Article by Chris Kenny, courtesy of The Australian.
31.10.2025
In federal parliament this week, Climate Change and Energy Minister Chris Bowen suggested the Coalition was out of touch when criticising the energy mess. Bowen said the Coalition’s willingness to promote nuclear energy as a reliable emissions-free alternative was all about appealing to Sky News viewers and One Nation voters (as if these cohorts are insignificant or unrepresentative).
Not so long ago the Labor Party and union movement would have seen it as their fundamental duty to ensure households and industry had continued access to reliable and affordable energy, to provide jobs and enhance our standard of living. Now they scoff at such mundane goals and prioritise UN emissions reduction targets such as net-zero emissions by 2050, a result that is impossible to achieve with current technology (according to the International Energy Agency).
No comparable country is on track to meet net zero. If by some stroke of ingenuity and at wicked expense Australia did manage to achieve this target, according to all the agreed facts and science it would have no discernible impact on the global climate.
So, what are we doing? And why are we doing it?
The Coalition has been torn apart for decades coming to grips with this policy debate, and it has long been seen as a major schism between the political right and the green left in our polity.
With so much emotive opinion, political rhetoric and personal invective involved in this debate, let us just examine the facts as they now stand, facts that must be addressed by all governments, all political parties and all voters.
Until two decades ago, cheap and abundant energy was a clear comparative economic advantage for our nation.
In Ross Garnaut’s seminal work, a report to the Hawke Labor government in 1989 entitled Australia and the Northeast Asian Ascendancy, he recognised the advantage we had in fuelling the economic transformation of our region.
Garnaut noted that early processing of our mineral resources required electrical and other energy, saying they were inputs that were “available in greater abundance and a lower cost in Australia than in Northeast Asia”. It would be laughable to spruik such an advantage today; we have exported our energy advantage along with our resources.
Back in those days Australia’s electricity prices were among the lowest in the developed world because we exploited our abundant and cheap coal and gas.
Now our power prices rank among the highest as we deliberately abandon coal (and to a lesser extent gas) in pursuit of a renewables-plus-storage model. Our energy advantage over Europe and Asia has disappeared; the US and Canada have electricity about half the cost of ours. We also refuse to use our uranium for nuclear energy. Instead, it fuels a nuclear renaissance across Europe, Asia and the Americas.
Given the major inputs to industry are wages, materials and energy, we have surrendered a considerable advantage. More than 200,000 manufacturing jobs have been lost in Australia across the past two decades – the jobs and production (and emissions) have shifted offshore.
Australian residential electricity prices were substantially below the OECD average through the 1970s to the 2000s with costs falling and then flatlining until about 2010, when the renewable push began to escalate dramatically.
Electricity costs have grown considerably since then, although suppliers, governments and authorities like to make the billing and assessments so complex that it is difficult to compare like-for-like figures – suffice to say that in real terms average household electricity costs have virtually doubled from just over $1000 a year in 2000 to almost $2000 now.
We have gone close to doubling the cost of energy for households. This matters little to those with high disposable incomes, but for families working to a budget, those on fixed incomes and small businesses, the costs are onerous.
But these retail costs paid by consumers, business and industry are only part of the additional energy expenses we have imposed on ourselves. A report by the Centre for Independent Studies found that in the decade to 2023 the federal government paid subsidies to renewable energy suppliers totalling $29bn.
In 2000, renewable energy made up only 1 per cent of generation in the national electricity market and by 2023 it reached 39 per cent (now topping 40 per cent on the way to the stated goal of 82 per cent by 2030). State governments also fork out with various feed-in tariffs, solar and battery subsidies totalling many billions of dollars.
Renewables projects such as the Snowy Hydro 2.0 scheme are directly funded by government. Snowy 2.0 was announced by prime minister Malcolm Turnbull as a $2bn project but it has blown out to $12bn and is expected to cost up to $20bn when transmission links are included.
There are at least $30bn worth of transmission line projects under way across 2500km to link renewable energy projects. That is about a quarter of what is required to meet the renewable grid goals, and these transmission investments operate under a guaranteed rate of return, feeding directly into power prices.
This, along with storage and firming costs, is why renewable energy leads to higher prices even when wholesale generation costs are low. Rooftop solar now accounts for more than 10 per cent of the NEM, after investments of more than $10bn by households and governments.
The federal government has allocated $17bn for green hydrogen projects and incentives, claiming Australia will lead the world in the “green hydrogen revolution”. A dozen or more projects have fallen over, even with the subsidies and incentives, costing state and federal governments millions of dollars as the technology remains uncommercial.
The on-again, off-again Sun Cable project that plans to send solar electricity from the Northern Territory to Singapore via an undersea cable is trying to access government subsidies. In South Australia, government grants also have been sunk as five of six proposed pumped-hydro projects have been scrapped, along with another in Queensland.
State and federal governments have provided subsidy packages of $2.4bn for the Whyalla steelworks, $600m for the Mount Isa copper smelter, $135m for Nyrstar’s Port Pirie smelter, with Tomago in NSW’s Hunter Valley seeking $1bn to keep going. In all these cases the operations face multiple challenges, but soaring energy costs top the list.
As the renewables rollout has accelerated it has undermined, as intended, the commercial viability of coal-fired generators, and plants have closed in South Australia, Victoria and NSW. This has led to grid instability and shortages of supply, so federal and state governments have been forced to subsidise coal-fired generators to the tune of $1.5bn to keep them going.
Apart from subsidising renewables to force coal out, and subsidising coal to keep it going, state and federal governments have subsidised households to shield them temporarily from the escalating power prices their polices have caused. The federal rebate scheme runs until the end of this year at a cost of almost $5bn while the state cost-of-living packages in Queensland, NSW, Victoria and Tasmania amount to a similar total.
As a result of all this spending, Australia’s greenhouse gas emissions have been cut by about 12 per cent since 2010 – from 602 million tonnes a year to 440Mt or a reduction of 162Mt a year. Across the same period global emissions have increased by about 15,000 million tonnes (or 15 gigatonnes) from 38Gt to 53Gt.
So, while we have up-ended our economy to cut greenhouse gases by 162Mt annually, the global increases have made up for that more than 90 times over.
On any rational or scientific analysis, our incredibly expensive and debilitating effort has made no perceptible difference to global carbon dioxide levels and therefore can have no discernible impact on the climate.
Whatever we think of global warming and energy options, we need to confront two unavoidable facts. Our efforts are costly and economically damaging, and they do nothing to alter the climate.
Real living standards have declined in Australia by 7 per cent since 2022, while across the same period the OECD average improvement in living standards has been 5 per cent. Across nine of the past 12 quarters, Australia’s GDP per capita has gone backwards – we have been in a per capita recession.
Draw your own conclusions. Make your own emotive or partisan claims. But these are the facts. And we cannot ignore them forever.
We have a national energy crisis that is the direct result of federal and state government policies, implemented by Labor and Coalition administrations across a long period, motivated by the goal of reducing carbon dioxide emissions. The current federal Labor government, along with the Greens, teals and too many Liberals, seems to be in denial about the reality of this situation and its debilitating impact across the economy.