| Abstract: |
Until its relatively sudden closure in March 2017, the Hazelwood Power Station
in Victoria’s Latrobe Valley was the most carbon-intensive electricity
generator in Australia. It became a symbol of Australia’s reliance on coal and
an electoral battleground in the bitter political struggles over climate
policy that have raged since the mid-2000s. The announcement by Hazelwood’s
owners, French multinational power company, Engie, in late 2016 that it would
be closing the plant for commercial reasons, therefore came as somewhat of a
shock. We argue that Australia’s political and economic institutions help to
explain the autonomous decision of Engie to close the plant, the short notice
period, and the lack of pre-closure government transition policy. These
institutions discourage long-term policymaking and encourage a
disproportionate amount of vote-seeking activity directed at marginal
electorates. Straightforward “vote-seeking” is however too simplistic an
explanation of the transition policies announced at the time of the Hazelwood
closure. Of particular relevance is the fact that, over the last few years,
the transition away from coal and towards renewable energy has become a
virtual inevitability in the Australian energy sector. One important outcome
of this trend has been the shift in position of the Australian union movement
towards advocacy for “just transition” policies, bringing it both closer
to—and, in some cases, in alliance with—environmental groups. Absent
institutional reform, the most likely means by which coal closures could move
closer to “best practice” in Australia is through action by unions and
environmental groups to mobilise institutional investors to pressure energy
companies to adopt more worker- and community-friendly, “just transition”
policies. The most plausible institutional reform path, given Australia’s
existing political-economic institutions, would involve the direct regulation
of companies’ transition obligations. Yet, the more interventionist the
regulatory change, the greater the costs imposed on existing generators and
the more politically contentious the reforms are likely to be. In this
difficult policymaking environment, an important variable is likely to be the
agency of civil society actors in making the politics of energy/climate
policymaking more conducive to just transition-oriented regulatory reforms.
Our case study has demonstrated that the positions of key civil society
stakeholders in Australia’s energy debate, including unions, environment
groups and to some extent business groups have been converging toward a
“just”—or at least an orderly—transition as a dominant political narrative for
substantive policies to improve the transition arrangements in the Australian
energy sector. Strengthening and perhaps formalising these alliances will
improve the incentives for political parties to invest in long-term policies
in the energy sector. |