The price of corruption: Taylor’s ‘CoalKeeper’ tax to cost households up to $400 a year

Australia’s corrupted political process could deliver a windfall of up to $6.9 billion to the government’s fossil fuel donors, paid for by ordinary households and businesses as part of Angus Taylor’s proposed tax to prop up fossil fuel generators.

Scandal-plagued Taylor is reported today to be “increasingly confident” that he will be able to impose a “physical retail reliability obligation” (PRRO) on electricity retailers, which would require them to subsidise coal and gas-fired power stations even though the latter are now commercially unviable due to the low cost of renewables. The subsidy from what is now being called “CoalKeeper” would come directly from higher electricity prices imposed on retail customers.

How much would electricity prices rise to look after fossil fuel donors? Last week, an analysis by the Institute for Energy Economics and Financial Analysis suggested the windfall could be between $2.9-6.9 billion. That translates into an increase in ordinary household electricity bills of between $182-430 a year.

As Giles Parkinson pointed out at RenewEconomy, the development of CoalKeeper and delays in investment in transmission means much-needed additional investment in new projects has dried up — the very opposite outcome to the purported goal of the PRRO.

How have coal and gas companies been able to push a massive subsidy onto the political agenda at a time when the rest of the world is dumping fossil fuels and trying to accelerate emissions reductions efforts? By capturing key stages of the political process. Let’s run through it:

Donations

Trevor St Baker’s Delta Electricity is a strong supporter of the PRRO, and he is a long-time Coalition supporter and donor. He purchased the coal-fired Vales Point power station — which will be a major beneficiary of CoalKeeper — for just $1 million from the NSW government under a sale process overseen by Kerry Schott, who is now the head of the Energy Security Board that is driving the CoalKeeper proposal.

Gas producers Santos and Origin, who will both indirectly benefit from propping up gas-fired power generators beyond their commercial lives, are big donors: Santos has handed over $1.8 million to the Coalition in the last 20 years; Origin — which this week changed its position and endorsed the PRRO — has handed nearly $500,000 to the Coalition.

Chinese-owned coal-fired power operator Energy Australia, another supporter, has given around $140,000.

Coal miners, which will also indirectly benefit, have given around a million dollars to the Coalition in donations.

Remember, donations don’t just buy gratitude — they buy access to ministers at fundraising events.

Staffing

Some of the government’s senior figures come from the fossil fuel industry. John Kunkel, who heads Scott Morrison’s office, previously worked for Rio Tinto and was a Minerals Council executive. Another of Morrison’s senior advisers, Brendan Pearson, was Kunkel’s boss at the Minerals Council; both were there at a time when the Minerals Council’s advocacy for the coal industry was so aggressive that BHP, fearing reputational damage, forced Pearson out.

Santos has also regularly employed an array of former Coalition staffers, with at least one shuttling between Santos and staffing roles and back again.

Policy development

Morrison has also outsourced energy policy to fossil fuel industry executives. He appointed Nev Power, an oil and gas firm director, to head the National COVID-19 Coordination Commission, along with Energy Australia’s Catherine Tanna, with advice from Aramco board member Andrew Liveris. The commission’s work formed the basis of Morrison’s “gas-led recovery” plan.

Morrison appointed former Santos head Grant King to review the Emissions Reduction Fund, which King recommended be expanded to fund carbon capture and storage, and then appointed King to the Climate Change Authority with another Santos executive, Susie Smith.

Energy Security Board member Clare Savage, the chair of the Australian Energy Regulator, is a former EnergyAustralia executive and staffer at the Business Council, which has tried to sabotage every major climate action policy of the last decade.

The fossil fuel industry has been able to stymie effective climate action at the federal level through buying policy outcomes, placing its people inside government and shaping the policy process. But it stands on the cusp of an even more impressive achievement: not merely will it continue to prevent any climate action, but it will bill households billions to continue pumping out greenhouse emissions.

Rarely has the pervasive soft corruption of Australian politics produced a bigger windfall.