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Abbott’s energy white paper focuses on fossil fuel favourites

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The Coalition government on Wednesday released its energy white paper – the document that is supposed to outline the nation’s energy vision for the short and long-term future. But there are no surprises for guessing that is a document that is largely focused on the rear-view mirror.

The energy white paper begins with a false assumption. That “Australia’s large quantities of traditional energy resources provide low-cost, predictable and reliable power for Australia and the world.”

It doesn’t. Coal might be cheap to shovel into a boiler, but it is mighty costly to transport. Grid (delivery) costs make electricity in Australia one of the most expensive in the world. Transport and shipping costs make its coal and gas also expensive, to the point where they are now being undermined by local, renewable alternatives, or a new focus on environmental policy, even in major markets such as India and China.

Like the Abbott government’s discussion paper on emission reduction targets released late last month, this document also works on the principle that the world will do nothing new to address climate change. The energy white paper’s assumptions are based on the International Energy Agency’s “new policies” scenario, which sets the scene for what would be a catastrophic rise in temperatures to an average 4C.

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No matter, the Abbott government concludes: “Ongoing access to large volumes of coal and gas will also underpin our energy generation mix for some decades.” Although it does at least acknowledge that these fuels will be “increasingly exposed to competition from renewable energy.”

Not that it intends to accelerate that transition. Quite the opposite. Unlike the actions of the US, China, Europe and other emerging economies, there is no talk of environmental impacts, emissions standards, enhanced renewable energy targets, or climate goals. It is almost entirely focused on the technologies of the past, rather than the future.

When the Green paper was released last August, RenewEconomy did a quick analysis that found that in the 78-page document, gas was mentioned 434 times, coal 100 times, followed by nuclear on 67. Storage got 32 mentions, solar 26, and wind energy just 13 mentions.

The ratio is pretty much the same in the more discursive 81-page white paper, even if the numbers are different. Gas leads still with 173, while coal gets 47 and nuclear 23. Solar gets 19 mentions, battery storage six and wind energy gets just the one mention – in a generic sentence that says Australia has “world class” solar, geothermal and wind resources.

But the energy white paper doesn’t say much – or anything – about how it is going to develop those resources, apart from repeating its opposition to the current renewable energy target of 41,000GWh, and its determination to make it a “20 per cent” target, meaning a cut to around its current negotiating position of 32,000GWh.

The energy white paper also continues its attack on solar. It describes interventions, such as the RET and solar feed-in-tariffs, as market-distorting signals that cause “unintended disruptions” to competitive energy markets.

“Policy interventions in the market framework should not be used to force market outcomes beyond the reliable and competitively priced supply of energy,” it says. “They should allow markets to operate efficiently for competitive outcomes, while providing consumer protection. Interventions, such as the RET and solar feed-in-tariffs, can distort market signals and cause unintended disruptions to competitive energy markets. “

It doesn’t mention what these are, but does spend a bit of time on “cross subsidies” of rooftop solar, and while it does recognise the much higher cross subsidies inherent in the widespread adoption of air conditioning – it proposes to solve this only with “time of use tariffs” –  a mechanism derided by some as simply an excuse for utilities to charge higher rates for longer periods, and increase the incentive for consumers to look after their own energy needs.

Indeed, the energy white paper does acknowledge that the development of cost-effective energy storage could bring about a “paradigm change” in the way Australia produces, transports and consumes energy.

The most profound effect, it says, will be in renewable energy, as storage can help overcome current limitations of intermittency in generation. And With Australia’s long, thin electricity grid and large share of remote power generators, Australia could benefit significantly from major advances in storage technologies, as Ergon Energy is already finding.

And the energy white paper notes that as affordable storage develops, it is important that Australia’s existing regulatory framework can accommodate this change. It makes mention of the Future Grid Forum work led by CSIRO – which 18 months ago warned that nearly half of all demand could be sourced by “local or on-site generation” and that unless utilities adapted their business models, one third of customers could choose to leave the grid.

The energy white paper acknowledged that “the growth of disruptive technologies and advances in energy storage (including electric vehicles), combined with greater consumer engagement through demand response and self-generation, could have major implications for electricity markets.

“Networks may need to adapt from the generator-to-customer transport system of the past to acting more as trading platforms between distributed energy users and producers,” it notes.

In other highlights of the energy white paper, the government says

  • it will not pursue policies to “pay” for exit of surplus generation capacity. It says “this could unfairly shift costs onto either consumers or taxpayers. “ Fossil fuel generators have been arguing for the payments, saying that owners of coal fired generators would rather “mothball” capacity rather than pay remediation costs – which could amount to $200 million per installation – if they closed.. This has left Australia with vast amounts of surplus capacity, which in turn has been used to argue against new renewable energy.
  • It will be keeping an open mind on nuclear energy. Interestingly, it says it recognises the argument that nuclear is a costly alternative to renewables, uses lots of water and has waste disposal issues. But it also says other argue that it is “adequate” affordable and reliable, and has significant environmental benefits and public health advantages over other existing base load technologies. It says it will consider the outcomes of the South Australian Royal Commission, including its use as an energy source.
  • The government still believes that carbon capture and storage may be a solution, and wants more funds to be spent. But it seems to be focused more on using Co2 for carbonated drinks, rather than being buried in the ground. That’s a lot of coke.
  • It notes electric vehicles are commercially available in Australia and have the potential to be a more mainstream transport option. It notes their advantages in lower running costs, environmental benefits and their ability to assist with managing demand on the electricity system if consumers are provided with an incentive to charge outside of peak energy use times. “Charging electric vehicles at off-peak times improves the utilisation of electricity infrastructure by increasing demand on the electricity grid at these times. Batteries in electric vehicles could also be used as a storage device to meet household demand or demand on the electricity grid through feeding back to the grid at peak times.”

 

 

 

   

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  • adam

    You’re crazy Giles, it’s visionary!

    Only Macfarlane’s seer-like genius could foresee that:
    * promotion of ermeging tech industries that will probably be the staple of the medium term future energy world is just stupid and pointless market intervention
    * More money should definitely go into CCS, despite the commercialisation pathway being not even fit for the back of a napkin. (phase 1 steal underpants, phase 3 profit, am I right or am I right?)
    * the carbon price is dead and is never ever ever coming back. Ever. So we don’t need to think about market and economic adaptation to something like that in the short to medium term.
    * The electorate will come around to nuclear eventually, so lets just sit on the fence until Jay Weatherill finds SA needs to be able to sell more than wine and Fringe Festival tickets to keep pace with the rest of us. And maybe we forget about Fukashima a bit more…

    and finally, and most importantly,

    * Our guiding principle is that markets should operate freely. This is espeically true for natural monopolies, essential services and highly concentrated oligopolistic, rent-seeking markets.

    I’m inspired – are you??

    • onesecond

      You forgot to mention the ridiculous amount of fossil fuel subsidies in the “free market”.

  • Rob G

    Al Gore had said if Abbott was unable to take climate change seriously, then he should stand aside. His arrogance and pride will never let this happen, so we will do as Al Gore predicts, we the voters will remove him and his tea party in 2016.

    • I will note that both the Pirate Party and the Greens support an aggressive move on climate change, with 100% renewables in 10 years their policy planks.

      https://pirateparty.org.au/wiki/Platform#Energy.2C_environment_and_climate_change

      If considering who to vote for based on climate change action, look outside the Labour/Liberal duo. the action on climate change is at the State level, with ACT, QLD, SA and WA, along with Tasmania all making big moves. The bad guys are:

      Federal Government, NSW, Victoria

      http://www.couriermail.com.au/news/queensland-state-election-2015/labor-leader-annastacia-palaszczuk-announces-plan-to-convince-more-homeowners-to-put-solar-panels-on-roof/story-fnr8vuu5-1227194457640

      • Rob G

        We had climate (and renewables) progress in the Gillard era – it wasn’t at the level I was happy with, but it was moving in the right direction. If the Greens win a good of number senate seats and Labor get into power (as expected) I suspect well see even stronger efforts made. We can see in history that often extreme conservative governments are often followed by strong progressive governments. As a recent example, I think of Obama following George W Bush.

        • Alastair Leith

          If any single political leader had an opportunity do something genuinely serious on CC it was Obama having a democratic Congress for first period of his Presidency. Blew it. Completely. Promoted gas, unconventional gas and oil, dangerous oil extraction methods. let BP off the hook in the Gulf and his “all of the above” advocacy for Fossil Fools will prove a disaster.

          Sun Shot good but small potatoes for such a powerful nation.

          China deal for “reduction” in CO2-e emissions is a hoodwink. By selecting high water mark for GHG emissions of 2009 It’s actually half the reductions that will occur anyhow on BAU (measured as they are ignoring methane fugitive emissions and livestock industry emissions which no nation in the world has confronted with eyes wide open).

        • I was very disappointed in the back flips of the Gillard Government, especially on carbon pricing. So no, I can’t give a blank cheque to Labour, since their performance was frankly quite lousy in recent times.

          I hope for the Greens to hold the balance of power, because someone has to keep the bastards honest. There does seem to be a cyclical pattern of conservative and progressive parties coming to power though.

          I hope the Liberal Party ends up with someone like Turnbull in power, because Australia needs a decent opposition. It would be nice to have two reasonable options.

  • David McKay

    Neither of the main parties have any interest in governing for the good of the country. LNP are entwined with big business & mining, Labour are beholden to the Unions. My understanding is the RET is legislated at 41,000GWh, not 20% of demand. Its law.
    Destruction of the renewable energy sector, along with the investment & jobs, is obviously more important that budget repair. They have backed away from the unpopular budget measures, but not this!
    They don’t understand this industry & its potential for infrastructure & jobs. All they see is a threat to their beloved coal.
    The Greens don’t get it either. While ever they make crazy claims like 100% renewables in 10 years, they can’t be taken seriously. We need a rapid but planned & orderly transition to clean energy.
    I guess we got what we expected with this White Paper.

  • Tim Buckley

    Fossil fuel proponents have bought themselves a Prime Minister, and that gives them a
    couple of years of rent gathering. But the electorate will dump a government that doesn’t act in the interests of the electorate or our country’s long term interests. How can I say this with confidence? Just ask ex-Premier Newman and Seeney.
    Renewable technologies get cheaper and more efficient every year, and the customer is always going to win in the end. The utilities are choosing to take their profits now, pollute their own backyard and piss off their own customers. Again, pretty obvious this short term strategy of telling our current PM he is doing a good job will backfire on Origin and AGL, and their shareholders. Head in the coal dump for Abbot while China, Europe, America and now India move full speed ahead to a lower carbon future.

  • onesecond

    So glad that there are only 20 millions Australians. Imagine if the Chinese government were as stupid as the Australians’. The world would be totally screwed.