The Conversation

South Australia has the most wind energy in the country. Wind turbine image from www.shutterstock.com

The last couple of days have brought the differences between state and federal energy policy into stark contrast. South Australia has unveiled an energy plan in which the state takes a much greater role in the energy industry. The plan includes storage, a new gas plant and greater powers for the state over the National Electricity Market.

SA has the highest proportion of wind energy in Australia – and the federal government has consistently blamed this for the widely reported blackouts last year.

In a acrimonious joint press conference with South Australian Premier Jay Weatherill on Thursday, federal energy minister Josh Frydenberg reiterated that states are responsible for the stability of their electricity system. The federal government has cast doubt on the legality of the plan.

Is reliability a state responsibility?

The federal government has repeatedly claimed that the SA government can’t keep the lights on. More generally, it has implied that the states are responsible for electricity system stability.

Under the National Electricity Market (NEM) framework, these statements are somewhat misleading.

The SA electricity industry is entirely privatised. The NEM governance framework is run by national institutions under the Council of Australian Governments Energy Council, a forum of federal and state energy ministers. This framework is supposed to ensure the system reliably delivers electricity to all consumers.

System security and reliability are the responsibility of the Australian Energy Market Operator. Network investment is the responsibility of private network businesses, overseen by the Australian Energy Regulator.

This governance system leaves little space for the SA government to take action to ensure system security. On the contrary, the NEM was set up to remove direct government involvement in the electricity sector. This was because a market was considered more efficient to achieve the same service.

The federal government has blamed wind energy for SA’s reliability issues. But, even if wind is one factor among many, did the SA government exacerbate the risk of blackouts?

South Australia has actively encouraged co-existence of wind farms and farming activities in its planning legislation. Land use planning laws can have great influence on the uptake of large-scale renewable energy, as Victoria shows.

While state renewable targets have been blamed for uneven investment in renewable energy, the SA target of 50% by 2050 is not actually backed by a particular mechanism. Wind generators settled in South Australia because it has good wind resources and favourable planning laws.

They were financed under the federal Renewable Energy Target, but also by the ACT reverse auction schemes, which led to considerable investment in SA.

The review of the NEM, chaired by Chief Scientist Alan Finkel, will consider how climate and energy policies can be aligned. As the policymaker for the NEM, the COAG Energy Council should be the responsible authority, not individual states, to resolve any mismatch.

Is South Australia breaking the rules?

Apart from public investment in storage and gas, SA’s energy plan aims to give the state energy minister “strong new powers to direct the national market in case of an electricity supply shortfall”. The federal energy minister has implied that some of the SA plans may be illegal and that the government will be seeking legal advice.

But is SA breaking any rules?

The governance arrangements for the NEM are based on an intergovernmental arrangement, which relies on federal-state cooperation. The Australian Constitution contains no clear powers to regulate for energy. This means that having both levels of government work together to overcome these constraints was necessary to set up and manage a national electricity system.

The intergovernmental agreement that sets up the NEM is the Australian Energy Market Agreement (AEMA). All governments – state, territory and federal – have signed this. The AEMA covers the setting up of the market institutions and legislation. Based on this document, all states have passed state legislation that contains the National Electricity Law.

The AEMA includes provisions for amending legislation. These mean that only the COAG Energy Council can amend energy market legislation. Whether the council would agree to SA ministers getting special powers is doubtful.

However, the agreement is political and not legal. Indeed, one clause states that “this agreement is not intended to give rise to legal obligations” for the state and federal signatories.

Where does this leave SA’s plan? It does not break the law, but, depending on how the actual legislation is drafted, it may well fail to pass COAG.

A dangerous development or much-needed leadership?

Due to the limits of the constitution, intergovernmental arrangements play an important role in Australian policy-making. An increasing number of agreements covers areas such as water, environment or trade.

As we’ve seen with debate about the Gonski deal on education funding, these agreements require trust between all parties and should not be lightly departed from.

SA’s frustration with the lack of COAG leadership and the blame game for the blackouts is understandable. The SA energy plan may galvanise energy market reform and lead to a better system. It can be interpreted as taking leadership in the energy-climate debate, where none has been forthcoming from the federal government or COAG.

On the other hand, a danger exists that other states decide to follow SA’s example. With a review of the market in process, one-sided action seems counterproductive.

An agreement on a timely and fair energy transition needs all parties at the table. It will need national coordination and a whole-of-system perspective. Finkel’s task of overhauling the electricity market may just have been made even harder.

Anne Kallies does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.

The federal government has announced a A$2 billion plan to expand the iconic Snowy Hydro scheme. It will carry out a feasibility study into the idea of adding “pumped hydro” storage capacity, which it says could power up to 500,000 homes.

Hydro is one of the oldest and most mature electricity generation technologies. And pumped hydro storage – in which water is pumped uphill for later use, rather than simply flowing downriver through a hydro power station – is the dominant form of energy storage globally.

But there are limitations to how much freshwater hydro can be accessed, so it’s worth looking at what alternate approaches are available. One promising prospect is to use seawater instead of rivers. This tactic could potentially help South Australia resolve its highly publicised energy problems.

Hydro basics

The principle behind conventional hydro power is straightforward: rainwater runoff feeds a river, which is dammed to create a large reservoir of water. This is then gradually released through pipes to a turbine at the foot of the dam, thus converting the gravitational potential energy into electricity. The water then flows on downriver.

Hydro power is fossil-free and also “dispatchable” – it can be turned on or off at will (provided there is water in the dam). This gives it a significant advantage over wind turbines and solar photovoltaic (PV) panels, which produce power only when the wind blows or the sun shines.

Hydro thus makes an ideal partner for wind and solar PV, as it can adjust its output in response to changes in output from these non-dispatchable renewables.

Pump it up

Pumped hydro energy storage (PHES) is very similar to conventional hydro power but differs in that rather than being a generator, it’s more accurate to describe it as a battery.

Normally done at smaller scales than conventional hydro, PHES uses excess electricity from the grid (such as during periods of low demand and/or high generation) to pump water uphill from a lower reservoir to a higher one.

Later, this water is released back downhill through the turbine, returning the electricity to the grid when it is most needed – typically during the evening peak. It is this approach that is being considered in the Snowy Hydro 2.0 project.

Pumped hydro storage thus helps to “smooth out” peaks in demand by effectively transferring excess electricity from periods of low demand to periods of high demand. It has a “round trip” efficiency of ~80%, which is comparable to that of batteries.

PHES is the most common form of grid-connected energy storage in the world, accounting for around 97% of the total. It is often built in partnership with “baseload” power generators such as coal and nuclear plants, to help them vary their output to cope with peaks and troughs in demand.

Australia already has three PHES facilities – at Tumut 3 in the Snowy Hydro Scheme, at Shoalhaven in New South Wales, and at Wivenhoe Dam on the Brisbane River in Queensland.

South Australia is arguably the place that is most in need of grid-scale energy storage. Unfortunately, South Australia lacks the rainfall, rivers and mountains to run a conventional hydro system, with or without storage.

However, there is a way to use this technology without rivers and mountains: by using the ocean as the lower reservoir, and building an artificial upper one.

The upper reservoir doesn’t need a river to feed it fresh water; it just needs to be significantly higher than the ocean (that is, there should be a steep slope on or near the coastline, up which the seawater can be pumped). Using seawater also avoids the need to divert freshwater resources into a large reservoir, where a significant amount would be lost through evaporation.

Testing the technology

So far, only one seawater PHES installation has been built anywhere in the world – on the island of Okinawa, Japan. It came online in 1999 and was decommissioned in 2016, after Okinawa’s power requirements changed. Seventeen years for a first-of-its-kind project is a significant success. However, the Okinawa project was combined with a coal-fired power station, so linking this technology with intermittent renewables has never been trialled anywhere.

So could this technology help to ease South Australia’s energy crisis? The Melbourne Energy Institute (MEI) report on Pumped Hydro Opportunities identifies several potential seawater PHES locations in South Australia. This includes a very promising site at the northern end of the Spencer Gulf, with significant elevation close to the coast and close to high-capacity transmission lines.

The Department of Defence manages this land, and discussions are ongoing as to how the project might be designed to not interfere with the department’s operations on the site. A win–win development is the primary design aim.

The MEI study suggests that PHES could be delivered at around A$250 per kWh of storage. This compares well with utility-scale lithium ion battery storage, which currently costs of the order of A$800 per kWh, although recent annoucements on Twitter from Elon Musk suggest this might be coming down towards A$500 per kWh.

The Spencer Gulf site has the potential to provide at least 100 megawatts of dispatchable generation, effectively making the wind and solar generation in South Australia significantly more reliable.

The Australian Renewable Energy Agency (ARENA) will help fund a feasibility study into the technology, working with partners Energy Australia, Arup and MEI. If the facility is ultimately built, it could become a key element in SA’s bid to avoid future power blackouts.

Roger Dargaville works with the consortium of EnergyAustralia and Arup that have been funded by ARENA to conduct the PHES feasibility study. He has previously received funding from ARENA to undertake energy system modelling studies.

An emissions cap could save Australians up to A$500 each year in fuel costs. Petrol image from www.shutterstock.com

The cheapest way for Australia to cut greenhouse gas emissions is to put a cap on car emissions. It would be so cheap, in fact, that it will save drivers money.

According to analysis from ClimateWorks, the toughest proposed standard would help Australia achieve about 6% of its 2030 emission reduction target, and save drivers up to A$500 each year on fuel.

The federal government is looking at policy options to meet Australia’s 2030 emissions target of 26-28% below 2005 levels. Last year it established a ministerial forum to look at vehicle emissions and released a draft Regulation Impact Statement for light vehicles (cars, SUVs, vans and utilities) in December.

There is no reason for the government to delay putting the most stringent emissions standard on cars.

Cars getting cleaner, but not in Australia

Australia currently does not have carbon dioxide emission standards on light vehicles. CO₂ standards work by improving the overall efficiency of the vehicle (the amount of CO₂ emitted per kilometre). These are different from fuel quality standards, which regulate the quality of fuels used by vehicles, and noxious emissions standards, which monitor a car’s emissions of noxious gases and particulates.

Currently, CO₂ emission standards cover over 80% of the global light automotive market. The lack of standards here means that Australia’s cars are less efficient than in many other countries, and this gap is set to widen.

In 2015, the average efficiency of new cars sold in Australia (in grams of CO₂ emitted per km) was 184g per km. In the European Union, the average efficiency of new cars was 120g per km for passenger vehicles and 168g per km for light commercial vehicles (such as vans used as couriers). In the United States – the spiritual home of the gas-guzzler – it is 183g per km and set to improve to 105g per km in 2025.

Australia’s cars account for about 10% of Australia’s greenhouse gas emissions, which are set to grow to 2030 if the market is left to its own devices.

Helping meet Australia’s climate target

In our submission to the draft Regulation Impact Statement, we confirmed that if the most stringent proposed target (105g per km) were introduced as proposed from 2020 to 2025, it would deliver 6% of Australia’s 2030 emissions reduction target. This would save A$49 per tonne of CO₂. Although there would be some costs in introducing the scheme, it would save A$13.9 billion by 2040 overall.

This saves an extra additional 41 million tonnes of CO₂ by 2030, 140 million tonnes by 2040, and an extra A$8.1 billion overall by 2040 compared with the least stringent proposed target (135g per km by 2025).

However, we found that a two-year delay would add an extra 18 million tonnes of CO₂ to the atmosphere, or 2% of the government’s 2030 carbon budget.

Any reductions not achieved in vehicle emissions will need to be made up in other sectors, or purchased through international carbon permits, most likely at a higher cost.

Savings on fuel and health

The most stringent target delivers A$27.5 billion in total fuel savings by 2040, A$16.7 billion more than the least stringent standard.

The draft regulations show that for an average car this is equal to a saving of A$197-295 a year for a driver doing 15,000km per year, and A$328-493 for a driver doing 25,000km per year.

To put this in context, based on 2012 household energy costs data, this would cut household energy costs by up to 10%, with even greater savings for low-income households.

But a two-year delay of the most stringent standard would also result in new car owners paying an extra A$4.9 billion in fuel costs by 2030, and an extra A$8.3 billion to 2040.

The reduction in fuel use will also potentially reduce air pollution, resulting in better health outcomes.

The most stringent standard will save deliver 2.6 times as much fuel as the least stringent standard, so should reduce health costs by a similar proportion. However, the introduction of emissions standards would need to occur in a way that does not increase noxious emissions such as nitrogen oxides.

No reason to delay

Given the enormous benefit of a more stringent standard, the government should also investigate an even more ambitious target.

Our research shows a standard of 95g per km by 2025 will deliver even greater benefits and is technically feasible based on achievements in other markets. The EU is aiming for this level by 2020.

While we also support improving fuel quality to reduce noxious emissions, research by the International Council on Clean Transportation (ICCT) shows that we do not need to improve Australia’s fuel quality standards before the introduction of standards to improve the overall efficiency of the vehicle.

Similarly, despite discrepancies between on-road and in-lab performance of vehicles as seen in the Volkswagen emissions scandal, a standard will still provide significant savings to consumers and the environment.

Standards alone are not the silver bullet. We’ll need a range of other measures to support emissions standards on cars to help improve efficiency and build consumer awareness of fuel-efficient vehicles.

With Australian car manufacturing due to cease by the end of 2017, it is an ideal time to ensure that new cars bought into Australia are the most efficient available. This will set us on the path towards lower vehicle emissions while reducing costs for motorists and improving health.

ClimateWorks is funded by philanthropy through The Myer Foundation with Monash University. ClimateWorks Australia also periodically conducts research with funding from Federal, State and local governments and from private companies; all our work is focused on supporting strong emissions reductions in Australia. The author has no other relevant affiliations

ClimateWorks is funded by philanthropy through The Myer Foundation with Monash University. ClimateWorks Australia also periodically conducts research with funding from Federal, State and local governments and from private companies; all our work is focused on supporting strong emissions reductions in Australia. The author has no other relevant affiliations.

The Great Barrier Reef has already been badly damaged by global warming during three extreme heatwaves, in 1998, 2002 and 2016. A new bleaching event is under way now.

As shown in a study published in Nature today, climate change is not some distant future threat. It has already degraded large tracts of the Great Barrier Reef over the past two decades.

The extreme marine heatwave in 2016 killed two-thirds of the corals along a 700km stretch of the northern Great Barrier Reef, from Port Douglas to Papua New Guinea. It was a game-changer for the reef and for how we manage it.

Our study shows that we cannot climate-proof coral reefs by improving water quality or reducing fishing pressure. Reefs in clear water were damaged as much as muddy ones, and the hot water didn’t stop at the boundaries of no-fishing zones. There is nowhere to hide from global warming. The process of replacement of dead corals in the northern third of the reef will take at least 10-15 years for the fastest-growing species.

The Great Barrier Reef is internationally recognised as a World Heritage Area. In 2015 UNESCO, the world body with oversight of World Heritage Areas, considered listing the reef as a site “in danger” in light of declines in its health.

Australia’s response falling short

In response to concerns from UNESCO, Australia devised a plan, called the Reef 2050 Long-term Sustainability Plan. Its ultimate goal is to improve the “Outstanding Universal Value” of the reef: the attributes of the Great Barrier Reef that led to its inscription as a World Heritage Area in 1981.

We have written an independent analysis, delivered to UNESCO, which concludes that to date the implementation of the plan is far too slow and has not been adequately funded to prevent further degradation and loss of the reef’s values. A major shortcoming of the plan is that it virtually ignores the greatest current impact on the Great Barrier Reef: human-caused climate change.

The unprecedented loss of corals in 2016 has substantially diminished the condition of the World Heritage Area, reducing its biodiversity and aesthetic values. Key ecological processes are under threat, such as providing habitat, calcification (the formation of corals’ reef-building stony skeletons) and predation (creatures eating and being eaten by corals). Global warming means that Australia’s aim of ensuring the Great Barrier Reef’s values improve every decade between now and 2050 is no longer attainable for at least the next two decades.

What needs to change

Our report makes 27 recommendations for getting the Reef 2050 Plan back on track. The following are critical:

• Address climate change and reduce emissions, both nationally and globally. The current lack of action on climate is a major policy failure for the Great Barrier Reef. Local action on water quality (the focus of the Reef 2050 Plan) does not prevent bleaching, or “buy time” for future action on emissions. Importantly, though, it does contribute to the recovery of coral reefs after major bleaching.

• Reduce run-off of sediment, nutrients and pollutants from our towns and farms. To date the progress towards achieving the water quality targets and uptake of best management practice by farmers is very poor. Improving water quality can help recovery of corals, even if it doesn’t prevent mortality during extreme heatwaves.

• Provide adequate funding for reaching net zero carbon emissions, for achieving the Reef 2050 Plan targets for improved water quality, and limiting other direct pressures on the reef.

At this stage, we do not recommend that the reef be listed as “in danger”. But if we see more die-backs of corals in the next few years, little if any action on emissions and inadequate progress on water quality, then an “in danger” listing in 2020, when UNESCO will reconsider the Great Barrier Reef’s status, seems inevitable.

This article was co-authored by Diane Tarte, co-director of Marine Ecosystem Policy Advisors Pty Ltd. She was a co-author of the independent report to UNESCO on the Great Barrier Reef.

Terry Hughes receives competitive research funding from the Australian Research Council. He is the lead author on today’s Nature paper on recurrent coral bleaching, and a co-author on the independent report to UNESCO on the Reef 2050 Plan.

Barry Hart does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond his position as Emeritus Professor, Monash University .

Karen Hussey does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond her position as Professor and Deputy Director at the Global Change Institute, University of Queensland.

In the third in my series on the crisis besetting the National Electricity Market (NEM) in eastern Australia ( see Part 1 & Part 2), I look at some evidence for how the market itself has played a role and specifically market power issues.

The recent troubles in our electricity market are well documented. As described in my earlier pieces in this series, two elements have focused the attention of our political masters and industry groups.

The first is the question of security, highlighted most dramatically by recent “black outs” in South Australia.

The second is the question of price, with both wholesale and contract market prices having risen dramatically across most regions in recent times but nowhere quite as dramatically as in Queensland (note that retail prices have also been rising as highlighted by the recent Grattan report).

While a tightening of the demand-supply balance in Queensland in response to an additional ~800 megawatt load from the massive CSG field developments and LNG export processing facilities partly explains the rise in wholesale or pool prices there, it is far from the full explanation.

Lurking in the details are issues to do with the very functioning of the market, and the exercise of market power by large generators who have, and continue to, exploit monopoly rents.

As described in the earlier posts, the NEM market is designed to signal changes in the balance of demand and supply via spot prices. But how much the spot prices respond is very dependant on the level of competition.

Recent experience of market participants flouting the spirit of the rules shines a light on competition issues and highlights a rather obvious, if somewhat trite, reality. That is, the benefits of competitive markets can only flow if markets are competitive.

The exercise of market power has been a perennial issue in the NEM. It is the role of the Australian Energy Market Commission (AEMC) to set the rules that allow for safe operation of the electricity network, and efficient operation of the market. It is the job of the Australian Energy Regulator (AER) to do the enforcing, while AEMO operates the market.

The AEMC periodically adjusts rules so as to minimise the impact of perceived or real anti-competitive behaviour. It did so most recently in December 2015 with the Bidding in Good Faith rule amendment because, to quote:

… The Commission considers that the current rules do not set adequate boundaries on the ability of some participants to influence price outcomes to the detriment of others. This is not reflective of an efficient market.

The statement “ability … to influence price outcomes” is key. It expresses AEMC’s concern that some participants have sufficient market power to extract so-called monopoly rents.

To understand why the particular rule amendment was introduced, we need to go back to the two important intervals on which the market operates, the dispatch interval and the trading interval.

The dispatch interval is where the physics of the power system meets the economics of the market.

The necessity to balance generation and demand in real time, requires a dispatch pool with an objective of serving the demand at minimum system-cost. Functionally, our energy market operates by pooling offers from generators and allocating dispatch for each five minute interval in order of increasing offer price.

A generator offer specifies the price at which a given quantity of electricity will be supplied into a given trading interval, if needed. The dispatch price is set by the last (highest-price) offer needed to meet the dispatch interval demand. All generation dispatched receives the same dispatch price, regardless of the offer price. Offers at prices above the dispatch price are not needed and so receive nought.

The theory is that, in a perfectly competitive energy-only market, generators will offer the majority of their capacity at their short run marginal cost, like that shown below for Victorian generators.

Short run marginal cost of Victorian generators, stacked from left to right in merit order of increasing marginal cost. The x-axis shows the cumulative nameplate capacity of the lowest cost power plants in megawatts. Because renewables such as wind have zero fuel cost they stack on the left side of the merit curve. Contrawise, gas and diesel generators stack on the right. Image by Dylan McConnell.

In practice, individual generators apportion their capacity into a range of different price bands. They are then allowed to rebid the capacity into different price bands at short notice as part of the mechanism for making rapid adjustments to unforeseen circumstances that periodically arise in the normal course of events. AEMC’s Bidding in Good Faith rule amendment requires a justification for any late rebidding within 15 minutes of the start of the relevant dispatch interval.

As a deregulated market, optimal bidding is insured primarily by the discipline of competitive forces. It goes without saying, that without adequate competition, there can be no such insurance.

The other key interval is the half-hour trading interval or settlement period, across which dispatch prices are averaged to obtain a settlement or spot price, so called because it is the period on which financial payments are settled.

Since demand normally varies only slightly across a given half hour trading interval there should be little difference in the dispatch prices across the six corresponding dispatch intervals and the settlement price, especially when averaged over many trading intervals. In an efficient market with generators offering the bulk of their capacity at near their short run cost, this trading interval averaging should not materially affect the financial outcomes of the market. A necessary, though not necessarily sufficient, signal of the efficient operation of our market will be independence of dispatch prices or revenues on dispatch interval.

As shown below, January 2016 provides an illustrative case. It shows the dispatch prices for each dispatch interval averaged across the month. The narrow range of variation across each of the four regional markets that define the mainland part of the NEM, meets the expectation of a well-behaved market.

Average prices for each of the 5 minute dispatch intervals that make up the half hour settlement price for January, 2016. Prices are relatively constant across all intervals as expected in a well-behaved market, trading in an interval of about $10-15 per megawatt hour, for all four regional markets that define the mainland part of the NEM. Note the period is the month following the Bidding in Good Faith rule amendment by the AEMC in December 2015, The good behaviour of the QLD1 market contrasts strongly with the same periods in the previous and following years as shown in the following diagrams.

There is no compelling theoretical or practical reason for the exercise of a half-hour trading interval, it being something of a historical artefact. However many of the operators of our large generators seem to love it (as witnessed by submissions to a proposed rule change that would dispense the trading interval).

Why so? The cynic would say because the current arrangements have afforded a convenient guise to engage in profiteering. For example, by rebidding capacity into higher price bands late in a trading interval, settlement prices can be raised, materially distorting the market because other participants do not have time enough to respond. While such a creative compliance would in theory only impact un-contracted customers trading directly on the wholesale market, any resulting price increase will eventually pass through to the contract markets thereby affecting all customers.

Does it happen? Well the AEMC certainly thought so, enough at least to amend the Bidding in Good Faith Rule in December 2015.

The AEMC was particularly concerned that such practices were impacting market outcomes in Queensland (QLD1). The smoking gun lies deeply buried in the detils of the offers and rebids. But the pointers are quite apparent, as shown in the figure below which covers the month of January in 2015, prior to the AEMC’s rule amendment. Rather than average price, it shows the wholesale revenue by the 5-minute dispatch interval (the two are strongly coupled and their graphs are identical twins). The striking feature is the asymmetry in QLD1 revenue distribution, increasing very substantially across the last two dispatch intervals, compared with the earlier intervals. A crude estimate of the excess revenue generated by the anomalous, or inefficient, market behaviour is given by the sum of the differences between the dispatch interval prices and the lowest average dispatch interval price for the period. As noted on the right, in QLD1 it amounted to some 30% of total market value, or ~ $200 million for the month.

Notional wholesale markets revenues for 5 minute dispatch intervals for January, 2015. The figures on the right correspond to the total market revenue for the month, and (marked with a +) the anomalous revenue given by the sum of the differences between the dispatch prices and the lowest average dispatch price. The latter is a guide to distortion that can be attributed to non-competitive market forces - about $200 million, or 30%, for QLD1 in this case.

Given the magnitude of the anomaly the AEMC’s interest in a rule change is hardly surprising. To quote from their rule determination:

… the price volatility that arises from deliberately late rebidding … [is] … estimated to have added around eight dollars per megawatt hour to the price of caps in Queensland in the final quarter of 2014, and around seven dollars per megawatt hour in the first quarter of 2015. Across the market, this represents additional expenditure of approximately $170 million.

The AEMC noted also that

… While it is not guaranteed that the changes to the rules will put an immediate stop to the conduct of concern, they are a proportionate response to the issue, and ought to make it easier for the AER compared to the current arrangements to take enforcement action in respect of deliberately late rebidding. At the same time, they should not prevent rebidding in legitimate pursuit of commercial interests.

Did it do so? The AEMC and AER may well have been well pleased to see the initial response to its new rule determination in data such as for January 2016 shown above. However I suspect they will be concerned by the figure below, for January 2017. Essentially it is the mirror image of the January 2015 scenario, seemingly implying QLD1 generators are now initially bidding in capacity into elevated price bands in the early dispatch intervals. Conceivably, they may be rebidd capacity down to more normal values later in the trading interval, though that is moot since whatever the strategy it is achieving an identical outcome to 2015. Even if entirely within the rules, it would seem not in the spirit. The substantive result would appear to be situation normal in Queensland, with a $225 million monopoly rent extraction at the expense of electricity customers for this past January accompanying unprecedented spot price rises.

Notional wholesale markets revenues for 5 minute dispatch intervals for January, 2017. It is notable that it is almost the mirror image of January 2015 shown above, an example of creative compliance by QLD1 generators following AMEC’s Bidding in Good Faith rule amendment of December 2015. Note also the almost doubling of January revenues since 2015.

There is such a lot to be said about this, and hopefully it will be. It is but one, easily illustrated example of the exercise of market power. There are others, as for example described in the notes below. From the perspective of this discussion it is illustrative of significant deficiencies in the current operation of the NEM. Those deficiencies are exacerbating our current energy crisis. A concentration of market power is adding materially to costs especially, but not only, in Queensland.

It is worth noting that the half-hour settlement period is currently under review by AEMC and will likely be scrapped against the wishes of most established operators, or so it would seem judging from their submissions to the review. (As Dylan McConnell has shown, the current rules also seriously disadvantage the economics of a number of emerging technologies such as battery storage, hindering innovation that would serve much needed competitive discipline into the market.)

Whatever is decided by AEMC, the underlying issue of market power cannot be addressed by tinkering with the rules. And it is only getting worse as old power stations such as Northern in South Australia and Hazelwood in Victoria are closed. In the wake of such closures lies an even more concentrated market. For example, following closure of Northern, AGL’s proportion of registered capacity in South Australia increased 4% points, from 35% to 39%, improving its relative market power by more than 10%.

Percentage of registered generation capacity by participant in South Australia (top) and Victoria (bottom), both before and after the closure of the Northern (NPS) and Hazelwood (HPS) Power Stations, respectively. Note that Hazelwood is still operational at the time of writing, but is scheduled to close at end of this month (March, 2017). In both instances AGL’s relative market power has, or will be, substantially improved by these closures, by over 10% in relative market power terms. This increases the likelihood of AGL being a necessary or pivotal supplier, as it’s was in July 7th in the first of the South Australian energy crises of last year as described briefly in note [1]. Only the biggest seven participants in each state are shown.

With AGL in a position of great market power following the closure of Northern, it played its hand ruthlessly across July 2016, during the first of the South Australian energy crises as summarised here and described in more detail here (see Note [1]). With the closure of Hazelwood in a few weeks, AGL will again be the beneficiary of increased market share in Victoria, to a similar margin as it was in South Australia. That will increase the likelihood of AGL being a necessary or pivotal supplier in future high demand events in Victoria. How AGL responds will be a key to how steeply prices rise in Victoria and neighbouring states.

Like with any industry, our electricity generators have shown adeptness at exploiting the opportunities availed by the market rules. In so doing they have contributed to the price outcomes that are helping provoke our current energy crisis. One could only wish they turned such “innovation” to helping drive our energy system to a place we need it to be, that is secure, affordable and with much, much lower emissions. To be so guided, our market rules will have to be radically reshaped to be more aligned to the national interest, explicitly including all three elements of our energy trilemma, and ensuring adequate levels of competition allow the benefits of the deregulated market flow to all participants.

Sadly, as our energy crisis has unfolded, partly in response to the need to address its emissions intensity, emissions have begun to rise again. Just by how much we do not know, as I will discuss in the next piece in this series.

Notes

[1] In our analysis of the July 7th event in South Australia, we analysed the extent to which AGL bid capacity to high price bands (typically the market cap price) for the Torrens Island A Power Station. We also looked at the proportion of capacity that was available below and above $300/MWh. In aggregate, Torrens Island A offered its entire capacity to the market at less than $300/MWh 96.5% of time in 2015. For the remaining 3.5% of the year (or about 300 hours) some capacity was pushed into high price bands. Our analysis shows a correlation between periods of high scheduled demand and Torrens Island A’s bidding of capacity into high price bands. The proportion of time when some capacity was priced above $300/MWh is clearly skewed to times of high scheduled demand. In 2015, for the top 10% of scheduled demand periods, the amount of time some capacity was bid into these high price bands was 16.7%. For the top 1% of scheduled demand periods it increased to 35%. On July 7th 2016, it is clear is that Torrens Island had bid an unusually high volume of capacity at the market price cap, at a time it was needed to ensure supply as a pivotal supplier, consistent with exercising market power. While there is nothing in the rules to prevent this, the lack of appropriate competitive discipline means significant market distortion accumulated.

Disclosure

Mike Sandiford receives funding from ANLEC and the ARC.

Early in the morning and late in the evening is when shorebirds escape disturbance on the beaches on which their survival depends. Arnuchulo

This is the ninth article in our Contested Spaces series. These pieces look at the conflicting uses, expectations and norms that people bring to public spaces, the clashes that result and how we can resolve these.

There’s no doubt about it, Australians love the beach. And why not? Being outdoors makes us happy, and all beaches are public places in Australia.

Head to a beach like Bondi on Christmas Day and you’ll share that space with more than 40,000 people. But we aren’t just jostling with each other for coveted beach space. Scuttling, waddling, hopping or flying away from beachgoers all around Australia are crabs, shorebirds, baby turtles, crocodiles, fairy penguins and even dingoes.

Beaches are home to an incredible array of animals, and sharing this busy space with people is critical to their survival. But, if we find it hard to share our beaches with each other, how can we possibly find space for nature on our beaches?

Beach birds

Here’s a classic example of how hard it is to share our beaches with nature. Head to a busy beach at dawn, before the crowds arrive, and you will most likely see a number of small birds darting about.

You may recognise them from the short movie Piper – they are shorebirds. As the day progresses, swimmers, kite surfers, dog walkers, horse riders, 4x4s and children descend upon the beach en masse, unwittingly disturbing the shorebirds.

We share beaches with an extraordinary array of life, including many shorebirds.

Unlike seabirds, shorebirds do not spend their life at sea. Instead, they specialise on the beach: foraging for their invertebrate prey, avoiding waves, or resting.

However, shorebird numbers in Australia are declining very rapidly. Several species are officially listed as nationally threatened, such as the critically endangered Eastern Curlew.

There are few places you can let your dog run for as long and as far as it pleases, which is one of the reasons beaches appeal to dog owners. But this disturbance results in heavy costs to the birds as they expend energy taking flight and cannot return to favourable feeding areas. Repeated disturbance can cause temporary or permanent abandonment of suitable habitat.

The world’s largest shorebirds, Eastern Curlews are critically endangered – and Australia is home to about 75% of them over summer. Donald Hobern/flickr, CC BY

The fascinating thing about many of these shorebirds is that they are migratory. Beachgoers in Korea, China, Indonesia or New Zealand could observe the same individual bird that we have seen in Australia.

Yet these journeys come at a cost. Shorebirds must undertake gruelling flights of up to 16,000 kilometres twice a year to get from their breeding grounds in Siberia and Alaska to their feeding grounds in Australia and New Zealand. In their pursuit of an endless summer, they arrive in Australia severely weakened by their travels. They must almost double their body weight before they can migrate again.

And these birds must contend with significant daily disruption on their feeding grounds. A recent study in Queensland found an average of 174 people and 72 dogs were present at any one time on the foreshore of Moreton Bay, along Brisbane’s coastline. And 84% of dogs were off the leash – an off-leash dog was sighted every 700 metres – in potential contravention of regulations on dog control.

Managing the menagerie

One conservation approach is to set up nature reserves. This involves trying to keep people out of large areas of the coastal zone to provide a home for nature. Yet this rarely works in practice on beaches, where there are so many overlapping jurisdictions (for example, councils often don’t control the lower areas of the intertidal zone) that protection is rarely joined up.

The beach-nesting Hooded Plover is unique to Australia where it is listed as vulnerable (and critically endangered in NSW). Francesco Veronesi/Wikimedia Commons, CC BY-SA Benjamint444/Wikimedia Commons, CC BY-SA

However, our work at the University of Queensland shows we don’t need conservation reserves in which people are kept out. Quite the reverse. We should be much bolder in opening up areas that are specifically designated as dog off-leash zones, in places where demand for recreation is high.

In the case of Moreton Bay, 97% of foraging migratory shorebirds could be protected from disturbance simply by designating five areas as off-leash recreation zones. Currently, dogs must be kept under close control throughout the intertidal areas of Moreton Bay.

By zoning our beaches carefully, the science tells us that the most intense recreational activities can be located away from critical areas for nature. And there’s no reason why this logic couldn’t be extended to creating peaceful zones for beach users who prefer a quiet day out.

By approaching the problem scientifically, we can meet recreational demand as well as protect nature. Proper enforcement of the boundaries between zones is needed. Such enforcement is effective when carried out in the right places at the right time.

We believe that keeping people and their dogs off beaches to protect nature is neither desirable nor effective. It sends totally the wrong message – successful conservation is about living alongside nature, not separating ourselves from it.

Conservationists and recreationists should be natural allies, both working to safeguard our beautiful coasts. The key is to find ways that people and nature can co-exist on beaches.

You can find other pieces published in the series here.

Madeleine Stigner received funding for the work referred to in this article from Birds Queensland and the Queensland Wader Study Group Nigel Roberts Student Research Fund.

Kiran Dhanjal-Adams received funding for the work referred to in this article from the Centre of Excellence in Environmental Decisions, the Australian Research Council, Queensland Department of Environment and Heritage Protection, the Commonwealth Department of the Environment, the Queensland Wader Study Group, the Port of Brisbane Pty Ltd, the Goodman Foundation and Birdlife Australia’s Stuart Leslie Award.

Richard Fuller received funding for the work referred to in this article from the National Environmental Science Programme's Threatened Species Recovery Hub, the Australian Research Council, Queensland Department of Environment and Heritage Protection, the Commonwealth Department of the Environment, the Queensland Wader Study Group, the Port of Brisbane Pty Ltd, the Goodman Foundation and Birdlife Australia’s Stuart Leslie Award.

South Australia’s government has unveiled its keenly anticipated new energy plan, with the aim of making itself more self-sufficient.

Against the backdrop of repeated crises such as the blackouts of last month and September last year, and a dramatic offer from Tesla founder Elon Musk to fix the state’s energy security problems, the new plan proposes a range of measures to fix what Premier Jay Weatherill has described as the “failures” of national electricity regulation.

Battery storage

First, as almost universally anticipated, there will be a tender for 100 megawatts of battery storage, to be funded from a A$150 million Renewable Technology Fund. The plan document says this project will “modernise South Australia’s energy grid and begin the transformation to the next generation of renewable-energy storage technologies”.

Neither the National Electricity Market rules nor any other federal policy provides any specific mechanism to encourage battery installation. Nor do the existing regulations allow battery operators to be rewarded for other services they could provide, including responding rapidly to price spikes or to sudden drops in voltage on the grid.

Large battery installations, if appropriately configured, would be capable of providing large injections of energy to the grid over short periods, as a way to offset extreme volatility. Both SA and Queensland have been plagued by such volatility in recent months, causing a rash of short-term price spikes indicative of markets without enough competition.

The Australian Energy Market Commission (AEMC) is currently considering a Rule change, termed the 30 minute/5 minute trading interval change, proposed by a large electrolytic zinc smelter in Townsville. The change is ferociously opposed by established generators, but supported by almost everyone else. If and when the AEMC ever gets around to approving the rule change, large battery installations would be able to compete directly with generators, thereby both gaining a new source of revenue and helping to keep wholesale prices within reasonable limits.

Taking back control

The second component of the plan is to introduce legislation that would allow the state government to override the NEM’s market dispatch process for generation in the event of an emergency such as the demand peaks that triggered last month’s blackouts.

This is an obvious response to what is widely seen, at least in SA, as the reluctance of the federal regulator to use its powers to suspend the market. Many observers consider that such reluctance was most evident in the morning of the statewide blackout last September, and believe that earlier intervention could have prevented it, despite the massive storm damage to the state’s transmission infrastructure.

The new proposal could be interpreted as a challenge to the federal government over who controls SA’s electricity.

Energy security

Third, the plan will require all new generators with more than 5MW of capacity to demonstrate how they will contribute to the state’s energy security, by providing what are called ancillary services, such as frequency control, so-called inertia, or short-term storage. This is another clear statement that the state government believes the NEM rules, which establish markets for some frequency control services but not the other services mentioned above, fail to offer the state enough of a guarantee of reliable power supply.

Build a new gas plant

The government plans to become a power station owner, 20 years after the Liberal state government sold off the last publicly owned plant, by building a new open cycle (peaking) gas turbine plant. This decision is most obviously a reaction to the load-shedding blackout amid last month’s heatwave, when the operators of the Pelican Point gas power station were either unable or unwilling to increase output. Had they done so, load shedding could have been avoided.

At A$360 million, this seems a rather expensive way to avoid another load-shedding blackout, presumably justified on the basis of avoided political cost. It could be seen as a missed opportunity to provide more support for a far more innovative (though well proven in other countries) project to integrate solar thermal generation, gas generation and molten salt storage.

Solar thermal generation may gain support from the tender for new generation to supply the government’s own electricity requirements, and possibly some from the Renewable Technology Fund, but that remains to be seen.

Energy security target

Finally, the government will introduce a requirement, called an energy security target, requiring electricity retailers to source a minimum percentage of their wholesale requirements from local generators, rather than from Victorian coal-fired stations.

This will provide a guaranteed amount of revenue to local generators, thus reducing dependence on supply through the interconnectors with Victoria, with their associated security risks.

In a direct, though entirely unsurprising confrontation with the Commonwealth, the plan document states that “South Australia’s energy security target will transition to an EIS or Lower Emissions Target (LET) if or when national policy changes in the future”.

The wider context

In the policy document, Weatherill writes that the NEM is “failing South Australia and the nation”. Taken together, the various elements of the plan can be read as a list of how exactly the SA government considers it to be failing, and what powers the state proposes to assume in order to get it fixed.

Although the plan’s objectives are not stated explicitly, it is clear that they are threefold, and seen of equal priority:

• suppress retail price rises by introducing more competition into the wholesale market

• enhance the physical security of electricity supply

• encourage renewable generation and reduce greenhouse gas emissions.

These priorities neatly match the three components of what the preliminary report of the forthcoming Finkel Review calls the “energy trilemma”, which is the need to “simultaneously provide a high level of energy security and reliability, universal access to affordable energy services, and reduced emissions.”

With the review’s final version set to be delivered to the Commonwealth government in the coming months, it remains to be seen whether federal energy policy will become similarly proactive in the future.

Hugh Saddler is a member of the Board of the Climate Institute.

The keenly awaited new energy policy unveiled today by South Australian Premier Jay Weatherill features a range of headline-grabbing items, such as a plan to spend A$150 million on a 100-megawatt battery storage facility to help stave off the danger of future blackouts.

On page 7 of the policy document, Weatherill explains part of his underlying rationale:

The national market is now widely considered to be failing and in need of urgent reform. The ability of governments to influence the industry requires cooperation within and across state borders and at a Federal level – cooperation that needs to transcend politics and self-interest.

Noble words, but the new policy doesn’t “transcend politics and self-interest”. Quite the contrary – it is a unilateral move by a state government understandably keen to safeguard itself after suffering vicious criticism at a federal level.

There are rules for how SA and the east coast states that make up the National Electricity Market (NEM) are supposed to behave, yet member states seem to be able to flaunt them, systematically undermining the NEM along the way.

Rightly or wrongly, the NEM does not account for schemes such as renewable energy targets or solar feed-in tariffs. This means that when states pursue them, they can distort the market in the process.

There is conjecture about how much blame the Weatherill government should shoulder for the reliability issues that have beset SA’s electricity network. Either way, the decision has been made to fix it with yet more unilateral state government intervention in what is supposed to be a federated electricity market.

As a result, the new policy is likely to cause major headaches for the NEM and its operators. The announcement includes plans to give the state’s energy minister Tom Koutsantonis the power to override the NEM’s operating rules, allowing him to order generators to supply extra power when he deems it necessary.

This might help avert another South Australian blackout, but it will also undermine the role of the Australian Energy Market Operator (AEMO), which is responsible for managing the supply of electricity within the NEM. I will be fascinated to see how the SA government deals with the complex issue of what price they will pay for such power.

If the NEM is experiencing a peak in demand and South Australia is facing a shortage, will the South Australian Minister be able to override AEMO and demand private power generators in SA deliver power at a price determined by the minister? Or will the price be the one dictated at that moment by the market?

It is unlikely that the predominantly Labor-run states that now constitute the NEM will allow any adverse action against South Australia. In fact, the SA Parliament is the body through which rules of the NEM are legislated, so it will be nigh-on impossible to toss SA out of the NEM, lest the whole house of cards collapses.

Going it alone

Two other interesting aspects from the South Australian “energy intervention” is the construction of a new A$360 million gas-fired power plant, courtesy of SA taxpayers, and the A$150 million battery bank.

Presumably the SA government would like this new power plant to be able to sell electricity into the NEM, but to reserve the right to commandeer its output when circumstances dictate. It is not at all clear that the NEM rules allow this.

Consider the circumstances during last month’s heatwave, when both SA and New South Wales were facing power shortages. Under SA’s proposed new rules, NSW would be on its own (unless it develops a similar policy of its own). Hardly an example of cooperation.

The same issue will apply to the battery bank. Will it only be on standby for power shortages in SA, or will it be able to discharge into the NEM to take advantages of peak pricing? Could this result in SA finding its batteries empty when the wind stops blowing?

The SA government is correct to point out the deficiencies in the NEM, and even perhaps to claim that it is failing the nation. But an interstate scheme cannot be fixed by the unilateral actions of one state government – in this case, it is likely to be worsened.

The most worrying prospect of all, as far as the NEM is concerned, is the possibility that this will increase investment uncertainty still further, making it even less likely that the interstate grid will attract the new investment it needs.

If that happens, we might well see a few more states deciding to follow SA’s lead and plan sweeping energy reforms of their own.

Jeffrey Sommerfeld is involved with an energy analytic consultancy he established with two other persons with PhD expertise in energy. He/they are not doing this research on behalf of a client and will receive no direct benefit from it. He was an adviser to former Queensland LNP energy minister Mark McArdle from April 2012 to July 2013.

The energy sector was supposed to be the showcase for privatisation and market deregulation. Yet in 2017, this premise is being sorely tested – no more so than in electricity retailing, where competition has failed to deliver on its promise of lower prices for customers.

The latest Grattan Institute report, Price shock: Is the retail electricity market failing consumers?, provides evidence that in the electricity retail sector, the anticipated price reductions have not happened, and innovation has been very slow in coming.

On the contrary, the markets with the least regulation have the highest prices. Australia’s experience is mirrored in the UK, the United States and Canada, and all are struggling to find solutions.

Mixed success

The privatisation of Australia’s electricity retail markets dates back to the 1993 Hilmer Report on national competition policy. The ensuing decade saw a raft of reforms that initially delivered increases in productivity, lower prices and business innovation. But in the decade after that, this progress became much harder to sustain.

The idea was for states to create regulated monopolies in electricity transmission and distribution (poles and wires), while deregulating the retail side (the supply of gas and electricity to customers).

The competition in electricity generation largely delivered lower wholesale prices through the National Electricity Market (NEM). But a mess has since been created by poor or absent climate policy at a federal level, which failed to match the enthusiasm of (some) states for clean energy. The resulting surge of investment in wind and solar happened without due consideration of the consequences for security and reliability of supply. Generating more renewable energy is essential, but failing to integrate it properly with the NEM was negligent.

Meanwhile, in Victoria – the state with most electricity retailers and the longest history of full competition – retail prices have been increasing without apparent justification and retail margins are higher than they should be. The cost to Victorians could be as much as A$250 million a year.

Lazy customers?

Customers are unhappy, and yet we are not seeing a surge of consumer action to get the best deals. So if it’s just a matter of lazy consumers, why should governments care?

Part of the answer to this conundrum lies with the product and its relationship with consumers. First, electricity is an essential service that underpins our daily lives, and switching off is not a realistic option for most consumers.

Second, the products offered by retailers are often complex and the advertising is confusing, if not downright misleading. It is hardly surprising that consumers feel stuck and eventually give up trying to find the best deal, when all too often an advertised 30% discount on their electricity bill doesn’t necessarily mean their bills will be 30% cheaper.

So far there have been few genuine innovations in electricity pricing – even in Victoria which has had full deregulation since 2009. The most common tactic has been a discount for paying on time or by direct debit, although consumers are often frustrated when they discover that at the end of their contract they lose the discount even if they continue to pay the same way.

Meanwhile, products that offer different prices for electricity use at different times of the day have been slow to appear. These products have the potential to deliver major savings, yet the industry has failed to deliver them in a way that makes them easy for customers to understand and adopt.

What to do

When faced with a market failure, governments should consider action. Yet, as with the Australia’s domestic gas market and South Australia’s power “crisis”, they should proceed with caution.

In Britain, the partial re-regulation of retail electricity competition delivered unexpected and perverse outcomes, such as the removal of the cheapest deals. A move to re-regulate prices here could stifle emerging innovation, and would most likely leave some consumers worse off without the guarantee of a better outcome overall. We seem to be driven to a choice between free markets and central planning. Yet neither is a panacea.

There are government interventions that could fix the worst problems without stifling effective competition. They include requiring clearer and simpler advertising, and more transparent and fairer contracts. Requiring retailers to provide data on their profit margins to an independent agency could also help, and could even be in the best interest of the retailers if it fends off more heavy-handed regulation.

The retail electricity market may be fixable, and the benefits of competition may ultimately exceed its costs. We may yet see fairer prices and real innovation. But if not, governments will have no choice but to return to price regulation. The electricity retailers who are used to the current free market certainly won’t want that.

Tony Wood owns shares in several energy and resources companies through his superannuation fund

One of the worst instances of mangrove forest dieback ever recorded globally struck Australia’s Gulf of Carpentaria in the summer of 2015-16. A combination of extreme temperatures, drought and lowered sea levels likely caused this dieback, according to our investigation published in the journal Marine and Freshwater Research.

The dieback, which coincided with the Great Barrier Reef’s worst ever bleaching event, affected 1,000km of coastline between the Roper River in the Northern Territory and Karumba in Queensland.

Views of mangrove shorelines impacted by dieback event in late 2015, east of Limmen Bight River, Northern Territory (imagery: NC Duke, June 2016).

About 7,400 hectares, or 6%, of the gulf’s mangrove forest had died. Losses were most severe in the NT, where around 5,500ha of mangroves suffered dieback. Some of the gulf’s many catchments, such as the Robinson and McArthur rivers, lost up to 26% of their mangroves.

Views of seaward mangrove fringes showing foreshore sections of minor (left side) and extreme (right side) damage as observed in June 2016 between Limmen and MacArthur rivers, NT. These might effectively also represent before and after scenarios, but together show how some shoreline sections have been left exposed and vulnerable. NC Duke The gulf, a remote but valuable place

The Gulf of Carpentaria is a continuous sweep of wide tidal wetlands fringed by mangroves, meandering estuaries, creeks and beaches. Its size and naturalness makes it globally exceptional.

An apron of broad mudflats and seagrass meadows supports thousands of marine turtles and dugongs. A thriving fishing industry worth at least A$30 million ultimately depends on mangroves.

Dieback of mangroves around Karumba in Queensland, with surviving saltmarsh, October 2016. NC Duke

Mangroves and saltmarsh plants are uniquely adapted to extreme and fickle coastal shoreline ecosystems. They normally cope with salt and daily inundation, having evolved specialised physiological and morphological traits, such as salt excretion and unique breathing roots.

But in early 2016, local tour operators and consultants doing bird surveys alerted authorities to mangroves dying en masse along entire shorelines. They reported skeletonised mangroves over several hundred kilometres, with the trees appearing to have died simultaneously. They sent photos and even tracked down satellite images to confirm their concerns. The NT government supported the first investigative surveys in June 2016.

Areas affected by severe mangrove dieback in late 2015 (grey shaded) along southern shorelines of Australia’s Gulf of Carpentaria from Northern Territory to Queensland. Aerial surveys (red lines) were undertaken on three occasions during 2016 to cover around 600km of the 1000km impacted. NC Duke

In the end, the emails from citizen scientists nailed the timing: “looks like it started maybe December 2015”; the severity: “I’ve seen dieback before, but not like this”; and the cause: “guessing it may be the consequence of the four-year drought”.

Our investigation used satellite imagery dating back to 1972 to confirm that the dieback was an unparalleled event. Further aerial helicopter surveys and mapping during 2016, after the dieback, validated the severity of the event extending across the entire gulf. Mangrove dieback has been recorded in Australia in the past but over decades, not months.

Mangroves losses (red) and surviving mangroves (green) around the shoreline and mouth of the Limmen Bight River, south-western Gulf of Carpentaria, April 2015 to April 2016. NC Duke, J. Kovacs Mysterious patterns in the dieback

We still don’t fully understand what caused the dieback. But we can rule out the usual suspects of chemical or oil spills, or severe storm events. It was also significant that losses occurred simultaneously across a 1,000km front.

There were also a number of tell-tale patterns in the dieback. The worst-impacted locations had more or less complete loss of shoreline-fringing mangroves. This mirrored a general loss of mangroves fringing tidal saltpans and saltmarshes along this semi-arid coast.

Mangroves were unaffected where they kept their feet wet along estuaries and rivers. This, as well as the timing and severity of the event, points to a connection with extreme weather and climate patterns, and particularly the month-long drop of 20cm in local sea levels.

Extreme weather the likely culprit

We believe the dieback is best explained by drought, hot water, hot air and the temporary drop in sea level. Each of these was correlated with the strong 2015-16 El Niño. Let’s take a look at each in turn.

First, the dieback happened at the end of an unusually long period of severe drought conditions, which prevailed for much of 2015 following four years of below-average rainfall. This caused severe moisture stress in mangroves growing alongside saltmarsh and saltpans.

Second, the dieback coincided with hot sea temperatures that also caused coral bleaching along the Great Barrier Reef. While mangroves are known to be relatively heat-tolerant, they have their limits.

The air temperatures recorded at the time of the mangrove dieback, particularly from February to September 2015, were also exceptionally high.

Views of mangrove shorelines impacted by dieback event in late 2015, north of Karumba, Queensland (imagery: NC Duke, Oct 2016).

Third, the sea level dropped by up to 20cm at the time of the dieback when the mangroves were both heat- and moisture-stressed. Sea levels commonly drop in the western Pacific (and rise in the eastern Pacific) during strong El Niño years: and the 2015-2016 El Niño was the third-strongest recorded.

The mangroves appear to have died of thirst. Mangroves may be hardy plants, but when sea levels drop, reducing inundation, coupled with already heat-and-drought-stressed weather conditions, then the plants will die – much like your neglected pot plants.

We don’t yet know what role human-caused climate change played in these particular weather events or El Niño. But the unprecedented extent of the dieback, the confluence of extreme climate events and the coincidence with the bleaching of the Great Barrier Reef mean the role of climate change will be of critical interest in the global response to mangrove decline.

What future for mangroves?

The future for mangroves around the world is mixed. Thanks to climate change, droughts are expected to become hotter and more frequent. If the gulf’s mangroves experience further dieback in the future, this will have serious implications for Australia’s northern fisheries including the iconic prawn fishery, mudcrab and fin fish fisheries. All species are closely associated with healthy mangroves.

We don’t know whether the mangroves will recover or not. But there is now a further risk of shoreline erosion and retreat, particularly if the region is struck by a cyclone – and this may have already begun with recent cyclonic weather and flooding in the gulf. The movement of mangrove sediments will lead to massive releases of carbon uniquely buried among their roots.

Mangroves are among the most carbon-rich forests in the tropics and semi-tropics and much of this carbon could enter the atmosphere.

Aerial view of severe mangrove dieback near Karumba in Queensland, October 2016. NC Duke

Now we urgently need to understand how mangroves died at large and smaller scales (such as river catchments), so we can develop strategies to help them adapt to future change.

Australia’s top specialists and managers will be reviewing the current situation at a dedicated workshop during next week’s Australian Mangrove and Saltmarsh Network annual conference in Hobart.

The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond the academic appointment above.

No matter how hard we dig, the Earth's resources are ultimately finite. Mining image from www.shutterstock.com

Our economy and society ultimately depend on natural resources: land, water, material (such as metals) and energy. But some scientists have recognised that there are hard limits to the amount of these resources we can use. It is our consumption of these resources that is behind environmental problems such as extinction, pollution and climate change.

Even supposedly “green” technologies such as renewable energy require materials, land and solar exposure, and cannot grow indefinitely on this (or any) planet.

Most economic policy around the world is driven by the goal of maximising economic growth (or increase in gross domestic product – GDP). Economic growth usually means using more resources. So if we can’t keep using more and more resources, what does this mean for growth?

Most conventional economists and policymakers now endorse the idea that growth can be “decoupled” from environmental impacts – that the economy can grow, without using more resources and exacerbating environmental problems.

Even the then US president, Barack Obama, in a recent piece in Science argued that the US economy could continue growing without increasing carbon emissions thanks to the rollout of renewable energy.

But there are many problems with this idea. In a recent conference of the Australia-New Zealand Society for Ecological Economics (ANZSEE), we looked at why decoupling may be a delusion.

The decoupling delusion

Given that there are hard limits to the amount of resources we can use, genuine decoupling would be the only thing that could allow GDP to grow indefinitely.

Drawing on evidence from the 600-page Economic Report to the President, Obama referred to trends during the course of his presidency showing that the economy grew by more than 10% despite a 9.5% fall in carbon dioxide emissions from the energy sector. In his words:

…this “decoupling” of energy sector emissions and economic growth should put to rest the argument that combating climate change requires accepting lower growth or a lower standard of living.

Others have pointed out similar trends, including the International Energy Agency which last year – albeit on the basis of just two years of data – argued that global carbon emissions have decoupled from economic growth.

But we would argue that what people are observing (and labelling) as decoupling is only partly due to genuine efficiency gains. The rest is a combination of three illusory effects: substitution, financialisation and cost-shifting.

Substituting the problem

Here’s an example of substitution of energy resources. In the past, the world evidently decoupled GDP growth from buildup of horse manure in city streets, by substituting other forms of transport for horses. We’ve also decoupled our economy from whale oil, by substituting it with fossil fuels. And we can substitute fossil fuels with renewable energy.

These changes result in “partial” decoupling – that is, decoupling from specific environmental impacts (manure, whales, carbon emissions). But substituting carbon-intensive energy with cleaner, or even carbon-neutral, energy does not free our economies of their dependence on finite resources.

Let’s get something straight: Obama’s efforts to support clean energy are commendable. We can – and must – envisage a future powered by 100% renewable energy, which may help break the link between economic activity and climate change. This is especially important now that President Donald Trump threatens to undo even some of these partial successes.

But if you think we have limitless solar energy to fuel limitless clean, green growth, think again. For GDP to keep growing we would need ever-increasing numbers of wind turbines, solar farms, geothermal wells, bioenergy plantations and so on – all requiring ever-increasing amounts of material and land.

Nor is efficiency (getting more economic activity out of each unit of energy and materials) the answer to endless growth. As some of us pointed out in a recent paper, efficiency gains could prolong economic growth and may even look like decoupling (for a while), but we will inevitably reach limits.

Moving money

The economy can also appear to grow without using more resources, through growth in financial activities such as currency trading, credit default swaps and mortgage-backed securities. Such activities don’t consume much in the way of resources, but make up an increasing fraction of GDP.

So if GDP is growing, but this growth is increasingly driven by a ballooning finance sector, that would give the appearance of decoupling.

Meanwhile most people aren’t actually getting any more bang for their buck, as most of the wealth remains in the hands of the few. It’s ephemeral growth at best: ready to burst at the next crisis.

Shifting the cost onto poorer nations

The third way to create the illusion of decoupling is to move resource-intensive modes of production away from the point of consumption. For instance, many goods consumed in Western nations are made in developing nations.

Consuming those goods boosts GDP in the consuming country, but the environmental impact takes place elsewhere (often in a developing economy where it may not even be measured).

In their 2012 paper, Thomas Wiedmann and co-authors comprehensively analysed domestic and imported materials for 186 countries. They showed that rich nations have appeared to decouple their GDP from domestic raw material consumption, but as soon as imported materials are included they observe “no improvements in resource productivity at all”. None at all.

From treating symptoms to finding a cure

One reason why decoupling GDP and its growth from environmental degradation may be harder than conventionally thought is that this development model (growth of GDP) associates value with systematic exploitation of natural systems and also society. As an example, felling and selling old-growth forests increases GDP far more than protecting or replanting them.

Defensive consumption – that is, buying goods and services (such as bottled water, security fences, or private insurance) to protect oneself against environmental degradation and social conflict – is also a crucial contributor to GDP.

Rather than fighting and exploiting the environment, we need to recognise alternative measures of progress. In reality, there is no conflict between human progress and environmental sustainability; well-being is directly and positively connected with a healthy environment.

Many other factors that are not captured by GDP affect well-being. These include the distribution of wealth and income, the health of the global and regional ecosystems (including the climate), the quality of trust and social interactions at multiple scales, the value of parenting, household work and volunteer work. We therefore need to measure human progress by indicators other than just GDP and its growth rate.

The decoupling delusion simply props up GDP growth as an outdated measure of well-being. Instead, we need to recouple the goals of human progress and a healthy environment for a sustainable future.

James Ward works for the University of South Australia. He is also privately affiliated with Sustainable Population Australia.

Keri Chiveralls works for Central Queensland University.

Lorenzo Fioramonti, Paul Sutton, and Robert Costanza do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.

“Flabbergas” in Beijing

The Sichuan basin is one of China’s premier shale gas plays, and when it comes to developing Chinese resources, state-owned enterprises like Sinopec have the inside running.

I met with Sinopec geologists earlier this week in Beijing to discuss collaborations and asked how their Sichuan Basin gas plays were shaping up. I was curious, having been told some years back by a senior Shell shale-gas engineer his view was “too deep and too tight”. After some initial interest, in 2016 Shell announced it was getting out of the Sichuan.

Somewhat to my surprise, my Sinopec colleagues were very upbeat claiming their shale gas production was on target. With a production schedule targeting some 8000 terajolues per day I wondered aloud, how long they thought they would need our LNG exports. They must have sensed some concern and quickly said not to worry. The cost of production from their Sichuan plays was well above the price they were paying for our gas. They wouldn’t be leaving us stranded any time soon, they assured me.

I then told them about the domestic prices here in Australia, where spot prices regularly sit at around $12 per petajoule and where future contracts are reputedly now being offered at up to $20 petajoule. Their reaction, in a word, “flabbergasted”. How could it be that we paid more for our own gas than they did to import it? For reference, Henry Hub spot prices in the US are currently settling at around AUD$3.4 per petajoule, just 30% of the Australian price (AUD$11.4) at the time of writing.

And importing our gas, the Chinese are. Back in 2015, BP reported that China imported around 50 million tonnes in barrels of oil equivalent (BOE) in energy terms, representing about 6000 terajolues per day.

Chinese gas production and consumption figures as terms of Million of barrels of oil equivalent per year, until end of 2015. Data from the BP Statistical Review of World Energy, 2016. While production has risen sharply, more than doubling in the last decade, consumption has risen much faster with a separation occurred around 2008. Consumption outstripped production by about 50 million tonnes in 2015, the equivalent of 7000 terajolues per day. Eastern Australian gas exported via the Gladstone ports will make a significant contribution to Chinese imports into the future, because the marginal cost of production in China’s frontier unconventional basins such as the Sichuan is above the price they pay to import.

The Gladstone Port Authority reported a touch under one million tonnes of LNG left Curtis Island in Queensland bound for China last December. That amounts to a daily rate of about 1600 terajolues. In total, Curtis island shipped 1.7 million tonnes in 27 cargoes in December, equating to about 3000 terajolues per day. That represented around 70% of the total production of 4200 terajolues per day from all the gas fields across eastern and southern Australia that are physically connected to the export facilities. The exports outstripped our domestic consumption in the eastern states by a factor of about 2.5.

The point is worth reiterating. In December last year more gas was shipped to China from Queensland than was used locally across the four eastern sea- board states and South Australia. That wouldn’t be a problem if there was enough gas to go round. But there is not, and instead we have entered the “red zone”.

Into the “red zone”

With the first shipments leaving Gladstone just a touch over two years ago, in January 2015, it is hardly surprising that the gas market is causing ructions here in Australia. In fact it shouldn’t surprise anyone as problems were anticipated as far back as 2013, as I discussed in a post mid last year titled “We really must talk about gas”.

And so it would seem we are now really talking about gas.

As illustrated in the figure below, the last few years have witnessed an unprecedented change in our eastern gas market. Production has risen 250% in just two years, from an average of 1800 terajolues per day in the last half of 2014 through to 4600 terajolues per day in last half of 2016.

Total production from the gas fields serving the eastern Australian gas market, coloured by producing region, along with the monthly averaged exports from Gladstone. Production data from AEO, export data from Gladstone Port Authority.

Also shown is exported gas, and the amount of gas used to deliver gas from the producing fields to the export facilities. The amount of additional gas needed for processing is a somewhat uncertain number but is likely to be more than 10%. In the figure above I assume 12%. Finally, I also show the contracted position of our LNG exporters who are ramping up to around 24 million tonnes of LNG exports per year (CLE), with an assumed additional load of almost 3 million tonnes needed to deliver that to the cargo (marked as “CLE+proc”).

So how does the figure above help us understand what has happened to so dramatically upset our gas markets here in Australia.

Firstly, note how our exports have tracked upwards more steeply than the production from our developing coal-seam gas fields in Queensland from the production region of Roma (shown in green). In the last few months the combination of exports plus the new processing load has begun to outstrip the total production from the new CSG-fields. Production from our older, conventional gas fields such as the Gippsland Basin in Victoria (in red) and the Cooper Basin in South Australia (in dark blue) is being partially used to fill the export cargoes. In short, we are short on gas, having entered the “red zone”.

In a previous postI have discussed the recent dynamics of gas pricing and availability in the National electricity market and its impact on prices, showing how quick we have switched from the “ramp-gas phase”. That is the stage when CSG fields were being developed prior to the completion of the export facilities, providing abundant flows of cheap gas for the local market. Now we are in the “scarce-gas” phase, or the “red-zone” as I like to call it. It is one of the key reasons for the recent doubling of spot electricity prices (another is the extra electricity demand from the LNG processing themselves, providing a double whammy for electricity users, as explained here). But scarcity pricing in the gas market is affecting all users, not just electricity generators.

And the reality is that now we are in the “red-zone” scarcity pricing is here to stay. In the medium-term it only seems likely to get worse. If no new production is bought to market, exports rise to meet contracts, and around 12% of additional gas is needed for export processing, then we we will be excising conventional resources to the export market at a rate of about 400 terajolues per day or about 30% of what would otherwise have been available for domestic use. While there remain many “ifs” in that scenario, it is a hugely worrying shift in the balance of demand and supply.

With politicians now scurrying to address the situation it is worth reflecting why has it taken so long to do so. It is not as though it wasn’t predicted. To quote from that earlier piece of mine - developing the new CSG fields at such scale was always going to risk that production would fall short of targets. As much was acknowledged by the 2013 Department of Industry and Bureau of Resources and Energy Economics study into Eastern Australian gas markets

The current development of LNG in eastern Australia and the expected tripling of gas demand are creating conditions that are in stark contrast to those in the previously isolated domestic gas market. The timely development of gas resources will be important to ensure that supply is available for domestic gas users and to meet LNG export commitments. Such is the scale of the LNG projects that even small deviations from the CSG reserve development schedule could result in significant volumes of gas being sourced from traditional domestic market supplies

That was some 2 years before the first LNG exports. Now some four years on and it is patently clear that Eastern Australia is short on gas, given the existing export contracts. While new conventional fields such as Kipper in the Gipplsand Basin are coming on stream (often with a hefty load of CO2 to complicate matters), existing fields are depleting.

To remedy the situation, there will be predictable calls such as for gas reservation (including by myself), and new exploration, including the lifting of on-shore moratoriums. All should be considered from a rational perspective, since the situation is urgent. But it should be eyes-wide-open, as all have problems.

No doubt, new production from unconventional resources such as shale and tight gas might alleviate the scarcity pricing events we are witnessing as we now enter the “red zone”, but it will not return us to the halcyon days to times past. Developing new unconventional gas fields is generally proving expensive. Just ask the Chinese. It is after all why they will continue to import our gas. The exception is the US, and that’s because US shale gas rides on the back of the US shale oil. Unconventional gas with liquids is a whole different ball-game.

Disclosure

Mike Sandiford receives funding from ANLEC and from the ARC.

The Climate Institute, Australia’s first NGO to focus solely on climate change, is to shut down at the end of June after 12 years.

It was born into an era when politicians and voters were finally waking up to the importance of climate policy. But now, its self-described “centrist, pragmatic advocacy” has run out of financial backing.

Early years

It’s easy to forget, given the political theatrics we’ve witnessed over the past decade, just how little attention was being paid to climate policy before the explosion of concern in late 2006. Life was bleak for environmental groups under the four Howard governments from 1996 to 2007, with the partial and controversial exception of WWF.

Climate change was simply not an issue that had traction with the federal government, and the business community had fought itself to a standstill on the topic of whether Australia should ratify the Kyoto Protocol, which John Howard resisted to the end.

Bob Carr, the then premier of New South Wales, had been trying to get carbon trading onto state and federal agendas with limited success.

By 2004 attitudes were shifting, not least because of the ongoing Millennium Drought. In a 2015 interview Clive Hamilton, a climate policy academic and inaugural board chair of the Climate Institute, noted:

In the early 2000s when the environment groups started to get serious about climate change, they adopted their standard tactics, which had run out of steam. The problem for environmentalism in Australia, as well as internationally, is that they had this glorious period of the 1980s and ‘90s, and then they became institutionalised; their tactics became stale. It wasn’t their fault – it’s just the world changed.

Hamilton explained that in 2005, Mark Wootton, director of the Poola Foundation, approached him saying that he had A$5 million and wanted to spend it on something that would “cut through” the stagnant climate change debate. Hamilton thought about it and proposed the Climate Institute, which he put together over the ensuing months. After chairing the board for its first year Hamilton returned to his duties at the Australia Institute.

Launching a tour of rural Australia the following year, Wootton told journalists:

People have to see there is a solution, that there is a way out… It’s about people moving on and not feeling that sense of despair, which I’ve genuinely felt, and that’s why we set this up.

The institute opened its doors in October 2005 and was soon in the headlines. Howard attacked Carr, declaring himself “amazed a former Labor premier should advocate that we should sign up to something that would export the jobs of Australian workers”.

A month later, the Climate Institute returned fire with an attack on the Howard government’s Asia-Pacific Partnership on Clean Development and Climate, widely interpreted as a way for polluting nations to dodge Kyoto.

This pattern of well-timed reports and timely rebuttals has continued over the past 12 years. During this time the Climate Institute has challenged successive governments to do more, to create stronger policy and a more predictable investment environment – something that is sorely lacking to this day.

The institute’s critics will claim it never escaped the neoliberal paradigm – the idea that the market can and will deliver as long as the right policy levers are pulled at the right time. In fairness, though, it never pledged to transcend free-market economics anyway, although it also tried along the way to expand the argument to include moral (and religious) values.

Main achievements

In the reporting on the institute’s demise, its main claims to fame are listed as helping to expand the renewable energy target in 2008, saving the Climate Change Authority from Tony Abbott’s axe in 2014, and building bipartisan support for Australia to ratify the Paris climate agreement in 2016.

But there was much else that the Climate Institute worked on, which is in danger of being forgotten.

It toured rural Australia to listen to farmers’ concerns.

It tried to signal to politicians that voters cared. For example, before the “first climate change election” in November 2007, it commissioned a poll of 877 voters in nine key marginal electorates. It found that 73% of voters thought climate change would have either a strong or a very strong influence on their vote at the election, an increase from 62% in August.

It also played a part in stitching together what political scientists call “advocacy coalitions”. One notable example was its help in producing the Common belief: Australia’s faith communities on climate change report, released in December 2006 with input from 16 Australian communities including Aboriginal Australians, Anglicans, Baptists, Catholics, Evangelicals, Hindus, Jews, Muslims, Sikhs and other denominations.

Why it died and what next?

The institute’s outgoing chief executive, John Connor, told Reneweconomy that the decision ultimately comes down to funding:

We haven’t been able to plug the [funding] gap. Centrist, pragmatic advocacy is not sexy for many people who want to fund the fighters or pour funds into new technology.

As such, the Climate Institute is another victim of the policy paralysis that has exasperated and bewildered commentators.

It is indeed hard to justify the funding of calm, measured policy advice when the mere mention of the most economically tame of notions – an emissions intensity scheme – causes panic and retreat in the federal government.

Climatologist and Climate Council member Will Steffen, interviewed on the ABC, suggested that over the past two or three years many organisations have begun to take climate change on board, and so the institute’s unique role was lessened.

But one piece of the furniture that urgently needs saving is the institute’s Climate of the Nation, the longest trend survey of the attitudes of Australians to climate change and its solutions. Hopefully another organisation (I’m looking at you, Australian Conservation Foundation) will pick this up.

The staff of the Climate Institute will hopefully find new roles within the now smaller ecosystem of environmental policy advice. With the impacts that the institute and others were warning about in 2005 arriving with depressing predictability, Australia desperately needs three things.

It needs community energy programs. It needs effective opposition to plans for yet more fossil fuel extraction. And most relevantly here, it needs a cacophony of well-informed and relentless voices advocating for the most useful policies to get the carbon out of our economy.

There’s a fourth thing, actually: luck. From here on we are going to need an enormous (and undeserved) amount of luck if the lost years of ignoring sensible climate policy advice are not to come back and haunt us.

Marc Hudson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.

Certain traditional owners and conservation groups allied to stand against a planned gas hub in Western Australia's Kimberley region. AAP Image/Tim Gentles

In Australia and across the world, Indigenous people are resisting developments that threaten their lands. Wangan and Jagalingou people stand in opposition to the planned Carmichael coalmine in Queensland, while the Sioux people are holding firm in their struggle against the Dakota Access Pipeline at Standing Rock.

As these contests intensify, they reveal that Indigenous peoples often have limited say over what happens on their country. When pitted against powerful state and corporate actors, Indigenous people may seek assistance from others, such as environmentalists, to protect their interests and further their aspirations.

In Australia, these arrangements have sometimes been called “green-black alliances”. However, as we argue in our new book Unstable Relations, it is misleading to contend that Indigenous people and environmentalists necessarily share (or don’t share) the same ends and motives.

They are neither natural allies nor enemies. Instead, we suggest, close attention to the past and present of “green-black” meetings in Australia reveals that their relationships are surprisingly unstable, and are shaped by shifting legal and social contexts.

To understand how and why these collaborations occur, and how and why they can fall apart, we need a better comprehension of the particular processes and people involved, rather than treating them all as uniform.

Understanding land rights today

Since 1966, governments in Australia have progressively recognised different forms of Indigenous land rights. Perhaps the most well known is “native title”, which was first recognised in the High Court’s 1992 Mabo decision.

Native title applies only to Crown lands and pastoral leases, only authorises limited land use rights, and is proven through condescending tests of cultural “continuity”. Because of the history of colonial dispossession, some groups fail to meet these tests; others refuse to do so. These problems notwithstanding, multiple forms of Indigenous land rights together cover more than a third of the continent, much of it in remote Australia.

As we have recently seen, mining companies and others often greet changes to land rights regimes with dire warnings about economic impacts. The “Mabo madness” of the 1990s proved overblown. By and large, Australia’s various land rights regimes have been highly accommodating to miners and mineral extraction.

In violation of United Nations principles, Australia’s native title laws do not recognise Indigenous peoples’ rights to consent over what happens on their country. Rather, they simply allow a right to be consulted for six months. This gives rise to contractual agreements, such as Indigenous Land Use Agreements, which effectively grant mining companies and others a “social licence to operate” in exchange for a mixture of cash and in-kind benefits.

Indigenous academic Marcia Langton and others have argued that this era of “agreement-making” has the potential to lift Indigenous people in remote areas out of poverty. According to this argument, environmental groups that raise concerns about industrial activity do so at Indigenous peoples’ expense.

A simplified version of this story is often found in the mainstream media, casting environmentalists as out-of-touch urbanites and portraying Indigenous groups who work with them as dupes or somehow illegitimate.

Meanwhile, many Australians seem to accept that extractive developments are both inevitable and beneficial, despite complex evidence to the contrary.

The alternative view is the one depicted in this painting by Garawa artist Jacky Green, in which a road train covered with dollar signs represents “the wealth being taken away from us, from our country”.

Unstable relations

The anthropological and historical research presented in our book highlights that, far from being manipulated, Indigenous people who are opposed to a particular development often seek to enter into strategic partnerships with environmentalists. Crucially, these are not inevitable alliances but negotiated collaborations, which can run into problems if circumstances change.

The controversy that erupted in recent years over Queensland’s Wild Rivers Act was shaped by collaborative relationships established between the Australian Conservation Foundation, The Wilderness Society, and Cape York Land Council and its former chairman Noel Pearson decades earlier. Whereas these groups had formalised an alliance in the mid-1990s, which successfully lobbied for land rights and the return of country to traditional owners in Cape York, they split in the late 2000s over how to regulate planning on that country.

Nonetheless, while a public controversy raged, together these groups continued to privately negotiate further outcomes over jointly managed national parks.

Another quite different example is the campaign against a major liquid-gas processing plant and port at Walmadany (James Price Point) in Western Australia. The ethnographer Stephen Muecke has characterised the relationship between those Goolarabooloo people who sought to halt the project and their green supporters as the most successful such collaboration in Australia’s history.

This was based on long-term personal relationships between some of those involved and, crucially, the media and scientific resources that environmentalists were able to bring to the campaign. “Citizen scientists” took their cue from Goolarabooloo people’s firsthand knowledge of local environs, conducting highly successful surveys of turtle nests and bilbies.

In our book, we and other contributors point to many other productive but nonetheless unstable relationships in South Australia, the Northern Territory, Victoria and elsewhere.

The ‘green-black’ future

Environmentalists often seem oblivious to the contractual landscape in which they are acting. They mistake their relationships with particular Indigenous groups as a natural alliance, based on received ideas of Indigenous connection to country.

But as Yorta Yorta activist Monica Morgan has pointed out, Indigenous people have a holistic relationship with their country, which doesn’t always fit with the specific goals of environmentalists. When green groups assume that Indigenous peoples’ “traditional culture” is necessarily conservationist, this can lead them to denigrate Indigenous people who pursue economic opportunities.

Relationships between Indigenous people and environmental interests continue to change. Both are now landholders of significant conservation areas in remote Australia, while Indigenous people are increasingly employed as rangers through state-funded conservation projects.

Again, specific case studies show how these arrangements are far from simple. At the former pastoral property of Pungalina in Queensland’s Gulf Country, Garawa people return to “Emu Dreaming” places now managed by non-Indigenous conservationists. There they negotiate an ambiguous field of responses to their presence, ranging from interest and respect to anxiety.

In Arnhem Land, Kuninjku people express ambivalence about the problem of the environmentally destructive buffalo in an Indigenous Protected Area. The buffalo are simultaneously recognised as companions, an environmental problem, and a crucial source of meat in hungry times.

As long as Indigenous people have limited capacity to decide what happens on their country, and as long as environmentalists continue to oppose destructive developments, their interests will sometimes intersect. However, as these situations arise and alliances form, we should be careful to avoid essentialising or conflating those involved. “Green-black” alliances will certainly be productive at times, but they will always be unstable.

Timothy Neale receives funding from the Bushfire and Natural Hazards Cooperative Research Centre.

Eve Vincent does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.

Citizen science projects are a way to contribute to science from your own backyard. Shutterstock

Our backyards are home to many scuttling, slithering and scampering creatures, which are often the subject of fascination. But they can also play a key role in tracking the changes in the world around us – for science.

Science is a vital tool to monitor the world, but scientists can’t do it all alone. Ordinary citizens can help by getting involved in a citizen science project.

People are spending weekends with their friends and families learning more about their backyards and gathering data that would otherwise be inaccessible to scientists.

They’re helping to manage invasive species, tree death, diseases and animal health. And it’s a way to take responsibility for the environment, urban areas, farmland and the creatures that visit our gardens.

Here are just a few ways you can get involved too.

Birds in backyards

Bird feeders and water dispensers are a great way to monitor human interactions with wildlife. If you have them, you can see the effect they have on your garden. You may even get a visit from a threatened species.

This project, created by researchers at Deakin and Griffith universities, aims to find out how people influence bird numbers and species diversity, and to measure the impact of food and water provisions. The organisers are looking for volunteers.

Additionally, BirdLife Australia’s Birds in Backyards is a project that collects reports of backyard bird sightings for analysis through the data-collection site Birdata. The site also contains resources on bird-friendly gardening, a bird finder tool (for identifying that pesky bird), forums and events.

Aggressive birds?

You may have heard the story of the bell miner (Manorina melanophrys), its feeding habits, aggressive behaviour and its association with a plant sickness known as eucalypt dieback.

A bell miner hangs from the trees. David Cook/Flickr, CC BY-NC

The Bell Miner Colony Project, which I run, looks at the bell miners’ habitat choice and movements, and investigates whether they really cause dieback. The project, developed two years ago, looks to answer questions about bell miner distribution across the east coast of Australia, and helps with managing forests and gardens.

Most people either love or hate bell miners. I personally love them, so I want to find out what they are really doing on a species scale.

One colony lives in the Melbourne Botanic Gardens and another in the Melbourne Zoo, so they are easy to see and visit. They make a distinctive “tink” call throughout the day, which can be used to monitor density. If you have seen any, please report them.

Tracking ferals

If your area seems to be riddled with pests, Feral Scan is a website for surveying and identifying them. The data is compiled and plotted on a map to create a scanner for previous sightings.

Another website for reporting biodiversity sightings is the Atlas of Living Australia. Any species seen in your backyard or during your travels can be added to the searchable database of sightings from across the nation.

Helping wombats

WomSAT maps and record wombats and wombat burrow locations. So if you’ve seen wombats running around, let them know.

A wombat infected with mange. Upsticksngo/Flickr, CC BY

There is also a call for volunteers in the ACT to help treat wombats with mange infections. Mange is a skin disease caused by mites, which leaves wombats itching until they scab. Volunteers help by applying treatments outside wombat burrows and monitoring the burrows with cameras.

Weed spotting

For those of you who are not into animals, there is a project for detecting new and emerging weeds in Queensland.

Queensland Herbarium teaches weed identification and mapping skills so that you can send your weed specimens and accompanying data to them.

This helps scientists determine where weeds are, how they spread and the best process for large-scale management.

Kathryn Teare Ada Lambert founded The Bell-Miner-Colony Project and is always on the lookout for interesting citizen science projects to get involved in.

One of the flashpoints in Saturday’s Western Australian election is the Perth Freight Link, a policy to improve the access for trucks to the port of Fremantle. This includes an extension to Perth’s Roe Highway, known as Roe 8. The plan has met with years of protests by local government, environmentalists and residents who are concerned about the economic, social and environmental issues associated with the development.

In particular, Roe 8 will cut through the Beeliar Wetlands, home to threatened ecological communities and migratory shorebirds. Labor and the Greens have long opposed this plan and have developed an alternative freight strategy. But this was discarded by the incoming Liberal government led by Premier Colin Barnett in 2008, which reverted to an older plan to extend Roe Highway.

Work has begun on clearing the site. However, a Senate inquiry report released on Tuesday recommended that action be suspended. WA Labor has promised to cancel Roe 8 and the Perth Freight Link project, while the Liberal Party is holding fast on the issue.

The controversy around Roe 8 has highlighted the lack of effective consideration of biodiversity values, not just at the Beeliar wetlands but across the city.

Why intact wetlands are important

In a recent radio interview, Premier Barnett stated that Roe 8 “will not damage the environment of the Beeliar Wetlands other than you will see a major road going between two lakes”.

The proposed extension of the Roe Highway. Man Roads WA

This displays an ignorance of natural systems. Fragmentation is a serious threat to our remaining biodiversity, along with climate change and declining rainfall.

Wetlands aren’t swimming pools with neatly tiled boundaries. Wetlands function because open water areas are linked to their fringing vegetation and woodlands. This is how pollutants are filtered before the water passes into the lake, how turtles maintain sustainable populations by nesting in woodlands, and how they exchange genetic material with turtles in other wetlands.

Nor is it difficult to enable these linkages. Examples include refitting drains to become living streams, and creating wildlife corridors along road verges with natural vegetation and trees.

It is essential that we retain our few remaining natural assets intact and enhance the connectivity between them. In assessing the Roe 8 proposal, the WA Environmental Protection Authority concluded that habitat fragmentation was a major issue of the development and that there was no easy solution to it.

Wetlands have been lost throughout the state. When the WA Environment Protection Authority released its State of the Environment Report in 2007 it noted that more than 80% of the original wetlands on the Swan Coastal Plain had been lost to development since 1829. Furthermore, it reported that wetland loss was continuing at an average rate of about four hectares (two football fields) each day.

Why is this happening? There are many reasons, but the principal one is a lack of will by the state government to implement its own policies on wetland conservation. The Bush Forever Plan – which aims to protect a comprehensive and representative system of Perth’s amazing biodiversity – is still incomplete nearly 20 years after it was drawn up. The government’s draft Green Growth Plan proposes a massive downsizing of the urban conservation estate.

In 1997, the Coalition government released a Wetlands Conservation Policy for WA. It proposed many worthwhile measures, including a policy to protect wetlands from encroachment by urban and industrial development. A draft of this policy was released for public comment in 2005, but it has never been completed or implemented.

WA’s current environment minister, Albert Jacob, has revoked the Swan Coastal Plain Lakes environmental protection policy, which provided some protection to important wetlands. Inappropriate development now threatens many significant wetlands across Perth.

The only remaining protection they have is via clearing regulations, which are intended primarily to manage farming operations. Roe 8 was approved despite the fact that it breached the EPA guidelines on assessment. The state Court of Appeal ruled that the EPA and the government were not obliged to follow these guidelines.

Global hotspot Hatchling turtles cross woodlands to reach wetland habitats. Jane Chambers

More broadly, Perth sits in a biodiversity hotspot, one of 25 places globally that together contain nearly half of the world’s wildlife and a third of the plants, but cover less than 2% of the land. They are places with exceptional concentrations of species found nowhere else, which are now seeing exceptional habitat losses. The biodiversity of the Perth region is comparable to that of the whole of Great Britain.

The threat to Perth’s biodiversity is illustrated by the plight of the Banksia Woodlands, which once covered much of the Perth area. In September 2016, the Banksia Woodlands of the Swan Coastal Plain were listed nationally as an endangered ecological community, particularly due to continuing fragmentation.

With such an internationally recognised threatened treasure on our doorstep you might imagine that environmental protection in Perth would be among the best in the world, but you would be wrong. Instead, valuable ecological communities, fauna and flora are subordinated to short-term commercial and political interests.

Why should we care?

For many of us the concept of biodiversity is a pretty abstract one. You can recognise that a rainforest or the Great Barrier Reef is an amazing ecosystem. But how is biodiversity relevant to urban areas?

Access to natural places is essential for human well-being. Contact with nature has been shown to promote faster recovery from surgery, better pain control, fulfilment of emotional needs, lower self-reported stress, positive moods, increased vitality, reduced depression, prosocial behaviour and healthier family units. Psychological benefits are also higher in areas with greater biodiversity.

You inherently know this to be true. Visualise walking down a crowded city footpath, with traffic banked up among tall city buildings. Now visualise walking down a tree-canopied path with birds singing and the sunlight dappled through leaves. Feel your shoulders drop?

Why are areas of high biodiversity more effective? Because, unlike parks, natural ecosystems have diversity that changes constantly – birdsong and flowers that change with the season, a turtle heading off to nest, or the appearance of tadpoles sprouting legs and becoming frogs. This provides a new experience every time we visit.

If that’s not enough, natural areas like wetlands also provide a suite of “ecosystem services” that benefit the urban environment.

They improve aesthetics and amenity, increase property values, provide recreational opportunities, remove pollutants from air (by trees) and water (by wetlands and streams), reduce noise and wind, protect us from storm events through flood control, provide climate control (tree canopies reduce temperatures), and offer habitat corridors so you can enjoy birds and wildlife in your backyard.

For our cities to grow sustainably we must have increased density of housing, but we must also ensure quality of life by including quality public open space. Natural ecosystems need to be sympathetically integrated into urban development, to benefit people and wildlife.

Jane Chambers is a member of the Beeliar Group of Professors for Environmental Responsibility.

Philip Jennings is affiliated with the Wetlands Conservation Society and the Cockburn Wetlands Education Centre and the Beeliar Group of Professors for Environmental Responsibility.

It is wet season in Bali, Indonesia, a popular tourist destination for Australian, Russian, German, Chinese and Japanese visitors.

As the rain pounds down on banana leaves and rice fields, the rivers fill up and irrigation systems overflow. With it, the water masses bring trash in bulk: anything from food wrappers and plastic bags to bottles and other domestic waste.

To tackle the issue of marine pollution, several organisations got together in Nusa Dua – a popular tourist destination – and other locations across Bali to stage the largest beach clean-up the island has seen.

Around 12,000 volunteers collected 40 tons of garbage at 55 locations, according to the One Island, One Voice campaign page.

While the beach clean-up was a hugely successful awareness campaign and a great promotion which highlights the efforts done around the island, it is only a drop in the ocean of global marine pollution.

Plastic pollution in Indonesia

In recent years, Bali has seen growing environmental problems such as pollution and freshwater scarcity. Popular tourist destination Kuta beach is regularly covered in waste. Most of this is plastic that washes ashore during the rainy season.

The island’s garbage dumps are reportedly overflowing,. This makes solid waste management a pressing issue. Substantial groundwater resources are predicted to run dry by 2020, threatening freshwater resources.

On top of that, Indonesia is the world’s second-biggest marine polluter after China, discarding 3.22 million metric tons of waste annually. This accounts for 10% of the world’s marine pollution.

The effects marine pollution has on ecosystems and humans are beginning to be well documented. Marine scientists have found harmful consequences of marine pollution to sea life, ecosystems and humans.

Plastic can kill ocean mammals, turtles and other species that consume it. It can also poison food and water resources, as harmful chemicals leach out of the plastic.

It poses threats to human health as well. Plastics leach cancerous toxins. After being consumed by marine species, they enter the food chain, eventually ending up in fish we eat.

Marine plastic pollution is a global problem and Indonesia’s beaches present pressing examples to study the socio-economic effects this has on coastal communities.

Most vulnerable to marine pollution left out of global discussions

Last month, The Economist held the fourth Oceans Summit in Bali.

The summit was attended by state leaders such as Indonesian Vice President Jusuf Kalla, representatives of major global economic organisations such as Citigroup managing director Michael Eckhart, and celebrity and entrepreneur Adrian Grenier.

Speakers and panels discussed a number of topics, including the “blue economy” and how companies and governments can participate in this marine-based sustainable industry.

During the summit, the Indonesian government announced it will pledge US$1 billion to curb ocean waste by 70% by 2025. It’s an ambitious objective, which shows dedication and commitment to a plastic-free future.

But not all voices are heard in this global debate. Many Bali-based environmental organisations engaged in education programs were not represented at the summit. Those economically most vulnerable to pollution – such as beach vendors, fishermen and others employed in the marine tourism trade – appear to be left out of the conversation.

Marine pollution and tourism

The Indonesian government plans to boost tourism and increase national visitors from 9.7 million in 2015 to 20 million by 2020. Such increases in visitor numbers and population will raise consumption and waste production, further pressuring the island’s infrastructure and ecosystems.

With tourism as the island’s largest economic sector, many Balinese people depend on foreign visitors to earn an income. Some tourism operators are concerned that if the plastic problem increases it will damage this industry. They fear tourists will stop coming to Bali if it is too polluted.

Marine communities may also suffer negative socio-economic consequences, as fishermen can lose their livelihood and tourism operators lose their customers.

While some tourism operators understand that clean beaches are key in attracting international tourists, the expected growth is likely to further stress Bali’s environment.

What is being done?

Efforts by activists, community groups and NGOs to clean beaches play a key role in protecting Bali’s environment. But they are only a temporary fix and don’t tackle the causes of this global problem.

Such groups are leading the fight against over-development and pollution through protests, clean-up events and educational programs.

Campaigners from Bali-based environmental youth group “Bye Bye Plastic Bags” advocate for an island-wide ban on plastic bags. They also spoke at the Ocean Summit.

And while they convinced Bali’s governor to commit to make the island plastic-bag-free by 2018, continued development of legislation, regulation and industry guidelines is needed to save Indonesia’s waterways from drowning in waste.

Thomas Wright does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.

Every year tens of millions of Christmas Island red crabs migrate from the island’s dense forest to the cliffs to spawn. It’s a phenomenon that literally stops traffic and draws tourists from around the world to the tiny Australian territory.

But while there are still tens of millions of red crabs on the island, in recent years their numbers have dipped by around a third as they compete for space with (and struggle to fend off) a recently introduced pest: the yellow crazy ant.

The ants are having a significant impact on the island’s biodiversity, which relies on the red crab to maintain the forest understorey and keep the forest floor clean.

So what can be done to save Christmas Island’s biodiversity from yellow crazy ant supercolonies?

For the past few years a team of scientists have been hatching a plan to introduce a parasitical wasp to the island to cut the ant’s food supply. And in December they got the ball rolling on the delicate process of tipping the scales back in the crabs’ favour.

La Trobe University’s Matt Smith speaks with Peter Green, Head of the Department of Ecology, Environment and Evolution at La Trobe, about the impact of the yellow crazy ant and how his team’s plan to save the Christmas Island red crab is working in the first few months of its implementation.

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Peter Green receives funding from the Department of Environment and Energy.

Australia’s population growth and economic activity continue to pose major environmental challenges, according to a comprehensive five-yearly stocktake of the country’s environmental health.

The federal government’s State of the Environment 2016 report (prepared by a group of independent experts, which I chaired), released today, predicts that population growth and economic development will be the main drivers of environmental problems such as land-use change, habitat destruction, invasive species, and climate change.

These main pressures are broadly the same as those listed in the first ever State of the Environment report in 1996.

Yet since the last report in 2011, there have been some improvements in the state and trend of parts of the Australian environment. Our heritage (built, natural, and cultural) and marine environments are generally in good condition, as is the Australian Antarctic Territory. However, the Great Barrier Reef was affected significantly by Cyclone Yasi in 2011 and record high sea surface temperatures in 2015-16, resulting in extensive coral bleaching and die-off, particularly across the northern regions.

Pressures and changes

The new report shows that some individual pressures on the environment have eased since the 2011 report, such as those associated with air quality, poor agricultural practices and commercial offshore fishing, as well as oil and gas exploration and production in Australia’s marine environment.

During the same time, however, other pressures have increased, including those associated with coal mining and the coal-seam gas industry, habitat fragmentation and degradation, invasive species, litter in our coastal and marine environments, and greater traffic volumes in our capital cities.

Climate change is an increasingly important and pervasive pressure on all aspects of the Australian environment. It is altering the structure and function of natural ecosystems, and affecting heritage, economic activity and human well-being.

We continue to lose agricultural lands through urban encroachment. Over the past five years land-clearing rates stabilised in all states and territories except Queensland, where the rate of clearing increased.

Coastal waterways are threatened by pollutants, including microplastics and nanoparticles, which are largely unregulated and their effects poorly understood.

Since 2011, the coast has experienced several extreme weather events, including cyclones, heatwaves and floods. Climate-related pressures of sea level rise, more frequent severe storms, and subsequent erosion and recession of the shoreline are expected to become increasingly significant for coastal regions in the future.

Population growth in our major cities, along with Australia’s reliance on private cars, is leading to greater traffic volumes, which increase traffic congestion and delays as well as pollution.

Australia’s biodiversity is continuing to decline, with some exceptions, and new approaches are needed to prevent accelerating decline in many species. Since 2011, the list of nationally threatened species and ecological communities has lengthened, with the addition of 30 new ecological communities, and 44 animal and 5 plant species. Two species have been reported as probably extinct: the Bramble Cay melomys and the Christmas Island forest skink.

What’s more, because climate change will increase the existing threats, the capacity of the environment to adapt to climate change will be improved if other existing threats are addressed or ameliorated.

Grounds for optimism

For some parts of the Australian environment, at least, effective policy and management have contributed to improved outcomes for the environment and people.

Since 2011, Australia’s conservation estate has increased in size. The National Reserve System has grown significantly, largely through the addition of new Indigenous Protected Areas.

Early indications are that environmental watering in the Murray–Darling Basin, driven by the 2012 Murray–Darling Basin Plan, along with the effects of natural floods, have contributed to ecological benefits.

The formation of the National Offshore Petroleum Safety and Environmental Management Authority in 2012 has resulted in greater focus on industry compliance and increased levels of preparedness for unplanned events.

Technology is also changing the way in which environmental managers and policy-makers can access and use information to support decision-making and environmental management.

The new digital platform for the State of the Environment has delivered improved transparency and access to environmental data, making it more accessible to decision makers (including the private sector) and the public, but there remain data gaps to be filled.

There have been significant improvements in knowledge about the environment. In recent years, citizen science has expanded, resulting in improved observations of the environment that, in turn, provides knowledge to support more effective management.

However, we need to accelerate the process of improving environmental information, data and analysis between government, the private sector and civil society. The move towards a national system of environmental economic accounts is a promising development.

Challenges ahead

It is clear that some parts of Australia’s environment are not yet being managed sustainably, including invasive species and litter in our coastal and marine environments. There are several key challenges to the effective management of the Australian environment, including:

• Lack of a national policy establishing a clear vision for the long-term protection and sustainable management of our environment

• Poor collaboration and coordination of policies, decisions and management arrangements across sectors and between both public and private sector managers

• Insufficient resources for environmental management and restoration, and a lack of understanding of cumulative impacts.

State of the Environment 2016 is fundamentally different from its predecessors – with innovations that make it interactive and easier to track change over time.

Its consistent format provides environment policy makers and hands-on environmental managers with better visibility of changes, vital to understanding the condition of our environment and making informed decisions about its future.

It is grounded in the best available information and analysis, and builds on 20 years of experience in national reporting on the environment.

Meeting these challenges will require integrated policies and actions that address both the drivers of environmental change and their associated pressures.

Meeting this challenge will require scientists, governments, communities and businesses to all work together, and there are promising moves in this direction. For example, the Reef Life Survey brings together scientists, managers and citizen scientists to monitor shallow-reef biodiversity in nearly 90 locations around Australia. The appointment of a Threatened Species Commissioner in July 2014 is also helping to bring a national, collaborative focus to conservation efforts to address the growing number of native species in Australia facing extinction. Such efforts need to be encouraged and expanded.

William Jackson receives funding from the Australian Government Department of the Environment and Energy as Chief Author of Australia State of the Environment 2016.

Australia's electricity grid is no longer fit for purpose. Tatters ❀/Flickr, CC BY-SA

The public debate over the problems of electricity supply displays a curious disconnect. On the one hand, there is virtually universal agreement that the system is in crisis. After 25 years, the promised outcomes of reform – cheaper and more reliable electricity, competitive markets and rational investment decisions – are further away than ever.

On the other hand, proposals to change the situation range from marginal tweaks to politically motivated mischief-making. The preliminary report of the Independent Review into the Future Security of the National Electricity Market, released last year, canvasses such options as the introduction of capacity markets for reserve power, which have done little to resolve problems overseas.

Meanwhile, the Turnbull government has used recent failures to score points against renewable energy (hated, for obscure historical-cultural reasons, by its right-wing base) and to promote the absurd idea of new coal-fired power stations.

A sorry state

This debate might make sense if the system had worked well in the past. In reality, however, the National Electricity Market (NEM) never produced lower prices or more reliable power for households.

In the early years of the NEM, reductions in maintenance spending concealed this failure. When new investment became necessary in the early 2000s, the result was a dramatic upsurge in prices. This was primarily because the NEM regulatory system allowed rates of return on capital far higher than those needed to finance the system under public ownership.

Until the 1990s state governments owned and controlled Australia’s electricity grids from power stations to poles and wires. The expansion of interconnections between state networks created the possibility of a truly national network. The Commonwealth and the states could have jointly owned such a network, following the highly successful model of Snowy Hydro.

The creation of the NEM broke this system into pieces. Ownership of generation was separated from transmission, distribution and retail, while maintaining effectively separate state systems. The only national component was at the regulatory level, where two separate national regulators (the Australian Energy Market Operator and the Australian Energy Regulator) overlap with the continuing regulatory operations of state governments.

Most state governments have sold their electricity enterprises wholly or partly. Victoria and South Australia fully privatised their systems by the early 2000s. NSW partially privatised its network business after 2015. Queensland privatised the retail sector but maintained public ownership of the network and some electricity generation.

Contrary to the hopes of the market designers, breaking up these integrated systems has delivered no benefits, while incurring huge costs. Power prices have continued to rise.

These costs have been on display, in dramatic form, in recent system failures in South Australia, Victoria and Tasmania. Everyone has blamed everyone else, and no real change has emerged.

The tragedy is that all this could have been avoided if we had seized the opportunity in the 1990s to build a unified national grid, with a single authority running transmission networks and the interconnectors between them. This would still allow competition in generation, but would abandon the idea of market incentives in the provision of network services.

Electricity networks are considered to be natural monopolies. Unlike other industries, where it makes sense for lots of businesses to compete and drive costs lower, the cost and importance of supplying electricity means it make sense for one business to control the market.

Given this status, this authority should not be a privatised firm or even a corporatised government enterprise. Instead, it should be a statutory authority with a primary mission of delivering energy security at low cost.

This failure was not confined to electricity. Our telecommunications network was also privatised in the 1990s, with the promise that competition would deliver better services. In reality, investment and innovation stagnated. It got to the point where the government was forced to re-enter the market with the National Broadband Network (NBN).

As the NBN example suggests, unscrambling the egg of failed reform will be a complex and messy business. It will have to be done gradually, perhaps beginning with South Australia and Tasmania, the states worst affected by recent disasters. But there is no satisfactory alternative.

Public appetite, lack of political will

An obvious question is whether renationalising the electricity network is politically feasible. While the political class on both sides views privatised infrastructure as an unchallengeable necessity, the general public has a very different view. With only a handful of exceptions, voters have rejected privatisation whenever they have had a chance to do so.

The question of reversing past privatisations is more difficult, and there is less evidence. However, none of the privatisations of the reform era, even those that took place decades ago, commands majority support in Australia.

The question has been addressed by pollsters in Britain, which provided the model for Australia’s energy reforms. The results show overwhelming public support for renationalisation, even though the electricity industry has been in private ownership for decades. Even a majority of Conservative voters support public ownership.

The issue will have its next electoral test in Western Australia, where the Barnett government is proposing to sell its majority interest in its electricity distribution enterprise Western Power. While nothing is ever certain in politics, current polls suggest the government is headed for defeat.

John Quiggin has worked on the issues of privatisation and electricity reform for many years, and has acted as a consultant to unions, state governments and community groups. He received no funding for the work on which this article was based.