En­ergy pol­icy and bio fu­els

Australian Forests and Timber - - In The News - By Tony Pasin Fed­eral Mem­ber for Barker

IN 1987, mi­cro-eco­nomic re­form was all the rage. It be­came so talked about that the then Trea­surer Paul Keat­ing once re­marked that if you went into your lo­cal pet store you would find the galah talk­ing about it.

To­day, that same galah would be talk­ing about en­ergy pol­icy.

I have writ­ten pre­vi­ously on the topic but given re­cent de­vel­op­ments I thought it was im­por­tant that we again con­sider the role that the forestry in­dus­try can play not only in ad­vo­cat­ing for lower en­ergy costs but also the role it can play in achiev­ing lower emis­sions in the process.

By way of back­ground, at an ex­tra­or­di­nary meet­ing on 7 Oc­to­ber 2016, Coali­tion of Aus­tralian Gov­ern­ments (COAG) En­ergy Min­is­ters agreed to an in­de­pen­dent re­view of the na­tional elec­tric­ity mar­ket to take stock of its cur­rent se­cu­rity and re­li­a­bil­ity and to pro­vide ad­vice to gov­ern­ments on a co­or­di­nated, na­tional re­form blue­print.

The fi­nal re­port (known as the Finkel Re­port) was de­liv­ered on 9 June to COAG and the Fed­eral Gov­ern­ment has since been ex­am­in­ing its rec­om­men­da­tions.

As you may have read in the me­dia I have been a vo­cal on this is­sue both pub­li­cally and be­hind closed doors.

The Prime Min­is­ter, his cab­i­net and my back­bench col­leagues are un­der no mis­ap­pre­hen­sion that my main fo­cus is to en­sure that Gov­ern­ment re­form in this space op­er­ates to put down­ward pres­sure on the cost of en­ergy, any other out­come rep­re­sents pol­icy fail­ure. The only way to do that in the short term is to ad­dress do­mes­tic gas prices and in the medium term is to find ways to in­crease en­ergy sup­ply from baseload low costs gen­er­a­tors while meet­ing car­bon emis­sion tar­gets.

Let us con­sider first the short term so­lu­tion.

The only mean­ing­ful way in the short term to re­duce en­ergy costs is to ad­dress the cost of gas in Aus­tralia. The elec­tric­ity price is cur­rently set 24% of the time by gas gen­er­a­tors. Gas in the Aus­tralian mar­ket cur­rently trades at about three times the price at which it is ex­ported from Aus­tralia.

The Prime Min­is­ter re­cently an­nounced a suit of mea­sures to ad­dress the is­sue which in­cluded fi­nal­is­ing tough new reg­u­la­tions in the gas sec­tor to give Aus­tralian cus­tomers pri­or­ity ac­cess to gas sup­ply be­fore it is ex­ported. This mea­sure com­menced on 1 July 2017.

I’m not con­vinced that this will go far enough to en­sure power prices are sig­nif­i­cantly re­duced.

I have made it clear that I want to see a more ag­gres­sive pol­icy im­ple­mented.

Pol­icy mech­a­nisms such as a gas re­serve, for ex­am­ple, that would quar­an­tine sup­ply and will re­sult in sig­nif­i­cantly lower prices.

Now let us con­sider the medium term.

No one will deny that re­new­ables will have a role to play in the en­ergy mix but the em­pha­sis can­not con­tinue to be on wind and so­lar alone.

For over a decade, Gov­ern­ments at both State and Fed­eral level, here and abroad have fo­cused their en­ergy pol­icy around the need to tran­si­tion to a lower emis­sions fu­ture in the en­ergy sec­tor. Some Aus­tralian states have adopted un­re­al­is­tic tar­gets and have com­pro­mised both the se­cu­rity and af­ford­abil­ity of our power sup­ply.

The South Aus­tralian La­bor Gov­ern­ment have proved that their pol­icy of 50% re­new­able en­ergy tar­get which was fo­cused so heav­ily on so­lar and wind with­out ap­pro­pri­ately con­sid­er­ing stor­age or baseload re­new­ables is a recipe for dis­as­ter.

Re­new­able bioen­ergy sourced from wood waste is a re­li­able re­new­able which can cre­ate baseload power whilst sup­port­ing eco­nomic de­vel­op­ment and jobs in ru­ral com­mu­ni­ties.

In short, it’s a win win. De­spite hav­ing the high­est area of for­est per capita of the de­vel­oped na­tions, in 2015 bioen­ergy only con­trib­uted 9.1% of to­tal re­new­able en­ergy and 1.3% of to­tal elec­tric­ity gen­er­ated in Aus­tralia. In con­trast, bioen­ergy con­trib­utes more than 24% of the to­tal en­ergy con­sump­tion in Fin­land, more than 22% in Swe­den and more than 17% in Den­mark.

But it is not lim­ited to bio en­ergy plants; con­sider for one mo­ment re­new­able biopel­lets from wood waste.

Presently we man­u­fac­ture these pel­lets in Aus­tralia and ship them to Ja­pan, where they are used to cofire ex­ist­ing coal and gas elec­tric­ity gen­er­a­tors.

In this ex­am­ple, an Aus­tralian re­new­able waste prod­uct is be­ing pro­cessed and then used to lower Ja­pan’s emis­sions rather than our own.

The Aus­tralian Gov­ern­ment al­ready ac­knowl­edges that bio­fu­els are a re­new­able source un­der the Re­new­able En­ergy Tar­get. What we need now are the right pol­icy set­tings in place to in­cen­tivise its use with ex­ist­ing coal and gas gen­er­a­tors. Coal gen­er­a­tors pro­duce en­ergy at the low­est unit cost and in­cen­tivis­ing them to tran­si­tion to co-fired tech­nol­ogy will not only lower emis­sions and gen­er­ate job in the forestry sec­tor but it will also lower the cost of elec­tric­ity over the medium term to busi­nesses and con­sumers alike.

Let’s hope I’m not the only galah talk­ing about this over com­ing months!

Re­new­able bioen­ergy sourced from wood waste is a re­li­able re­new­able which can cre­ate baseload power whilst sup­port­ing eco­nomic de­vel­op­ment and jobs in ru­ral com­mu­ni­ties.

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