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Under a single minister, will energy and the environment be friends or foes?

Double time: Josh Frydenberg has added environment to his energy portfolio. AAP Image/Mick Tsikas

Under a single minister, will energy and the environment be friends or foes?

One of the most notable moves in yesterday’s cabinet reshuffle was Prime Minister Malcolm Turnbull’s decision to merge the environment and energy portfolios, and hand them both to current energy minister Josh Frydenberg.

The immediate reaction was mixed. The Australian Petroleum and Exploration Association described it as “the holy grail”, whereas others branded the move a nightmare scenario.

Often when two agencies are combined, the culture of one dominates. In this case, it will hinge on the agenda chosen by Frydenberg, Turnbull, and the government as a whole.

If the resource-oriented, centralised, growth-focused energy industry culture dominates, we could see emerging industries blocked, the climate response crippled, and environmental destruction.

On the other hand, if the various interest groups are forced to engage with the climate issue, and the abuse of market power, fossil fuel subsidies and other longstanding conflicts are worked through, it could be the circuit-breaker that’s so sorely needed.

Tricky issues

One thing that’s clear is that Frydenberg has been given a remarkably complicated brief. Energy and environment are both great examples of “wicked problems” – issues so complex that we struggle to define the problems, let alone agree on how to deal with them.

For instance, one crucial aspect of Frydenberg’s existing energy portfolio relates to energy exports, which traditionally have represented a significant proportion of Australia’s overall exports. But a recent Productivity Commission report points out that services (which are typically low-energy) now make up more than 40% of exports from a “value-added” perspective.

Factor in environmental considerations and the prospect becomes more complex still (although a good energy minister will already be across these trends). Australia’s profits from fossil fuel exports create deficits for consumer countries as well as contributing to their carbon emissions. The global shift away from fossil fuels is a necessary and understandable response, which calls into question the long-term future of Australia’s energy exports.

But energy policy has other dimensions that are often more important to voters and the broader economy. Fair energy prices and reliable power supply are crucial for the community and business. The sector creates many environmental problems but can also help to improve environmental quality. It has traditionally underpinned economic development but employs few people and is capital-intensive – and our economy is decoupling its progress from dependence on energy growth.

The energy sector is also in deep crisis, with volatile and increasing electricity and gas prices, conflict over mining, and a war between proponents of emerging clean energy solutions and powerful energy companies.

Need for vision

It all sounds daunting, but this is also a perfect time for someone with a broader perspective and wider experience to engage the many stakeholders, resolve tensions, and guide Australia towards a sustainable, 21st-century energy sector.

What can we surmise about the various figures who will influence this process? Turnbull is famously keen on innovation, and is comfortable with disruptive energy sources, being one of the 1.5 million householders with rooftop solar. And he was very excited after his ride in a Tesla electric car.

His chief of staff Drew Clarke has a strong background in industry development, energy efficiency and (the new buzz-phrase) energy productivity. Martin Parkinson, secretary of the Department of Prime Minister and Cabinet, is a former head of the environment department.

Frydenberg himself is one of the few recent Australian energy ministers not enmeshed in the traditional energy industry – a marked contrast to his predecessors Ian Macfarlane, Greg Combet and Martin Ferguson. His career has encompassed a broad range of interests, including finance, international affairs, back-room politics, sport, and even helping the print handicapped. Soon after his appointment as energy minister, he attended several international energy meetings, including an APEC energy ministers’ conference at which I spoke on the future role of clean energy. He seemed pretty interested.

After returning, he commented at a meeting of COAG’s Energy Council that energy efficiency seemed to be the big international agenda item. He has also presided over development of Australia’s National Energy Productivity Plan, and he has been an advocate for innovation.

So he seems to be ambitious, forward-looking and broad in perspective. However, as energy minister he has been reported as supporting a range of controversial energy development options, including new coal mines.

It remains to be seen whether this stance was part of Turnbull’s “calm the conservatives” strategy, or perhaps informed by a lack of exposure to up-to-date economic and scientific analysis. What does Josh Frydenberg really think? And if independent policy research contradicts his views, will he be prepared to change his mind?

Another important issue is who will be appointed to the department’s senior positions. This could have a crucial bearing on the outcome. Choosing the right people could guide a positive transformation that supports progress towards a truly sustainable energy and environmental future.