Budget backs wrong tech to reach net zero

In this year’s federal budget, Prime Minister Scott Morrison had the opportunity to place Australia on the path to becoming a renewable energy superpower.

In this year’s federal budget, Prime Minister Scott Morrison had the opportunity to place Australia on the path to becoming a renewable energy superpower. With $1.2 billion devoted to emissions reduction, there was certainly a substantial headline spend. But it’s far from clear that our leaders have chosen the right path to take us to net zero.

At US President Joe Biden’s recent climate summit, the Prime Minister told the world Australia saw the transition to net zero emissions as a technological challenge. While a “technology not targets” approach may be politically useful, the reality is we need both.

At a corporate level, targets work. A McKinsey study found that globally companies and industries with more aggressive targets achieve greater emissions reductions. Given that the private sector will be charged with implementing most of the emissions-reducing measures both within the energy sector and outside it, strong national emissions reduction targets would provide both certainty and incentives in that venture.

It’s true that without the right technological road map we cannot make progress and – just as importantly – we cannot measure it. But the technologies that the Prime Minister identified – blue (gas-fired) hydrogen and carbon capture and storage – are not the right tools for the job. The decision to place more than half a billion dollars of public investment in these nascent technologies while ignoring more mature, appropriate options is a mistake.

Australia’s only commercial-scale carbon capture and storage program, located in Chevron’s Gorgon LNG project on Barrow Island, has been a less than stellar performer in reducing Australia’s carbon emissions. After receiving $60m from the Western Australian Government to implement the technology, the company could not get it to work, and this failure resulted in their project wiping out all the gains made rooftop solar nationally in the 2016-17 year.

While there is significant promise in the green hydrogen industry, and the adjacent green ammonia sector, the decision to include gas-powered or “blue” hydrogen production in Australia’s public-funded transition proposal is deeply concerning.

When hydrogen is produced using electrolysis to separate water into hydrogen and oxygen, immense amounts of energy are consumed. If that energy was created using emissions producing inputs the impact is pronounced. Given that the cost of renewable energy is so much lower than any other input type, it doesn’t make economic sense to pursue this form of hydrogen production.

The technology that we need to reach net zero emissions lies elsewhere.

Currently, a significant proportion of energy produced from renewable sources in Australia is unable to be deployed into the grid because of stability issues.

We need improvements to grid stability itself. There are several ways this benefits us. Investment in firming technologies like batteries can even out the peaks and troughs that characterise wind and solar. Investing in battery technologies can also build a domestic export capability in areas with rising demand.

While the budget devoted $30m to battery projects and microgrids in the Northern Territory, this is an order of magnitude less than the funds sent towards carbon capture and storage. Given that batteries are a proven technology and more than 80 per cent of CCS projects fail, this is a baffling allocation of resources.

Australia produces around half the world’s lithium and has immense nickel reserves. We are extremely well-positioned to build a resilient battery value chain locally and to export battery technology to our trading partners. This will also accelerate our own deployment of renewable energy technologies by both providing firming technologies that make our grid renewables-ready, and allowing householders and business owners to more effectively and affordably store renewable energy from behind-the-metre solar panels on homes and businesses.

Digital technologies and the regulations that govern their use are the other piece of the puzzle.

Australia has near-total national smart metre coverage, but we are unable to take full advantage of their capabilities because the data they collect about energy use is locked away with network providers, smart metre manufacturers and increasingly with the opaque tech multinationals that host smart metre data.

Accelerating a consumer data right for energy that allows householders to use their data to purchase renewable energy will capture existing consumer demand and preferences for renewables and use it to drive our transition away from fossil fuels.

Grid digitisation will assist in making the grid fit for purpose in a renewable future, able to balance fluctuating loads more easily and be more responsive to demand. It will also allow us to capture the aggregate power of behind-the-metre solar – from apartment roofs to airports – and feed it back into the grid, using our small-scale solar infrastructure as virtual power plants.

Introducing these technologies that allow us to make full use of our immense renewable generation capacity can form the basis of direct renewable energy exports like the Sun Cable project that plans to transmit Australian renewable energy directly to Singapore.

Finally, digital technologies are crucial to accurately measuring our emissions reductions – this is especially important for large private sector organisations who must account for not only the emissions from their own operations, but the emissions from their business partners, products and supply chains.

The announcement of a $50m venture financing function within the Australian Renewable Energy Agency is a welcome step in the right direction, though it too is overshadowed by larger ticket items.

If we set our ambition high with firm but realistic targets, Australia can become a renewable energy superpower. If we embrace technologies that move us towards those targets rather than pandering to large polluters we will diversify our export base, revive our manufacturing industries and create jobs for a resilient future. The choice is ours.

Kaspar Kaarlep is the founder of WePower and the former CTO of European network operator Elektrilevi. He lives in Melbourne