August 26th 2017


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Articles from this issue:

CANBERRA OBSERVED Crikey, is nobody a true dinks Aussie these days?

SAME-SEX MARRIAGE Hundreds of doctors call on AMA to withdraw defective statement on same-sex marriage

EUTHANASIA What disability advocates say about assisted suicide by Daniel Giles

SAME-SEX MARRIAGE Triggs' one important contribution to rights by Greg Walsh

ENERGY High prices 'destroying the economy': Glencore

ENERGY Renewable energy barely even a fair weather friend

ECONOMICS The world it is a-changin': globalisation in crisis

SAME-SEX MARRIAGE Gay Liberals' push out of step with LGBTI realities

INTERNATIONAL AFFAIRS South Africa is losing its rainbow nation credentials

MUSIC A moral scale: Does 'good' music make us better?

CINEMA War for the Planet of the Apes: Best-laid plans of apes and men

BOOK REVIEW Risk nothing; gain nothing

BOOK REVIEW The most infamous crime in history

MARRIAGE The issue, Bill, is transgender marriage

POETRY

LETTERS

MORAL EDIFICATION A cartoon

SAME-SEX MARRIAGE The media, champions for free speech and rights (for the media), demonstrate predictable inability to contain bias on postal vote

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ENERGY
High prices 'destroying the economy': Glencore


by Peter Westmore

News Weekly, August 26, 2017

Leading Australian mining executive Peter Freyberg has warned that Australia has a year to fix the country’s electricity crisis, or permanent damage will result.

He is a senior executive of Glencore, one of the world’s largest producers of commodities – minerals, petroleum and agricultural products – and boasting over 150,000 employees and contractors in 90 countries around the world.

Australia is an important part of this business, with over 15,000 people working across a range of industries – coal, copper, nickel and zinc, oil, and agricultural products such as cotton and grain.

Last year it contributed over $12 billion to the Australian economy and paid $1.3 billion in taxes and royalties.

Most of its investments are highly capital intensive and long term, requiring a stable and predictable investment environment, including electricity.

If Australia is unable or unwilling to provide such stability, Glencore would and could move its operations to other countries, with adverse consequences for Australia’s economy, and on local industry and employment. It is therefore important to listen when its senior executives, and those of other companies that operate in global markets, point to policy challenges facing Australia.

Three months ago, Mr Freyberg warned that due to soaring prices and unreliability of supply, arising from the closure of base-load power stations and the increasing reliance on renewable energy, Australia had entered an energy crisis.

He said permanent economic damage would result unless reliable and affordable base-load power was available within 12 months. His warning echoed comments by senior executives of both BHP Billiton and Rio Tinto.

Glencore is less affected by rising electricity prices than others in heavy industry, because almost all its coal is exported. However, electricity is one-third of its operating cost at its Mount Isa copper mine and smelter, and at its Townsville copper refinery.

In a wide-ranging address given in Sydney early this month, Mr Freyberg pointed to the failures of Australia’s electricity generating policies, despite the establishment of a national energy market, and “market mechanisms” that are supposed to deliver reliable electrical power cost effectively.

Speaking to the Australian British Chamber of Commerce on August 2, Mr Freyberg said that a decade of poor energy policy was now having its effect.

“Energy costs, availability, reliability and security have traditionally been a major competitive advantage for Australian businesses.

“But a decade of poorly designed and uncoordinated energy policy in Australia has led us to an energy crisis.

“Failure to adequately plan for and replace base-load capacity combined with changing climate-change policies, and increasingly disproportionate subsidies for renewable energy have weakened grid stability and increased volatility and costs in the energy market.

“Cheap, reliable and secure energy has historically been a key advantage for Australia in highly competitive global markets and it has been particularly important in helping offset our high labour costs. This is no longer the case.

“Energy price increases in Australia are now directly threatening investment confidence – particularly heavy industry.

“Since 2015, wholesale electricity prices have increased 30 per cent year on year. Wholesale electricity prices at the generator are now well over double that of 2015 pricing.

“The markets currently show further increases, with pricing for 2018 now trading in excess of $90 per megawatt/hour.

“The public debate tends to go straight to how to reduce both emissions and electricity prices. But there’s a fundamental step before that – ensuring the long-term stability and security of the Australian energy market. If we don’t do that first we won’t have to worry about reducing emissions because the industrial base of the economy will be in terminal decline.

“It’s also irresponsible for state governments to announce emission reduction targets or renewable energy targets without first disclosing the true costs and impacts to households and industry.

“Take Queensland, for example – to achieve the stated net zero emission target by 2050 – what industrial assets will need to close, how many jobs will be impacted and, more importantly, what will the cost of electricity be for Queenslanders?

“Also beware the rhetoric around battery storage capability.

“Firstly, battery installations are only designed to mitigate potential system outages due to voltage and frequency fluctuations associated with intermittent power sources.

“Secondly, the much heralded proposed renewable lithium battery storage in South Australia of 129 megawatt/hours would power one aluminium smelter here in New South Wales for a grand total of 7.7 minutes.”

He added: “Electricity prices have got to a level where many industries, both large and medium, are either suffering or are becoming uneconomic because of high energy prices.

“Unless something happens quickly, those businesses will shut. We’re going nowhere with emissions reductions, we’re just putting the Australian economy at risk.”

Criticising both state and federal renewable energy targets, he said: “All we have is a renewable energy target that is seeing billions of dollars chucked into renewables and base-load power being shut down. We are seeing the consequences of that in elevated energy prices and businesses going out of business.

“Let’s get energy and affordability right, and then work emissions reduction into that in an orderly way.

“That way, you can achieve emission reductions by sustaining the economy, rather than achieving it by destroying the economy.”




























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