Australia's Energy Folly: How Net Zero Zeal is Turning Resource Riches into Economic Ruin, By James Reed

Introduction: A Nation Blessed with Energy, Cursed by Ideology

Australia should be the envy of the developed world, an island continent sitting atop the world's largest coal reserves, second-largest natural gas exports, and 30% of global uranium deposits. Instead, as Leith van Onselen's blistering October 23, 2025, op-ed declares, we're witnessing a self-inflicted catastrophe: skyrocketing electricity prices that dwarf those in the US and UK, all while chasing the mirage of net zero emissions. NPR's recent lament about US power costs rising twice as fast as inflation pales against Australia's reality, where bills have ballooned despite government rebates. Van Onselen's chart, shared by economist Alex Joiner on X, lays it bare: Australia's energy inflation outpaces peers, turning our competitive edge into a liability. This isn't just policy misstep; it's economic masochism. In pursuing virtue-signalling green targets, Australia has exported its bounty abroad, imported inflation at home, and primed the pump for deindustrialisation. The result? We're arguably the dumbest developed nation on Earth, squandering natural wealth on ideological altars. This discussion defends that stark verdict, dissecting the data and decisions that got us here.

The Price Tag of Green Dreams: Australia's Electricity Surge vs. Global Peers

Van Onselen's piece spotlights a damning comparison: while US electricity prices climb amid data centre booms and gas exports, Australia's ascent is meteoric, even outstripping the UK's renewables gamble. OECD data underscores the gap. As of March 2025, Australian households pay around 27 Australian cents per kWh (roughly 17.6 US cents PPP-adjusted), below the OECD average of 24.2 US cents but still a hefty load when unadjusted market rates show Aussies forking out nearly twice what Americans do, up to 50% more on better metrics. In California, a renewables poster child, prices have spiked faster than the national average, but Australia's trajectory is steeper: wholesale prices dipped just 6% year-on-year in H1 2025 to USD 68/MWh, yet retail bills remain punitive due to intermittency costs and grid upgrades.

Australia's "advantage" in solar and wind deployment, now over 5,000 MW under construction, hasn't translated to affordability. Instead, it's fuelled inflation: Compare the Market's 2025 study shows a drop from AU$0.423/kWh in late 2023 to $0.391 in mid-2024, but that's a blip against a decade-long doubling. Even with rebates, households spend 2.27% of daily wages on power, better than Portugal's 8.84%, but a farce for a resource superpower. The US, with its pragmatic fossil fuel backbone, keeps costs in check; Australia, ideologically blinkered, pays the premium.

Exporting Wealth, Importing Pain: Gas and Coal Policies Gone Awry

Australia's energy paradox is epitomised by its export mania. We're the globe's top coal shipper and No. 2 in LNG, yet the East Coast faces gas shortages by 2027, per Senex Energy's CEO. No domestic reservation policy means exports to Asia, where prices soared twelvefold from 2020-2022, leave locals vulnerable to global whims. The 2022 Ukraine shock amplified this: LNG spot prices hit $38/MMBtu, but Australia's failure to cap exports domestically turned crisis into catastrophe.

Coal tells a similar tale. We're shuttering plants while exporting 400+ million tonnes annually to China and India, who ramp up consumption unabated. Electricity production from coal has plummeted from 80% in 2005 to under 50% in 2025, per IEA data, without viable baseload replacements. Van Onselen's charts on gas/coal production and fossil fuel consumption trends paint the folly: We're fuelling rivals' growth while our grid teeters, inviting blackouts and price spikes. The IPA nails it: Net zero's "ideologically driven" decommissioning has eroded reliability, with business leaders warning of "further power price spikes." Only 19% of Aussies prioritise net zero over affordability, yet policy marches on.

Nuclear Taboo: The Clean Power We Banned Ourselves From

Compounding the absurdity: Australia bans nuclear despite uranium riches that could power the nation emissions-free. France thrives on it (prices stable at ~0.20 USD/kWh), but we're locked out by federal prohibition, forcing reliance on weather-dependent renewables that grid operators call "unreliable." UNSW's critique of the 2021 net zero plan rings true in 2025: It ignores exports while betting on unproven tech like carbon capture, funnelling billions to fossils instead of innovation. With 54% of voters wanting a net zero pause, this self-denial isn't prudence, it's punitive.

Deindustrialisation Accelerant: From Manufacturing Might to Export Pawn

High energy costs aren't abstract, they're eviscerating industry. Van Onselen's manufacturing share chart shows a plunge from 15% of GDP in the 1990s to under 6% today, as firms flee to cheaper climes like China. The Productivity Commission warns: Without coherent incentives, net zero's "patchwork" policies stall investment, risking security and jobs. Grattan Institute's 2025 Orange Book echoes: Sort the gas mess, or watch renewables falter amid coal's exit. We're exporting embodied emissions (and jobs) while importing inflation, fossil fuel consumption graphs confirm rivals gorge as we starve. RBA scenarios predict coal exports halving by 2050 under net zero, with modest LNG dips offset by green hopes, but at what cost to GDP? A 0.1% annual drag from lost exports, per models, compounds to crisis.

Conclusion: Time to Wake Up from the Net Zero Nightmare

Leith van Onselen's provocation isn't hyperbole, it's a wake-up call. Australia's energy policies, mired in a decade of uncertainty and net zero fervour, have transformed abundance into affliction. We've reserved nothing for domestics, banned the cleanest baseload, and watched industries evaporate, all while peers balance transition with pragmatism. Defending the "dumbest" label means owning the failure: A patchwork of state-federal discord breeds blackouts and bills that bite.

The fix? Reserve gas, lift the nuclear ban, coordinate incentives via Capacity Investment Schemes, and prioritise affordability over absolutism. Anything less perpetuates the folly, turning our sun-kissed shores into a cautionary tale. Australia: Land of the fair go? Not if energy policy has its way. Let's reclaim our riches before it's too late.

https://www.macrobusiness.com.au/2025/10/australia-is-the-dumbest-developed-nation-on-earth/