High-stakes power play will shape the future of our energy security
Energy security has become the axis around which the PM’s transformation of the economy pivots – and coal communities are the new political frontline.
The climate wars may be over but an equally divisive battle is arising out of the nation’s new political consensus. Both sides of politics are locked into a net-zero emissions target by 2050, Labor by choice, the Coalition by the force of political reality. But Peter Dutton’s introduction of the nuclear option creates a stark contest between the main parties on how to get there.
The competing pathways to net zero offer profoundly different outcomes for the nation’s future. They go beyond climate change and raise the fundamental question: what sort of Australia will emerge once a point of no return in the rollout is reached?
Labor’s vision remains an ambitious and unparallelled proposition of a renewables-only approach. Few if any countries are pursuing this course. Anthony Albanese’s pitch is for an Australia as a clean energy superpower that will underwrite a revitalised sovereign manufacturing base.
Opposition energy spokesman Ted O’Brien accuses the Prime Minister of leading the country down a road to a poorer and weaker one by mid-century. This is an assessment that was being made before there was a coherent long-term alternative.
The stakes have since been raised with the Liberal leader’s decision to pursue a nuclear option as a 24/7 baseload anchor to firm renewables for cheaper, reliable and zero-emissions electricity, with gas being the interim fix to ensure energy security through the transition.
This has injected a new ideological contest into the debate, reigniting a clash of ideas not only over the future of energy but for the communities that have generational ties to its production.
There are two essential issues at stake.
While the question of energy security has become the axis around which Albanese’s radical transformation of the economy pivots, the economic future of the nation’s coal communities has become the new political frontline between Labor and the Coalition.
In this sense, Australia is not unique. The US is grappling with its own socio-economic dilemma. Determined not to repeat the experience of the rust belt de-industrialisation era, it is pursuing a renewables-plus-nuclear transition tied to advanced manufacturing.
Last week, as the Prime Minister was preparing to fly to the Hunter Valley coalfields to announce a $1bn solar panel scheme to generate jobs as coal exits the community, Dutton was meeting privately with executives from Rolls-Royce for a deep dive into the feasibility of small modular reactors in an Australian context.
This juxtaposition symbolises the chasm of policy approaches to the challenge of decarbonising the economy. Both sides are embarking on equally ambitious road maps. While Albanese has rubbished the idea of an Australian civil nuclear energy program, Dutton is convinced it can work.
In an interview with Inquirer on Wednesday, he pledged that if the Coalition were returned to government at the next election, the first nuclear reactors would be up and running by the mid-2030s.
It is understood Rolls-Royce is confident its small modular reactor technology could be ready for an Australian market in this time-frame with a price tag of $5bn for a 470-megawatt plant. Each plant would take four years to build and have a life-span of 60 years.
Rolls-Royce signed a contract with the Albanese government in February to build the nuclear reactors for the second tranche of AUKUS submarines.
According to this timeline, nuclear power generation could begin being rolled out at about the same time as the first nuclear-powered submarines are delivered. The feasibility of this timeline will be strongly contested.
Social licence is essential to the Coalition’s ambitions.
Under a plan taken to Dutton’s shadow cabinet two weeks ago, seven coal communities were identified as potential locations for coal-to-nuclear transition on or near the sites of exiting coal-fired power stations, with the promise of cheaper electricity for those communities, higher paying jobs and upgraded infrastructure.
The nuclear question is being set against what the Coalition is framing as a less-favourable alternative – massive transmission infrastructure as envisioned under the Labor government’s program of connecting vast regionally based wind and solar farms to the grid. This comparison has the potential to shift the debate on its axis.
Not all of Dutton’s colleagues are convinced there is enough time in the political cycle to start building the political case for nuclear power.
Yet the government’s agenda is also under siege. Community antagonism towards the scale and disruption of the Labor project is escalating. Climate Change and Energy Minister Chris Bowen’s renewable energy targets are being questioned as the magnitude of what needs to be achieved becomes more apparent.
Both sides are highly alert to the acute political consequences of an ill-managed transition.
What looms is an election battle over energy security set against vastly contrasting ideologies.
“We live in an uncertain world where energy security is more critical,” Dutton told Inquirer. “We need to be more resilient in our systems, not weaker.
“Labor is taking us down a path that might give it more seats and votes in inner city Melbourne and Sydney but our plan is for the whole country that gives us a transition to net zero in a responsible way that doesn’t destroy the economy.
“If we win the election, it is clear to me that (South Australian Labor Premier) Peter Malinauskas would be the first to sign up, and we could deal with regulatory burdens quickly.
“There is every reason to be optimistic about bringing small modular net-zero emission nuclear into the power mix in the 2030s. I think the mid-2030s. There is no question about that. And there is every reason to believe other jurisdictions would follow suit.
“When you look at where technology has advanced and what Rolls-Royce is doing with the nuclear submarines the government has signed up to buy, the future is much closer than we think.
“The ability to produce zero-emissions baseload with 24/7 electricity to firm up renewables is within our grasp. My honest view is we have to embrace a new energy system and we have to have an orderly transition but the government doesn’t have a credible pathway to next zero by 2050.”
Of the 19 coal-fired power stations still in operation, 17 are marked for closure within the next 30 years and 10 of these before 2035.
The Albanese government’s Net Zero Economy Authority bill passed by the parliament before Easter set out the agency’s purpose as one clearly designed around the transition to renewables. It was unambiguous in its assessment of the cost and scope of Labor’s plan. The bill was equally clear about what is at stake with the exiting of coal-fired power stations across the country and the consequences if steps aren’t taken to protect these communities.
It defines coal-fired power stations and associated thermal coalmines as being located in six regions around Australia: Collie in Western Australia, the Latrobe Valley in Victoria, the Hunter Valley and Lithgow in NSW and three regions in Queensland – the Darling Downs, Gladstone and Central Queensland.
Of the 19 coal-fired power stations still in operation, 17 are marked for closure within the next 30 years and 10 of these before 2035.
The political expression of this reality is the number of regional seats that will be affected. Some sooner than others. Neither side can claim a monopoly on ownership of these constituencies.
In NSW, Labor is at risk in the Hunter Valley in the seats of Hunter, Shortland and Paterson, while Calare west of Sydney, held by the Nationals until Andrew Gee resigned to sit on the crossbench, covers the coal community of Lithgow.
In Queensland, the LNP has Flynn stretching west from Gladstone to consider with legacy coal community economics also stretching into Capricornia, which takes in Rockhampton up to southern Mackay. Both seats have been in Labor hands before. Nationals leader David Littleproud’s massive Queensland seat of Maranoa is another that takes in coal communities through Queensland’s southern and central west.
In Victoria, coal communities stretch across the Nationals’ seat of Gippsland, which now takes in the industrial region of the Latrobe Valley.
There are early markers for getting it wrong. In Collie, unemployment is at 7.4 per cent, significantly above the national average, with the percentage of workers in low-skilled and semi-skilled occupations considerably higher than the Australian average.
With the closure of Hazelwood in Victoria, immediate impacts were felt at a local economic and social level. The decline in parts of the Latrobe Valley have already begun.
State governments are highly sensitive to Canberra’s policy direction. The NSW Labor government is acting to prevent the early closure of Eraring power station in the Hunter Valley, and the West Australian Labor government is seeking to delay further closures in Collie.
Malinauskas went as far on Thursday as to say he would welcome a debate on the cost of nuclear power – an intervention that won’t be welcomed by Albanese.
Parallel with the US and UK, nuclear is also supported by one of the nation’s largest trade unions, the Australian Workers Union, which fears that without it heavy industry will be at risk.
Speaking to Inquirer on Thursday, Albanese said the government had a clear focus on the future of coal communities and no one would be “left behind”.
“Eleven coal-fired power plants have already closed and the former Coalition government didn’t lift a finger to help workers in these communities,” Albanese said. “Rather than playing politics with the transition, the government is putting in place practical measures to ensure workers are looked after.
“The Net Zero Economy Authority will support workers to access new employment and to help create jobs in new businesses and industries. The Energy Industry Jobs Plan introduced into parliament last week outlines a redeployment scheme to align workers with jobs in new industries. The authority will work with business unions and communities. We will not leave them behind.
“A practical example is the Liddell site in the Upper Hunter which is being transformed into an energy and manufacturing hub, employing more people than the old power station did.
“Recently, Rio Tinto signed Australia’s biggest renewable energy deal to power its Boyne aluminium smelter in Gladstone.”
The Albanese government’s bill to enable the commencement of the Net Zero Economy Authority warns of the socio-economic impact of the energy transition, estimating 3000 coal-fired power station jobs will be disrupted by the phase-out.
“Coal-fired power station regions tend to have worse socio-economic indicators relative to national averages, potentially exacerbating the costs of closures and the difficulties of economic transition,” it stated. “Job losses will likely arise as stations close, both at the facilities themselves and in companies providing supplies and services to them.
“Communities are concerned there will be insufficient job opportunities available for retrenched workers based on previous closure events.
“Careful consideration is required to mitigate the risks of poor social and economic outcomes associated with long-term unemployment in regional communities that may result from facility closures.”
Critically, Greg Combet, the outgoing head of the Net Zero Economy Authority, in his address to the National Press Club on Tuesday, could give no guarantee on the transition of coal power station workers to green jobs in the renewable sector with the prospect that these would be lower-paid jobs, as opposed to Dutton’s promise of a higher paid workforce in a nuclear industry.
Dutton’s challenge is twofold. He must destroy Labor’s credibility on its renewables path to net zero while building broad appeal for nuclear energy based on re-education of a generation who grew up watching The Simpsons.
This is a daring enterprise that is not without risk.
A Newspoll in February this year suggests majority community support for small nuclear power plants as a net-zero option to replace coal-fired power stations once they are retired. It shows 55 per cent of all Australian voters supported the idea of small modular nuclear reactors as a replacement technology for coal-fired power.
Support was highest among 18 to 34-year-olds – the demographic most concerned about climate change – with 65 per cent saying they would approve of such a proposal.
While the case for nuclear would appear to have shifted significantly since it was included as an afterthought in the Morrison government’s technology road map for net zero, Dutton will need to be prepared for the inevitable anti-nuclear campaign.
Albanese’s claim against Dutton will be that nuclear will be too expensive, will take too long and will require an extension of coal-powered plants beyond their terminal point.
Labor will also seek to expose the Coalition’s inherent internal divisions.
“Dutton is just papering over the cracks in the party room … he knows he can’t go back to the pre-Glasgow position … the moderates won’t accept it,” a senior Labor source said.
“But they can’t accept solar and wind because the Nationals will never cop it.
“This is just a pragmatic political fix that has been determined by their internal conflicts.”
Labor leans heavily on the GenCost assessments produced by the CSIRO and the Australian Energy Market Operator which consistently ranks small modular nuclear reactors as the highest-cost solution to decarbonisation.
It points to a current absence of commercial viability for SMRs and the regulatory burden for Australia in going down a nuclear path.
All state and territory governments have nuclear energy prohibitions, with a national ban imposed in 1998 when the Greens forced amendments on the Howard government in order to extend the operation of Australia’s only current nuclear reactor at Lucas Heights in NSW.
The GenCost assessments are strongly disputed by the Coalition. But this is a significant challenge for Dutton. Treasurer Jim Chalmers has described the “economic insanity of his uncosted nuclear fantasy”.
Bowen claims the Coalition’s nuclear policy would cost more than $300bn.
In his Press Club address, Combet said the switch to renewables would also cost “hundreds of billions of dollars”, adding that governments would need to become the underwriters for much of the investment to ensure its viability.
“We can’t let the cost argument take hold,” a senior Liberal MP told Inquirer this week. “This is not a vote winner for us. The best we can hope for us is to neutralise it as a vote winner or loser.
“But we have to put markers in the ground to show people we stand for something. There are policy markers which may not be immediately popular but give you long-term credibility.
“That is why this is necessary. In time it will be.”
One of the key findings of the Labor Party’s 2019 election loss post-mortem was the conflict between modern Labor’s competing constituencies – blue collar workers and the progressive movement within the inner metropolitan seats. Albanese has sought to finally resolve this tension by appealing to the regions with the promise of a manufacturing boom powered through a green energy revolution.
In 2019, after assuming the leadership following Bill Shorten’s election defeat by Morrison, Albanese put his own markers down in Perth when he said Labor would not be forced to choose between climate and jobs.
Following the Glasgow climate change conference in 2021, he committed Labor to targets with a promise to work with business to bring back manufacturing.
His mission now is to put detail to the ambition.
But coal communities, which generally have a high energy IQ, will need to be convinced of the plausibility of Albanese’s plan.
Dutton has moved considerably over the past six months from a concept stage to the development of what he will claim is achievable policy on nuclear.
His pitch to the coal communities is built around incentives, cheaper energy and industrial revitalisation that will be attracted to the reliability of nuclear. The Australian model would be based on a US model to replace coal with nuclear and have communities effectively bid for the plants to be built in their regions.
“I think regional communities have largely been treated with contempt by this government,” Dutton told Inquirer.
“We are transitioning to a new energy system; the question is how can we do it in our country’s best interests.
“A lot has been made of jobs in the renewables sector, some of its true, much of it is exaggerated. The government has no plan as to how these communities will survive.
“Our country is in the process of de-industrialisation and the first ones that go to the wall will be coal communities, the small businesses will be the first to go broke and first to leave town.
“There is no serious manufacturer who is going to continue manufacturing in an environment where the power is intermittent and unreliable.
“Under our model, you will have renewables firmed up by net-zero nuclear, so you have stability, no disruption, you have proven reductions in bills, as well as transition to greener energy.
“The rollout of 28,000km of poles and wires will never happen. It’s a fantasy the PM is leading us down and it will end in tears.”
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