Greenpeace position on the proposed privatisation of the NSW electricity sector

20 February 2008

Greenpeace has a number of concerns with proposals to privatise the retail sections of the NSW electricity sector, and to lease out the generation assets. These are detailed below. In general, Greenpeace believes that elected governments must be actively engaged in the electricity sector in the coming decades to ensure that the production and consumption of electricity is consistent with the need to avoid dangerous climate change. Australia’s greenhouse gas emissions must be reduced to 40% below 1990 levels by 2020, and to zero as quickly as possible beyond that date. This will involve massive reductions in the amount of electricity consumed through energy efficiency measures, and the replacement of coal-fired power stations with zero-emission renewable energy. To ensure both of these outcomes government action is needed, such as creating markets for new technologies and regulation. How electricity is produced, and how much is consumed, cannot be a decision that is left entirely to the market. Specifically, Greenpeace has the following concerns about the proposals being advanced by the NSW Government: 1. long term leasing of generation assets. To avoid dangerous climate change, NSW’s coal-fired power stations must be phased out in the next 10-20 years. Long term leases beyond this time-frame to private companies will make this impossible, as the leasee will need to operate the plant over the full lease period to make a profit. The state should retain ownership of NSW’s coal-fired generation assets and develop a plan for their phase-out, beginning with the retirement of the Munmorah power plant by 2012. 2. impact on emerging national greenhouse policies. In the next two years, a range of important climate and energy policies and decisions will be introduced or concluded. These include the introduction of an expanded Mandatory Renewable Energy Target (MRET), legislation to establish a national Emissions Trading Scheme (ETS), and the conclusion of international negotiations on greenhouse gas reduction targets for industrialised countries, including Australia, in the period beyond 2012. A decision on privatising any sector of the NSW electricity industry should at the very least be deferred until this process is completed. We fear that a new private sector entrant at this point would lobby to weaken emerging climate legislation and/or demand special deals or exemptions relating to carbon liability as a condition of purchasing state-owned assets. Neither is acceptable. 3. we are concerned that the debate over privatisation is frequently a proxy debate over how to create the best conditions for a new baseload power station, which may be coal. This is a feature of the arguments advanced by both pro- and anti-privatisation advocates. Whatever decisions are made by the NSW Government in the course of the next years relating to ownership of the state’s electricity assets, they must be guided by the need to avoid dangerous climate change. Far from creating the optimal conditions for new coal plants, the next two decades must see government policies which lead to a complete phase-out of coal in NSW, and massive investment in energy efficiency and renewable energy.