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Further implications
Australia's long-term planning to meet the nation's energy needs has been bedevilled by a lack of political consensus. Central to this dilemma are differing views on the importance of global warming as an environmental imperative demanding a policy response and differing views on what such a response might be.
Australia finds itself in the awkward political position of having leaders at both State and federal levels who actively promote fossil fuels opposing leaders who want the rapid phasing out of these energy sources and their replacement with renewables. There is no cohesive national leadership on this question.
Australia's current Prime Minister, Malcolm Turnbull, lost his leadership of the Liberal Party while in Opposition in 2009 because of his willingness to support the Carbon Pollution Reduction Scheme proposed by the Rudd Government. His successor, as Leader of the Opposition and then Prime Minister, Tony Abbott, was a self-declared climate sceptic who came to office in part because of his vigorous denunciation of the Gillard Government's 'carbon tax'. The resultant uncertain national position on renewables did not inspire confidence in investors that the sector would continue to grow and it was largely Labor State governments who persisted in presenting policies designed to foster renewables and phase out coal-fired electricity generation. This has resulted in a hesitant quality to the reform of Australia's power generation practices.
However, Australian electricity production does not occur in a vacuum. It is affected by international factors and the decisions taken by the foreign owners of Australian power plants.
Of Australia's eight states and territories, only three governments retain full ownership of all elements of their electricity networks: Western Australia; Tasmania; and the Northern Territory. Queensland also owns the generation, distribution and transmission of electricity, but the retail market has been privatised. Those States, such as Victoria, where electricity generation, distribution, transmission and retail are privately owned and controlled are largely held hostage by the commercial decisions taken by overseas owner-operators and by the States' contractual obligations to those owner-operators. Though Victoria's royalty rates discouraging coal-fired power generation may have been a factor in determining the exact timing of Engie's decision to close the Hazelwood power plant, the decision itself appears to have been inevitable given Engie's announced policy of removing the Company from coal-fired power generation in its operations worldwide.
As Australia has progressively moved away from the State ownership of utilities, governments are essentially in the situation where they can move the levers but they do not drive the train. All such governments are able to do is attempt via the establishment of targets and the imposition of taxes or the granting of tax concessions to create conditions within which private operators are encouraged to take the direction that a government currently prefers.
Given that their capacity to influence private investment is relatively tenuous, it is important that such levers as governments can pull are applied consistently across time and jurisdictions. However, Australia has yet to achieve the sort of consensus that makes such concerted policy formulation possible.