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Qld says CO2 cuts should wait until society is richer

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The conservative Queensland state government has called for action on emissions reductions to be deferred, saying that economic growth should not be impeded, and low emissions technologies should only be deployed “when society is wealthier.”

The government of one of the richest states in one of the world’s wealthiest economies – and with the highest emissions per capita – argues that “action now runs the risk of being expensive yet ineffective and harmful to those in the community least able to afford the additional costs.”

The assessment by Energy Minister McArdle, in his submission to the Renewable Energy Targt Review, runs counter to most economic analysis, which shows that early action is important because it will end up being cheaper.

The International Energy Agency, a conservative institution based in Europe, highlighted in a recent report that delays in decarbonising the world’s electricity markets had already lifted the cost of combating climate change by $8 trillion to $44 trillion. But it says these costs can be offset three-fold by reduced fossil fuel costs.

Queensland, however, wants to dig up and extract and sell all its fossil fuels. Premier Campbell Newman has made it his mission to do so, and yesterday we reported on how the state was supporting a proposal to build a new 800MW coal-fired power station in the north, at a cost of $1.8 billion.

The report into that proposal made it clear that the plant would need subsidies from the government to help pay for a transmission line, as well as “protection” from the government against future carbon prices.

But McArdle’s team argues that the RET should be reconfigured so that subsidies to renewables are removed. He takes a leaf out of the book of conservative pin-up boy Bjorn Lomborg, in suggesting that renewables should not be deployed until they are “cost competitive” – which ignores the reality that deployment is the best way to bring down costs such as manufacturing, installation, maintenance and finance.

This is what the submission says:

“In general there is a strong argument that low emissions technologies should not be deployed until they are economically viable in a commercial setting. Society might well benefit more by:

  1. deferring action to reduce emissions so that the economy’s growth is not impeded;
  1. allocating funds now to research and develop low emissions generating technologies which are capable of performing comparably to existing fossil fuelled generating plant; and
  1. in the future when society is wealthier, deploying the new low emissions technologies at times when doing so does not diminish welfare.

“Action now runs the risk of being expensive yet ineffective and harmful to those in in the community least able to afford the additional costs.”

By Queensland’s own admission, it has built hardly any large-scale renewable projects, despite the RET being in place for many years. No wind farms have been built, and McArdle can only point to a $120 million, 38MW cogeneration plant that generates enough electricity for one-third of Mackay.

At the small-scale, however, Queensland has installed 1.1GW of rooftop solar on one in six of the state’s households. This is frustrating the government, because the state-based tariffs were so generous that 84,000 houses now don’t pay a bill, meaning that the state-owned network assets are losing out on revenue.

Queensland argues that renewable generation should only occur in instances where new generation is required, or traditional generators reach the end of their economic lives.

“It should not be brought forward until the wholesale market has clearly signalled a need for it through appropriate price signals set by the balance of supply and demand.”

Such a move would likely defer any renewable projects for a decade, according to the recent demand update from the Australian Market Operator. It is also blatant self-interest: Queensland has had to close down significant amounts of coal and gas capacity in the last 18 months, blaming the impact of solar. It is now trying to sell those assets.

The submission also notes that the cost of the LRET to consumers is $3.95/MWh. Some perspective is needed here. The average household pay $280/MWh for their electricity, not including a fixed charge of more than $300 a year. Rising gas prices and network costs have accounted for the bulk of increases in the latest year.

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  • Keith

    …. and South Australia is heading beyond 40% renewable energy for electricity generation. What is it about the deep north?

    • wideEyedPupil

      And cheaper power bills for S.A. can they really keep that a secret forever, even from Queenslanders who, lets face it, see things through a very ‘tropical’ prism.

  • Zvyozdochka

    It’s going to take a lot of work to get rid of their business-as-usual deniers.

  • Steve Hirst

    Qld is right of course.
    It’s the environments fault for global warming so we should us innocents have to pay.

  • wideEyedPupil

    Energy Minister McArdle is another mouth-breather like George W. In the three decades we’ve been talking about climate change in public, it’s never been the right time to do anything. And yet wind and solar have sailed down a remarkable cost curve and are now “commercially viable” replacements for fossil fuels and expensive and somewhat risky nuclear power.

  • Alen

    I wonder where he wants the economic growth to come from? FF industries are facing increasingly more pressure and financial difficulties for any new developments, science seems to have become the nemesis of the LNP, RE and clean technologies which are undergoing a ‘boom’ in many places and that have many economic benefits are a no-go subject for the government, the farming sector is struggling with the long drought which will find no deprival anytime soon thanks to the forecast El nino ..so I suppose when he means economic growth he’s hoping for more Chinese investors to buy higher quantities of properties and boost the housing market and grow the economy that way.
    Let’s just hope that the El nino doesn’t result in too much of a drought, bushfires or severe and damaging cyclone that ends up costing the government too much in disaster relief.
    Who’s responsible for voting these idiots into power seriously?

    • José DeSouza

      ‟Who’s responsible for voting these idiots into power seriously?″

      Most of us, unfortunately. Unless most of us acknowledge we’re in a kind of a collective trance fed by neoclassical economics rubbish such as the axiom that money is just like some sort of scarce commodity and its corollary that savings must therefore precede investment, things are likely to get worse. Do most of us need to wake up from that trance and start to move things otherwise? Definitely yes. Please, see the link I posted in this thread. ;-D.

  • coomadoug

    The heading and content of this article is such a crazy thing. I would write an article with the following heading
    CO2 cuts will make society richer
    I can imagine Kodak writing to the government in 1985.
    They would request that laws be passed to prevent the expensive lower quality digital technology from taking part in the industry until Kodak get a bit richer.

    • http://www.reneweconomy.com Giles

      Hmmm, kodak didn’t write to government, it just told its own digital division to stop doing whatever it was doing. They were really, really stupid.

      • coomadoug

        I would like to see more articles that talk about the positive future we can initiate and ignore the bad ideas all together. For example we could talk about electric cars eventually replacing poles and wires to homes.

        They could eventually perform the same task as the grid connection in a different way. In so doing the overall demand can flatten to a 24hr load, super efficient renewable generation.

        We could talk about the cost of such energy for the transport system and highlight the efficiency gain. We can make the combustion engine look like a joke without mentioning it. We can make the large base load coal idea the same without talking about them.

        I think we can create an appetite for 100% green energy without mentioning climate change disasters just by describing the possibilities

        • David Osmond

          Good idea!

          Average demand on the NEM is 21.7 GW, but on a typical day it varies by about 8.2 GW from ~17 to ~25 GW. We’d need about 20 GWh of storage in order to flatten the varying daily profile to a flat 21.7 GW. That’s about 330,000 of the Tesla 60 kWh battery packs.
          Seems quite achievable to me!

          Moreover, once the price of these gets down to about $200 per kWh, which Tesla thinks it will by 2020, then people with solar PV will buy them for the sensible economic reason that they can use most of their PV electricity themselves, rather than exporting it to the grid for a measly ~8c per kWh and buying back later for ~30c per kWh. The ~22c difference will pay for the battery.

          • coomadoug

            David

            The 22c difference you highlight there in the previous comment is interesting. Is it a reasonable figure at the moment to pay 300% premium on the energy because it is available 24/7. Yes it is reasonable and good business as long as there is nothing cheaper that can provide this same benefit.

            The electric car will be your grid. You will have your travel plan in the car computer, interesting that you will be able to talk to it as you drive, to modify inputs and change arrangements with energy providers. The car will talk to you also. Just imagine the car’s computer with a Swartzenegger voice as you drive into Cootamundra. It says, “your travel plan is 4KWH under charge for your next 48 hr travel plan. The electron charge station at 48 Young drive has rapid charge free for customers of the provisions store who spend in excess of 200 dollars. Shall we stop there”? You say yes. The computer locks it in and says, “all good, the charge will take 10 minutes.”

            The smart switching internet device in the car has your travel plan integrated with your energy use plan at home. If for some reason things are changing unexpected and you have a large energy requirement at home in the next few days, you can tell the car computer and it will examine the available energy in the home battery and also the weather and likely output of the home solar. The last resort may be the operation of a gas fuel cell that is in the garage and is the main back up.

            It doesn’t matter where you are, the car is smart switched and may buy and sell energy where ever it is plugged in. If you are at a friends place you plug in if need be and a financial transaction between your and their car takes place as the energy plans are integrated.

            There are endless possibilities with this concept. If it gets anything like it in the future, one wonders what the grid will be other then a network of energy providers for the transport industry and major grid connection for high load industries.

            One thing that is surprising to most people is that a litre of petrol puts about a Kilowatt hour of energy onto the wheel of a car at an efficiency around 20%. Then there is the standing still idle time. The whole thing is really bad economics. The electric car can put a kilowatt hour of energy onto the wheel over 90% efficient.

          • Diego Matter

            Well, I use my car during the day. Therefore it can’t be charged from my solar system because it is parked elsewhere. How will you solve that conundrum?

          • nakedChimp

            how many km do you drive on average per day?
            You need ~0.2 – 0.3 kWh per km in electric energy.
            Let’s say 100km round-trip.. this means ~20-30 kWh.

            Gretchenfrage then is:
            What does it cost to transfer 30 kWh over 50km from your home PV to where your car is parked? The transmission would probably be in a timeframe of about 3-4 hours.. so 10 kW is needed.

            If you want to store at home you need at 70% DOD for your stationary battery a 43 kWh system.. charging would happen with ~10kW during the 3-4 hours sunshine (needs 10+ kW PV) and discharging into your car over a longer time (9 hrs?) during night.. so less stress (~3kW, equivalent to 2 toasters running).

          • coomadoug

            You won’t have to transmit energy over those distances. With smart grid switching all energy is integrated

          • nakedChimp

            that was ‘layman’s speak’ for the simple observation that you put 30kWh in at one place and pull out 30kWh at another place.. and that you can do that because some dudes have wiring all over the place (infrastructure) and let you access it for push/pull of electricity, but they want money for it naturally.

          • coomadoug

            There will be charging stations everywhere. You park and the car will be smart switched by market selection.

          • David Osmond

            In addition to the replies you’ve had from coomadoug & nakedChimp, it wouldn’t surprise me if many of these batteries also end up being used outside of the car as stationary back-up in our garage. SolarCity is planning to use Tesla’s batteries for just this purpose.

          • coomadoug

            Wherever you take your car, you plug into the infrustructure and it will charge. The cost of this will be all worked out in the smart meter and computer in your car. The car has your travel plan and energy requirements in the algorithms that constantly run. Your car will buy and sell energy when it is plugged in, no matter where. Your car will have 80KWH of energy when 80% charged. This is enough to run your home for a week. The possibilities are endless. it is the system we have now that looks rediculous when you consider all the potential of the new technologies

      • coomadoug

        I hate myself here but will reflect on a negative for a minute. What you say about kodak is true and they gave the genius behind the digital camera a really hard time. In fact Kodak invented the digital camera and had a few info sessions outlining the potential. I think they stoned the man.
        I see the big base load power grid just like the chemical photo development thing we used to do. Dispersed renewable s are like mobile phones compared to the big black phones with the solid steal dialer and the drunk phone exchange worker who connected you to the wrong number.

      • Tim

        Still, even if they were incredibly brilliant about it, it’s hard to see how things could’ve turned out any differently. Digital photography is an inherently democratic technology. It destroys the price bottlenecks in the system–film and development–and thus the industry. The only way Kodak could’ve prevented their self-destruction is if they were the only ones making digital cameras. But someone else would’ve released something slightly different before long, and the result would’ve been the same.

  • José DeSouza

    Neoclassical economists, most politicians and mostly everybody else in between as well still don′t understand what money is all about. In spite of all we’ve been through. That’s why flawed neoclassical textbooks are still on the loose to keep on duping most economists, politicians of every colour of the rainbow and the public in general, into believing that money is some sort of ″scarce” (LOL) commodity. The fallacy of investment preceding savings is at the core main argument in the article above, namely that society needs to get richer, i.e., to invest to make the current mess even messier, in order to save to get the wherewithal to finance the cleaning up of all that ugly and scary compounded mess that shouldn’t be there in the first place, to say the least. Sounds utterly deranged, doesn′t it ? And it actually is. The other way around seems much more sensible, namely, that credit must be advanced in order to finance renewable energy projects, which in turn will generate income in the form of wages, salaries, profits and taxes, as well as savings (any form of income not consumed) which may help future generations to enjoy a cleaner environment, a stabler economy and even perhaps a less violent world due to the possibility of greater income equality, See, for instance: http://www.debtonation.org/wp-content/uploads/2011/04/A_Green_New_Deal_1.pdf