July 27, 2016

Why the Environment and Energy Merger Makes Sense for Australia

When it was announced that the Energy and Environment portfolios would be united some expressed concern the move represented a downgrade of the Environment portfolio.

Under the new arrangements, Josh Frydenberg will take up the job of Minister for the Environment and Energy and a new Department of the Environment and Energy will be created by adding Energy matters to the existing Department of the Environment.

The new minister’s previous argument that there’s a “strong moral case” for increasing Australia’s coal exports has led some to believe that under his leadership this may be the case. Greenpeace called Frydenberg’s appointment “a clear show of contempt for the Australian public”. Time will tell what priorities he brings to the job.

Departmental culture will matter, argues RMIT senior fellow Alan Pears.

“If the resource-oriented, centralised, growth-focused energy industry culture dominates, we could see emerging industries blocked, the climate response crippled, and environmental destruction,” he writes.

Ministerial priorities aside, merging the Energy and Environment portfolios makes a lot of sense, think some renewable energy experts.

“The need to get energy and climate policies that actually work together is critically important and justifies the change,” thinks Grattan Institute Energy Program director Tony Wood.

He blames South Australia’s rising energy prices and growing risk of supply disruptions in part on poorly thought out renewable energy policy.

“We have seen energy market outcomes that impact our capacity to achieve climate objectives and climate policies that have led to negative impacts in the energy sector,” he told The Mandarin.

“The latest mess in South Australia is an excellent example of the latter. So, the two of areas are almost symbiotic.”

Of course there’s the risk that the government will pursue bad policy, but putting the two portfolios together should make that less likely, he argues.

“It would clearly be bad if energy policy screwed up achieving our climate objectives or if we pursued climate policies that led to an unreliable electricity supply. But these are actually arguments for bringing them together.”

Wood’s colleague Grattan Institute energy fellow David Blowers, who has worked on energy policy for the Victorian government, agrees that the changes make sense.

He told The Mandarin that “in the recent past climate change policy and energy policy have run along separate lines, with no real consideration of each other. We’ve seen climate change policy not having an idea of how it’s going to impact on the electricity market, which has led to perverse consequences. We’ve also had energy policy existing in a world where climate change doesn’t matter, but it does.”

One example was the “bizarre” prospect of the 2014 Energy White Paper, which barely mentioned climate change or the impact it will have on energy policy.

Climate Institute CEO John Connor also welcomed the merger of the portfolios, citing a lack of direction.

“We are at a critical time for our country and economy — while the shift to clean energy is already happening globally, the hodge podge of climate and energy policies in Australia is deterring investments,” said Connor in a statement.

“Our politicians must work together to achieve solid, constructive progress that integrates energy and climate policy and smooths this inevitable transition to clean energy.”

Not an unprecedented move

The debate is reminiscent of a similar one that took place in Victoria a few years ago. In April 2013 Premier Denis Napthine announced that the Department of Primary Industries and the Department of Sustainability and Environment would be combined. There were similar concerns that environmental policy would take a back seat to farmers’ interests, especially under a Coalition government.

Adam Fennessy was the secretary of the resulting Department of Environment and Primary Industries, which ultimately only lasted around 18 months.

Fennessy told The Mandarin earlier this year that “not surprisingly there are pros and cons” to putting the two together. But he thinks it can work well.

These days the two portfolios are split between an economy and jobs-focused department and an environment-focused one — the Department of Economic Development, Jobs, Transport and Resources and the Department of Environment, Land, Water and Planning — which allows for different emphases in advice to government.

But it can lead to positions drifting too far apart to be useful if you’re not careful.

“If you have contested areas in the one department you can try and sort out a balance within that department,” he says. “If they’re in different departments you can get a really good concentration on the economic aspects and in our case the liveability aspects. The risk is you move too far apart.”

He and DEDJTR secretary Richard Bolt tackle this potential problem by working closely together under a signed agreement.

Ultimately, however, although the structure of the departments does have some impact, the minister is the one who makes the decisions.

“Richard and I agree our job is not to try to crunch complex issues into one piece of advice for government. It is, however, to get senior officials to work together to get a good set of clear options so they can make the trade off decisions, because they’re elected, and a lot of the trade offs around the state are things that parliament should consider,” Fenessy explains.

“Is this part of the state best used for agriculture? Or expanding the population? Where do you put your transport corridors? Where do you preserve the highest value parts of the environment?

“We can go a long way to working those through, and then for the really difficult trade-offs it’s got to go through a democratic process.”

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