Morrison government approves next step towards Adani coal mine


Kevin's Walk on the Wild Side

Michelle Grattan, University of Canberra

The Morrison government has ticked off on the groundwater management plan for the proposed Adani coal mine, an important but not a final step for the central Queensland project receiving the go-ahead.

The decision, taken by Environment Minister Melissa Price, comes after intense pressure from Queensland Liberal National Party members, including a threat by senator James McGrath to publicly call for Price’s resignation if she failed to treat the Adani project fairly.




Read more:
View from The Hill: It’s the internal agitators who are bugging Scott Morrison on Adani


But the Adani decision will not help Liberals fighting seats in the south, with strong anti-Adani campaigns in some key electorates.

Price said in a statement on Tuesday: “CSIRO and Geoscience Australia have independently assessed the groundwater management plans for the Carmichael Coal Mine and Rail Infrastructure project”, and both had confirmed the revised plans…

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View from The Hill: Tony Abbott tries some climate adaptation for the winds of Warringah



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Tony Abbott is being challenged in Warringah by Zali Steggall, who has climate policy at the centre of her platform.
AAP/Peter Rae

Michelle Grattan, University of Canberra

Tony Abbott pulled the panic lever on Friday, and Malcolm Turnbull pushed the revenge button.

The gainers from these spectacular plays were Zali Steggall, the independent candidate who is trying to oust Abbott in Warringah, and Bill Shorten, who is handed another break in his campaign to defeat the government.

Years ago, in a much earlier round of the climate and emissions wars, Abbott referred to himself as a “weather vane.” That accurate self-assessment invited ridicule, but his latest change of direction is beyond absurd.

For months, Abbott was calling for Australia to exit Paris, like the Americans. It was part of his unremitting campaign against Turnbull, and the then PM’s drive for a national energy guarantee.

But Abbott’s new view is that leaving Paris is unnecessary.“I’m not calling for us to pull out now,” he told a Warringah candidates’ debate on Friday.

“We had an emissions obsession that needed to be broken and it’s now changed”, with a new prime minister and a new energy minister, he said.

“We can meet our Paris targets without substantial policy change and without significant additional costs on the economy.”

Abbott’s beef with the Paris agreement – for which his government set Australia’s targets – was tied to his jihad against his successor.

What’s mostly changed, though, is Abbott’s own circumstances. He faces what’s for him an existential threat – the risk of being driven out of parliamentary life. Steggall has climate change at the centre of her campaign.

But can Abbott really think his local voters are so naïve that they’ll be convinced by such an obviously expedient shift of position? They know him too well for that.

University of Canberra research has shown they are critical of him, especially over his opposition to same-sex marriage and his wrecking behaviour.

Isn’t his risk that they could simply become more cynical, concluding he’s taking them for mugs, and he could worsen rather than improve his position?

And apart from how Warringah will read his latest shift, what about his vocal right-wing supporters? You’d expect they would be shocked by this backflip.

Abbott didn’t do a full conversion, however – he remains a coal advocate, suggesting the Snowy Hydro Corporation could invest in it.

“Coal-fired power remains the cheapest form of baseload power,” he declared.

That was enough to bring in Turnbull, who slapped down his nemesis from afar. Oceans and time zones mean nothing when your anger burns hot and Twitter’s at hand.

“But it isn’t, ” Turnbull tweeted from London in response to Abbott’s
claim about cheapness. “Today the cheapest form of new dispatchable or
base load energy is renewables plus storage.

“We are now able to have lower emissions and lower prices but we need
to plan it using engineering & economics rather than ideology and
innumerate idiocy”.

In another tweet Turnbull continued, “The reason the fossil fuel lobby and their apologists rail against Snowy Hydro 2.0, and have tried to stop it, is because it delivers the massive storage which does make renewables reliable and this enable our progress to lower emissions and lower energy prices”.

Turnbull was already fired up, having in a BBC interview (recorded on Wednesday London time) once again canvassed the circumstances of his political demise in that “peculiarly Australian form of madness” of last August. Unloading on those who’d brought him down, he contended that “you could argue, that their concern was not that I would lose the election but rather that I would win it”.

If it isn’t enough for a government, weeks out from the announcement of the election, to have two former PMs refighting the climate/energy wars, the Nationals are parading their own obsessions and divisions.

A letter this week from half a dozen Queensland Nationals called for the government to underwrite a new power generation project in regional Queensland (they refrained from specifying coal but that’s what they were thinking). They also said the government should put its “big stick” legislation to discipline power companies to a parliamentary vote – despite the fact it would be amended unacceptably
and so get nowhere.

This was followed on Friday by a Courier Mail report that some Nationals, discontented with Michael McCormack’s leadership, were pushing to have him replaced by Barnaby Joyce before the election.

The agitation is driven particularly by the situation in Queensland, where several Nationals’ seats are at risk – notably Capricornia, Flynn and Dawson.

Joyce did nothing to calm things on Friday when he told the Northern Daily Leader he was “not driving the process”, but if a spill were called “of course I would stand”.

McCormack is not cutting through electorally and critics are unhappy he does not stand up enough to the Liberals.

He’s considered certain to lose his leadership post-election, assuming the loss of Nationals seats.

But any attempt at moving him before the election would be madness – and most Nationals do appear to accept that.

Consider how it would look, in budget week (the only time the parliamentary party is scheduled to be in town before the election) if the Nationals were to roll the Deputy Prime Minister, or make a move to do so.

Anyway, Joyce is now a highly controversial figure within and outside the party. He might win some votes in Queensland, but he might well lose some for the government elsewhere.

With a battle for the “women’s vote” so live at this election, and Labor going all out to exploit Coalition weaknesses in this area, it would be lunacy to think of bringing back someone whose exit from the leadership was partly triggered by allegations (denied) of sexual harassment.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Morrison to announce $2 billion over 10 years for climate fund


Michelle Grattan, University of Canberra

Scott Morrison will announce $A2 billion over a decade for a Climate Solutions Fund, as the government seeks to counter criticisms that it is not doing enough towards dealing with climate change.

The money will extend the Emissions Reduction Fund (ERF), set up under the Abbott government’s “direct action” program, which at present has only $226 million uncommitted in it. More than $2.3 billion has now been committed under the ERF.

The new money – which will be about $200 million annually starting from January 2020 – will be used to partner with farmers, local government and businesses to reduce emissions. The government gives as examples

  • Remote indigenous communities will be assisted to reduce severe bush fires.

  • Small businesses will be supported to replace lighting, air
    conditioning and refrigeration systems to cut energy costs.

  • Farmers will receive assistance with revegetation and drought-proofing.

  • Local communities will receive help to reduce waste and boost recycling.

In a Monday speech, part of which has been released ahead of delivery, Morrison defends the government’s record on climate and attacks Labor’s policy as irresponsible.

The speech will contain further environment announcements beyond the $2 billion.

Climate change was an issue to the forefront in the Wentworth
byelection, the loss of which threw the Coalition into minority
government. It is considered a potent issue in Victoria, where the government has several seats at risk. In the high profile contest in Warringah, NSW, independent Zali Steggall, Tony Abbott’s main opponent, is running hard on it.

There has been debate over whether Australia could on present policies meet its Paris target – that Abbott set – of reducing emissions by 26-28% on 2005 levels by 2030.

Morrison has repeatedly said this will be reached “in a canter”. But the annual UN Environment Emissions Gap Report, released late last year, had Australia among a number of countries that are not on track to reach their 2030 target or have uncertainty based on current projections.

Morrison’s announcement will shore up Australia’s effort.

Moderate Liberals, in particular, have been pressing for more action from the government on the climate front.

In his speech Morrison says: “Our government will take meaningful, practical action on climate change, without damaging our economy or the family budget.

“Our Climate Solutions Package will ensure Australia meets our 2030 emissions reduction target – a responsible and achievable target – building on our success in comprehensively beating our Kyoto commitments”.

He says that Liberals and Nationals “don’t believe we have to choose between our environment and our economy.

“We acknowledge and accept the challenge of addressing climate change, but we do so with cool heads, not just impassioned hearts”.

The government’s 2030 target is the equivalent of cutting per capita emissions by about 50%, one of the largest cut of any G20 country, Morrison says in his speech.

The target is not “a slouch” but nor is it reckless, he says. In
contrast. Labor’s 45% target would require “more than three times the amount of emissions reduction by 2030”.

Modelling by BAEconomics confirmed Labor’s target would put a
“wrecking ball” through the economy, slashing jobs and wages and
increasing wholesale electricity prices, Morrison says.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

A Trump-aligned World Bank may be bad for climate action and trade, but good for Chinese ambitions


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A World Bank in sync with Donald Trump’s views about climate change and multilateralism would probably help to increase Chin’s role in international development and finance.
Shutterstock

Usman W. Chohan, UNSW

The seat of World Bank president is becoming vacant. Its president, Jim Yong Kim, will step down on January 31, three years earlier than his term formally ends.

His move – described as “sudden” and a “shock,” particularly since the World Bank has been going through significant internal restructuring – gives US president Donald Trump the chance to appoint a replacement more aligned with his outlook.




Read more:
World Bank president: list of reforms African states should be demanding


This is because, since the World Bank’s establishment in 1945, the United States has had outsized influence as its largest shareholder. Its president has always been an American citizen nominated by the US government. Kim was chosen by the Obama administration in 2012.

Rumours circulated early on that Trump was considering his daughter Ivanka for the job. Even though that has since been denied, it’s likely he will choose a candidate sympathetic to his worldview.

This may mean a substantial change in the World Bank’s priorities. In particular, in two areas the bank has played an important and positive role: funding sustainable projects to deal with climate change (“climate resilience”); and encouraging robust international connectivity through trade.

Focus on climate resilience

The World Bank has put substantial emphasis on funding projects in developing countries that address climate change. Last financial year 32% of its financing – a total of US$20.5 billion – was climate-related.

Recently approved World Bank projects included climate resilient transport in the Oceania region (such as in Tonga and Samoa), and solar projects across Sub-Saharan Africa. This is all part of a detailed five-year Climate Change Action Plan underway since 2016.

This concern about the consequences of climate change stands in marked contrast to the Trump administration’s record.

Trump’s disregard of climate science is reflected in the defunding or reorganisation of climate-related research projects and institutions. His appointee to head the US Environmental Protection Agency, Scott Pruitt, played a key role in the US withdrawing from the Paris Climate Agreement and energetically worked to gut pollution protection regulations.

So there’s good reason to believe the Trump administration’s pick for the World Bank will reflect its hostility to climate security, and that the bank’s priority towards funding climate resilience will change as a result.

Antipathy towards multilateralism

The Trump administration has already sought to curb salary growth among World Bank staff. More severely, Trump’s National Security advisor, John Bolton, has argued the World Bank should be privatised or simply shut down.

This is part of a wider “antipathy towards multilateralism” that includes institutions such as the United Nations and the World Trade Organisation.




Read more:
Australia has to prepare for life after the World Trade Organisation


Trump’s belief that free trade has hurt the US is at odds with the World Bank’s long history of facilitating reforms designed to promote international trade.

Part of the original logic for the World Bank was that trade was seen as a means to create interdependence, and thus reduce economic conflict that might lead to war.

The Trump administration has shown it is more than willing to revert to an old-fashioned trade war.

Its tariff contest with China (which joined the WTO in 2001 with the World Bank’s help) is already hurting global manufacturing, with the International Monetary Fund downgrading its global economic growth forecasts as a result.

Though a Trump appointee might not upend the World Bank’s commitment to free trade in principle, the result might be an organisation less active in promoting multilateralism in practice.

Playing to China’s strengths

Ironically a Trump-compliant World Bank might result in promoting its sidelining to the advantage of China.

In its first six decades of existence the World Bank was an immensely powerful international institution. But its relevance to international development and finance is now being overshadowed by alternative funding mechanisms such as private-sector lending and particularly institutions related to Chinese international development initiatives.

China is planning through its Belt and Road Initiative to spend US$1 trillion on international infrastructure projects over the coming decade. Much of these are focused on Eurasian and African regions where the World Bank has struggled most to promote sustainable prosperity.

China has also has built a rival to the World Bank in the form of the Asian Investment Infrastructure Bank (AIIB), which has a sizeable balance sheet and a proactive approach to funding projects, including those in sustainable development.




Read more:
US sparks new development race with China – but can it win?


But in climate resilience and global economic integration, the World Bank still retains the mantle of global leader. Thus far it has welcomed cooperation with the AIIB, signing a memorandum of understanding in 2017.

Blunt its work in these two areas and the World Bank becomes more irrelevant. Combined with the organisation’s serious governance problems, which are most unlikely to be addressed by a Trump appointee, the future for the World Bank is not bright.The Conversation

Usman W. Chohan, Economist, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Coal does not have an economic future in Australia


Frank Jotzo, Crawford School of Public Policy, Australian National University and Salim Mazouz, Australian National University

Renewables are stealing the march over coal in Australia, and the international outlook is for lower coal demand. Today the international Coal Transitions project released its findings, based on global coal scenarios and detailed case studies by teams in China, India, South Africa, Australia, Poland and Germany.

Our research on Australian coal transition – based on contributions by researchers at the Australian National University and the University of Melbourne – looks into the prospects for coal use in Australia and for exports, and the experiences with local transition in the case of the Hazelwood power station closure.




Read more:
Hazelwood closure: what it means for electricity prices and blackouts


Coal exports

Coal production in Australia is likely to be on a long term declining trajectory. Almost all coking coal (coal used for making steel) mined in Australia is exported, as is around 70% of steam coal (for electricity generation). Australia supplies about a fifth of the global steam coal trade.

A question mark hangs over the future of steam coal exports. Economic, technological and policy developments in other countries all point to likely falling coal use over time. The international coal transitions synthesis report expects that global coal consumption will go into reverse by the early 2020s.

In most industrialising countries, there are big concerns about local air pollution, and renewable power alternatives are becoming cost-competitive with coal. Add to that the pressure to meet Paris emissions targets.

China and India, on which much of the hopes of Australia’s coal export industry are pinned, mine coal themselves. When overall coal use in these countries falls, imports may be curbed, if only because of pressures to prop up domestic coal mining.

Coal in Australia’s power sector

Most coal used in Australia is for power generation. We are at the start of a fundamental change in the system, where coal power will be replaced by renewables, with energy storage and flexible demand-side response to firm up the system.




Read more:
Want energy storage? Here are 22,000 sites for pumped hydro across Australia


This change now reflects market economics. New wind farms and solar parks can now provide energy at much lower cost than any new fossil fuel powered generators. A new coal fired power plant would need subsidies, take a long time to build, and suffer exposure to future carbon policy.

The competition is now between renewables and existing coal fired power stations. Wind and solar power cost next to nothing to run once built, so they are dispatched first on the grid and tend to bring wholesale market prices down. In turn, the economics of coal power plants deteriorates. They will not be able to sell as much power, and get lower prices on average for every megawatt-hour of electricity produced. New wind and solar is now contracted at prices close to the operating cost of some existing coal plants, and renewables costs are falling further.

Coal plants will be less and less profitable. They will tend to be shut down earlier, typically when major repairs or overhauls are due. Major refurbishments will tend to become unattractive. And the system does not need coal plants to run reliably. A combination of regionally dispersed renewables, pumped hydro and battery storage, gas plants and demand response will do the job.

It is difficult to predict just when coal plants will shut down. The following graphic illustrates the difference between a flat 50-year retirement pattern (as used for example by the Australian Energy Market Operator), with plants retiring at 40 years of age, in line with the average retirement age of plants over the past decade, and two illustrative scenarios that capture the fact that coal plants will come under increasing economic pressure.

In our “moderate” scenario, remaining coal plants retire at 55 years in 2017 and progressively retire younger until they exit at age 30 by 2050. In our “faster” scenario, plants exit at 50 years now, then progressively younger until they exit at age 30 by 2030.

Coal closure scenarios from Coal Transitions Australia report.

Even more rapid closure scenarios are plausible if the cost of renewables and storage continue on their recent trends. We do not present them here, instead opting for relatively conservative assumptions.

The pace of closure makes a big difference to emissions. In the “moderate” scenario, cumulative emissions from coal use are around 2.6 gigatonnes of carbon dioxide (GtCO₂) during 2020-50, and in the “faster” scenario around 1.8 GtCO₂.

As a reference point, a “2 degree compatible” emissions budget for Australia proposed by Australia’s Climate Change Authority has a total national emissions budget of around 5.8 GtCO₂ from 2020-50. Our “moderate” scenario has coal emissions take up around 44% of that cumulative emissions budget, while the “faster” scenario takes up around 32%. By comparison, coal currently makes up around 30% of Australia’s annual net emissions.

It is no longer true that reducing emissions in the electricity sector necessarily means higher prices. These days, and in the future, having policy to guide the replacement of ageing coal capacity with cheap renewables is a win-win for consumers and the environment.

We had better get ready

We better put our efforts in preparing for the transition, rather than trying to stem the tide. That includes a meaningful policy treatment of carbon emissions, and mechanisms to allow more predictable exit pathways. The relatively sudden closures of the Hazelwood power station is an example of how not to manage the transition.

Wholesale prices jumped up because the replacement investment takes time, and governments scrambled to provide support to the local community after the fact.

We can do much better. Australia is well placed for a future built on renewable energy. The change can be painful if it’s not well managed, but the future looks bright.




Read more:
Australia is not on track to reach 2030 Paris target (but the potential is there)


The Conversation


Frank Jotzo, Director, Centre for Climate Economics and Policy, Crawford School of Public Policy, Australian National University and Salim Mazouz, Research Manager, Crawford School of Public Policy; and Principal at NCEconomics, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Turnbull has politicked himself into irrelevance on energy and climate in 2018



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Marcella Cheng/The Conversation

Alan Pears, RMIT University

As we approach the end of the year, it’s useful to look back and forward. Now is an auspicious time, as two major energy-related reports have been released this week: the federal government’s review of their climate change policies, and a discussion paper from the Australian Energy Market Operator (AEMO) on future energy paths.

The difference between the two is striking. The AEMO paper is practical, direct and realistic. On the other hand, the climate policy review relies essentially on Australia buying lots of international carbon permits to meet our Paris target (and, implicitly, on state governments taking up the challenge their Canberra colleagues have largely abanondoned).

It’s amusing to read a document that plays with numbers in such creative ways. But it is a fairy story, and it’s no way to drive national climate policy.


Read more: The federal Climate Policy Review: a recipe for business as usual


I almost feel as though I could just change the dates and reprint my article reviewing prospects for energy in 2017:

2017 is the year when many long-festering energy policy problems must be addressed. Our outdated energy market model is falling apart. The gas industry is lining its pockets at the expense of Australian industry. Climate policy is urgent, but controversial among key decision-makers. Our fossil fuel exports are under threat from global forces.

But things have in fact shifted a long way – the revolution is accelerating and unstoppable. The federal government is almost irrelevant; the public statements and policies it presents are simply aimed at getting “something” through the Coalition party room, or trying to throw blame on others. It’s very sad.

The real games are being played out within state governments; in battles between energy policy agencies and regulators; by emerging industry players who do not even have formal roles in energy legisation; and by business and the community as they defend themselves from the failures around them by implementing “behind the meter” solutions and working together.

The real heavy lifters

Medals of Valour should be awarded to Chief Scientist Alan Finkel, AEMO chief executive Audrey Zibelman, and South Australian Premier Jay Weatherill.

The government’s response to this year’s Finkel Review showed that no amount of compromise would allow a sensible energy and climate policy to pass through the minefield of the Coalition party room. Prime Minister Malcolm Turnbull and Environment and Energy Minister Josh Frydenberg, both of whom know what they need to do, simply have too little political capital within that place to drive realistic energy policy.

But the Finkel Review also successfully recommended many changes that will help to fix the physical operation of the grid. Innovation and the laws of physics have finally begun to triumph over market politics and ideology.


Read more: The Finkel Review at a glance


AEMO worked out a way to get around the glacial and obstructive tactics of the Australian Energy Market Commission on demand-side action by setting up a “pilot project” to drive demand response. It has been clear for decades that this is a very cost-effective tool. Zibelman has been a voice of practical reality and clear understanding of the future of energy, including the demand side, and AEMO’s future energy paths reflects that.

Weatherill has weathered a storm of abuse over his state’s innovative energy strategy. His government has shown how a diversified approach can transform an energy system in little more than a year. But he needs to put more effort into long term energy efficiency and energy productivity improvement measures integrated with renewables and storage, to reduce pressure on electricity systems over time. For example, home cooling comprises a third of South Australia’s peak electricity demand, but could be slashed by efficient buildings and cooling equipment.

What lies ahead

Looking forward, the coming year will be shaped by some key issues, some of which are already playing out at a frenetic pace. Consider a small sample of many recent events:

  • As mentioned, AEMO has released a discussion paper framing a very different electricity future, and including a low-carbon scenario.

  • The new battery in South Australia has delivered remarkable outcomes, helping to stabilise the grid in ways that few imagined.


Read more: Yes, SA’s battery is a massive battery, but it can do much more besides


  • The Victorian Essential Services Commission has proposed a new “time of day” feed-in price for rooftop solar that reaches 29 cents per kilowatt-hour in afternoons and evenings. If approved, this will be a game-changer, as adding battery storage to rooftop solar will become far more attractive.

  • The Energy Networks Association, not the gas industry, has released a zero emission gas strategy at last.

  • The annual report on the National Energy Productivity Plan (remember that?) shows we’re falling behind even the government’s weak target: not surprising given the miniscule resources allocated.

Meanwhile the federal government has released energy modelling to underpin ongoing negotiation on the National Energy Guarantee (NEG) that is simply irrelevant and embarrassing. The Energy Security Board’s involvement in this has undermined perceptions of its independence, especially when it is contrasted with the vision AEMO is discussing in its paper.

While the states have agreed to continue discussion on the NEG in April, there are some major hurdles. Primarily, states must be allowed to set and achieve their own energy targets: the federal energy minister has put the blame for problems on the states, and they now have to be seen by their voters to act.

Second, the design must ensure it does not give the dominant energy companies even more power to distort markets. Some members of the Energy Security Board seem to understand the challenges, and are optimistic they can be overcome. Time will tell.

The ConversationAs Turnbull has said, we live in exciting times.

Alan Pears, Senior Industry Fellow, RMIT University

This article was originally published on The Conversation. Read the original article.

The true cost of keeping the Liddell power plant open


Frank Jotzo, Australian National University and Zeba Anjum, Australian National University

For a long time, Australian governments have believed that the private sector should run the electricity sector. And successive governments have used market instruments to incentivise reducing emissions, by supporting renewables, discouraging coal use, or both.

Now things seem inside out: uncertainty about energy policy mechanisms is pervasive, and the federal government is attempting to broker a deal for the ageing Liddell coal plant to stay open past its planned decommissioning date. It’s possible the plan will require government payments – amounting to a carbon subsidy.


Read more: AGL rejects Turnbull call to keep operating Liddell coal-fired power station


Fear of supply shortages and an appetite for coal have combined with an inability to resolve the political side of energy and climate policy.

Power companies see coal as a technology of the past, but the government seems unready to accept that wind and solar technologies (already the cheapest option for new capacity in Australia) are the future of Australia’s power.


Read more: The day Australia was put on blackout alert


The latest suggestion amounts to deferring serious investment in renewables for a while, fixing up some of the old coal plants up so they can run a few more years, and buying time in the hope of keeping power prices down. Chief Scientist Alan Finkel has backed the idea, at least in principle.

The cost of delaying the inevitable

Commissioned in 1972, the Liddell power plant is the oldest of Australia’s large coal-fired stations (after the closure of the Hazelwood station). The New South Wales government sold it to AGL in 2014, at an effective price of zero dollars.

AGL announced some time ago that it will close the plant in 2022 and has considerable financial incentive to do so. This week AGL reiterated this. The latest suggestion is that Delta Electricity might buy and continue to operate Liddell.

What might be the benefits and costs of keeping Liddell running for, say, another decade? We do not know the plant-level technical and economic parameters, but let’s look at the principles and rough magnitudes.

Keeping the plant running longer will require refurbishments, defer the investment costs in renewables, and result in additional emissions, both in carbon dioxide and local air pollutants.

Refurbishment is costly. Finkel put refurbishment costs at A$500-600 million for a 10-year extension. Such refurbishment might achieve an increase in efficiency – as GE, a maker of power station equipment, recently argued – but perhaps not by much for a very old plant like Liddell.


Read more: Coal and the Coalition: the policy knot that still won’t untie


And refurbishment might not work so well, as the experience with the Muja plant in Western Australia shows: A$300 million was spent on refurbishment that ultimately failed. Spending big money on outdated equipment is not a particularly attractive option for energy companies, as AGL’s CEO recently pointed out.

Liddell’s power output during 2015-16 was around 8 terawatt hours – about 10% of present NSW power supply (it was more in 2016-17, and less in previous years). It might well be lower as the plant ages.

Ironically, the reduction in the Renewable Energy Target, from 41 to 33 terawatt hours per year, almost exactly matches Liddell’s present power output. With the original RET target, new renewables would have covered Liddell’s output by 2020.

Liddell emitted around 7.5 million tonnes of carbon dioxide per year in 2015-2016. With the assumed reduction in output and some improvement in CO₂ emissions intensity, the carbon dioxide output might be in the order of 5-6 million tonnes per year, or 50-60 million tonnes over ten years.

If the government were to pay for the refurbishment, as has been suggested, this would equate to subsidising CO₂ emissions at a rate of perhaps $10 per tonne, compared to the alternative of replacing Liddell with renewable power.


Read more: FactCheck Q&A: is coal still cheaper than renewables as an energy source?


At the same time, the government is paying for projects to reduce emissions, at average prices of around $12 per tonne of carbon dioxide, under the Emissions Reduction Fund. The contradiction is self-evident. Furthermore, keeping more coal plants operational deters commercial investment in any kind of new plants.

Of course this needs to be seen in the context of supply security, any subsidies that might be paid in future to renewable energy generators, and the possibility that a Clean Energy Target will determine overall emissions from electricity production irrespective of whether Liddell operates or not. It’s complicated. But the fundamental point is clear: paying for an old coal plant to operate for longer means spending money to lock things in, and delay the needed transition to clean power.

A possible compromise might be to mothball the Liddell plant, to use if supply shortages loom, for example, on hot summer days. But such a “reserve” model could mean very high costs per unit of electricity produced.

It is not clear that it would be cheaper than a combination of energy storage and flexible demand-side responses. And it may be unreliable, especially as the plant ages further. During the NSW heatwave last summer Liddell was not able to run full tilt because of technical problems.

A market model to pay for reserve capacity would surely do better than government direction.

Australia’s energy companies have been calling for a mechanism to support new clean investment, such as the Clean Energy Target. And many would no doubt be content to simply see a broad-based, long-term carbon price, which remains the best economic option. If the policy framework was stable, private companies would go ahead with required investment in new capacity.


Read more: Finkel’s Clean Energy Target plan ‘better than nothing’: economists poll


The ConversationMeanwhile, federal and state governments are intervening ad-hoc in the market – making a deal to keep an old plant open here, building and owning new equipment there. It is the worst of all worlds: a market-based system but with extensive and unpredictable intervention by governments that tend to undermine investor confidence.

Frank Jotzo, Director, Centre for Climate Economics and Policy, Australian National University and Zeba Anjum, PhD student, Australian National University

This article was originally published on The Conversation. Read the original article.

How hard will Tony Abbott run against the Finkel plan?



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The government faces a hard internal sell on the Finkel plan, not least to Tony Abbott.
Mick Tsikas/AAP

Michelle Grattan, University of Canberra

Bedding down an energy security policy based broadly on the Finkel model is now crucial for Malcolm Turnbull. But the issue will also test Tony Abbott’s judgement and influence, in what has long been a marquee area of difference between the two men.

Abbott is poking and prodding at the Finkel plan, raising questions and doubts about it.

He told 2GB’s Ray Hadley on Monday that two criteria were essential when judging the chief scientist’s proposal for a clean energy target (CET) that, his report says, “will encourage new low emissions generation [below a threshold level of carbon dioxide per megawatt hour] into the market in a technology neutral fashion”.

Abbott’s criteria were:

  • Did Finkel’s scheme take the pressure off power prices?

  • Did it allow coal to continue?

“My anxiety, listening to reports of the report and this statement that they’re going to reward clean or low emissions fuels while not punishing high emissions fuels, is that it’s going to be a magic pudding,” Abbott said.

“Now we all know that there is no such thing as a magic pudding. And if you are rewarding one type of energy, inevitably that money has got to come from somewhere – either from consumers or taxpayers”.

“And if it’s from consumers, well it’s effectively a tax on coal and that’s the last thing we want”.

For Abbott, the magic word “tax” conjures up his glory days of fighting the Labor government’s “carbon tax”.

Labels can make a lot of difference. As Abbott’s former chief-of-staff Peta Credlin said earlier this year of the carbon tax: “It wasn’t a carbon tax, as you know – it was many other things in nomenclature terms. We made it a carbon tax. We made it a fight about the hip pocket and not about the environment. That was brutal retail politics.”

The CET is not a “tax”, and Finkel argues that consumers will be better off than if the status quo continues – a status quo that businesses and most other stakeholders consider not to be an option.

But the scheme would disadvantage coal relative to renewables – and the extent of the disadvantage will be crucial in the debate within Coalition ranks.

In a softening up exercise, Energy Minister Josh Frydenberg lobbied backbenchers individually about the Finkel plan before Friday’s release. Government sources say the feedback is good and believe there is a strong majority that believes Finkel offers a potential way forward.

But the chairman of the government’s backbench environment and energy committee, Craig Kelly, a hardliner, wants more work done “by a couple of other independent organisations”.

In the end, the argument may come down to how “Finkel” is interpreted and the precise form in which it would be translated into practice.

Tuesday’s Coalition meeting is set to provide the first indication of whether the government’s optimism about the positive reception of the plan is solidly based.

The Nationals are vital, given their passion for coal and their original role in mobilising Coalition feeling against an emissions trading scheme. Their general position is they can live with the Finkel framework but it will be a matter of the detail, notably the threshold, with its implications for coal.

Deputy Prime Minister Barnaby Joyce is on board, based on his pragmatic assessment that this is better than possible future alternatives. He said on Friday: “I think that if we don’t bed this down, you can see what’s happening in England or anywhere else. If you lose the election, you’re going to get a worse outcome.

“So I’d rather bed down an outcome that secures coal miners, that secures coal-fired power, because I strongly believe in its capacity to provide baseload power that fulfils our obligations in international treaties.

“If we can do that and make sure Mr and Mrs Smith get cheaper power, then of course I’m going to consider that.”

Outspoken Nationals George Christensen is waiting on more information. “I’ve got some mixed thoughts,” he says of Finkel’s plan, and wants to talk further to Frydenberg.

“I’m comfortable with measures to bring down electricity prices. But I’m not comfortable with anything like an emissions trading scheme, or a derivative thereof” – and he is not sure whether this proposal is a “derivative”.

The position of the Liberal critics will be much weakened if the Nationals get behind the Finkel plan.

Abbott will have to make a call about the mood of his colleagues and decide how hard to go on this issue in coming weeks. This area has been a signature one for him and his weakness would be highlighted if he could only attract a handful of naysayers.

The ConversationObviously, the stakes are a great deal higher for Turnbull. If things went badly for Turnbull in his pursuit of the Finkel option, it would be a major disaster for him and his government. When it comes to emissions policy, Turnbull is always walking on the edge of a sinkhole.

https://www.podbean.com/media/player/icjdu-6b9a25?from=site&skin=1&share=1&fonts=Helvetica&auto=0&download=0

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Time for China and Europe to lead, as Trump dumps the Paris climate deal


Christian Downie, Australian National University

President Donald Trump’s announcement overnight that he will withdraw the United States from the Paris climate agreement comes as no surprise. After all, this is the man who famously claimed that climate change was a hoax created by the Chinese.

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While it will take around four years for the US to withdraw, the prospect is complicated by Trump’s claim that he wants to renegotiate the agreement – a proposal that European leaders were quick to dismiss. But the question now is who will lead global climate action in the US’ absence?

As I have previously argued on The Conversation, there are good reasons for China and Europe to come together and form a powerful bloc to lead international efforts to reduce greenhouse gas emissions.

China is now the world’s number-one energy consumer and greenhouse gas emitter, and should it combine forces with Europe it has the potential to lead the world and prevent other nations from following the US down the path of inaction.

There are very early signs that this may be happening. Reports this week indicate that Beijing and Brussels have already agreed on measures to accelerate action on climate change, in line with Paris climate agreement.

According to a statement to be released today, China and Europe have agreed to forge ahead and lead a clean energy transition.

While it is too early to predict how Chinese and European leadership will manifest in practice, in the face of American obstruction they are arguably the world’s best hope, if not its only hope.

Decades of destruction

Trump’s announcement only reaffirms his antipathy towards climate action, and that of his Republican Party, which for decades has led attempts to scuttle efforts to reduce emissions at home and abroad. Let’s not forget that it was President George W. Bush who walked away from the Kyoto Protocol.

In just the few short months of his incumbency so far, Trump has halted a series of initiatives executed by President Barack Obama to address climate change. These include taking steps to:

  • Repeal the clean power plan

  • Lift the freeze on new coal leases on federal lands

  • End restrictions on oil drilling in Arctic waters

  • Reverse the previous decision against the Keystone XL pipeline

  • Review marine sanctuaries for possible oil and natural gas drilling.

And the list goes on.

This remains the real problem, regardless of whether the US is inside the Paris climate agreement or outside it. As the planet’s second-largest emitter of greenhouse gases, what the US does domestically on climate change matters a great deal.

As a result, if China and Europe are to lead the world in the US’ absence, not only will they have to ensure that other nations, such as Australia, do not follow the US – and some members of the government hope they do – but they are also going to have to think creatively about measures that could force the US to act differently at home. For example, some leaders have already mooted introducing a carbon tax on US imports, though such proposals remain complicated.

In the meantime, while these political battles play out around the world, climate scientists are left to count the rising cost of inaction, be it the bleaching of coral reefs or increasing droughts, fires and floods.

The ConversationIf only it were all a hoax.

Christian Downie, Fellow and Higher Degree Research Convener, Australian National University

This article was originally published on The Conversation. Read the original article.