One of Australia’s largest business groups has issued an appeal to the new Albanian government to speed up the transition to renewables, saying Australia’s dependence on coal has led to “appalling” electricity prices.
The chief executive of the Australian Industry Group, Ines Willox, has described Australia’s heavy dependence on coal and gas as “working against commercial interests”, as energy users are exposed to the effects of rising fossil fuel prices.
“The price pain is already severe for those companies that have suddenly found themselves in need of new energy contracts amid domestic and global turmoil,” Willox said in a statement.
“Families will feel the blow from the virtual electricity price hike from July, and more pain is coming for everyone.”
“All of Australia’s previous strengths – our dependence on an aging coal generation fleet, large gas resources and deep intertwining with export energy markets – are working against us in the current circumstances.”
“But it is challenging to accelerate all of our new energy options – from renewables and storage to biogas, hydrogen and energy efficiency – amid global supply chain problems, skills constraints, and uneasiness from the communities surrounding mega-energy projects,” Willox added.
The statement notes the extent to which major industry groups have changed their stance on energy policy over the past decade.
The Australian industry group has joined other peak groups – including the Australian Business Council and the Australian Minerals Council – in opposing carbon pricing. But now Australia’s dependence on fossil fuels is seen as an act against business interests.
Wholesale electricity prices have skyrocketed since the start of the year, as turmoil in global energy markets—caused by events such as the Russian invasion of Ukraine—has driven up prices for all fossil fuels.
The price of Australian black coal, exported from the Port of Newcastle, has quadrupled since the beginning of the year, exceeding $400 per ton. Oil prices nearly doubled over the same period, which in turn drove up Australian gas prices, as it is standard practice in Asian markets to tie gas prices to the price of oil.
These factors have contributed to a massive increase in wholesale electricity prices in Australia – particularly in parts of Australia that still depend on coal generation, such as New South Wales and Queensland, where prices are up to five times what they were in the previous year.
This situation prompted Willox to call the current electricity market “horrific.”
“Dreadful increases in energy prices threaten to disrupt the industry and threaten households. They are calling for a national, integrated and strategic response,” Willox said.
“Extraordinarily high prices, including a 50-fold increase in wholesale gas prices in Victoria, have seen market price limits imposed in some of our largest domestic energy markets. The immediate pressures are from outages at old coal plants, and the consequent of rising gas demand for energy, and the collapse of a mid-size gas retailer.”
Willox called on the new Albanian government to act urgently on the current electricity price crisis, including the re-engagement of the federal government with state governments on the energy transition.
“The new Albanian government has an urgent and unenviable task in responding to this crisis. It is not something they can or should take on their own. Countries have many relevant levers, as do energy market authorities, energy suppliers and energy users,” Willocks said.
“The Commonwealth’s number one task is to bring us all together. Any strategy will need broad participation in order to succeed.”
Michael Mazngarp is a Sydney-based reporter with RenewEconomy, writing on climate change, clean energy, electric cars and politics. Prior to joining RenewEconomy, Michael worked in climate and energy policy for over a decade.
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