The energy wars are back: Labor has wedged the NSW Liberals on renewables

The NSW Coalition’s decision to walk away from bipartisan support for the state’s renewable energy zones has been a long time coming.

And long gone are the days of Liberal energy minister Matt Kean and Nationals leader John Barilaro breaking bread over an energy road map which promised an economic windfall for Nationals electorates in the regions while winning the NSW Liberals plaudits for its commitment to green policies. Now an orange wave is coming, and the Coalition has jumped overboard.

By deciding to scale back the state’s largest renewable energy zone in the New England area by not proceeding with the 500kV transmission line corridor, the Coalition has ended a brief and glorious window of energy policy bipartisanship in NSW.

But it’s not surprising. As anger has grown over the rollout of renewables in the regions, the NSW Nationals have become increasingly desperate to step out of the firing line. Maintaining the status quo simply wasn’t an option for them.

To give him credit, opposition energy minister James Griffin has managed to finesse a policy that will allow Liberals in Sydney – such as himself – to argue the party is still as committed as ever to renewables by vowing to develop renewable energy zones in Sydney and parts of outback NSW that won’t present a headache for the Nationals.

Developing an outback renewable energy zone is not an idea the Coalition pulled out from nowhere. Some of Australia’s largest renewables developers, including mining billionaire Andrew Forrest’s private firm Squadron Energy and Spanish giants Iberdrola and Acciona, have previously pushed for a new Inland Renewable Energy Region in response to the fierce community pushback plaguing the rollout of REZs in some rural and regional communities.

A Sydney REZ is also not novel, though would likely come with significant planning challenges. Last year, the Committee for Sydney released a paper with engineering consultancy firm ARUP arguing that a Sydney REZ could deliver 75 per cent of the city’s energy needs through rooftop solar and storage. It would rely on the rollout of solar on industrial estates, and use excess capacity in nearby residential areas.

But scrapping the next stage of the New England REZ would create significant uncertainty for firms investing in the area.

There would also, inevitably, be a significant delay in rolling out the additional generation, meaning we would be relying on clapped-out coal-fired power for longer.

But this announcement is really about politics, and ahead of her budget reply speech on Thursday, it gives opposition leader Kellie Sloane something to fight back with. Labor has been hammering the Coalition for months over its support, or otherwise, for renewable energy zones.

It began after Nationals MPs walked away from their commitment to net zero, but Labor has been turning the screws ever tighter since One Nation’s emergence as an existential threat for the junior Coalition partner.

Labor has sought to capitalise on this, particularly by wedging Liberals in traditionally moderate seats who could face pressure from teal candidates.

That won’t stop now. During question time on Wednesday, Premier Chris Minns taunted Griffin – whose seat of Manly overlaps the federal electorate of Warringah, held by independent Zali Steggall – over whether he’d “heard of the teals”.

But it does, potentially, help Nationals MPs including Dave Layzell in Upper Hunter and Brendan Moylan in Northern Tablelands, both of whom are looking at some frightening polling numbers.

Despite increased optimism in the Liberal party room since she took over, Sloane has largely been treading water. Polls have repeatedly shown the Liberals could be in serious trouble at the state election next March, and the opposition leader is not getting a lot of help from a shadow frontbench which needs a few more lifters.

Thursday’s budget reply could help that. Along with the proposed cut to payroll tax announced on Thursday, the Liberals are starting to give themselves something to sell. The question will be whether anyone is still listening to what they’re offering.

The irony of Labor’s use of renewable energy policy to hit the Coalition is that this government does not exactly have a perfect record on the subject. Though it has recently placed renewables front and centre of its economic pitch – Treasurer Daniel Mookhey used a pre-budget speech to highlight the rollout as the only thing keeping the NSW economy out of recession – that focus has coincidentally dovetailed with One Nation’s surge in the polls and the attendant pressure on the Nationals.

The government is not on target to meet the legislated 2030 or 2035 emissions reductions targets, according to its own Net Zero Emissions Dashboard. It has repeatedly been criticised by the Net Zero Commission – an independent agency set up by Labor to monitor its progress towards the targets – over its climate policies.

In December, the commission warned that continued coal mine expansions are “not consistent” with meeting climate targets.

But in its long-awaited statement on the coal industry’s future released in May, Labor said while it would not consider proposals for “standalone greenfield coalmines” on undeveloped sites, it would continue to allow expansions and time extensions at existing mines.

That’s not to suggest Labor hasn’t been committed to the REZs. Minns has repeatedly maintained the government’s commitment to the rollout, despite growing angst in the regions. However, probably wisely, the focus has been almost entirely on the economics.

The government has been considerably quieter on the environmental benefits of the transition to renewables.

That could change in the lead-up to the election but for now, the energy wars are back.

Michael McGowan is state political editor.

Get a weekly wrap of views that will challenge, champion and inform your own. Sign up for our Opinion newsletter.