David Van (Victoria, Liberal Party) Share this | Hansard source

Australians are hurting. The cost of living is rising through the roof, and we have a government who is refusing to do anything about it. Even worse, we have a government who went to the most recent election with a promise to reduce electricity prices by $275 per household by 2025. However, as the MPI points out, after only a matter of weeks, they are walking back their promise. Prime Minister Albanese said he would take responsibility, but all he seems to be doing is blaming others and making personal attacks. The Prime Minister is doing anything but taking responsibility for the energy crisis we are currently facing.

It seems clear from the contributions in the chamber from the other side that this is largely because they have no experience in the energy sector whatsoever. At least I can say I have spent 20-plus years in the energy sector on and off, including two stints at AEMO, so I bring a little bit of knowledge to this matter.

The energy crisis is largely due to a number of factors, partly the war in Ukraine and our capacity for coal fired power generation being at the lowest level in over a decade. However, we are also facing a gas shortage crisis that has the potential to drive power prices through the roof. As the ACCC report that was released today states:

The east coast gas market is facing a 56 PJ shortfall in supply in 2023, signifying a substantial risk to Australia's energy security.

For those of you who don't know a petajoule from your pet, this is equivalent to about 10 per cent of next year's forecast demand.

The effects of these changes are concentrated in the southern states (NSW, Victoria, South Australia, Tasmania and the Australian Capital Territory) where gas resources have been diminishing for some time …

The ACCC report specifically states:

To address the projected shortfall in 2023 significant additional volumes of gas will need to be:

Now, I don't see how the government will be able to stick to the Prime Minister reducing power bills if they do not specifically support the additional production of gas. It is this lack of support that is hurting Australians already, with the report highlighting that users are now receiving offers of higher prices with less flexibility.

Australia is now paying the price for some incredible mistakes by the Andrews Victorian government. A government ban on onshore gas exploration as well as fracking and coal seam gas exploration has exacerbated this problem. We only have this supply problem because the Andrews government cut off supply without a thought of how it was going to be replaced. This is a problem entirely of the Andrews government's making, and it is at a time when the cost of living is increasing. Australians are paying for that incompetence and the lack of willingness from the Albanese government to do anything about it.

Here is a quick history lesson. Victoria has had a long history of cheap, abundant natural gas. It has one of the strongest gas industries in the world. The Bass Strait gas and oil wells powered Victoria, turned it into industrial powerhouses, because we had cheap, available gas. Now, with those Bass Strait oil wells drying up and no replacements because of the bans and moratoriums, we are bringing gas down from Queensland, paying extra and expending more energy to transport that via the distribution transmission network. Yet what a lot of people on that side, across the chamber, seem to forget is that a lot of the gas coming out of Queensland is from coal seam gas, fracked coal seam gas. It's a little bit of an inconvenient truth for you, maybe, but it's the actual truth. The only way to drive a disconnect between high global gas prices and our domestic east coast prices is to invest in more supply, which my home state of Victoria has an abundance of but is not being allowed to access.

As published by the International Energy Agency recently, the world has experienced the first global energy crisis in history. Now, I don't know how they missed the 1970s oil crisis, but let's put that to the side. Yes, in a large part, this is because of the Russian invasion of Ukraine; however, it highlights what should be a bleedingly obvious point: there are, and always will be, unexpected events and outcomes. If the last three years have taught us anything it is that we really do not know what the future holds and that we can only be prepared for the future by ensuring we are protected against a whole range of scenarios.

While this government is not responsible for a surge in global prices, it is responsible for how it responds. Australians expect that this government act to fulfil its promise to the Australian people and lower their power bills. Now, the Labor Party are correct when they state that renewable energy is the cheapest form of energy. On a plant based level, when the wind is blowing and the sun is shining, wind and solar are the cheapest form of generation. However, as cited in JP Morgan's 2020 annual energy paper, putting more renewable energy on the grid will not guarantee lower prices. I repeat: it will not guarantee lower prices. This is because energy prices rest on an average cost of generation, not the actual cost of sustaining a power source that cannot deliver energy on a continuous basis unsupported. The term we use is firmed. The report notes that the costs include transmission; backup thermal power; and, potentially, if it ever comes, utility-scale battery storage. None of this will come cheap, and ultimately costs will be passed on to the consumer.

Whatever fills the intermittent power void will initially be expensive, and it most definitely won't be easy. Labor's community battery for households policy is to fund 400 community batteries of 500 kilowatt hours each, which is supposed to provide power for 250 households. Assuming the 22 kilowatt hour nightly load, it would take over 80,000 batteries to meet the power consumption of Melbourne's 1.8 million households. Even if the 400 proposed batteries were all built in Victoria, they would only meet 0.5 of the city's winter night-time demand. A 500 kilowatt battery could provide sufficient power overnight for only 23 households. This is equivalent to needing one on every street, not in each suburb.

Snowy 2.0 has the capacity of 350 million kilowatts, the capacity to meet Melbourne's nightly demand for over a week. Labor suggest they can source batteries at $500,000 each, which equates to $1,000 per kilowatt hour. Snowy 2.0, costing $4.5 billion for 350 megawatt hours, comes out to only $12.90 per kilowatt hour. This $500,000 estimate does not reflect market prices and is unlikely to include costs for installation and maintenance. AEMO's latest integrated system plan, released in June, states that we are going to have to double electricity by 2050 as we electrify the economy.

As coal-fired generation withdraws—and it will, and it should—weather-dependent generation will start to dominate. Investment will be needed to treble the firming capacity provided by new, low-emission firming opportunities that can respond to a despatch signal with efficient network investments to access it. Now we're seeing the economic risks of mismanagement playing out before our eyes.

Despite Labor claiming that they had conducted, 'The most comprehensive ever done for any policy by an opposition in Australia's history since Federation,' it is clear that their plan cannot work and will not work. Europe serves as a good example. It severely miscalculated by reducing its production of fossil fuels faster than it reduced its own consumption of fossil fuels. It has now been caught off-guard and is suffering at the hands of Russia due to its energy reliance. We should not make the same mistake.