Clean en­ergy needs big com­mit­ment

The Weekend Australian - Travel - - Resources - Keith Orchi­son

COM­MIT­TED and pro­posed spend­ing on low-emis­sion elec­tric­ity projects is nowhere near enough, says one of Aus­tralia’s lead­ing cor­po­rate ad­vis­ers on en­ergy.

Ron Lo­borec, na­tional leader of Deloitte’s en­ergy, in­fra­struc­ture and re­sources di­vi­sion, ar­gues that ‘‘$ 100 mil­lion here and there’’ for demon­stra­tion plants will not ad­dress Aus­tralia’s needs for new baseload power with a low en­vi­ron­men­tal foot­print, or as­pi­ra­tions to show lead­er­ship in global warm­ing mit­i­ga­tion.

Lo­borec says pub­lic sen­ti­ment is driv­ing global warm­ing pol­icy in Aus­tralia at present — re­sult­ing in an­nounce­ments de­signed to per­suade vot­ers that their con­cerns are be­ing heard — and the ma­jor po­lit­i­cal par­ties have to do much more to es­tab­lish an ap­pro­pri­ate plat­form to meet the twin Aus­tralian chal­lenges of re­li­able, af­ford­able power and re­duced green­house emis­sions.

He adds that both gov­ern­ment and in­dus­try have to re­view the fi­nan­cial com­mit­ment they are pre­pared to make in elec­tric­ity tech­nol­ogy de­vel­op­ment. ‘‘ The IT in­dus­try has been pre­pared to spend far more money on in­no­va­tion than the en­ergy sec­tor. The level of cap­i­tal spend­ing re­quired to de­liver clean coal tech­nol­ogy by 2020, or ear­lier, goes way be­yond what is cur­rently com­mit­ted. Pol­i­cy­mak­ers have to get on the front foot to pro­duce much stronger in­vest­ment.’’

He agrees that there is an op­por­tu­nity for Aus­tralian in­no­va­tion to win world­wide mar­ket, es­pe­cially in China, where 600 coal-fired power sta­tions are planned for de­vel­op­ment in the next 20 years. ‘‘ The Chi­nese are the world’s quick­est fol­low­ers,’’ Lo­borec says. ‘‘ Make clean coal tech­nol­ogy avail­able and they will be fast to adopt it.’’

He ar­gues that the cur­rent sta­tus of zero emis­sion projects in Aus­tralia and the US will de­liver only a small amount of com­mer­cial power by the mid­dle of the next decade, by which stage both coun­tries will have had to in­vest sub­stan­tially in new elec­tric gen­er­a­tion.

Pol­i­cy­mak­ers, he says, need to com­mit now to an en­tirely larger scale of ac­tiv­ity.

‘‘ Re­new­able en­ergy is not go­ing to meet the re­quired baseload de­vel­op­ment. Whether nu­clear power can be in­tro­duced to Aus­tralia re­mains prob­lem­atic at best. Nat­u­ral gas can cer­tainly pro­vide a bridge to 2020 and be­yond.

‘‘ Its tech­nol­ogy is proven. Nat­u­ral gas power sta­tions can be built rel­a­tively quickly. It emits much less car­bon diox­ide than coal.

‘‘ But a strong dash for gas will re­quire sub­stan­tial ad­di­tional re­serves to be brought to the east­ern seaboard mar­ket — and its fu­ture price is an is­sue.’’

Lo­borec says there should be a stronger fo­cus on clean brown coal. ‘‘ This is a very valu­able re­source that can­not be ex­ported — as ura­nium, black coal and LNG can. If the green­house gas emis­sions from burn­ing brown coal can be cut, even elim­i­nated, then the ba­sic low cost of the fuel, even al­low­ing for car­bon mit­i­ga­tion tech­nol­ogy, will make it a strong com­peti­tor for nat­u­ral gas and a key con­trib­u­tor to east­ern seaboard baseload needs.’’

At core, he adds, gov­ern­ment needs to set in place a strong plat­form for de­vel­op­ment of al­ter­na­tive en­ergy strate­gies for the next cen­tury and prob­a­bly even longer. ‘‘ This re­quires de­vel­op­ment of a com­pelling pol­icy frame­work that will un­der­pin in­vestor think­ing. And it needs to be set out now. We can­not af­ford to wait five or six years, or longer, to see if the new tech­nol­ogy be­ing in­ves­ti­gated is work­able.

‘‘ We need to drive in­vest­ment in low­eremit­ting gen­er­a­tion and car­bon cap­ture faster than that. This re­quires that we spend bil­lions, not mil­lions, not even hun­dreds of mil­lions, and that we start think­ing on a big­ger scale right now.’’

Lo­borec warns pol­i­cy­mak­ers to beware of cre­at­ing a Cal­i­for­nian-style trap for them­selves and for elec­tric­ity con­sumers. A fail­ure to ad­e­quately think through a strong pol­icy plat­form for power sup­ply brought the Cal­i­for­nian ad­min­is­tra­tion, some util­i­ties and the con­sumers un­done when stronger than an­tic­i­pated de­mand and the im­pact of drought (cut­ting hy­dro-elec­tric ca­pac­ity) saw de­mand ex­ceed sup­ply be­tween 1999 and 2001.

Cal­i­for­nia, he adds, cre­ated sig­nif­i­cant prob­lems for power sup­ply through in­ef­fi­cient reg­u­la­tion — and Aus­tralia has yet to de­velop a reg­u­la­tory regime for its power mar­ket that is recog­nised as ef­fi­cient by ei­ther sup­pli­ers or large end-users.

The in­tro­duc­tion of car­bon diox­ide cap­ture and stor­age or nu­clear power, or both, he says, will re­quire sub­stan­tial reg­u­la­tion — and no in­vest­ments will oc­cur in ei­ther area un­til com­pa­nies and their bankers are sat­is­fied that the reg­u­la­tory regime is work­able, durable and ef­fi­cient.

Drought is an is­sue for elec­tric gen­er­a­tion in Aus­tralia, too, he says. It is af­fect­ing both ex­ist­ing power pro­duc­tion in Queens­land and other states and is im­pact­ing on pro­pos­als for new gen­er­a­tion de­vel­op­ments. It could yet be a fac­tor in whether or not Aus­tralia, and es­pe­cially the east­ern seaboard, where the bulk of power is con­sumed, has an ad­e­quate elec­tric­ity sup­ply in the next 10 years.

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