Oct 21, 2016 - 6:00am
This article first appeared in The Age on 21 October 2016.
National Policy & Research Manager, The Climate Institute
The closure of Hazelwood is unfolding like Ernest Hemingway's description of going bankrupt: "gradually, then suddenly". Age, emissions and other energy options meant it was only a matter of time before Australia's oldest and dirtiest power station retired. Rumours permeated the Latrobe Valley for the last couple of years. But only now that an announcement appears imminent – and closure could be as early as next April – are governments starting to respond.
The federal government has said it's up to the power companies themselves to decide if and when to close coal stations. But leaving it up to the market means giving up control of critical infrastructure and the future of regional communities to a few big power companies.
We saw what happened when Alinta shut down South Australia's Northern coal station with just eight months' notice: 400 jobs gone, massive dislocation for the people of Port Augusta, and sudden pressures on the state's electricity system which the energy market operator is still figuring out how to address. The causes of South Australia's recent price spikes are many, but earlier attention to smoothing the impacts of coal exit could certainly have helped.
Now we are about to repeat the same experience in Victoria, on a larger scale. This is a messy way to undertake what Energy Minister Josh Frydenberg calls the transition to a lower emissions future.
Hazelwood's owner, Engie, has already committed globally to get out of coal and build its renewables portfolio. Engie CEO Isabelle Kocher says the 21st century will mark the end of fossil fuels; the company has sold off coal assets in India and Indonesia and closed them in Britain and Belgium. Engie is the world's largest electricity company and the owner of two of the Latrobe Valley's coal generators, so its reorientation toward renewables is going to be felt by Australia whether we are ready or not.
This is why we need a plan for a managed transition. The Latrobe Valley urgently needs both federal and state government to come forward with a well-funded, comprehensive strategy to help the region come through the closure of Hazelwood. But ultimately we need a nationwide approach to coal station closures. We should start investments in replacement industries and replacement energy services well before coal stations close, not after their retirement has been announced.
The federal government needs to recognise that global momentum is driving an unstoppable transformation of electricity supply and use. This isn't just because of climate change; it's also due to fast-changing energy technologies and consumer preferences. In the face of these trends, talk of turning back the clock – like the SA Liberals' calls to consider reopening Northern – is not just a distraction. It is harmful.
The desire to put off unavoidable change leaves us at the mercy of global forces and it worsens the eventual pain. If we invest in new industries and new generation ahead of time we are better placed to cope with the challenges of transition, hard though many of them will be. Without this, though, the shift will be far messier and more difficult, and job losses, price spikes, and ongoing community stress will be worsened by the knowledge that our leaders don't get it – or don't care.
The new catchphrase in ministerial circles is "energy security", which has the unarguable virtue of being something everyone wants. But maintaining the security of the electricity system through a major transformation – like maintaining secure, resilient communities – demands a forward-looking strategy that prepares for changes both gradual and sudden.
Olivia is the Acting CEO of The Climate
Institute. She has worked in the US, UK, Australia and New Zealand
across the fields of journalism, diplomacy and resources. Olivia has provided policy analysis and advice for the New Zealand
Ministry of Foreign Affairs and Trade and the NSW Minerals Council. She was the recipient of a Fulbright award to study in the United States and holds an MA in Security Studies from the University of Georgetown