Melbourne

Today was an interesting day. I met with two important energy bodies, The Australian Energy Regulator (AER) as well as NEMMCO, the operator of the National Energy Market. Australia silos its regulatory bodies, with the AER responsible solely for regulation. They do not do rulemaking nor do they have a real role in policy making. NEMMCO operates the energy market, allowing competition and market forces to shape what they do, but they also do not have a huge role in policy making. They simply operate under the fairly proscribed market rules. While the meetings were incredibly informative about how the Australian market operates and is regulated, the Australian markets operate quite differently than in the US. Most importantly, the Australian markets force separation of generation from other aspects of the market and support completion at the retail level. The regulators and the market operators simply operate under whatever rules are proscribed. Policy is set somewhere else.
My other meeting however was different. I met with Terry White, who is essentially a climate change activist, who is involved with helping the transition from coal to renewable energy. He believes that the target set by the current cap and trade proposal is woefully low and risks serious community backlash. He also believes that the current scheme is a disincentive to voluntary community action. He believes that voluntary action is critical to the success of any scheme.
Along with Terry, I met with Professor Roger Jones. Jones helped Professor Ross Garnaut in developing the Garnaut Climate Change Review. The Review is the seminal document that explores the effects of climate change on Australia and recommends the response that the Government should undertake to combat climate change. However, Professor Jones believes that while the Garnaut review is vital to Australia, it approaches climate change from the wrong starting point. The Garnaut approach is to first take into account the financial aspect of climate change. Jones believes that it does not do enough to address the environmental aspects of climate change. In other words, do the costs really matter if carbon is as dangerous to the country as all the science seems to indicate? It is a fairly impolitic position to take because he is basically saying that Australia is in crises and that costs are secondary to solving the economic crises. This is really the first criticism that I have heard of the Garnaut review since getting here. The Review has been hailed as a founding document in Australia’s call to action on climate change. I’ll certainly inquire as to this tension in my future meetings.