Hubert Horatio Humphrey, the 38th vice-president of the United States, famously once said: “To err is human, to blame someone else is politics.”
Never was that more evident than on Friday when, in the midst of Canberra’s chaotic political meltdown, AGL boss Andy Vesey pulled the plug and walked off into the sunset.
For more than two years, Mr Vesey has been on the receiving end of an increasingly hostile attack from the Federal Government, coal lobbyists and various sections of the media.
Variously described as a “Yankee” along with breathless accusations that he arrived in Australia on a 457 visa — both of which are self-evidently true — it seems Mr Vesey last week decided enough was enough. The timing couldn’t have been more pointed.
His crime? He was doing the job the AGL board employed him to do when he was hired in 2015; to take the company into the future, a future that involved gradually scaling back its carbon emissions.
In the process, he became the lightning rod for a highly vocal but relatively small section of the Parliament that refuses to accept what the business community years ago recognised as inevitable.
If Mr Vesey miscalculated, it was that he presumed incorrectly that transparency and honesty would stand him in good stead.
Unlike French group Engie, which gave just five months’ notice before it shut the Hazelwood coal-fired power plant in Victoria, Mr Vesey decided to announce the closure of the Liddell power station in the NSW Hunter Valley five years before the eventual shutdown.
That gave everyone plenty of time to sheet home the blame for the east coast energy crisis on to him.
Who’s really to blame for expensive electricity?
There are three main causes for the extraordinary spike in electricity prices across most of the country.
The first, and the major cause, is 15 years of federal government inaction and factional infighting over energy policy which stalled private investment in new generation resulting in a supply shortage.
The second is the enormous spike in gas prices, resulting from a botched foray into export markets that has seen Australia — a gas-rich nation and soon to be the world’s biggest exporter — paying more for its gas than customers in Asia. That forced generation prices higher.
And the third was the gold plating of the poles and wires networks by state governments that simply passed on the costs to consumers.
Given Friday’s events, it’s worth briefly recapping our national energy policy over the past 20 years.
The Howard government introduced the Renewable Energy Target and John Howard, as prime minister, came close to forging an agreement with then-opposition leader Kevin Rudd over an emissions trading scheme.
Kevin Rudd, as prime minister, came close to forging an emissions trading scheme with then-opposition leader Malcolm Turnbull. Ultimately, that failure played a major role in both being dumped as leaders.
Julia Gillard, as prime minister, introduced a carbon price in the form of a tax that would then revert to a market-based pricing scheme. That was axed by then-prime minster Tony Abbott in one of his first acts of government.
And on it goes. Changes to renewables targets, cutbacks in clean energy financing, a massive subsidy to big polluters, signing up to the Paris climate agreement but later fighting over whether to withdraw. Then came the Clean Energy Target, the Finkle Inquiry and the National Energy Guarantee, each of which failed to get across the line.
As a finale, there were calls for a fully federal-government-subsidised coal-fired power plant from the most ferocious opponents of subsidies, who usually berate all and sundry with calls for minimal government and lower taxes.
Business goes it alone
Households years ago opted to leave Canberra behind with a rush to rooftop solar, a trend that was accelerated by the huge lifts in electricity prices.
Now big business is doing the same. For all the posturing in Canberra, our big industrial and resource companies are going it alone.
Here’s what some of them had to say this week on ABC’s The Business.
BHP chief executive Andrew McKenzie:
“I’m disappointed here [Australia] and I was disappointed when Donald Trump abandoned Paris. I personally asked him not to.
“We in BHP are very clear. We think climate change is happening and the way to deal with that is to create less carbon in energy and less CO2 emissions from industrial processes.”
BlueScope Steel’s John Nolan:
“The goal of the project [a multi-year energy purchase agreement from Australia’s biggest ever solar farm] is to reduce the cost of our power but, as well as that, the goal of the project is to try and do something to reduce the emissions from the power that we do use.”
UK industrial and steel magnate Sanjeev Gupta, owner of the Whyalla steelworks on his $1 billion solar and storage investment for Whyalla:
“That will give us the ability to offer dispatchable baseload power at prices cheaper than other forms of power.”
Confectionary group Mars has a new solar offtake agreement. Numerous other companies are heading down a similar path.
Coal here for decades
AGL, like Origin and Energy Australia, generates most of its electricity from coal. In addition to Liddell and the neighbouring Bayswater coal generator, it also owns the giant Loy Yang A station in the La Trobe valley, a short hop from the now-mothballed Hazelwood.
Loy Yang A provides 30 per cent of Victoria’s power needs and will do so for decades. Coal accounts for around 60 per cent of AGL’s electricity generation and the vast bulk of its earnings, a fact most of Mr Vesey’s critics conveniently overlook.
Just like Hazelwood, Liddell will be shut because it is no longer viable. Mr Vesey, like Frank Calabria at Origin and Catherine Tanna at Energy Australia, was hired to transition AGL from coal to renewables.
Why? The economics favour it.
The cost of renewables has plummeted, the technology is advancing at breakneck speed and it is cleaner.
Unlike renewable plants, not one dollar of private capital has ever been allocated to building a coal-fired electricity generator in this country and the only way another will ever be built is if taxpayers foot the bill.
If there is any criticism to be levelled at AGL, along with Energy Australia, Origin and ERM, they have the ability to manipulate the market because they not only generate energy, they retail it as well. In many instances, the retail businesses were purchased from state governments during the past decade.
If blame is to be apportioned for that development, it is with state governments who were only too willing to take the cash.
When it comes to politics, however, it’s always best to have a decoy, a handy victim who can cop the vitriol for the mistakes of others. Andy Vesey was that guy.