This is a two part post. News from the last week helps capture the total confusion and incoherence of Australian energy policy. The first post discusses the incoherences and the second discusses the consequences of those incoherences.
Firstly, Australian electricity prices are falling. This is supposed to be of great concern to the Coalition government, which campaigns heavily on the idea of cheap electricity, and of blaming renewables, or a repealed carbon price, for any price increases…
However the reason the prices appear to be coming down is because of renewables…
In its Quarterly Energy Dynamics report for the fourth quarter of 2019, the Australian Energy Market Operator says spot wholesale electricity prices averaged $A72/megawatt hour (MWh), marking a 19 per cent fall from Q4 2018, and the lowest prices since Q4 2016….
The market operator said that a “key driver” of this fall in spot prices was increased supply from wind farms and solar farms, whose combined output increased by a massive 39 per cent compared to Q4 2018.
The largest fall in price occurred in the renewable rich state of South Australia, “where the average price for the quarter was $68/MWh”
The Energy Security Board, which reports to the Council of Australian Governments is expecting further price reductions:
Looking forward a downward trend in retail prices is noted. Over the period to 2021-22 a decrease in prices of 7.1% (about $97) is expected. A decrease in wholesale prices is the main driver and this decrease is in turn driven by new low-cost renewable generation entering the system.
ESB Health of the National Electricity Market Media Release
There were also a large number of coal outages in 2019 – we have old coal power stations which are unreliable in the heat – so much for the stability of coal power. The system used to collapse quite regularly when the generators where young as well, as many older people can tell you. What is worrying about the breakdowns is not the breakdowns of the old lignite fired power stations, but of the most recent and biggest power station, built in 2007, Kogan Creek. These collapses, and other factors, lead the AEMO to say:
black coal-fired generation around the country decreased by 1,061MW on average compared to Q4 2018, its lowest quarterly level since Q4 2016
So more black coal is not needed all the time, even now. Gas can also be problematic. RenewEconomy reports:
Origin [a major electricity provider] has been hit by a long-term outage at its Mortlake gas generator in Victoria, and at its Eraring coal generator in NSW. These outages alone slashed $44 million from its first half earnings, while a 7 per cent slump in volumes due to the growth of rooftop solar and expired business contracts cut profits by $46 million, and price controls in Victoria and federally cost another $55 million.
Renew Economy 20 Feb 2020
This apparently cost Origin $170 million in electricity earnings, an overall drop of 11% for second half of 2019.
There was so much renewable energy around, that not only did it reduce profits for some corporations, but prices were occasionally negative and some renewable sources were told to curtail production.
[R]enewable energy curtailment across the National Electricity Market – the main grid covering the eastern states – increased to 6 per cent of total output in Q4 2019, the highest amount on record.
With typical realism, former minister Matt Canavan (who left the ministry to support Barnaby Joyce’s leadership bid) declared that “Renewables are the dole bludgers of the energy system, they only turn up to work when they want to“. The reality is that they have to sometimes be laid off to keep the coal energy industry in business. He continued to argue that Australia apparently needs coal for our remaining manufacturing. Supporting manufacturing has not been something the Coalition has been that interested in for a while.
As the article quoted above states, it is close to “impossible to name a single federal Coalition MP that recognises the potential of wind and solar”, even with the latest research from the CSIRO and AEMO stating that renewables with storage are cheaper than coal, and far cheaper than nuclear. Some other research suggests storage and “dispatchability” could potentially no longer be a problem; a report from the ANU states that there are around 22,000 potential pumped hydro storage sites in Australia, and Professor Blakers from the ANU Research School of Engineering says:
“Australia needs only a tiny fraction of these sites for pumped hydro storage – about 450 GWh of storage – to support a 100 per cent renewable electricity system…”
There are large scale plans to sell renewable energy generated in Australia to Singapore, or to generate hydrogen gas and export it instead of methane (especially in South Australia), but the Federal government appears to ignore these ideas, or realities. Coal is still its god, and needs taxpayer support. So it is not surprising that:
The Australian Coalition government has announced a new $4 million grant to pursue a new 1GW coal fired generator in north Queensland in one of the first acts of the new pro-coal resources minister Keith Pitt.
Taxpayers’ money is being given to Shine Energy to conduct a feasibility study for a proposed 1GW HELE coal plant at Collinsville in Queensland.
Let’s ignore the probability that Northern Queensland already has more energy than it needs.
“The problem is it makes little commercial sense to build more generation in Queensland at the moment. The state is in oversupply. Queensland’s 13GW of conventional generation has been augmented over the last decade by more than 5GW of new rooftop solar and large-scale renewables. There’s more on the way”.
Australian Financial Review
Richard Denniss of the Australia Institute commented:
there is absolutely no evidence suggesting that marginal electorates are the cheapest or best places to build new power stations. …
The former resources minister Matt Canavan even pulled out the schoolyard defence of ‘they started it’, arguing on Twitter that: “I see some are saying that we should not help coal-fired power stations provide jobs because we should leave it to the market. Well if that’s the view be consistent and argue against the billions we give to renewables every year!”….
First, no federal government has spent billions per year on subsidies for renewables. None. While it’s true that the government mandates that minimum amounts of renewable energy are supplied to the grid, such obligations don’t cost the budget a cent.
Australian Financial Review 24 Feb 2020
Denniss also points out that:
Only one coal-fired power station is being built anywhere in Western Europe, North America or Australia; a German plant that is nine years overdue. Even in Trump’s America, no coal-fired power stations are under construction.
as above
What this grant to Shine shows is that nobody is prepared to even look at building coal power in Australia without subsidy. Just as Adani is constantly demanding subsidy for its coal mine (free water, royalty holidays, train lines, apart from straight money gifts), and this mine is unlikely to benefit any Australians at all, and likely to damage a few.
We now know:
The only physical trace of Shine Energy, which wants to build a $2bn coal-fired power station in north Queensland, is a small post office box next to an Asian grocer at a suburban Brisbane shopping complex….
Company documents show Shine Energy is worth a nominal $1,000 on paper. It has no registered financial obligations, and no physical office at its listed address.
On its website, Shine describes its business as providing “renewable energy solutions”, but the company could offer no evidence that it or its directors…. has ever previously worked on an energy generation project.
The Guardian 29 Feb 2020
Superficially, this looks like a strange company to entrust with the task.
The PM justified all of this by saying “We listen to all Australians and we listen to Australians right across the country, not just those in the inner city.” I suspect they only listen to Australians who sponsor them, or agree with them, after all “60% of a sample of 1,083 voters believes Australia should be doing more” and 64% of another poll see climate change as the prime critical threat to Australia, and most of them think we should act even if it involves significant costs. Quite a few people, including Coalition voters, think their lack of climate policy is problematic.
And of course this spending on coal is being justified as it will “help drive down prices for businesses and their customers.” The Prime Minister apparently said: “we won’t be bullied into higher taxes and higher electricity prices.” Barnaby Joyce argued that the government needs to ensure that “the poor people can get affordable power, and that we can get dignity in people’s lives.”
However, prices are already going down without coal, and coal emissions will have disastrous effects on poorer people in fire and flood zones – they won’t be able to afford the insurance hikes. No one in the Coalition seems at all concerned about the cost to the ecology in terms of climate change. The future costs of the loss of agriculture, loss of water and through storm, flood and fire damage appears completely opaque to them. It does not count. Effectively fossil fuels are being subsidised by ignoring the costs that will fall on ordinary people and the economy in general.
We already have problems of too much energy for the market, subsidised coal will not solve that problem, and if it is more costly to build, then without even more taxpayer subsidy, it will cost more and pollute more, and take more water and damage climate even more. Coal is a loose/loose situation.
And then we learn that:
Renewable Energy Partners has been given $2 million in funds from the Coalition government to advance a feasibility study into a project that would combine 1.5GW of pumped hydro, with seven hours storage, along with up to 1.3GW of solar PV, 800MW of wind energy and a 200MW hydrogen electrolyser, fuelled by the green energy sources.
The CEO states:
“Our initial studies have already shown that our site is well suited for solar generation, the topography is ideal for the construction of a large-scale wind farm and a recent study by the Australian Energy Market Operator has confirmed the need for a large pumped hydro facilities in North Queensland, the Urannah Renewable Hub is the battery of the north,”
There is no evidence of coherency in this policy. The government could strongly point out that they are trying to find the best system, by linking or comparing the projects, but they don’t and probably can’t.
The government has also apparently started leaking that it would prefer to “favour technology over taxation” because, according to the PM:
“currently no one can tell me that going down that path won’t cost jobs, won’t put up your electricity prices, and won’t impact negatively on jobs in the economies of rural and regional Australia.”
PM Transcript 18 Feb 2020
We have seen electricity prices seem to be coming down and the CSIRO working with other people such as the National Bank and other businesses (so this is not some ‘crazy’ left wing report) have argued:
Australia faces a Slow Decline if it takes no action on the most significant economic, social and environmental challenges. But, if these challenges are tackled head on, Australia can look forward to a positive Outlook Vision. This could mean higher GDP per capita, ‘net zero’ greenhouse gas emissions by 2050, strong economic growth and energy affordability, and more liveable major cities
CSIRO Australian National Outlook 2019
They go on to suggest that this could lead to 2.75–2.8% annual growth in GDP (ok there are possible problems with this, but from the Coalition’s point of view this is good), 90% wages growth by 2060, and $42–84 billion increase in returns to landholders (Executive Summary p.9). This is much better than the option of failing to “adequately address the global and domestic issues, resulting in declining economic, social and environmental outcomes.” So the Prime Minister can’t really say that nobody has told him that going renewable would be good for the economy and the country.
The PM continues his argument by suggesting that:
There’s a lot of people at the moment wanting us to put more taxes on people to solve problems. I don’t believe higher taxes are the solution to our problems.
PM Transcript 18 Feb 2020
He does not say who these people are, but another commentator in the not leftwing Australian Financial Review remarks:
far from being mutually exclusive, technology and a carbon price can be complementary in driving down emissions. …
without a market-based carbon price to incentivise lower emissions technology and private sector research and development, the government will resort to heavy-handed interventions to try to spur new emissions-reduction technology. It’s remarkable that on climate and energy policies, a Liberal government favours big government picking winners instead of market principles.
Australian Financial Review 22 Feb 2020
In a later speech the Prime Minister seems to assume that:
“hazard reduction for keeping people safe as, frankly, as important as emissions reduction when it comes to addressing these climate issues…. And, you know, rural and regional Australia is tough. They’re resilient. And it’s a great place to be.”
PM Transcript 17 Feb 2020
You almost certainly cannot reduce the hazard from 3-4 degree temperature rises and and sea level rises, enough to keep people safe.
Then we hear there are:
Record levels of investment in renewable technologies, beating our Kyoto emissions reduction target by 411 million tonnes.
PM Transcript 17 Feb 2020 b
Ignoring the Kyoto accounting trick [2] [3] [4] [5] and its effects, in this statement, the government, with Labor support, are running down the finances of the Australian Renewable Energy Agency, which helps fund the establishment of renewable energy systems and research into renewable energy. ARENA expects to exhaust its funds by the end of the year. This is simultaneous boasting of spending on renewables and inhibiting that spending. It is not coherent. Unless of course, by technology, they do not mean renewables, or greenhouse gas free technologies.
Indeed we have to assume that incoherency is the standard response of Australian politicians when faced with climate change. The Labor deputy leader responded to all this, by saying:
“I absolutely support coal mining jobs and coal miners, and the role that that plays within our economy, and it will continue to play a role for a long time to come,… [we should] acknowledge the significant role that coal miners play and the communities play within our economy” [but] “A Labor government is not going to put a cent into subsidising coal-fired power. And that is the practical question as to whether or not it happens”
Yes look after the workers, but don’t poison the planet. This is not a difficult idea; the climate movement has been talking about “just transitions” for a long time. A few days after this, Labor leader Anthony Albanese said, in response to questions about coal fired energy plants:
You may as well ask me if I support unicorns…. I don’t think there’s a place for coal-fired power plants in Australia, full stop… The truth is no private sector operation will touch a new coal-fired power plant with a barge pole
Canberra Times
However,
Business and industry groups are urging the government to commit to zero carbon emissions by 2050…. Mr Albanese refused to give a clear answer when pressed on whether Labor supported their calls, saying his party would cement their climate policies closer to the next federal election in 2022.
same as above
Later Mr Albanese objected to the proposal to give Shine Energy taxpayer’s money, saying:
“they are using $4m of taxpayers funds to give to a private operation that has no record of building a new power station anywhere”
However, he went on to support the Adani mine saying:
“It’s a good thing those jobs have been created. I support jobs regardless of where they are [and, he supports] and the economic activity that will arise from them…..Our priority is jobs and jobs here in Queensland, and we make no apologies for that.”
The Guardian
As I have argued on several occasions there are not that many jobs in the Adani mine, and there are severe disputes about the economic flow on benefits, especially granted the royalty holidays, taxpayer subsidies and risk of destroying water flows. It might be cheaper just to use the subsidies to start new local industries in Queensland to provide real jobs.
Late last year Albanese also said:
“the proposal that we immediately stop exporting coal would damage our economy and would not have any environmental benefit”.
Brisbane Times
Nobody I am aware of, is arguing that we “immediately stop exporting coal,” so this is not a real point, but lots of people are arguing that we should not open new coal mines or expand the coal exports. This is because, climate change is a global systemic problem. It does not matter where the fossil fuels are burnt, they affect, and worsen, Australia’s climate, causing job losses in other parts of the country.
In an interview on the ABC’s Insiders, after the policy speech, Albanese agreed there was still likely to be coal mining and export in Australia after 2050. “[The target is] net, that’s the point.” He said that exported coal was not counted in Australia’s greenhouse gas budget. “You don’t measure the emissions where the original product comes from.” This avoidance of responsibility is despite him recognising the targets are economy wide, and not cutting back emissions affects the world.
If Labor supports the mining and burning of coal, they do not have an effective climate policy, they (at best) only have a ‘get Australia out of coal fired energy policy’.
Conservative Independent Zali Steggall has proposed legislation which would enforced zero net emissions by 2050, and give a series of targets on the way, but Albanese appears not to be keen to support her move, giving the excuse that the Government would not allow debate, leaving his climate change spokesman Mark Butler to try and say they would engage with the possibility of supporting the proposed legislation. Later Albanese said:
the world must achieve net zero carbon emissions by the year 2050…. [so that] the amount of pollution released into the atmosphere is no greater than the amount we absorb which can occur through agriculture, forestry and other means.
Speech: Leadership in a New Climate 21 Feb 2020
Nothing in this speech, or in what he has said elsewhere, gives any interim targets to get to “net zero carbon emissions by the year 2050”. This indicates little planning, or expectation of planning, and the apparent refusal to take on Steggall’s interim targets suggest this lack, is part of the policy.
He continued:
We pride ourselves on always pulling our weight. And we have seen climate change be a factor in our devastating bushfires. We could see it, smell it, even touch it. Our amazing continent is particularly vulnerable. So we have a lot to lose. But the good news is we also have a lot to gain. Action on climate change will mean more jobs, lower emissions and lower energy prices….in recent months we had some foreshadowing of the costs of inaction.
Speech: Leadership in a New Climate 21 Feb 2020
So, we are told both that action on climate must be sacrificed for jobs and produces jobs. And that we can sell climate change elsewhere and suffer here, and not suffer here. Labor is not coherent either.
One problem with neoliberalism, and Australian politics is primarily neoliberal, is that because it only recognises the virtues of profit, and preferably profit by established companies, it looks like corruption. Neoliberals will always support established corporate power and give it handouts, but they don’t have to be bought, they just do it anyway.
Then I guess there is the problem of existential crisis, and the difficulty of recognising that we cannot do what we have previously done, as it will harm us. This may well be affecting politicians and many high level business people, and if so then that leaves us in a storm without a rudder, clinging to what worked in the past and destroys us now.
The next post discusses the consequences of this confusion
Tags: disorder, Energy, neoliberalism, politics
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