Morrison Government keeps coal fired up despite AGL bid

The offer by tech billionaire Mike Cannon-Brookes and his partners in the Brookfield group to buy out AGL has stunned the markets and left the Morrison Government blindsided.

How would they react, we wondered? Would Prime Minister Scott Morrison and Minister for Industry, Energy and Emissions Reduction Angus Taylor see it as an opportunity, the free market operating, technology working, emissions coming down and freeing them from the opprobrium and electoral pain caused by their failure to properly address climate change?

The Prime Minister took a target of net-zero by 2050 to Glasgow; surely, he would be pleased an entrepreneur like Cannon-Brookes has pointed out how to get there? Well, no.

The Australian Financial Review reported a ‘veiled threat’ by the PM to block the merger. The paper speculates how that could be done, using the Foreign Investment Review Board (FIRB), the Australian Competition and Consumer Commission (ACCC), or the Energy Regulator.

Angus Taylor, still reeling from last week’s announcement of an early closure for Eraring power station, is reported to have said:

“Energy companies, as providers of an essential service, have a responsibility to put consumers first.”

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He might have added the responsibility they have to lower emissions, reduce stack emissions harmful to health and to manage their ash dams responsibly.

Outgoing Labor MP Joel Fitzgibbon wrote in the AFR that neither of the bidders, Cannon-Brookes nor Brookfield, is driven primarily by environmental concerns. He underestimates both. Even a casual search of Cannon-Brookes’ history reveals a deep concern he holds for the environment, especially climate change, concerns shared by his spouse.

Mark Carney is the vice-chair and head of Brookfield Asset Management and head of transition investing. Carney, when Governor of the Bank of England, in a now-famous speech to Lloyd's insurance group ahead of the Paris Climate Conference in 2015, spoke of the “tragedy of the horizon” which climate change presented.

He meant that the catastrophic impacts of climate change are felt beyond the traditional horizons of most, including in business, government, insurance and banking. He outlined the impacts and the cost of doing nothing and warned of the risks to come.

Most of the commentary on the takeover is about the economics and the adequacy of power supply. What will it do to electricity costs and reliability? Such concerns are real but there is more to be considered. In 2021, The Australian Academy of Science released a report entitled ‘The risks to Australia of a three 3ºC warmer world’. The report noted that current pledges by governments to reduce emissions would potentially result in 3º Celsius of global warming.

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The incidence of extreme weather events, including heatwaves, bushfires, storms and coastal flooding would all increase and become more intense. Impacts would be felt on ecosystems, food production, cities and towns, health and wellbeing.

The scientists made ten recommendations. Number one was ‘Join global leaders in increasing actions for tackling and solving climate change as a matter of urgency’, also recommending ‘Australia accelerates its transition to net-zero GHG emissions over the next ten to 20 years’. Number six recommends ‘a suite of policies that would deliver deep and rapid cuts in emissions across the economy’. Put bluntly, vague promises of “by 2050” don’t amount to anything without urgent action this decade.

Much is made by critics that if the Cannon-Brookes/Brookfield purchase proceeded and Origin Energy closed Eraring power station early, reliability of supply would be threatened. The Clean Energy Council has described how 100 per cent renewable energy by 2030 is feasible in their ‘Roadmap for a renewable energy future’.

The burning of coal releases hazardous air pollution, including particulate matter, sulphur dioxide, nitrogen oxides, mercury and arsenic. The Lancet medical journal published an article that estimated 24 people die prematurely for every terawatt of generation from coal. Air pollution from coal is a major contributor to leading causes of death: lung cancer, chronic respiratory disease, stroke and heart disease.

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The Chairman of AGL Energy has admitted that the company is failing to meet emissions targets as share value continues to plummet.

Air pollution from coal and traffic pollution are sources for the air pollution that causes 3,000 premature deaths each year in Australia. Research from Harvard University School of Public Health found that more than 8 million people died in 2018 from fossil fuel pollution, including 350,000 in the United States. While caution is required in extrapolating overseas data to Australia, Doctors for the Environment epidemiologist Dr Ben Ewald has estimated that 279 premature deaths per year in NSW alone are attributable to coal-fired power stations.

An article in the journal Energies said:

‘Estimates of current health costs of coal-fired power in NSW are approximately 10-15 per cent of the total costs of coal-fired electricity generation, representing a significant externality that is not currently factored into electricity prices.’

Higher rates of asthma in children living near power stations are well documented.

It has been suggested that the Cannon-Brookes/Brookfield takeover bid for AGL could be blocked by the ACCC. No doubt it could, but whether it should is another matter. Would the regulator stand in the way of significant progress in decarbonising the electricity system and the health benefits which follow? Let’s hope not.