While PM Scott Morrison and his coal-cuddling colleagues defend their use of accounting tricks, action by others will deliver Australia's Paris emission
reduction targets a whole five years earlier. I chart this surprising development, lamenting that Scotty from Marketing will likely take full
'Australia has the potential to be an economic superpower'
‘The fog of Australian politics on climate change has obscured a fateful reality: Australia has the potential to be an economic superpower of the future post-carbon world.’ Ross Garnaut, professorial research fellow in economics, University of Melbourne.
Over Christmas and New Year, Australia was on fire from coast to coast. Megafires grew from small beginnings, feeding on vast stretches of bush dried out by years of drought. Rainforests were burning, even towns along the coastal fringe were on fire, and firefighters were no match for bushfires turned into infernos. Refugees lined the highways as if escaping from an advancing enemy army.
The rest of the world pointed to Australia saying: this is what climate change looks like, while Prime Minister Scott Morrison told Radio 2GB: ‘The suggestion that there’s any one emissions reduction policy or climate policy that has contributed directly to any of these fire events is just ridiculous.’
Renewable Energy Windfall
A little over a year ago, Prime Minister Morrison told parliament that Australia would meet its Paris Accord emissions reduction target ‘in a canter’. It may surprise you that the PM is right; in fact it looks like the target will be met 5 years earlier. I suspect it won’t surprise anyone if Mr Morrison takes full credit for that achievement, even though the coalition has demonized anything resembling renewable energy at every turn.
Professor Andrew Blakers from the ANU tells us that Australian industry has been building new solar and wind power generation at a rate 4 times faster per capita than the EU, USA, Japan and China. He adds that ‘the electricity sector is on track to deliver Australia’s Paris emissions reduction targets 5 years early, in 2025, as long as industry continues to install 6.5 GW of renewable energy a year.’
Big Coal, Big Prawns and Big Bananas
It’s only a couple of years ago that Mr Morrison waved a lump of coal in parliament and extolled its virtues. As Australia’s new prime minister, he lost no time to dismiss giant battery technology as ‘the Hollywood Solution’, and told the media: ‘… by all means have the world’s biggest battery, have the world’s biggest banana, have the world’s biggest prawn like we have on the roadside around the country, but that is not solving the problem.’
It’s a sad state of affairs when a Prime Minister shoots from the lip on a subject he clearly knows nothing about.Then again, coal has been a drug of addiction to our governments for decades, and has blinded them to much more exciting opportunities. Anyone who threatens to take coal away is instantly attacked, as former premier of South Australia Jay Wetherill discovered.
Wilful Blindness to the Economics of Renewables
Jay Wetherill transitioned South Australia to a state generating 50% of its power from renewable sources, against a constant barrage of ridicule and outright lies from the Turnbull government. ‘South Australia has been a basket case when it comes to energy policy,’ Josh Frydenberg told Sky News and added that Premier Jay Weatherill's big experiment had failed. The Premier paid for his courage with his job. Now SA is a net exporter of energy.
The sledging for the coalition has stopped, but the heated debates in the coalition ranks continue. Last week Mr Morrison promised that he wouldn't be bullied into tougher action on climate change, 'into higher taxes or higher electricity prices.' Matt Edwards, a director of the Coalition for Conservation, accused the Coalition government of wilful blindness to economics of renewables.
The cost of power from renewables has fallen to $50 per megawatt hour, about half that of coal and about a fifth of nuclear, which the conservatives still see as a preferable choice for 'clean' energy..
So deep runs the loathing of clean and green energy technologies among conservatives that, at the recent UN climate negotiations in Madrid, Energy and
Emissions Reduction Minister Angus Taylor didn’t say a word about the rapid progress we’re making with renewables. Instead he embarrassed Australia
by relying on carryover credits from the Kyoto Protocol to argue that we would meet our 2030 Paris Accord target.
And when AGL submitted its plans for deploying giant batteries as grid energy storage to the government’s Underwriting New Generation Investment scheme, it did not make the shortlist. Neither did any of the other battery projects submitted to the scheme.
Minister Angus Taylor chose a peaking gas generator instead; these are old technology generators that can be quickly fired up to add capacity to the grid when demand peaks. They use natural gas, a fossil fuel that is far from clean – more on that below.
‘Batteries are a Game Changer’
South Australia’s giant Tesla Battery, known as the Hornsdale Power Reserve, has proved so useful in stabilizing the grid and covering during emergencies and maintenance operations, that it’s undergoing a 50% capacity upgrade. It has also saved South Australian electricity users $40 million every year. The 50% increase in capacity will add an additional $47 million in savings for consumers, according to SA Energy Minister Dan van Holst Pellekaan.
Remember Liddell, the dilapidated power station then PM Turnbull pressured AGL to keep running for an extra 5 years? AGL’s board decided to invest the money in clean technology instead: In October last year, AGL signed a deal with renewable energy company Maoneng to build 4 large-scale batteries, each of 50MW/100MWh capacity.
These batteries will replace the Liddell coal-fired generator when it is shut down in 2023. Battery storage becoming a cost-competitive option for the main grid will give pause to those who’ve argued that renewable energy will never deliver baseload power.
‘We are staring at the dawn of a new age of energy: the dawn of the battery age,’ AGL CEO Brett Redman told the media. He added that AGL had some $2 billion new energy supply projects under construction and another $2 billion in the pipeline.
One of these is the Wandoan solar farm in Queensland, backed by a 100MW/150MWh battery. Queensland energy minister Anthony Lynham said: ‘The next wave
is battery storage. Batteries are a game-changer.’
Lynham also told the press that the state had seen $4.7 billion worth of investment in renewable energy projects in the last 3 years, creating 4200 jobs. Why did Bill Shorten not capitalize on that in the recent Queensland election? Adani’s Carmichael mine is expected to provide fewer than 1500 jobs during the construction phase, and a mere 100 after that (working mines are highly automated these days).
Energy to Burn
We are fortunate to have courageous entrepreneurs in Australia who can see opportunities and seize them. British billionaire Sanjeev Gupta, who bought Arium’s mining and steel making facilities in Wyalla is ‘pushing ahead with the construction of the Cultana Solar Farm in South Australia which will boast 780,000 solar PV panels.’
The 280MW solar farm will be backed up by pumped hydro energy storage systems that use old iron ore pits. A giant battery is also part of Gupta’s $1.5 billion renewable energy program.
The Walcha Energy Project is the biggest single renewable energy project in Australia’s main grid. It’s an all-in-one project developed by MirusWind and Energy Estate, located at Walchat 55 km south of Armidale. It combines onshore wind and solar energy generation with pumped hydro storage. It’s expected to be operational by 2022, and will generate up to 15% of NSW’s electricity demand with a total power output in the region of 4GW.
The The Sun Cable project, backed by Mike Cannon-Brookes and Andrew ‘Twiggy’ Forrest, is by far the most ambitious in the pipeline. The plan is for a 10 gigawatt solar project in central Australia, combined with a battery that is 150 times the size of the Hornsdale Power Reserve in South Australia. The power generated will be sold to Singapore and delivered via an undersea cable.
Energy to Export
ANU professor Ken Baldwin, Director of the Energy Change Institute at the ANU, says that the radical shift towards renewable energy ‘has the potential to reshape the Australian economy and create exports worth hundreds of billions of dollars.’ He makes the point that the Indo-Pacific region will drive much of the world's energy demand growth in coming years, and Australia is in a strong position to help the region reduce its greenhouse gas emissions.
‘Australia is in the midst of a renewable energy boom,’ according to Heidi Vella at power-technology.com. ‘Rapid investment in new clean power projects in recent years have led analysts to predict that solar and wind will provide 35% of the country’s electricity needs within two years. This is up from 13% in 2012/2013.’
The challenge will be upgrading the grid to cope with the growing influx of intermittent renewable energy, which will create technical and logistical challenges. This is where the big batteries play a key role, along with pumped hydro, in reducing the reliance on back-up generators such as coal-fired power stations or peaking (gas) plants.
Image source: Renew Economy
Paying The Industry to Pollute
Low cost has been a major attraction of fossil fuels, and discovering that our government gives some $30 billion to the industry in subsidies every year comes as a shock. Not only do we give the fossil fuel industry no incentives to clean up its act, but we’re paying the industry handsome rewards to keep on doing what it’s doing.
This is a global issue: according to the latest IMF report: fossil fuel subsidies grew to $5.2 trillion in 2017, despite a 2009 G20 agreement to stop these subsidies by 2025. Here are the biggest culprits:
- China - $1.4 trillion
- USA - $649 billion
- Russia - $551 billion
- EU - $289 billion
The USA’s spending on fossil fuel subsidies is more than the country’s defense budget and 10 times what it spends on education.
‘Had nations reduced subsidies in a way to create efficient fossil fuel pricing in 2015,’ says the IMF report, ‘it would have lowered global carbon emissions by 28% and fossil fuel air pollution deaths by 46%, and increased government revenue by 3.8 % of GDP.’
Giving our Gas Away
We’re even more generous when it comes to gas. ‘Australia is on track to eclipse Qatar as the largest exporter of gas by 2020,’ the Sydney Morning Herald reports in a story headed 'Staggering': $90 billion lost in resources tax. It says Australia ’is expected to only earn $600 million in 2018 compared to Qatar's $26.6 billion.' The reason: despite various governments’ promises to deliver budget surpluses, they never addressed the gigantic resource-rent tax loophole.
As a result, we saw stories like this one: ‘Energy giant Exxon will enjoy an 8-year company tax break in Australia,’ in the Sydney Morning Herald. ExxonMobil Australia last paid tax in 2013, and it is not alone: The New Daily reports that the big miners ‘earned $53.8 billion in revenues in the 2017-18 year without paying any tax, according to the Australian Taxation Office’s latest figures.’
Image Source: The New Daily
Mr Morrison’s latest move is an agreement with the NSW government to pump an additional 70 petajoules of gas into the grid, claiming it would reduce both emissions and electricity prices. He also claims that 'this is a vital accompaniment to our record investment in renewables.’
He said unlocking domestic gas supply was central to his government’s agenda, and added: 'We need to get the gas from under our feet.' As luck would have it, Santos’ Narrabri coal seam gas project is expected to produce 70 petajoules of gas a year.
Energy and Environment Minister Matt Kean called this 'a massive green deal,' but other (states with Labor governments) are green with envy. 'NSW got $3 billion. Us? Nothing,’ said QLD energy minister Anthony Lynham. 'Here we have this massive gift to NSW. It's wrong.’
Victorian Energy Minister Lily D'Ambrosio said Victoria would not yield to pressure from Canberra to lift its ban on fracking as a condition for a bilateral deal, and added: 'We're tired of waiting for the federal government to develop a national climate and energy policy.'
Energy market analyst Bruce Robertson told The New Daily that gas prices would not drop, since ‘gas supply on the east coast of Australia has tripled since 2014 – primarily for export – and domestic gas prices have also tripled.’ Robertson described the deal as ‘a deliberate strategy to lock Australians into another fossil fuel – this time gas.’
He adds that developing coal seam gas at Narrabri is uneconomic, and that high-cost gas fields such as Narrabri ‘cannot compete on the global stage.’ So it looks like the PM is doing the miner a huge favour. His claim that we need a transition fuel ignores the growing amounts of renewable energy coming on stream, and that the cost of renewable energy has dropped well below that of fossil fuels.
Fossil Fuels vs Renewable Energy: the real costs
Subsidies for the renewable sector in Australia total $2.5 billion a year, less than one tenth of the subsidies for fossil fuel industries. The money comes primarily from investments by the Clean Energy Finance Corporation (CEFC), the Australian Renewable Energy Agency (ARENA), and from state government initiatives.
CSIRO's most recent cost comparison is summed up by its Chief Energy Economist Paul Graham in the GenCost 2018 report: ‘ … while existing fossil fuel power plants are competitive due to their sunk capital costs, solar and wind generation technologies are currently the lowest-cost ways to generate electricity for Australia, compared to any other new-build technology.’.
CSIRO and AEMO estimate that a new black coal-fired power station would produce power at a ‘levelised’ cost of $82.10 to $111.00 per megawatt hour. The cost for power produced by a new brown coal plant would be even higher. By contrast, the cost of power generated by new large-scale solar plants has come down to $50 per megawatt hour, according to Renew Economy.
That leaves us with a simple question: How much longer can the hard right in the coalition ignore the hard numbers of energy economics?
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