Australia invokes emergency powers to block coal exports in energy crisis

Australian authorities have given themselves the power to block coal exports if the resource is needed to ease the country’s crippling power crisis in the latest measure taken to avert the risk of blackouts.

Rising coal and gas prices, coupled with outages at ageing coal-fired power stations, have plunged the market into turmoil this week, forcing the Australian Energy Market Operator to take control of the wholesale market to ensure reliable supply of electricity to eastern states.

The government of New South Wales invoked emergency powers on Friday to oblige miners operating in the state to redirect coal heading overseas to local generators. The precautionary move was taken to strengthen energy security on the advice of AEMO.

“We’re just giving ourselves all the levers we need to give the community certainty that we’re doing everything we can to keep the system going,” said Matt Kean, the energy minister and treasurer for New South Wales, the country’s most populous state.

The energy crisis has highlighted the failure of Australia, one of the world’s largest producers of fossil fuels, to prepare for the transition to renewable energy sources by investing in modernising the country’s electricity infrastructure, analysts say.

“We are in an invidious position. It is a global story as there is a gas shortage and prices are skyrocketing but for Australia it is combined with coal-fired power stations going offline,” said Ben Oquist, executive director of the Australia Institute think-tank.

The crisis has highlighted how a failure to prepare for renewable energy becoming a larger part of domestic supply was hitting the country’s consumers in the form of higher bills and potential blackouts, he added.

The government this week asked consumers in New South Wales, which includes Sydney and the coal-rich Hunter Valley, to conserve energy by turning off lights and using white goods in the evening to avert the risk of blackouts.

The crisis has coincided with unseasonably cold weather, with many consumers forced to use freestanding heaters due to the lack of insulation and central heating in many homes.

The energy supply squeeze has heaped pressure on Prime Minister Anthony Albanese, who took office less than a month ago and pledged during his election campaign to deliver cheaper energy bills. He has also recommitted to a sharper reduction of carbon emissions by 2030 than the previous government and to stimulate more investment in renewable energy.

“What we’re paying for here is 10 years of delay and denial. We haven’t had the investment go into the energy sector that is needed because we haven’t had the investment certainty that businesses require,” he told local media. “Our plan will see some A$52bn of private sector investment over coming years into new energy.”

The previous government of Scott Morrison was cautious about plans to accelerate the energy transition by bringing forward the closure of coal-fired power plants due to concerns about rising consumer prices and supply.

Morrison also launched a “gas-fired recovery” plan during the pandemic, which provided grants and subsidies for new exploration projects.

Oquist said the former prime minister should have promoted investment in the electricity grid and storage to promote renewable energy. “We were supposed to have a gas-fired recovery but I think we got a gas-led catastrophe,” he said. “Morrison put political muscle into gas during Covid but it has left Australia in a very vulnerable position.”

Australia is one of the world’s largest gas producers but the fuel is mostly exported. Albanese said calls to build a gas reserve for domestic use needed to be set against increased risk if the industry were to break contracts.