Australia’s energy transition
Who bears the cost of the transition?
The costs of our energy transition are regionally concentrated: renewable energy firms need to treat those communities with respect.
The Latrobe Valley east of Melbourne has been Victoria’s powerhouse since the 1920s, when, under guidance of the State Electricity Commission Chair John Monash, a cluster of power stations was developed, drawing on the valley’s large reserves of brown coal. Because of the nature of that coal – it is prone to spontaneous combustion – the power stations were built near the mines which means they are large integrated operations.
Loy Yang
The big expansion in the Latrobe Valley’s power system was in the 1960s and 1970s, and those power stations and the associated open-cut coal mines are coming to the end of their operational lives.
The small Brix Power Station closed in 2014, and the large Hazelwood Power Station closed in 2017. The Yallourn Power Station is scheduled for closure in 2028, and the Loy Yang A Station is scheduled for closure in 2035. The only station without a firm closure date is Loy Yang B, its life being dependent on the pace of the clean energy transition.
As in other parts of the world (such as Sachsen-Anhalt in Germany to name a similar situation that has come to our attention) these closures are having a concentrated effect on the communities where they are located.
The Victorian government has fine words about A just transition for the Latrobe Valley, with reference to a “brighter and fairer future”, acknowledging the need for a planned transition, and has appropriated $266 million for an adjustment package, but the mood in Morwell, the city at the centre of the Latrobe Valley, is anything but bright and fair, according to Anthony Ham, writing in The Monthly: The fading light.
Unless you’re a Schwarz Media subscriber the site has a firm paywall, but it’s worthwhile getting a copy of the September edition if you can find a decent newspaper shop because it’s a well-written story about the almost unavoidable social consequences of the closures.
As with other transitions in single-industry regions, there is no path to a low-pain future. The workforces in these power stations are highly skilled in the complexities of keeping old machinery in operation, dependent on poor-quality coal. There should be renewable energy projects in the region: it makes good sense that they be located where there are already the high-voltage transmission lines serving closed or soon-to-close coal-fired stations. But the skills required in renewable energy generation are quite different from those required in coal-fired stations, and in any case solar, wind and battery technologies require far less labour than old coal-fired power stations.
Ham is critical of the Victorian government for its handling of the closures, contrasting its approach with the way a similar transition was carried out in Western Australia, where there was a phase-out of coal mining and power generation in the Collie region. He also notes that although the power stations had been privatized, the old community service culture of the SEC was still alive. The businesses were well embedded in the local community as good neighbours in a way that the renewable energy companies generally are not.
Writing in The Conversation Mingming Cheng and Peta Ainsworth pf Curtin University cover the same ground, concerning the way different regions in Western Australia have handled the transition, some well and some badly. Their research is directed at identifying the conditions that lead to community opposition to renewable energy: Australia needs renewable energy fast – but building it is only half the battle. The crucial point is about how the companies and the state governments deal with the community. It’s not just about the distribution of financial returns and the inclusion of local workforces in projects. These are important, but it is also about whether the companies treat the local communities with respect, particularly in early-stage consultations.
Just add a border collie
There are strong lessons in these stories: good corporate behaviour is a necessary condition for the transition to occur. But even the most sensitive and considerate corporate behaviour has to deal with a well-funded and well-organized campaign waged against renewable energy in rural regions. To many people opposition to renewable energy has become an essential aspect of a bucolic identity: climate change and renewable energy are matters for urban elites who know nothing about the bush. Lies abound about the health effects of wind turbines and the albedo effects of solar panels, and one of the most outrageous lies is about the way solar farms are robbing Australia of good farming land.
That lie is easily checked. With conservative assumptions one can calculate that the whole of Australia’s electricity needs could be met by 1000 square km of solar panels – about the size of one cattle station. Or even better a large sheep station, because sheep can graze among panels and even benefit from their shelter. Mustering is a little more difficult in a paddock full of panels, but a well-trained sheep dog is smart enough to handle that task.
Data centres
The government’s difficulty in setting rules for data centres exposes a weakness in our emissions policy.
Our electricity sector is making good progress in making a transition to renewable resources, but that progress in in the mix of renewable and fossil fuel sources, rather than the absolute amount of emissions.
Writing about the government’s negotiations about regulations applying to data centres, the Grattan Institute’s Alison Reeve points out that the data centre power spat exposes a hidden truth, that hidden truth being the absence of any restriction on electricity emissions, and the fact that we’re not building capacity fast enough to meet all sources of new demand. She points out:
Apart from the two years where Australia had a carbon price, electricity generators have never been forced to reduce their emissions. Instead, governments have focused on pushing more renewables into the electricity mix. Provided they could push these in faster than demand was growing, emissions went down, as coal generators were undercut and lost market share.
That’s why the Commonwealth is finding it so hard to come up with a firm policy on data centres, because within existing policies a big expansion of data centres could see a rise in emissions, and possibly a rise in dependence on expensive fossil fuel, even while the percentage of renewable investment is increased.
Also writing about data centres’ power requirements is Ehsan Noroozinejad of Western Sydney University, whose Conversation article – Australia’s backdown on data centres allows them to use energy from coal and gas: here’s what that means – suggests that we shouldn’t be too worried about the Commonwealth’s backdown to the Queensland and Northern Territory governments’ demand that they not be constrained by any Commonwealth requirement that they rely only on renewables, backed up by batteries and firming gas.
His argument is that there’s not much point in entering into a fight to stop those governments from doing something that they’re not going to do anyway, because electricity generated from fossil fuels, particularly coal, is just too expensive. The only regulation necessary is to ensure that anything they do does not require power prices to rise for all other consumers. To this end effective monitoring and supervision, including attention to data centres’ demand on water, are essential.
In this regard a close eye should be kept on state accounts. For many years in the 1960s Queensland’s corrupt Bjelke Petersen government gave large hidden subsidies to the coal industry, by setting very low charges on their use of trains on the government’s rail network, paid for by excess charges paid by all other users. If the Queensland government is determined to keep its coal-fired power stations operating, there are ways of hiding the cost. That’s another reason to set pollution limits on the electricity sector, as Alison Reeve urges.