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Jacobin - February 26, 2022

The free market itself often undermines the environmentally sound choices it is supposed to offer.

Privatization Was a Climate Disaster

Last week, Canadian asset manager Brookfield and Australian tech billionaire Michael Cannon-Brookes made an $8 billion bid to buy fossil fuel company AGL. If successful, it will mean that Brookfield — which recently acquired Victoria’s electricity grid — will own a substantial chunk of what was once the publicly owned State Electricity Commission (SEC) of Victoria. What’s less well known is that prior to being privatized in 1992, the SEC was already planning for the climate crisis they knew was coming.

In 1989, the SEC published a greenhouse effect discussion paper proposing nine priority reforms including promoting energy efficiency and the use of renewable energy. Other priorities included informing the public about the greenhouse effect and supporting further scientific research. The paper even anticipated events such as the disastrous 2014 Hazelwood open cut fire and the 2019–20 bushfires, noting that “the likelihood of bushfires or open-cut fires would be likely to change with the greenhouse climactic scenario.”

Surprisingly, given Victoria’s very high reliance on gas, it also anticipated the need for policies that would discourage and “conveniently replace” domestic gas-powered cooking. In the mid-1980s, the SEC had just completed building the Loy Yang power stations A and B. Nevertheless, as a public institution, it recognized that new legislation would mean balancing its responsibility to reduce greenhouse emissions with the possibility of reduced energy sales. The SEC’s approach stands in stark contrast to that taken by AGL, which currently owns Loy Yang and recently announced it plans to keep Loy Yang A open as late as 2045.After holding public seminars, the SEC called for comments to be submitted by mail, with feedback to be integrated into a final paper released in 1992. That same year, Liberal leader Jeff Kennett became premier of Victoria and quickly began breaking up and selling off the SEC. In the process, thousands of well-paying technical jobs were lost. Regional areas were particularly hard hit as engineers tasked with maintaining the state’s power grid were sacked.The SEC’s plans to mitigate and prepare for climate crisis were, unsurprisingly, shelved by its new corporate owners. It’s just one example of how privatization helped set Australia’s response to the climate crisis back by decades.

Market-Driven DisasterLast year, the Australia Institute released a report that found that privatized companies like AusNet have been investing less in Australia’s energy grid, even as the climate crisis worsens. Through interviews with frontline electricians, the report also found that Australia’s energy grid is not prepared for increasingly severe fires and storms. This is in part because retail electricity companies have been spending money on marketing and sales instead of electricians and engineers.From 1996 to 2016 the number of sales workers in the electricity industry increased by 400 percent. Meanwhile, as the report outlines, in just five years between 2011 and 2016, the number of electricians and related specialists employed declined by 19 percent, an equivalent of 1,650 jobs. Michael Wright, assistant national secretary of the Electrical Trades Union described the shift, noting that

over the past 15 years, high-vis maintenance and transmission workers have been replaced by telemarketers, spin-doctors and banking spivs. This has done nothing for network reliability, but has left us unprepared for the challenge of extreme weather and the incorporation of renewables to our energy supply.

Working-class and rural communities are suffering the consequences of the market’s failure today. Many regional communities have recently experienced lengthy power outages after fires, storms, and floods. In 2021, for example, a storm left residents of the Latrobe Valley, a region that produces approximately 85 percent of Victoria’s energy without power. As Wendy Farmer, a Latrobe Valley resident who became involved in environmental activism after Hazelwood mine fire told Jacobin...
Read full report at Jacobin