Nuclear option made easy by the renewables miscue

Immediately after the 2022 federal election pundits were quick to declare the climate wars were over and all that was needed was legislative certainty for business to get on with the job. Urged along by the Greens and teal independents, Labor lifted Australia’s emissions reduction target to 43 per cent, requiring renewable energy to supply 82 per cent of total electricity by 2030. The safeguard mechanism was strengthened to force big companies to cut their emissions by 5 per cent a year or pay a financial penalty. On paper the pathway was for business to take up the challenge laid out by government to enable Australia to rejoin the global collective on climate action.

Halfway through the Albanese government’s first term, progress has been slower and more expensive than predicted. Despite the increased certainty for business, investment has slowed, not increased. Obstacles have arisen in key projects including Snowy Hydro 2.0, the thousands of kilometres of transmission lines needed to enable a renewables-only future and the big generation assets, including offshore wind. Investment fell to below the level it was during the Morrison government as projects had difficulty securing access to an already stretched electricity grid network. For consumers, power prices have risen.

Two events during the past week emphasise the size of the problem. A summer storm in Victoria left hundreds of thousands of energy users without power. And BHP confirmed it was considering closing down its West Australian nickel investments, which would virtually guarantee an end to hopes of Australia making the transition from major fossil fuel producer to battery maker. The federal government has stepped in with new subsidies that put taxpayers on the hook for billions. Lithium, the other major feedstock for electrification, is under similar price pressure. It has been wrong to assume that Australia will automatically maintain its dominant position in supplying raw materials to the world for a green transition. Other countries have the same idea and the evidence is we cannot compete with low-cost producers such as Indonesia. The same is true for development of new technologies including hydrogen as a liquid fuel to replace gas. Myriad nations are trying to crack the code to reduce the cost of producing green hydrogen and the US has stolen a march with the Inflation Reduction Act, which is attracting the biggest companies and brightest minds.

With more restrictive industrial relations laws, green tape, lawfare and punitive new taxes on fossil fuels, there is little to suggest the Albanese government is aware of the potential difficulties that lie on the horizon. Peter Dutton is suggesting Australia follow the lead of other major developed economies and look to nuclear power as a replacement of the baseload electricity that is currently supplied by coal. There is a lot to like about nuclear, given it is a safe, dense energy source that will not involve despoiling vast tracts of land with infrastructure that will be vulnerable to extreme storms. The business case being put is that nuclear plants be built at the site of existing coal-fired power stations so they can use existing grid infrastructure. Going nuclear is a logical option for emissions-free power that was investigated by the Howard government as a precaution to the mess we find ourselves in today. Nuclear is a sensible option but incendiary politics. It rekindles the climate wars and undermines the certainty that is craved by business. Nonetheless, it is an issue that must be dealt with properly and now. The first step is to withdraw the legislative ban that exists in the Environment Protection and Biodiversity Conservation Act. Failure to act on that will show that opponents such as the Greens, the teals and Labor are not serious about meeting the climate challenge in the most effective and expedient way.