Cut through com­plex­ity, Prime Min­is­ter, and get real about en­ergy pol­icy

Silly ideas can­not gen­er­ate the elec­tric­ity needed by Aus­tralian homes and busi­nesses

The Weekend Australian - - INQUIRER - JU­DITH SLOAN

For a man who seems to love a slo­gan — jobs and growth, eco­nomics and en­gi­neer­ing — it was more than pass­ing strange that Malcolm Turn­bull would com­plain “there has been too much slo­gan­is­ing (sic), too much pol­i­tics, too much ide­ol­ogy and, frankly, too much id­iocy” when it comes to en­ergy pol­icy.

But maybe he was talk­ing about his own ap­proach to en­ergy pol­icy: too many slo­gans, too much pol­i­tics, too much ide­ol­ogy and def­i­nitely too much id­iocy. I would add too much pro­cras­ti­na­tion. Sure, he de­fends the de­lay be­cause he is “work­ing through this very com­plex area very care­fully”. But at this rate, the lights will be out, we will be shiv­er­ing in the win­ter and swel­ter­ing in the sum­mer and in­dus­try will have shut down.

The Prime Min­is­ter and his En­ergy Min­is­ter, Josh Fry­den­berg, are sell­ing us a pup by sug­gest­ing the three ob­jec­tives of en­ergy pol­icy — af­ford­abil­ity, re­li­a­bil­ity and meet­ing our emis­sions tar­get — can be achieved si­mul­ta­ne­ously. They know the Aus­tralian govern­ment was mad to sign up to the Paris Agree­ment com­mit­ment of between 26 per cent and 28 per cent re­duc­tion by 2030 over 2005.

You can just imag­ine the ad­vice given to the cabi­net. Then en­vi­ron­ment min­is­ter Greg Hunt, with his re­new­able en­ergy ob­sessed ad­vis­ers egging him on, would have told his col­leagues th­ese tar­gets were com­pletely achiev­able at vir- tu­ally no eco­nomic cost. (Af­ter all, he had sup­ported the re­duced re­new­able en­ergy tar­get.) The luvvies from For­eign Af­fairs and Trade would have been mak­ing the point that any­thing less would have made Aus­tralia an “in­ter­na­tional pariah”; we need to do our bit. What­ever, I say.

Just why the mem­bers of cabi­net, in­clud­ing Tony Ab­bott, the prime min­is­ter at the time, and who by rights should have known bet­ter, didn’t ob­ject is any­one’s guess. Af­ter all, Aus­tralia has one of the high­est pop­u­la­tion growth rates — and the govern­ment seems in­ca­pable of re­duc­ing the im­mi­gra­tion in­take — which makes our per capita emis­sions re­duc­tion tar­gets close to the high­est in the world.

Does this make any sense for a (pre­vi­ously) en­ergy-in­ten­sive econ­omy with am­ple sup­plies of coal, gas and ura­nium? Will our eco­nomic sui­cide note make any dif­fer­ence to global emis­sions?

Why would the next prime min­is­ter, Turn­bull, con­firm our Paris com­mit­ment on the day Don­ald Trump was elected US pres­i­dent, know­ing full well Trump had made a pledge to pull the US out of the Paris Agree­ment (which he has done)? (Yes, a very good ex­am­ple of “too much id­iocy”.)

And let us not for­get that China, In­dia, Rus­sia (which has de­ferred its sign­ing up) and now the US are not part of the deal to re­strict the growth of emis­sions. What this means is that any ef­fort we make will be eclipsed in a mat­ter of weeks by th­ese be­he­moths.

And if you think it is just me say­ing th­ese things, this week em­i­nent — no, top of the trees — econ­o­mists Gary Banks and Fred Hilmer made the same point: that Aus­tralia’s emis­sions re­duc­tion tar­gets are too high and should be ditched or de­layed. The pri­or­ity must be re­li­a­bil­ity and af­ford­abil­ity. Don’t even think about the clean en­ergy tar­get. As th­ese two gen­uine ex­perts note, the RET and RET Mark II (the CET) are among the high­est cost means of abat­ing car­bon diox­ide emis­sions and should never have been con­sid­ered as ap­pro­pri­ate pol­icy op­tions in the first place.

So where does this leave en­ergy pol­icy as the Prime Min­is­ter works through this very com­plex area? Can some­one wake me up when he has some­thing sub­stan­tive to an­nounce other than lu­natic schemes to pay peo­ple — with movie tick­ets and ham­burger vouchers — not to use elec­tric­ity, bul­ly­ing en­ergy com­pa­nies and jaw­bon­ing states to lift their bans on gas de­vel­op­ments?

Ev­i­dently, do­ing some­thing about the in­creas­ing pen­e­tra­tion of re­new­able en­ergy is just too dif­fi­cult, even though the Prime Min­is­ter is fond of slag­ging off at the home of re­new­able en­ergy, South Aus­tralia. Why not try to sus­pend the RET? The Sen­ate may knock this back but it’s worth a try.

Just look at the fig­ures. In the past five years, 92 per cent of the new sup­ply of elec­tric­ity gen­er­a­tion has been re­new­able en­ergy. In the mean­time, there has been the exit of ma­jor coal-fired fa­cili- ties, in­clud­ing the North­ern power sta­tion and Hazel­wood, plus the sus­pen­sion of some gas-fired ones.

But we are be­ing told — by the rent-seek­ers — that there is a ver­i­ta­ble gold rush go­ing on in terms of large-scale so­lar farms and noth­ing should stand in its way. (We all know who made money from the gold rush: not the min­ers but the mer­chants sell­ing the equip­ment.)

But here’s the thing about re­new­able en­ergy: most of the in­stal­la­tions won’t last more than 20 years and their ef­fec­tive­ness in gen­er­at­ing elec­tric­ity falls from day one. So­lar pan­els, for in­stance, de­te­ri­o­rate and need to be washed. But here’s an­other thing: many of th­ese so­lar farms are lo­cated in very dry re­gions where there is lit­tle water.

And what hap­pens to th­ese in­stal­la­tions when they conk out? Will the rent-seek­ers be around to re­place them, par­tic­u­larly as hope­fully the RET will be an acro­nym that is just a dis­tant mem­ory? And what hap­pens when th­ese re­new­able en­ergy in­stal­la­tions don’t even last as long as ex­pected — a com­mon oc­cur­rence over­seas?

But, Ju­dith, you say, you’re not get­ting with the pro­gram. Bat­tery back­ups will turn re­new­able en­ergy into a form of cheap, re­li­able elec­tric­ity gen­er­a­tion.

While it is true bat­ter­ies may help sta­bilise the grid, there are many is­sues as­so­ci­ated with bat­tery tech­nol­ogy in­clud­ing the cost, the use of toxic ma­te­ri­als in their construction and their ul­ti­mate dis­posal (they are not re­cy­clable).

But the key at this stage is their lim­ited scope to pre­vent black­outs — to a few hours for, say, 30,000 house­holds or a few min­utes for a state the size of South Aus­tralia. In other words, nice but no cigar.

You’re ig­nor­ing Snowy 2.0, Ju­dith, a par­tic­u­lar favourite of the Prime Min­is­ter. His view is that this is the dream com­bi­na­tion of eco­nomics and en­gi­neer­ing. Hope­fully, the en­gi­neer­ing chal­lenge can be met, but given Aus­tralia’s ap­palling track record of build­ing large-scale in­fra­struc­ture — over bud­get and well beyond dead­line — it’s al­most cer­tain the eco­nomics won’t stake up. At a min­i­mum cost of $150 a megawatt hour, Snowy 2.0 is a very ex­pen­sive form of gen­er­a­tion, even if it’s used only as backup. And if you ask any en­gi­neer — yes, eco­nomics and en­gi­neer­ing — they will tell you that pumped hy­dro uses nearly as much en­ergy push­ing the water up­hill as is gen­er­ated when it is re­leased.

The crit­i­cal chal­lenge now is to cre­ate in­cen­tives for the build­ing of new baseload elec­tric­ity plants (prob­a­bly on the sites of ex­ist­ing plants) and to in­ject more com­pe­ti­tion into the gen­er­a­tion space. The gam­ing that is go­ing on in the sys­tem is prob­a­bly adding close to 30 per cent to the whole­sale elec­tric­ity price and will only get worse with more re­new­able en­ergy.

If we care about man­u­fac­tur­ing and min­er­als pro­cess­ing, there is no al­ter­na­tive. (Of course, the Greens and La­bor don’t seem to worry about the clo­sure of th­ese plants as long as we’re “sav­ing the planet”, which we aren’t.)

So stop faffing around, Messrs Turn­bull and Fry­den­berg. Stop be­ing di­verted by silly ideas such as de­mand man­age­ment, smart me­ters and be­hind-the-grid tricks (house­holds ac­count for only a quar­ter of de­mand).

Stand up for what’s best for the coun­try as a whole.

Will our eco­nomic sui­cide note make any dif­fer­ence to global emis­sions?

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