The age of baseload power is over, Australian Energy Market Operator chief executive Daniel Westerman told a Melbourne business conference on May 1, two days before the federal election.
Labor’s rout of a Coalition that built its election campaign on supporting nuclear power and extending fossil fuel baseload power almost certainly means Westerman is correct.
While Energy Minister Chris Bowen focuses on getting a gold star from the UN by being awarded hosting rights for COP31 next year and Treasurer Jim Chalmers talks about a “Future Made In Australia”, voters will soon discover the true cost of being a world leader in renewable energy: heavy power price rises and a loss of manufacturing.
Other countries with high penetrations of renewable energy overwhelmingly rely on conventional hydro-electric power, as Tasmania has for 100 years.
Australia’s future will be built on solar, wind and firming from batteries, pumped hydro and gas. Former Energy Security Board chair Kerry Schott told Patricia Karvelas on ABC Radio National in 2022: “It may not be possible but I think we’ve got to try.”
Two generations of voters and Labor politicians have grown up in a media environment that has persuaded them any questioning of renewables is climate denial.
While young people believe climate Armageddon is coming, the maximum they would be prepared to pay for clean energy is $50 a year, according to a survey reported by Spectator Australia. They are risking their unparalleled high standard of living for benefits they think are worth $50 annually.
Most of our environment writers ignore the wisdom of China’s supreme leader Xi Jinping who told his party’s latest Congress in 2022: “We will advance initiatives to reach peak carbon emissions in a well-planned and phased way, in line with the principle of getting the new before discarding the old.”
China is responsible for a third of global emissions. The US is number two emitter and the world’s largest producer of oil and gas. US President Donald Trump has pulled out of the Paris Accords.
The next largest emitters, India and Russia, are continuing to build coal-fired power plants.
Even the EU, which has been losing manufacturing industry to China and the US because of soaring European power prices driven by its renewables commitments, is under internal pressure to take its foot off the accelerator.
In Australia, we plan to shut our last coal-fired power plant by 2038, end 90 per cent of coal generation by 2035 and shut the country’s largest plant, Eraring in NSW, by 2027.
Westerman told his audience Australia had reached 100 per cent renewables generation last August but the highest penetration of renewables across the grid was the 75.6 per cent hit last November.
The Renew Economy website said “the gap between potential and actual renewable penetration” was explained by renewables generators curbing output because of low prices, lack of transmission line capacity and the need for grid stability.
Australia’s position is looking like a triumph of hope over experience as Labor’s belief in technologies that are yet to be proven is shaken by real world setbacks.
Think green hydrogen, which Chalmers and Bowen have said would make Australia a clean energy super power. Planned projects totalling up to $100bn have been cancelled or are on hold, because, as this column wrote on October 16, 2022, the economics don’t stack up.
Energy campaigner Saul Griffith had told an Australian Financial Review conference that for Twiggy Forrest’s green hydrogen plans to work, power would need to be priced at 2c per kilowatt hour rather than the-then range across the states from 25c to 40c.
Think offshore wind. Bowen is a keen advocate but this newspaper reported on Wednesday that Spanish offshore wind developer BlueFloat Energy, which has licences for projects off Victoria’s Gippsland coast and off NSW’s coast, is reconsidering its involvement in Australia. Norwegian developer Equinor has not decided on accepting an offshore licence in NSW.
Federal Labor has also claimed Australia would become a powerhouse producer in the critical minerals industry that is key to the development of lithium ion batteries to replace non-electric power sources. China dominates rare earths production globally and battery manufacture.
While Australia exports rare earths, little headway has been made in refining them here. Power prices are cited as a limiting factor, as is Chinese price manipulation in the rare earths market.
Jennifer Hewett in the AFR last Wednesday, reporting Foreign Minister Penny Wong’s rare earths discussions at the Quad meeting in Washington DC, commented: “It’s notable BHP and Rio’s latest big bets in copper and lithium prospects respectively are in South America rather than Australia.”
Add February’s South Australian and federal bailouts at the Whyalla steel plant and pleas for government support by Glencore’s Mount Isa copper refinery, the Tomago aluminium smelter north of Sydney and South Australia’s Nyrstar multi-metals smelter, and this plank of Labor’s Future Made in Australia plans looks sick.
It gets worse. The biggest hurdle in our renewables transition is the government’s $20bn Rewiring the Nation project, which in many places is up to six years behind schedule and in some cases up to six times over budget.
Back to Westerman. His May speech said AEMO believes large spinning machines used in conventional generation would be required to maintain inertia in the grid, as this column has been arguing in pieces quoting US power system engineer Russ Schussler from Judith Curry’s Climate Etc. blog.
Leading environment journalist Giles Parkinson in his Renew Economy report of Westerman’s speech cast doubt on this. He suggested grid-forming battery inverters would do the trick.
There’s more. Nowhere has ideology trumped facts as plainly as in the gas market. It has been clear since Julia Gillard was Labor prime minister 15 years ago that Australia’s renewables transition would need gas back-up and that it would be less polluting than coal.
Victorian Premier Jacinta Allan has now backtracked on predecessor Dan Andrews’ ban of domestic gas in new homes and in new industrial processes, a silly policy picked up this year by Sydney mayor Clover Moore.
How can politicians seriously think of banning a fuel that AEMO acknowledges will be central to firming for another 30 years?
And now Bowen, who rejected a Coalition plan for a domestic gas reservation policy at the election, has started an inquiry into his own gas reservation policy.
In the face of all this damage to our prosperity, the global Climate Action Tracker site rates Australia’s overall efforts on decarbonisation as “insufficient” and our net zero by 2050 efforts as “poor”.
It recommends Australia stop using agriculture to offset emissions. It says we should end all subsidies for fossil fuels and stop approving new coal and gas projects. It wants faster closure of fossil fuel power generation, mandatory electric vehicle use for transport, and emissions reductions in agriculture, industry and building.
It’s a recipe for a much poorer future that no large CO2 emitters are following.
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