Nimbyism – not in my backyard – is not a new phenomenon and is always politically sensitive, of course. But this is more pronounced in an era where the “social license to operate” is considered the basis for any business case.
Local community or environmental opposition – often sharpened by legal challenges or legislation – can also keep projects going indefinitely. And while the main target is coal or gas development, the imminent arrival of large new transmission lines or mass scale wind turbines across the landscape has become another source of community concern.
This is why the NSW government, for example, announced last month that it would pay landowners $200,000 per kilometer in installments over two decades to have transmission wires on their properties.
Zac Kerr, energy and infrastructure partner at Gilbert + Tobin, says the NSW move is a good start and there are likely to be similar initiatives in other jurisdictions given the challenge of maintaining a social licence, especially in regional communities.
“You have private grid companies that have to try and get local communities on board, which is very challenging when you have to report to your shareholders,” he told The Australian Financial Review Infrastructure Summit.
“I think what we’re seeing across the board is probably a trend of governments wanting to make announcements about what sexy commitments are – but not necessarily bringing grassroots advocacy to get those community on the line.”
But ultimately, he says, it’s impossible to build the necessary energy transformation without that infrastructure.
Nor is it an issue for regional Australia.
Gabriel Metcalf, outgoing chief executive of the Committee for Sydney, argued that when it comes to building public transport or energy transmission lines, it is necessary to pay generously to the people and then proceed with the project as quickly as possible.
US-born Metcalf admits he was hurt by the frustrating experience of years that have turned into decades of extensive community consultation about California’s high-speed rail – which has yet to be built and likely never will.
“There’s an extreme that I see where you completely base the ability to build anything to stop,” he said at the summit. “The damage you cause to future generations every little bit you delay to build things, is very important. And in weighing the very difficult trade-offs, maybe I think, the better should be win.
However, there is little appreciation of the extent and complexity of trade-offs in particular energy transitions and the urgency of making them.
Bowen, from his attendance at COP 27 in Egypt, happily told parliament again on Tuesday that renewable energy remains the cheapest form of energy as well as the key to reducing emissions.
But Frank Calabria, CEO of Origin Energy, warned of the need to “continue an honest dialogue with the community that goes beyond virtue signaling about achieving emissions reductions”.
“The community will not congratulate us for that if we deliver poor reliability results or unsustainable road price increases,” he said at a CEDA conference.
“I would argue that we are still not moving with enough urgency to build the replacement infrastructure needed over the next seven years to manage the coal shutdowns and meet the nation’s goal of 82 percent renewables by the year 2030. With each passing day, not only will the urgency and complexity of the challenge increase, so will the cost.”
Comparing the magnitude of the investment and construction to the wartime reconstruction effort, he pointed out that it all had to be paid for. And, as Calabria fully appreciates, some of that cost is already being felt in rising electricity bills.
That’s despite the amount of global capital looking to invest in the energy transition this decade – seen in Brookfield and EIG’s recent non-binding bid to acquire Origin with Brookfield proposing to invest $20 billion up to 2030.
Labor’s rewiring of the country’s funding provided cheaper loans to private investors – but they still wanted a return.
Calabria said there are limits to the amount of price increases the community can absorb in the next few years on the premise that decarbonization will result in cheaper and cleaner energy over time.
“To avoid losing community support, we need greater coordination and collaboration between retailers, transmission and distribution companies, regulators and advocacy groups, and state and federal governments.
“We need to have an honest conversation with the community about the ambition and targets we’re aiming to achieve, and the associated costs of that scale and pace of change.”
After you. No, after you. Please.
