The stunning collapse of engineering group RCR Tomlinson, months after pocketing another $100million from investors, is the first big corporate casualty of Australia's solar energy boom. Australia's solar and wind energy potential is rich. Solar and wind technology costs are falling rapidly. Firmed up by battery or pumped hydro storage, renewables could become the mainstay of Australian electricity in decades to come.

Yet, for years to come, it is still a subsidised industry being force-fed into Australia's east coast electricity grid. Because it is so subsidised, it is prematurely ending the commercial life of Australia's coal-fired baseload power plants. But because solar energy is not 24/7 reliable, it imposes extra backup costs that are born by electricity consumers. And the wide dispersion of solar energy generation is causing all sorts of technical problems for running a traditionally centralised grid.

In South Australia, solar generated power has to be cut off at times to stabilise the grid. Energy Security Board chairman Kerry Schott told The Australian Financial Review's energy summit last month that the uncoordinated explosion of solar, notably including big new rooftop subsidies from the Victorian Labor government, was causing electricity grid "anarchy".

The RCR Tomlinson collapse is a symptom of the new phase of Australia's decade and a half of energy and climate change policy failure. After helping to end the prime ministerial careers of Kevin Rudd, Julia Gillard and Malcolm Turnbull, the two sides of politics are exhausted by the climate wars. Remarkably, the Coalition government has brandished a "big stick" to force energy retailers to cut household energy bills even as wholesale energy prices rise.

As an poll commissioned by The Australian Financial Review showed early this week 47 per cent of voters nominate cutting power bills as their priority, over 39 per cent preferring to reduce carbon emissions. The government now led by Scott Morrison is itching to exploit Labor's over-ambitious emissions reduction target – 45 per cent by 2030 along with a 50 per cent renewables target – to fight an election over power prices.

Sensing the danger, Bill Shorten's Labor now has sought to disconnect its emissions target from power bills by promising $15 billion worth of taxpayer-backed interventions to subsidise household batteries, renewable energy generation and transmission infrastructure to connect renewables to the grid. Energy company investors face being clubbed by the government's big stick or crowded out by Labor's taxpayer-funded interventions.

It is a long way from the "cap and trade" emissions trading scheme that John Howard promised at the 2007 election help the market find the least-costly ways of reducing emissions. The resulting carbon price would have been lower than the implicit carbon price embedded in the Renewable Energy Target that Tony Abbott increased when in office

But, in the meantime, Mr Rudd and Ms Gillard over-reached. And, three months ago, an internal revolt over the proposed National Energy Guarantee destroyed Mr Turnbull's leadership along with hopes for a bipartisan political consensus and hence a stable energy investment framework.

Government interventions have badly distorted the energy market, inflating the boom in industrial-scale and rooftop solar. Instead of removing distortions to allow the market to work better, both sides are imposing distortion upon distortion, price regulation and quasi-renationalisation.

Labor's new plan does include an embedded carbon price through a so-called baseline and credit scheme that would apply to the 300 biggest manufacturers, miners and LNG producers, perhaps with exemptions for emissions-intensive production exposed to foreign competition. Higher-emitting plants, factories and mines would be required to buy carbon permits from relatively lower-emitting ones. That would provide the market signals to reward lower-carbon production over higher-carbon output.

Coalition policy previously has included the option for such a scheme. Yet the rest of Labor's plan is so dominated by more heavy-handed subsidies and a recklessly ambitious emissions reduction target to be considered any better than the Coalition's.