Australia’s energy transition
Will the National Party please stop betraying the bush and the nation
In his speech at the National Press Club on Monday Andrew Forrest came out with an impassioned plea for the National Party to “stop betraying the bush”.
“I’m an ex jackeroo, a bloke from the bush and proud of it”, he said. He asked the party that claims to represent rural Australia to “stop whingeing, bickering and courting division”.
He was referring to the National Party’s destructive stance on climate change, a stance with two strands. One is to stop the rollout of renewable projects and transmission lines, backed with the absurd claim that the demands for land to build wind farms and solar farms are driving farmers off their properties. The other strand is to assert that nuclear energy can fill our needs for de-carbonizing our electricity supply.
Forrest dismissed both strands. The land required for renewable energy is tiny, and does not conflict with agricultural use. Nuclear energy is expensive – far more expensive than renewable energy, even when all firming costs are included – and nuclear power plants would take many years to install.
Besides the National party, his other target was the fossil fuel lobby. When a journalist asked what support he would like to see for his ambitious renewable plans – a subsidy perhaps – his reply was that he wanted to see the fossil fuel lobby get out of the way. He referred not only to the financial and regulatory support successive governments have given the fossil fuel industry, but also to the way the fossil fuel lobbies, along with anti-renewable Coalition politicians, have been so dominant in the political landscape. Businesses need a clear policy environment if they are to invest in our energy transformation; by raising doubt, spreading false claims, and making renewable energy a partisan and identity issue, the fossil fuel lobby and its political backers are holding Australia back, particularly while there is a risk that the Coalition may be elected.
Those criticisms are about the forces impeding progress. His main point was to call for supportive policies. His most radical proposal was for a “climate trigger”, a power to be given to the Commonwealth to halt any project that would contribute to GHG emissions. His other call on public policy was to throw his weight behind Ross Garnaut and Rod Sims for a “Carbon Solutions Levy” (see last week’s roundup) – a means of pricing carbon, while providing funds to help households and businesses in the transition.
There will be cynics who accuse Forrest of promoting his own business interests in Fortescue Metals and in his private companies, but the influence of a Press Club address is miniscule in comparison with the influence of the international fossil fuel industry.
It’s worth spending at least 35 minutes to hear his speech (the last 25 minutes are Q&A), to get a feel of the urgency of his message. We don’t have much time. The US Inflation Reduction Act is re-shaping the whole investment environment, attracting talent and capital: in spite of our natural resources we’re in danger of being left behind. And in two years the EU’s Carbon Border Adjustment Mechanism will be up and running, enforcing a carbon price. We can either have our own carbon price, keeping the funds in Australia, or face having to pay what is the equivalent to tariff protection against our carbon-intensive industries.
If you hang on for the last 25 minutes you can hear the Q&A, including a catty question from an Australianjournalist. The question journalists didn’t ask was about Forrest’s choice of investment vehicles. While the green steel project is in Fortescue Metals, a public company, other projects are in his private companies. Is it possible that our stock exchange, with its emphasis on short-term returns, is not suited to renewable energy investments? If so, will most Australians of modest means, who invest in shares through their personal portfolios and in superannuation funds, miss out on the investments that should be the basis for our long-term prosperity?
If you think coal-fired energy is expensive wait till you see the cost of nuclear power
Andrew Forrest reminds us that the National Party proposes to address climate change goals (assuming they take them seriously) with a series of small nuclear power stations where our present coal-fired stations are (or were) located. (See the above article.)
There are only two problems. One is that it would take many years to build them, during which time renewables and storage would continue on their downward cost path, and the other is that nuclear power is already a very expensive way to generate electricity. These are covered in a Conversation contribution last November by Rueben Fineghan Is nuclear the answer to Australia’s climate crisis? Fineghan agrees with other independent experts that nuclear is the most expensive way to generate electricity.
In December this was confirmed by the CSIRO-AEMO report GenCost: Annual insights into the cost of future electricity generation in Australia, which gives nuclear power a poor cost estimate.
The main findings of the CSIRO-AMEO report — unsurprisingly — are that out of current technologies, renewables are cheapest on a per kWh basis — somewhere between 6 and 10 cents in 2030, compared with 9 to 25 cents for coal and gas. (Note that $100 per MWh = 10c per kWh if you’re trying to reconcile the figures in your report with the figures in your electricity bill.)
On small-scale nuclear reactors — the Coalition’s preference — the authors don’t try to calculate the costs per kWh. All it has to go on is an estimate of the capital cost per kW capacity, using some theoretical figures, and figures from a plant in Utah currently under construction, where the capital costs per kW capacity have risen from around an estimated $A20 000 to $A30 000 during construction. This compares with capital costs of around $A2 000 per kW capacity for wind and solar. That is, ten times the cost. It is also safe to suggest that nuclear power has higher running costs than solar, because nuclear plants have to be managed and manned quite intensively.
It’s not clear why the Coalition is so keen on nuclear power. Maybe it’s an attempt to wedge Labor, or maybe they are sincere in this conviction. The logic seems to be that if other countries can rely on nuclear energy, so too should we — a logic that ignores sunk costs and geography.
Economics is not the Coalition’s strong point, but they excel in spreading lies and misconceptions, and on this they seem to have done a good job. On his Poll Bludger site, William Bowe reports that the most recent Newspoll includes responses to “a proposal to build several small modular nuclear reactors around Australia to produce zero-emissions energy on the sites of existing coal-fired power stations once they are retired”. That elicited 55 percent approval, 31 percent disapproval.
The Coalition’s strategy seems to be one of discrediting renewable energy, while they do all they can to hold up investment in renewables, for example by mobilizing partisan supporters to mount “environmental” protests against windfarms, and by floating superficially attractive but uneconomic ideas of their own, such as a suggestion that nuclear power plants could be built at former coal sites in Latrobe Valley.
People such as Andrew Forrest and Ross Garnaut, and independent academics, make a useful contribution when they talk and write about the real costs of energy, but the message has to go out further, and the government needs to ensure that renewable projects get a move-on, so that people see tangible results in terms of physical projects visible from the roadside and in terms of lower power prices.
Critical minerals and green iron
On last week’s Saturday Extra Fran Kelly interviewed Greg Combet, now Chair of the Net Zero Economy Agency, a body established last year “responsible for promoting orderly and positive economic transformation to ensure Australia, its regions and workers realise and share the benefits of the net zero economy”.
In the interview -- Anthony Albanese's “think big” pledge on clean energy – Combet outlined three opportunities for Australia – supplying materials transformed by renewable energy, particularly “green” iron, supplying minerals needed for the world’s electrification, and developing an open competitive economy based on low-cost renewable energy. It’s a repetition of the energy aspects in Albanese’s speech in Newcastle, in which he laid out the government’s re-industrialization agenda.
National Party idiocy
Probably not a party member
In the interview referred to above, Fran Kelly mentions the National Party’s calls for a moratorium on building transmission lines and renewable projects in the country. The National Party’s story is that farmers’ livelihoods are being ruined by new wind and solar projects and by transmission lines built across farmland. The Nationals’ ridiculous story is that the bush is full up: there is no room for more renewables – a claim easily rebutted by Andrew Gunn and Christian Jakob of Monash University writing in The Conversation: The Nationals want renewables to stay in the cities – but the clean energy grid doesn’t work like that. Our best renewable resources are in inland regions, and the system needs a variety of geographically-separated power sources to smooth out supply.
It’s hard to make sense of the National’s stance. In fact it’s far from evident that there is a significant number of farmers opposed to renewable energy: farmers are the most heavily impacted by climate change, and many farmers and the communities around them are prospering from solar and wind farms on rural land, which help them hedge against the wide fluctuations in rural commodity prices. The ABC reports on evidence that the majority of farmers support renewable infrastructure on their land. Their finding is based on a small sample, but it does present a challenge to the National Party to support their claim that farmers don’t want renewable projects.
It is correct, however, that some renewable energy companies have been insensitive and arrogant in their dealings with farmers, but the government is well aware of the problem, and the Australian Energy Market Commission has drawn up new rules, that have been endorsed by the government, for stakeholder engagement in construction of transmission lines. It appears that the motive behind the Nationals’ stance is to delay the rollout of renewable energy, so that they can keep high power prices on the political agenda.