New Energy Politics in Australia

In February, one of Australia’s major energy companies announced that it would close Australia’s largest coal-fired power station in 2025, seven years earlier than expected. The Eraring Power Plant, in the Hunter Valley north of Sydney, currently supplies 20 percent of the electricity for the state of New South Wales. The owning company, Origin Energy, said the rapidly changing energy market has made the power plant unviable. They plan to build a 700-megawatt battery at the site once the power station closes.

Despite a lack of energy framework from the federal government to reduce the use of carbon-intensive coal-fired power stations, the energy market in Australia is shifting regardless. With more renewable energy sources such as wind and solar farms being built, as well as a significant uptake in the use of rooftop solar panels, coal is finding it difficult to compete.

That said, coal still makes up 60 percent of Australia’s power generation. Yet renewables are making dramatic inroads, rising from around 20 percent of the market three years ago, to 35 percent in the final quarter of 2021. The writing is on the wall for coal. Last year, the Yallourn power plant in Victoria also announced it was bringing its closure ahead four years to 2028

While these trends are positive for Australia’s carbon emissions, there are strong political ramifications that are also accompanying this energy revolution. The battle over energy has become one of the driving forces of major political shifts in Australia.

One of the more intriguing shifts is that the parties of the conservative Coalition have abandoned their long-held principle of economic liberalism when it comes to energy generation and firmly positioned themselves as protectors of the coal industry. This is an astonishing position to take for the Liberal Party. The party transformed climate change into an issue of identity, and as a result has become deeply suspicious of market forces in the energy sector.

This is less surprising for the National Party, the Liberal Party’s coalition partner. The National Party’s purpose has always been to defend the interests of rural Australia in an overwhelmingly urban country, and therefore the party has always been less enthusiastic about liberal economic ideas. The National Party sees such ideas as creating a powerful social churn that could rip through many small communities.

Politically, there is a strong argument to be made that the Coalition's defense of the coal industry was the decisive factor in their victory in the 2019 federal election. The Coalition only won a seat majority, but won 23 of Queensland’s 30 seats, decimating the Labor Party through central Queensland where the coal industry remains a vital economic force, and where the Labor Party has also traditionally been strong.

The seat of Hunter in New South Wales, where the Eraring Power Plant is situated, is also indicative of this political shift. The Labor Party has held the seat since 1910, yet at the 2019 election it saw a 14 percent swing against it. The party now only holds the seat by 3 percent, placing it well within the reach of the National Party at the forthcoming election. The closing of the Eraring Power Plant may be the issue that finally wrestles the seat from Labor’s hands.

Yet for every seat the Coalition may gain from rural, traditionally working class, seats that no longer see the Labor Party as defenders of their interests, the Liberal Party has the potential to lose one of its wealthy urban strongholds to independent candidates. There is a well-funded and well-organized group of loosely aligned independent candidates who have made climate change their primary issue, and are focused on winning many of the “wealth-belt” seats through harborside Sydney and eastern Melbourne.

In the last election, former Prime Minister Tony Abbott suffered an embarrassing loss to one such candidate in his seat of Warringah. Voters in wealthy urban areas such as this cannot bring themselves to vote for the Labor Party, and they see the Greens as immature and lacking practicality, but they can no longer stomach the Liberal Party’s inability to act on climate change.

With a federal election required to be held before the end of May, it is highly likely that the politics of energy will be a central part of the campaign. But with market forces looking like they are doing the work that the government has refused to do itself, it may be the party that can best offer a future within new energy producing industries that has the best chance of victory.