Clean energy needs big commitment
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.