The post-COVID energy world


By Molly Jackson and Kim Middleton*
Thursday, 21 May, 2020



The post-COVID energy world

In the lead-up to the COVID-19 pandemic (COVID) we were still reeling from Australia’s worst bushfire season in recent history. We had unprecedented public support for a targeted, national-level climate change policy in Australia. Coupled with outdated energy regulation, it seemed the perfect time to integrate our energy and climate change policy: complementary national laws which promote a sustainable and green future.

If you don’t have time to read this article, the short answer is: we still don’t have these — but the better answer is: COVID has shown us that we already have everything we need to make them happen.

The leap is there for Australia to take, but we need the certainty of the law to bridge that gap. Here we look at the state of the old energy world, lessons from COVID, what we can do to change our energy status quo... and our vision for the new normal.

The old energy normal

Pre-COVID we had (and we still have) lots of private commercial interest in climate action, driving dynamic changes in our energy sector: local and foreign private capital looking for sustainable ways to invest their money, start-ups developing innovative green technologies, a fast-growing energy storage sector, unprecedented uptake in rooftop solar, and a whole bunch of shovel-ready renewable and transitional energy projects.

We also had record levels of public support for a climate policy that would push Australia to reach net-zero carbon emissions by 2050; that is, to keep below 1.5 to 2 degrees of global warming as required by the Paris Agreement.

So, business and community have for a long time been overwhelmingly aligned on the financial and environmental imperative of greening our economy. But that’s not the impression we’ve been getting from our federal government — which continues to treat green and transitional energy as a partisan issue, to the detriment of us all.

Federal government inaction and apathy meant that the Old Energy Normal was far from perfect. In fact, as we discuss below, it stood in the way of private companies progressing (or realising to their full potential) new green energy technologies.

The problems with the lack of appropriate energy regulation

Our biggest issue in Australia pre-COVID (and we can decide whether we want to change this post-COVID) is that, at the federal level, energy regulation is too restrictive and it is bordering on obsolete.

Our energy laws are made up of a complex network of bandaid solutions that need urgent, wholescale reform. Why? Because this system puts the National Electricity Market (NEM) at risk. The NEM is effectively what enables the transmission of electricity across the Australian grid (excl. WA).

These bandaid solutions leave private sector renewable development floundering in an unregulated — and therefore high-risk — legal vacuum. Lack of regulation discourages innovation in energy sectors and leaves projects siloed, with less transformational effects than may otherwise be possible if we had centralised and aspirational energy policy.

The net effect is that we are lagging dangerously behind our 2050 zero-emissions target: Australia is ranked as one of the worst-performing countries on climate change policy, and an “increasingly regressive force” globally.

Lessons from COVID

This gap between policy, practice and progress is a problem worldwide. What COVID has shown us is how quickly and effectively these three elements can be connected to fix a big problem.

When faced with an imminent threat to our national health, despite a few setbacks/cruise ships (whatever you want to call them), a number of really interesting things happened in Australia that we previously thought were impossible:

  • Our government demonstrated it could act, through bipartisan and federal/state collaboration, quickly and effectively to implement policy based on the recommendations of experts.
  • Stimulus packages turned out not to be so politically divisive: we recognise that we can step in to provide assistance to people and industries which become vulnerable as a result of policies implemented to aid the greater good. The public understands that short-term debt can have long-term economic benefits — and that being in the ‘black’ is not the only measure of success.
  • When faced with legal changes and commercial incentives, businesses can and will pivot to meet the needs of a new way of life, as well as considering what they can do to help achieve a collective national goal.
  • As a community we demonstrated we are adaptable, resilient and willing to transform the way we live in order to respond to needs of the vulnerable.
     

What does this demonstrate? It is a little bit like we have — and have always had — all the resources we need to revolutionise our energy sector and to combat climate change, because we’re a modern economy with an informed public, and an engaged and responsible private sector.

Plus, even our government can be effective when it wants to be.

We’ve seen what the law can do — and how to apply it to energy and climate

The national goal post-COVID should be to create a better normal for future generations. We should do this primarily by replacing our outdated energy laws with modern umbrella regulations that meet the needs of a new energy world (one that must heavily rely on renewable energy), provide transformational, whole-of-economy targets, and in doing so offer clear direction to business and consumers.

The removal of regulatory barriers to the reduction of carbon emissions has cross-sector support; it is even included as a legal policy objective in the International Bar Association’s recently released Climate Crisis Statement.

A broad policy-level solution might be the proposed Climate Change Act currently before parliament, which does four main things:

  1. It turns the Paris Agreement’s 2050 net-zero emissions target into national law — rather than simply being a statement of non-binding intent.
  2. It creates guiding principles for decisions made under the Act, which include: effective and equitable action, community engagement, informed decision-making, risk-based analysis of short- to long-term economic, environmental and community threats, fair employment transitions and national and international cooperation. Ironically (given the government’s resistance to dealing with the threat of climate change) the very same principles which have been applied to Australia’s response to COVID.
  3. It creates an expert national Climate Change Commission (one could think of it as our ‘Climate Chief Medical Officer’) to research and advise on climate-related issues, including how Australia can meet its Paris Agreement obligations. The Commission’s role includes preparing a national climate change risk assessment every five years.
  4. It requires the Minister to create an adaptation plan setting out how Australia proposes to address the issues in the risk assessment, consistent with the guiding principles.

Concurrently with this kind of federal climate law, we also need wholesale reform to our energy laws to make the NEM more sustainable and adaptable to the uptake of new green energy technologies. This means going faster and further than the AEMO’s current 20-year Integrated System Plan.

Australia has even more incentive to do this in the post-COVID context, because we need the investment in jobs and infrastructure, plus capital will be cheaper than ever.

Our vision for the 'New Energy Normal'

We have the impetus and the capacity to create a whole new energy world post-COVID, so there’s no reason we can’t be pushing ahead with a variety of renewable or transitional energy projects, like solar and wind farms, brown-to-green hydropower plants, while making long-awaited improvements to the NEM.

Australia also has untapped opportunities to export its renewables pipeline overseas.

Closer to home, we can also expect to see the relaxing of planning laws regulating the uptake of rooftop solar PV and storage solutions — and it should become commonplace to integrate green energy into the construction sector more broadly. For example, where possible there should be solar PV on all supermarket builds and other community infrastructure.

Heavy industry itself can and should be driven by renewables: Australia has electric commercial vehicle technologies and — because renewable energy is increasingly becoming the cheapest option — a number of Australia’s mining towns are ironically (but positively) already powered exclusively by wind farms and solar panels.

Most importantly, post-COVID: we have to back ourselves. Change is never easy, but we’ve proven that when it matters and we’re given the opportunity, we can do amazing things. In any case, the world is changing whether we like it or not and we have a once-in-earth’s-lifetime opportunity to make it change for the better.

There is so much hope in the progress we have yet to make in Australia — we just have to get a move on now.

*Authored by Law Graduate (Commercial) at Marque Lawyers, Molly Jackson and Partner at Marque Lawyers, Kim Middleton; this article is edition two of Marque Lawyer’s post-COVID playbook series. It has been republished with permission.

Image credit: ©stock.adobe.com/au/vukhoa

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