The government’s electricity shortlist rightly features pumped hydro (and wrongly includes coal)


Mark Diesendorf, UNSW

The federal government this week released a shortlist of 12 project proposals for “delivering reliable and affordable power” to be considered for subsidy under its Underwriting New Generation Investments program.

The shortlist features six renewable electricity pumped hydro projects, five gas projects, and one coal upgrade project, supplemented by A$10 million for a two-year feasibility study for electricity generation in Queensland, possibly including a new coal-fired power station.

The study is unnecessary, because the GenCost 2018 study by CSIRO and the Australian Energy Market Operator already provides recent cost data for new power generation in Australia. It shows that new wind and solar farms can provide the lowest-cost electricity, even when two to six hours’ worth of storage is added.

Hence there is no economic case for new coal-fired power in Australia. After a century of coal, it should not be subsidised any longer.




Read more:
It’s clear why coal struggles for finance – and the government can’t change that


State of the states

While Queensland and Victoria have state government policies to drive the rapid growth of large-scale solar and wind, New South Wales does not even have a renewable electricity target. Yet the retirement of large, old coal-fired stations is in the pipeline: Liddell, nominally 1,680 megawatts, in 2022 and Vales Point, nominally 1,320MW, possibly in the late 2020s.

Coal baron Trevor St Baker bought Vales Point from the NSW government for the token sum of A$1 million in 2015. He wants to refurbish it and run it until 2049 – and his plan has made it onto the government’s shortlist.

Given that Vales Point is now arguably a A$730 million asset, St Baker has made a huge windfall profit at the expense of NSW taxpayers, and so a government subsidy to upgrade it would be unjust.

With the price of solar and wind electricity still falling, it will soon be cheaper to replace old operating coal stations that have paid off their capital costs with new renewable electricity, including storage.

Unfortunately, the newly elected NSW Liberal-National Coalition government has no policies of substance to fill the gap left by retiring coal stations with large-scale renewable electricity. It will therefore be up to the federal government after the May election to provide reverse auctions with contracts-for-difference, matching the policies of the ACT, Victorian and Queensland governments. Also, increased funding to ARENA and the Clean Energy Finance Corporation is needed for dispatchable renewables (those that can supply power on demand) and other forms of storage.

Driving the change

The transition to renewable electricity is already well under way, as even the federal energy minister Angus Taylor admits. The low costs of solar and wind power are driving the change. To maintain reliability, dispatchable renewables (as opposed to variable sources such as solar and wind) and other forms of storage are needed in the technology mix.

Batteries excel at responding rapidly to changes in supply and demand, on timescales of tens of milliseconds to a few hours. But they would be very expensive for covering periods of several days, even at half their current price. So there is a temporary role for open-cycle gas turbines (OCGTs) to meet demand peaks of a few hours, and to fill lows of several days in wind and/or solar supply.

Small-scale pumped hydro, in which excess local renewable electricity does the pumping, has huge potential for storage over periods of several days, but takes longer to plan and build, and has higher capital cost per megawatt, compared with OCGTs.

Small-scale pumped hydro should be the top priority for the federal program. In particular, the off-river proposal by SIMEC Zen Energy, which is part of Sanjeev Gupta’s GFG Alliance, will use a depleted iron ore pit and provide cheap, reliable, low-emission electricity for both GFG’s steelworks at Whyalla and other industrial and commercial users.




Read more:
Five gifs that explain how pumped hydro actually works


Hydro Tasmania’s proposed “Battery of the Nation” would involve building a new interconnector across the Bass Strait, together with possibly three new pumped hydro plants. It’s very expensive and is already receiving A$57 million in federal funding. Its inclusion in the shortlist is worrying because it could soak up all the program’s unspecified funding for pumped hydro.

Furthermore, the need to greatly increase Tasmania’s wind capacity to deal with droughts appears to be an optional extra, rather than an essential part of the project.

Little information is available for the other shortlisted pumped hydro projects. UPC Renewables is proposing a huge solar farm, together with pumped hydro, in the New England region of NSW. In South Australia, Sunset Power (trading as Delta Electricity, chaired by Trevor St Baker), in association with the Altura Group, is proposing an off-river pumped hydro project near Port Augusta, and Rise Renewables is proposing the Baroota pumped hydro project. BE Power Solutions, which does not have a website, is proposing pumped hydro on the Cressbrook Reservoir at Crows Nest, Queensland.

Pumping for Snowy 2.0 (which is not part of the program) will be done mostly by coal power for many years, until renewables dominate supply in NSW and Victoria. Therefore, I give low priority to this huge and expensive scheme.




Read more:
Snowy hydro scheme will be left high and dry unless we look after the mountains


To sum up, new coal power stations and major upgrades to existing ones are both unnecessary. They are more expensive than wind and solar, even when short-term storage is added – not to mention very polluting.

A few open-cycle gas turbines may be acceptable for temporary peak supply during the transition to 100% renewable electricity. But the priority should be building pumped hydro to back up wind and solar farms. This will keep the grid reliable and stable as we do away with the old and welcome the new.The Conversation

Mark Diesendorf, Honorary Associate Professor, UNSW

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

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…

View original post 660 more words

Grattan on Friday: The Coalition is trapped in its coal minefield


Michelle Grattan, University of Canberra

Sydney shock jock Ray Hadley was apoplectic. Home Affairs Minister
Peter Dutton, one of Hadley’s favourites, who has a regular spot on his 2GB program, had just committed blasphemy.

Dutton said he didn’t believe in the government building a new
coal-fired power station. Hadley couldn’t credit what he was hearing. “You’re toeing the [Morrison] company line”, he said accusingly.

It’s another story with Dutton’s cabinet colleague and fellow
Queenslander, Resources Minister Matt Canavan, who is part of the
Queensland Nationals’ push for support for a new power station in that state.

“Studies have come back always saying that a HELE [high-efficiency, low-emissions] or a new coal-fired power station would make a lot of sense in North Queensland,” Canavan said this week.

The two ministers’ divergent views are not surprising on the basis of where they come from. In Brisbane voters tend to share similar opinions on climate change and coal to those in the southern capitals – it’s the regions where support for coal is stronger.

What’s surprising is how the rifts at the government’s highest levels are being exposed. In these desperate days, it is every minister, every government backbencher, and each part, or sub-part, of the Coalition for themselves.

Never mind cabinet solidarity, or Coalition unity.

The most spectacular outbreak came this week from Barnaby Joyce,
declaring himself the “elected deputy prime minister” and pressing the government for a strongly pro-coal stand.

It was a slap at besieged Nationals leader Michael McCormack, after rumourmongering that McCormack might be replaced even before the election. Predictably, the NSW Nationals, fighting a difficult state election, were furious.

The Joyce outbreak was further evidence that the federal Nationals are a mess, over leadership and electorally. They have a party room of 22 – there are fears they could lose up to four House of Representatives seats as well as going down two in the Senate.




Read more:
View from The Hill: Coal turns lumpy for Scott Morrison and the Nationals


(However it’s not all gloom in the Nationals – at the election they will gain three new women, two in the Senate – Susan McDonald from Queensland and Sam McMahon from the Northern Territory – and Anne Webster in the Victorian seat of Mallee. Whatever happens to the party’s numbers overall, the women will go from two to four or five, depending on the fate of Michelle Landry, who holds the marginal seat of Capricornia. The Nationals’ NSW Senate candidate is also a woman but is unlikely to be elected.)

By mid week Joyce was back in his box, stressing that McCormack would take the party to the election. But he was still in the coal advocacy vanguard.

The coal debate and the assertiveness of the Queensland Nationals
smoked out a clutch of Liberal moderates, who question spending
government money on coal projects (although there is some confusion between building power stations and underwriting ventures).




Read more:
Queensland Nationals Barry O’Sullivan challenges Morrison over coal


The government’s policy is for underwriting “firm power” projects, on a technology-neutral basis, if they stack up commercially.

The marauding Nationals were derisive of moderate Liberals trying to protect their seats. “Trendy inner-city Liberals who want to oppose coal and the jobs it creates should consider joining the Greens,” Queensland National George Christensen said tartly on Facebook.

It was a rare appearance by the moderates, who have made a poor
showing over the last few years, True, some were crucial in achieving the same-sex marriage reform. But in general they’ve failed to push back against the right’s tightening ideological grip on the Liberal party, and the government has suffered as a result.

The week highlighted, yet again, that instead of a credible energy
policy, the government has only confusion and black holes.

With his recent announcements, Morrison has been trying to show he’s heard the electorate on climate change. But actually, these were mostly extensions of what had been done or proposed.

The Abbott government’s emissions reduction fund (renamed) is getting an injection, given it would soon be close to exhausted. And the Snowy pumped hydro scheme, announced by Malcolm Turnbull, has received the go-ahead. Didn’t we expect that? There was also modest support for a new inter-connector to transmit Tasmanian hydro power to Victoria.

The government can’t get its “big stick” legislation – aimed at
recalcitrant power companies – through parliament. It will take it to the election. But who knows what its future would be in the unlikely event of a re-elected Coalition government? It would face Senate hurdles and anyway “free market” Liberals don’t like it.

And then we come to the underwriting initiative. The government has 66 submissions seeking support, 10 of which have “identified coal as a source of generation”.

Sources say it is hoped to announce backing for some projects before the election. But this will be fraught, internally and externally, for the government.

One source hinted one project might involve coal. Even if this is
true, it won’t satisfy the Coalition’s coal spruikers, deeply unhappy that Morrison has flagged there won’t be support for a Queensland coal-fired power station. (The Queenslanders liken Morrison’s cooling on coal to Kevin Rudd’s 2010 back off from his emissions trading scheme.)

On the other hand, underwriting of any coal project would alarm
Liberals in the so-called “leafy-suburbs” electorates.

Given the proximity to the election, the government could do little more than give promises to particular projects. There is also the risk of blow back from those whose bids are unsuccessful.

There would be no obligation on a Labor government to honour any
commitments, because formal agreements would not have been finalised.

Meanwhile the government is trying to promote a scare against Labor’s climate policy, still to be fully outlined, which includes reducing emissions by an ambitious 45% by 2030 (compared with the government’s pledge of 26-28%).

But unlike, for example, the scare over the ALP’s franking credits
policy (dubbed by the government a “retirement tax”), this scare is much harder to run, except in specific regional areas.

The zeitgeist is in Labor’s favour on the climate issue, not least
after sweltering summer days and bushfires.

The public have a great deal of faith in renewables – in focus groups people don’t just like them, they romanticise them.

It seems the government can’t take a trick on climate and energy
policy – even the school children are reminding it of that.




Read more:
Students striking for climate action are showing the exact skills employers look for


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.

View from The Hill: Coal turns lumpy for Scott Morrison and the Nationals


Michelle Grattan, University of Canberra

Scott Morrison’s government is struggling with a fresh crisis,
the combination of a bitter domestic within the Nationals and the
conflicting imperatives of pitching to voters in Australia’s north and south on the highly charged issues of energy and climate change.

Former deputy prime minister Barnaby Joyce on Monday turbocharged his push to regain the Nationals leadership with a media blitz.

Obviously the former Nationals leader would like his positions back
now (despite saying “we’ve got to go to the polls with the team
we’ve got”) but if that’s not possible he’s staking his claim for
after the election.

There was a manic edge to Joyce’s Monday interviews, focused on leadership and championing coal. Explaining why, while he wouldn’t move for a spill, he’d feel no “guilt” about standing if the opportunity came, he described himself as the “elected deputy prime minister of Australia”. That claim was based on occupying the position when the Coalition won the election.

Bizarrely, he also questioned that emissions could be measured. “It is a self-assessment process by the major emitters … And then it’s compiled by the government. So basically, it’s a proposition about a supposition,” he said on the ABC.

Although these days he sounds more over-the-top than ever, Joyce resonates with Queensland Nationals fearing a loss of seats – they have boundless faith in his campaigning power, and are highly critical of the ineffectiveness of party leader Michael McCormack.

One of their key KPIs for McCormack has been that he must successfully pressure Morrison for the government to underwrite coal-fired generation.

But McCormack hasn’t been able to deliver, and that became obvious on Monday, when Morrison indicated the government won’t be nominating a Queensland coal project for underwriting.

“For such a project to proceed, it would require the approval of the Queensland state government,” the Prime Minister said.

“Now, the Queensland state government has no intention of approving
any such projects at all. So I tend to work in the area of the
practical, the things that actually can happen”.

Annastacia Palaszczuk might derive some wry amusement to find the
PM sheltering behind her skirts.

The Queensland rebels are less amused, seeing this as evidence that
McCormack has lost the battle (if he ever joined it) and worrying the Prime Minister is “cutting Queensland adrift to sandbag Victoria”.

Morrison certainly knows that to embrace a coal project would be
counterproductive for the Liberals in Victoria, where a number of
seats are at risk.




Read more:
Politics with Michelle Grattan: Ian McAllister on voters and issues in the coming election


But it is not just Victoria, or even just Liberal seats.

A hard-fought state election is underway in NSW, and the Nationals have much at stake.

They have several seats on or near the north coast where concern about climate change would top commitment to coal.

Lismore is a case in point, where the Nationals have their member retiring, and polling is showing a strong Green vote.

The regional vote is seen as crucial to the NSW election outcome,
and it is very volatile.

The destabilisation in the federal party is the last thing the NSW
Nationals need right now. If the state Nationals do badly on March 23, there will be recriminations and that will flow back into the federal backbiting and panic.




Read more:
Mark Latham in the upper house? A Coalition minority government? The NSW election is nearly upon us and it’s going to be a wild ride


How McCormack will go managing his rebellious party in the coming
weeks is problematic.

He displays poor judgement under pressure, as he did on Monday, after Joyce said the Nationals could pursue policies in their own right because “we are not married to the Liberal Party”.

“I understand when you have a marriage that it’s a two-way
relationship,”. McCormack shot back. “You don’t always get what you
want, but you have to work together … That’s what I do with the
Liberals.”

The man who lacks “cut through” had cut through, in an unfortunate way, to Joyce’s marital failure.

On Monday night, the row over coal took a new turn, threatening a
dangerous further escalation.

A batch of moderate Liberals, in a co-ordinated effort, waded into the debate, with public comments opposing taxpayer funds being used to build or pay for any new coal-fired power station.

They included Trevor Evans, Jason Falinski, Tim Wilson (who likes to call himself “modern” rather than “moderate”), Trent Zimmerman, Jane Hume – and Dave Sharma, the candidate for Wentworth.

Their comments were made under the cover of supporting the Prime Minister, but they had been wanting to say their piece for quite a while.

Once again, raging energy and climate wars are burning out of control in government ranks.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.

The Chinese coal ‘ban’ carries a significant political message


File 20190228 150688 12m2l1x.jpg?ixlib=rb 1.1
The market reaction to the “ban” was telling, underscoring the problem of being so reliant on a single client.
Shutterstock

Tony Walker, La Trobe University

As a standoff over Australian coal shipments through the northern Chinese port of Dalian continues, it underscores the extent of Australia’s economic dependence on China.

One-third of all Australia’s exports globally are China-bound.

Market reaction to a Chinese coal “ban” was telling and reflected concerns about an over-dependence on one client.

The Australian dollar tumbled before recovering. Coal producers were pegged back.

Initially, the decision was attributed to local customs officials, but this misunderstood the nature of the Chinese regime.

No decision to restrain imports from China’s largest supplier of raw materials would be taken without the imprimatur of the leadership in Beijing.

While the freeze on Australian coal imports through Dalian may prove to be a short, sharp shock, what China’s action does convey is a message that Beijing can turn an import spigot on and off at will.

Why it might have chosen now to remind Australia of its vulnerability to central planning decisions, arbitrarily applied, is not clear. But it’s reasonable to speculate that politics is involved.




Read more:
Huawei executive’s arrest will further test an already shaky US-China relationship


What is notable about China’s action is that it does not, at this stage, affect Russian and Indonesian coal imports. Australia appears to have been singled out.

Australia is far and away the world’s largest coal exporter. It accounts for more than 20% of China’s coal imports, the bulk of it thermal coal for greedy power stations.

China’s foreign ministry has said there is no “ban” on Australian coal imports through the Dalian port. But with demurrage charges mounting on coal carriers obliged to stand offshore for 40 days or more, use of the word “ban” is moot.

If politics is a factor, then several possibilities present themselves in what has been a rocky relationship over the past several years. Beijing could be signalling its displeasure over Australia’s decision to bar the technology company Huawei from participating in the build-out of Australia’s 5G communications network.

Other possible causes of Chinese unhappiness include Canberra’s decision to deny a re-entry permit to Australia for businessman Huang Xiangmo. This follows a decision to deny Huang Australian citizenship on grounds that his links with the Chinese Communist Party render him a security risk.

Delicate late-stage negotiations between the US and China on trade could also be a factor. Beijing might regard meting out a bit of grief to one of America’s closest allies as a reminder of its ability to exact retribution if things do not go its way.

Then there are the twin issues of the South China Sea and China’s push into the southwest Pacific.

Canberra is a persistent – if low-key – critic of Beijing’s militarisation of disputed territory in waters that are subject to claims and counter-claims before international tribunals.

These waters span trade routes through which the bulk of Australia’s seaborne trade passes to its markets in north Asia, including trans-shipment points like Dalian.

Beijing will also not have overlooked a vigorous campaign against its interests being waged by elements of the Australian foreign and security policy establishment.

At the forefront of this criticism is the government-funded Australian Security Policy Institute. ASPI spokespeople have focused particularly on China’s alleged breaches of cyber security.

Sections of the Australian media, feeding off ASPI criticism of cyber breaches, will have added to Chinese displeasure.

Then there are irritants like the continued detention on security grounds of Chinese-Australian writer Yang Hengjun. Yang has been a persistent critic of the Communist Party.

While a freeze initiated by Beijing – during which no senior Australian official visited China for high-level talks for the better part of two years – has been lifted, relations remain problematic.

Foreign Minister Marise Payne went to Beijing late last year for talks with her Chinese counterpart. These were designed to “re-set” the relationship. But episodes like the “ban” on coal shipments foreshadow further difficulties in the Sino-Australia relationship as China’s power and influence grow.




Read more:
Australia and China push the ‘reset’ button on an important relationship


Other explanations offered for what appeared to be, on the face of it, arbitrary action against Australian coal shipments relate to pressures on China’s hard-pressed domestic producers.

In a slowing Chinese economy, competition from higher-quality and competitively priced imports has battered domestic coal producers.

In other words, a number of factors are likely to have been at play in China’s decision to halt Australian coal imports through Dalian, if only temporarily.




Read more:
Australian-Chinese author’s detention raises important questions about China’s motivations


These coal shipments, it should be noted, amount to a relatively small proportion of the 300 million tonnes shipped annually.

About 7 million tonnes passes through Dalian. This is coking or metallurgical coal for the steel industry, to distinguish it from thermal coal for power generation.

In 2017-19 coal exports to China were worth about A$13 billion, second only to exports of A$50 billion of iron ore and concentrates.

However, if the ban spreads to other ports Australian exporters will have cause for much deeper concern.

Uncertainties among Australian exporters are not helped by an opaque Chinese system that denies transparent explanations – unless it suits Beijing – of actions that are unfriendly to its trading partners.

China’s slowdown in imports of Australian wine last year is a case in point. The problem has eased, but the episode unnerved wine exporters whose production is geared significantly to a booming Chinese market.

Australian officials will also be concerned about action taken against Canadian nationals who have been detained in apparent retaliation for Canada’s arrest – pending extradition to the US – of the daughter of the Huawei founder.

Meng Wanzhou, Huawei’s chief financial officer, has been fighting extradition through the courts in Vancouver to prevent her removal to the US, where she has been charged with violations of sanctions against doing business with Iran.

The arrest of two Canadians – former diplomat Michael Kovrig and businessman Michael Spavor – for allegedly endangering China’s national security is widely viewed as retaliation against Canada for the arrest of Meng.

What all this tells us is that dealing with a more nationalistic, assertive and ruthless China in pursuit of what it regards as its national interests will become more, not less, difficult.

Western officials can talk about a rules-based international order until they’re blue in the face, but if the rules don’t correspond with Beijing’s own preferences, then chances are it will disregard them.

This is a reality that has taken some time to impress itself on those who might have believed that encouragement to China to live up to expectations of it becoming a “responsible stakeholder” will survive an encounter with Chinese self-interest.

In that regard, Beijing and Washington are not dissimilar in a new era in which a more nationalist US is shunning multilateral trading agreements like the Comprehensive and Progressive Agreement for Trans Pacific Partnership and looking to a narrower self-interest.

The new US-China trade deal is set to be concluded next month. You can be sure that interruptions to Australian coal shipments to China will be very far from their concerns.The Conversation

Tony Walker, Adjunct Professor, School of Communications, La Trobe University

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.




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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.

Grattan on Friday: Coal fires Tony Abbott’s pre-Newspoll play


Michelle Grattan, University of Canberra

One Liberal moderate bluntly characterises the “Monash Forum”, which burst into the energy debate this week, as “the deplorables trying to give themselves a credible front”.

Whatever else it might be, the so-called forum is Tony Abbott’s latest weapon in baiting the Turnbull bear.

Coalition backbenchers who signed the forum’s letter, which calls for the government to construct a new coal-fired power station in the Latrobe Valley on the site of the now-closed Hazelwood, are driven by various motives – revenge against Malcolm Turnbull, an ideological commitment to coal, the desire to sharpen the differences with Labor, a passion for publicity.

For Abbott and his allies Kevin Andrews and Eric Abetz this is a guerilla operation, in part building on an earlier loose conservative grouping. There is also a strong “coal constituency” within Coalition ranks.

It looks like the gathering of signatories involved a whip-around of the usual suspects and a few innocents. It’s unclear how many signed. Invoking John Monash, famed World War 1 general who spearheaded the development of Victoria’s coal power supply, turned out to be too clever by half – descendants of Monash issued an angry statement.

Regardless of numbers, a strongly-motivated few can do a lot of harm, when today’s breathless 24-hour news cycle amplifies everything. The forum’s voice easily reached high volume.

We always knew there’d be a performance from Abbott to mark next week’s expected 30th consecutive negative Newspoll. A radio and TV blitz seemed inevitable.

But we underestimated the planning. Not only has the coal group created bad vibes in the run-up to the poll, but Abbott will be in the Latrobe Valley on Monday with his annual pollie pedal, cycling through the coal and power seat of Gippsland, held by Nationals minister Darren Chester.

The lycra-clad former prime minister will be camera-bait on the current prime minister’s anticipated black day.

As well as being a distraction politically, the coal push is flawed as a policy.

The unwillingness of private enterprise to invest in new coal-fired power stations emphasises how ill-judged it would be for government to do so. It would be flying in the face of the energy transformation, and squandering taxpayers’ dollars.

It would go against the grain of traditional Liberal philosophy, articulated by John Howard, who has declared he isn’t keen on the idea: “I don’t think governments should do things private enterprise do better.”

Treasurer Scott Morrison countered the cheapness argument, distinguishing between “old coal” and “new coal,” with the price of electricity from new coal-fired plants being much higher than from existing ones.

Abbott (who harbours bitterness about Morrison from the coup) lost no time in delivering a backhander to the Treasurer. Recalling Morrison not so long ago flourishing a lump of coal in Question Time, he said, “I thought he was making a lot more sense that day than he was today.”

The forum letter has publicly divided the Nationals, still reeling from the trauma created by the Barnaby Joyce crisis. Joyce is a signatory, but Resources Minister Matt Canavan, Joyce’s one-time chief-of-staff and personally strongly pro-coal, said he didn’t think coal needed subsidies.

The coal insurgency won’t prevail – in that the government won’t be building a Hazelwood 2.0, or any other coal-fired power station. But what will be the political fallout of the push?

Many among the public will discount Abbott’s activities as just his usual trouble-making. The noise, however, reinforces the general impression of a fractured government.

It complicates Energy Minister’s Josh Frydenberg’s pursuit of the National Energy Guarantee (NEG). Assuming a deal is struck with the states and territories on the NEG, it could make it more challenging for the government to then laud that achievement, if the internal dissenters continue to say it is not enough.

Frydenberg meets energy ministers on April 20 on the NEG, with the negotiations much helped by the change of government in South Australia.

The April meeting will look at a design proposal for the NEG; a final design needs to be approved by the governments in August. Legislation for the separate parts of the plan then has to be passed by the South Australian parliament (as a model for other states and the ACT, but not Western Australia or the Northern Territory which are not in the National Electricity Market) and by the federal parliament.

The government’s timetable is to have this done and dusted by year’s end, so the energy plan can come into operation over 2019-20. The timetable is extremely tight, especially given the politics of the Senate, the opposition’s incentive to make trouble, and the discontent among some on the backbench.

The timing fits with the election, due in the first half of next year. It is imperative for the government to be able to say in the campaign that it has a viable energy policy, even if prices are still high.

Where to now for the Monash Forum remains to be seen.

On Thursday Howard delivered a very deliberate, stern message to Liberal MPs, saying they had “a collective responsibility to get the act together.”

Supporters around the country “want you to work together. They want you to bury differences,” he said in an ABC interview. “They want you to make certain that we speak as much as possible with one voice and, sure, Malcolm Turnbull has got to give the lead – that can’t be disputed – but he is not the only person who has got a responsibility. Every man and woman in the parliamentary party has one as well.”

It seems very unlikely Abbott will heed his old boss.

The ConversationAs for Monday, Western Australian Liberal backbencher Andrew Hastie had some advice for the man who invoked 30 lost Newspolls when making his 2015 leadership challenge: “Just acknowledging the irony is probably a good way forward.”

Michelle Grattan, Professorial Fellow, University of Canberra

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

The pro-coal ‘Monash Forum’ may do little but blacken the name of a revered Australian


Marc Hudson, University of Manchester

The coal industry has a new voice in parliament, in the form of the so-called Monash Forum – an informal government faction featuring former prime minister Tony Abbott and backbench energy committee chair Craig Kelly.

The group, which also reportedly contains former deputy prime minister Barnaby Joyce alongside as many as 11 of his Nationals colleagues, is agitating for the government to go beyond its current energy policy and build a taxpayer-funded coal power station.

As several commentators have pointed out, the move is a calculated push by the usual backbench suspects to put pressure on Prime Minister Malcolm Turnbull, two weeks ahead of crucial talks with state and territory leaders over the design of the National Energy Guarantee (NEG).




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Perversely, the Monash Forum’s members want the NEG to prove its “technology neutral” credentials by including coal as well as renewables. And let’s not forget that the NEG policy was cooked up when it became clear that Chief Scientist Alan Finkel’s Clean Energy Target was unpalatable to Coalition MPs (but not economists).

What’s in a name?

In choosing to form a group like this, opponents of action on climate change are trying to give themselves gravitas, in three possible ways.

First and foremost, they are aiming for the “halo effect” of taking a known public figure and claiming some of his (and it’s usually a he) intellectual cachet. First and foremost here are groups named after scientific figures.

In 2000, a group of climate deniers, including the late Ray Evans and former Labor finance minister Peter Walsh, set up the grandly named Lavoisier Group to undermine progress towards Australian ratification of the Kyoto Protocol and a domestic emissions trading scheme. Economist John Quiggin probably said it best when he wrote that the group was “devoted to the proposition that basic principles of physics discovered by, among others, the famous French scientist Antoine Lavoisier, cease to apply when they come into conflict with the interests of the Australian coal industry”.

Then in 2011, opponents of Julia Gillard’s carbon pricing scheme created the Galileo Movement – casting themselves, like their Renaissance namesake, as heroic dissidents to an unthinking orthodoxy.

The second aim is to create a name that implies a stolid, no-nonsense approach to policy. One example is the now defunct Tasman Institute, which was an influential voice against climate action and in favour of electricity privatisation in the 1990s.

The third tactic takes this approach a step further, by creating a name that sounds impartial or even pro-environmental, thus obfuscating the group’s true intent, which is to stymie climate policy. Previous examples include the Australian Industry Greenhouse Network, the Global Climate Coalition, the Australian Climate Science Coalition, and the Australian Environment Foundation, launched in 2005 to the chagrin of the existing Australian Conservation Foundation.

The Monash Forum – with its implied connotations of nation-building and high-minded political debate – is perhaps trying to achieve all three of these goals, this time from within parliament itself rather than the surrounding policy development bubble.

Monash on the march

For the younger readers among us, John Monash was arguably Australia’s most revered soldier, described by British war historian AJP Taylor as “the only general of creative originality produced by the First World War”.

The Monash Forum’s founders also hark back to his role in helping kick-start the exploitation of Victoria’s enormous brown coal reserves in the 1920s.

But the Returned and Services League is not impressed that this former serviceman has been pressed into political service, declaring that “Monash’s name is sacrosanct and should be above this form of political posturing”.

What’s more, the name is bound to create confusion over whether it is affiliated in some way with Monash University (it isn’t), and there will doubtless be some unhappy faces at the Economic Society of Australia’s ESA Monash Forum (which is).

Will coal really make a comeback?

In seeking to deliver new coal-fired power stations, the new Monash Forum is attempting to mine a seam that has already been extensively excavated.

The Minerals Council of Australia, which [merged with the Australian Coal Association in 2013], has been trying for years to kickstart public support for coal. Who could forget the “Australians for Coal” and “Little Black Rock” campaigns, or last year’s “Coal: Making the future possible”?

But the council’s latest energy and climate policy statement refers to coal only once, prompting headlines that it has gone cold on coal. BHP has considered quitting the council over its pugnacious stance, while Rio Tinto is selling off Australian coal assets. The mining lobby may soon have to recalibrate its priorities – lithium, anyone?

The problem for coal’s proponents is that most Australians are keen to see the back of it. The promised global wave of “High Efficiency, Low Emission” coal plants has failed to materialise. And stunts such as Treasurer Scott Morrison waving a lump of coal in parliament are derided by a public who are far more energised by the prospect of renewables.




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When he was prime minister, Abbott tried to sabotage investment in large-scale renewables so as to keep the way clear for fossil fuels. But tellingly, he left subsidies for rooftop solar panels largely untouched, presumably realising that voters saw renewable energy as sensible and viable, on a small scale at least.

The problem for advocates of renewables, and climate action more broadly, is that winning slowly on climate change is the same as losing, as Bill McKibben noted last year.

The ConversationPerhaps that is the ultimate aim of the Monash Forum and those who share its goals. Renewable energy may win in the end, but it will win slowly enough that coal can earn one last payday.

Marc Hudson, PhD Candidate, Sustainable Consumption Institute, University of Manchester

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

Why big projects like the Adani coal mine won’t transform regional Queensland


John Cole, University of Southern Queensland

Queensland election campaigns often focus on big projects for the regions, such as for roads, power plants and mines. But research suggests that mega projects, such as in gas and coal, have not transformed skills or improved employment prospects in regional Queensland.

Take away the temporary booms from construction and other short-term jobs, and employment growth overall is no better than before the global financial crisis. Certainly Queensland’s regions are no more resilient. Instead of these mega projects, what’s needed are new sources of economic value in knowledge, services, and technology.


Read more: Here’s 49 small communities innovating as well as the big cities


Between 2010 and 2013 investment in coal mining surged 400% in the Bowen Basin. Further south, in the Surat Basin and at Gladstone, four international consortia spent more than A$70 billion fast-tracking a coal seam and liquid natural gas industry.

These projects fell far short of generating new skills and enduring businesses in the regions. Continuing dependence on resources and agriculture also creates its own vulnerabilities, as both are challenged by market and investment volatility, and increased climate risk.

Overall the focus on mega projects has weakened social and economic resilience in communities across Queensland. Resilience refers to the capacity of regional communities to handle risks and manage change. Resilient regions deepen and diversify their economies.

Megaproject sugar highs

Annual construction spending in the resources sector peaked at A$36.6 billion in Queensland in 2013-14, and has dropped by 70% since. Unemployment has doubled in Queensland’s northern, central and outback regions.

The impact is seen in Townsville, Rockhampton, and Gladstone, who are now pitching to become bases for “Fly In Fly Out” workers. Rather than drive their own local economic development, these cities are punting on the next big mining project.

Gladstone is already the pin-up of the construction boom-bust development model. The port city boasts a highly trained workforce in alumina and aluminium processing, cement, liquid natural gas and chemical manufacturing. Still, it waits on the next big mining construction boom.


Read more: If Queenslanders vote on economic issues the Labor government is looking good


What regional Queensland really needs is politicians to abandon short-term economic fixes, in favour of a sustainable long term vision. Policies would have greater impact if they focused on skills and enterprise training. Stronger regional collaboration to broker opportunities for smart businesses is essential.

Just north of Brisbane, Moreton Regional Council is showing the way by transforming a former industrial site into a university campus. Tertiary education will come to the fast growing region along with a research and technology park, creating the jobs of the future.

Regional Queensland can also learn from the European Commission’s “smart specialisation” structural assistance programs that help regions build knowledge-based competitive industries through strategic public funding and support for research and development etc.

By 2020, smart specialisation in Europe is expected to deliver 15,000 new products to market, 140,000 new startups and 350,000 new jobs.

Integral to the European strategy is strong collaboration between the research and university sectors, and regional industries. Strong cooperation between levels of government is key to the success. The industries are as varied as cheese manufacturing in Spain, new transport systems in Finland, and materials manufacturing in France.

The Europeans have found that changing business culture and boosting entrepreneurship are just as important to creating opportunity as large infrastructure projects.

What Queensland should do

Queensland should rethink its big projects for a big country approach. Regional jobs that depend on project investment without generating local income are not sustainable. Small business and community must be restored to centre stage in development strategy.

Small and medium businesses collectively account for more than 99% of all business in Queensland, and three times as many people work in the state’s A$20 billion manufacturing sector (169,000) as work directly in the resources sector (48,000).

But small and medium businesses lack the profile of the “big end of town”, and the large resources companies have been effective at selling the narrative that they are central to the A$300 billion Queensland economy.


Read more: Bust the regional city myths and look beyond the ‘big 5’ for a $378b return


The priority for developing Queensland’s regions should be investment that generates small business growth, local income, new skills and communities. Particular emphasis has to be given to attracting and retaining talented people.

The state government can best help regional Queensland by heeding the Productivity Commission’s call to help regional Australia adapt and exploit the opportunities of ever present change. This requires greater local initiative, making the most of competitive strengths, and training people to better engage with the world.

The global services sector is a $US47 trillion industry. For regional Queensland to tap into this sector will require skills in fields as diverse as big data, biotechnology, genetics, robotics, communications, and digital manufacturing.

A good start has been made in the Advance Queensland Regional Innovation Programs which have challenged regions to think outside the box, collaborate, and come up with their own strategies. It complements the federal government’s Building Better Regions Fund.

The ConversationThis approach challenges the current politically dominated top down model of regional development. It’s a vision for regional Queensland that extends beyond resources, agriculture, tourism and construction to the people themselves.

John Cole, Executive Director, Institute for Resilient Regions, University of Southern Queensland

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

Why Adani may still get its government loan


Brendan Gogarty, University of Tasmania

Even though Queensland Premier Annastacia Palaszczuk announced she would be vetoing the around A$1 billion loan to Adani for a rail link to its proposed Carmichael coal mine, funds could still flow to the company.

Currently in caretaker mode for the Queensland election, the premier would need the consent of the opposition party to exercise such a right. That is very unlikely given the LNP’s longstanding support of Adani’s mine.

This means any veto could not be exercised until late November, or more realistically, December 2017.

As the Northern Australia Infrastructure Facility (NAIF) loan doesn’t need state approval (but rather explicit veto) it could also mean the money will make its way to Adani, without any direct action by the state government.

How would Commonwealth money make its way to Adani?

The NAIF body was established in 2016 and administers A$5 billion in Commonwealth funds. It’s been empowered to award grants to the northern states and Northern Territory for infrastructure projects. Practically, however, these jurisdictions are used as financial conduits to pass this money to large corporations operating in northern Australia.

The NAIF is established under the “tied-grants” provision of the Constitution, Section 96, which states:

…the [Commonwealth] parliament may grant financial assistance to any state on such terms and conditions as the [Commonwealth] parliament thinks fit.

This section was intended to provide for a short-term (around ten years) mechanism for central funds to be granted to the new states affected by the restructuring of national public finances, after federation. However, the Commonwealth parliament continued to use this section well into the 20th century (and increasingly today) to grant funds to cash-strapped states.

Over time, the Commonwealth started to impose terms that required the states do things that were outside of the Commonwealth’s legislative power – such as education or, indeed, infrastructure development.

The early-20th-century High Court concluded that this was acceptable, as long as the state technically consented to the terms and conditions of the grant.

While the NAIF legislation does not require such consent, under rules issued by the Commonwealth minister the NAIF has to:

… commence consultation with the relevant jurisdiction as soon as practicable after receiving an investment proposal

In Adani’s case, the Investment Rules indicate that the “jurisdiction” is the “state or territory the infrastructure project is located”, namely Queensland. The state government after reviewing project and investment may provide:

… written notification that financial assistance should not be provided to a project.

If that is the case then the NAIF is not permitted to provide the grant money to the applicant (Adani). But that doesn’t mean the state hasn’t consented to the loan.

The problem is that the High Court has never really addressed what the word “state” means in Section 96. Specifically who should the money be paid to: the “parliament of the state”; “government of the state” or, as seems to be implied in the Palaszczuk statements the “premier of the state”?

Conventionally, when we talk of “state consent” to funds, we envision a complex process by which money is paid into a central state fund under the control of state parliament. However, the NAIF legislation appears to allow for merely the state government to consent in a very minimal way, simply by passing the money directly to Adani without the state parliament ever reviewing or approving the transaction.

The NAIF legislation also doesn’t specify who in the government might consent. To date, it is the treasurer who seems to have been most actively involved in working with the NAIF, and indeed Adani. It seems that, so long as the state has been “consulted”, unless it takes active steps to stop the loan, it will go ahead.

Does Palaszczuk have a ‘veto’ power?

The premier’s reasoning for the veto is a continuation of her government’s legacy of having “no role to date in the federal government’s NAIF Loan Assessment Process for Adani” and no “role in the future”.

These statements seem to be contrary to earlier ones by the Queensland treasurer, Curtis Pitt, that the government would “do what is required” to facilitate Commonwealth funds going to Adani. In fact, as early as November 2016, Pitt declared in state parliament:

Since we came to office, we have been working very closely with the Commonwealth government to facilitate … the NAIF – in North Queensland… It is through the NAIF facility, which the state wholeheartedly supports, that Adani can get the infrastructure support that it needs.

As a result, it would seem that everything needed to pass the NAIF funds to Adani is provided for. The only thing to actively stop it is a formal, written statement by Palaszczuk to the NAIF refusing the loan (not to the prime minister as she claimed). Given Palaszczuk’s statement that she intends to write this statement, it is clear that no formal notice has yet been issued to the NAIF.

However, it would seem that a “Master Facility Agreement” between Queensland and the NAIF has already been agreed to and set up. This agreement seems to envision the treasurer of Queensland passing the money to Adani, without it ever going into the state’s bank accounts. Hence, in May this year, the Queensland treasurer confirmed that:

Our role, for constitutional reasons, is the legal financing contract, the loan agreement including the drawdown and timing, repayment of interest — all of those things have to have state involvement constitutionally.

So, unless the Queensland opposition takes the very unlikely step of agreeing to a veto, Palaszczuk would appear to lack the power to issue one herself until after the election.

The ConversationIn the interim, NAIF has no legal restrictions on issuing the loan and, with the apparent agreement of the Queensland treasury, this money is likely to flow through to Adani. While Palaszczuk can say her government gave no active assistance to Adani, without active measures to block the loan, it would certainly be a silent partner in the process.

Brendan Gogarty, Senior Lecturer in Law, University of Tasmania

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