Ken Henry #4

A gas export tax would help solve Australia’s energy crisis, says Dr Ken Henry

The dire state of Australia’s domestic electricity market and our lack of investment in renewables has been a mess of our own doing, says former Treasury Secretary Ken Henry.

Australia has also squandered the opportunity to use its huge reserves of domestic gas as a transition fuel to shift our electricity system from a heavy reliance on coal to renewables, he says.

“It was wasted on politics – part ideological, part, I think, driven by personal ambition – and that put us in a really bad spot,” he told the ABC this week. .

“It’s too late to have the kind of reliance on gas power as a transitional fuel that we imagined in the last century.”

Dr Henry, who served as Australian Treasury Secretary from 2001 to 2011, argued in 2004 that Australia should adopt a national emissions trading system.

In his 2010 fiscal review, he warned that energy markets could become unstable if investors didn’t have enough certainty to make long-term renewable energy investment plans.

Now, looking back, he says no one involved in energy policymaking in the late 1990s and early 2000s could say they didn’t see Australia’s current energy crisis coming.

But a one-off tax on gas exports could help smooth things over, he said.

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Would a tax on gas exports solve Australia’s energy crisis?(Rachel Pupazzoni)

Australian decision makers have ruined everything

Dr Henry spoke to the ABC after one of the most tumultuous weeks in Australia’s energy policy experience.

Australia’s east coast power system last week was thrown into chaos as a shortage of electricity supply translated into spikes in demand as people increased their energy use during a severe cold spell.

Some fossil fuel producers had withdrawn a huge amount of capacity from the national electricity market, which exacerbated the projected power shortage and prompted unprecedented regulatory intervention.

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