targets to fill the void the federal Coalition has created.
“With the Commonwealth not moving forward with the NEG and really having no material energy policy post-2020, that creates uncertainty for industry,” Mr Thornton said.
Labor’s argument is also one of supply and demand: more power in the grid means lower prices for consumers.
“This is a growing sector; it is about jobs and skills,” Premier Daniel Andrews said. “It’s also about more supply putting downward pressure on household bills.”
But the growth of the renewables sector logically signals the wind-down of the brown coal sector that has powered Victoria for a century.
Last month the federal government’s most senior energy adviser, Kerry Schott, told a Melbourne audience that Australia’s remaining coal-fired power plants - including those in the Latrobe Valley - would likely close years before their technical end-of-life, because they will struggle to compete with renewables on cost.
The Liberals’ shadow energy minister, David Southwick, similarly argued that Labor’s 50 per cent target would trigger the closure of Yallourn, Victoria’s oldest power station, within about five years.
“It will definitely force out Yallourn, and that will have adverse effects on price and reliability,” Mr Southwick said.
Hazelwood’s rapid closure last year forced up power prices in Victoria to record levels, although those prices have since eased as more renewables have come online since.
As renewables gradually supersede coal-fired power, Victoria must firm its energy grid.
The question voters face is whether Labor’s approach of government intervention is the best way to do this, or the Liberals' view that the market should be left to sort it out.