For the last two decades, every few years the fossil fuel industry, via whatever politicians they are then manipulating, have another go at forcing “clean coal”, carbon capture and storage (CCS) and more recently coal seam gas (CSG) on an increasingly sceptical community to justify their continued expansion.
This time the cycle started with the Federal Government promoting development of the Adani Carmichael mega-coal mine in Queensland’s Galilee Basin, for coal export to India. Events gathered pace with the South Australian blackout last September when violent storm conditions blew down transmission towers, prompting instant Federal Government accusations that excessive State reliance on renewable energy was the cause, despite clear advice to the contrary.
When the long-overdue closure of the Hazelwood brown coal power station in the Latrobe Valley was announced in November, energy security became the political battleground. In passing, Adani were to be offered a $1 billion subsidy to construct the Carmichael rail line, then a further subsidy for a new domestic coal-fired power plant at the mine was slated, apparently to assist the development of Northern Australia.
The Prime Minister’s recent speech to the National Press Club emphasised the need for “affordable, reliable and secure energy”, took a further swipe at the States for their “unrealistic” renewable targets, offered some encouragement for energy storage, but then confirmed the evangelical swing back to coal, straight from the Minerals Council and IPA hymnbooks.
Priority would be given to “clean coal and carbon capture and storage (CCS) and onshore gas (CSG)”, implying that renewables were neither affordable or reliable. Further “The next incarnation of our energy policy should be technology agnostic – it’s security and cost that matter, not how you deliver it. Policy should be ‘all of the above technologies’ working together to meet the trifecta of secure and affordable power while meeting our (substantial) emission reduction commitments”.
So what could possibly be wrong with such sweeping vision? Well, pretty much everything.
First, the speech skirted around the biggest risk facing Australia today, namely accelerating climate change.
The Coalition has a long history of climate denial which remains today. The rot set it when John Howard in 1997 blackmailed the developed world by refusing, at the last minute, to sign the Kyoto Protocol unless Australia was treated as a special case, because of our reliance on coal-fired power generation, and allowed to increase its emissions when everyone else had to make reductions.
The so-called “Australia Clause” was hailed as a great victory. In reality it has done enormous damage to the economy and undermined our ability to prosper in the 21st Century.
It bred widespread complacency as business had to make little effort to contain emissions, and governments of both persuasions had no incentive to initiate policies which would address climate change.
The ensuing uncertainty and dysfunctional climate policies stalled investment in the new low-carbon technologies and saw a brain-drain of expertise and jobs overseas, ensuring that Australia would always be a follower in the low-carbon world, rather than the innovative giant it might have been. Howard had the gall to laughingly admit, in a 2013 speech, that he never believed in climate change anyway.
That complacency and ignorance of the climate science continues today. Whilst Australia has signed and ratified the Paris Climate Agreement, our emission reduction commitments are not as “substantial” as the PM would have us believe.
They are laughable both in comparison with our peers globally, and to have any chance of making a fair contribution to the Paris objectives of holding global temperatures “well below 2oC above pre-industrial conditions and to pursue efforts to limit the increase to 1.5oC”.
Second, to have a realistic chance, say 90%, of meeting the Paris objectives, the science tells us that the world should no longer emit any further carbon to atmosphere. As we still emit record amounts today and need some fossil fuels to build the new low-carbon economy, that is not going to happen. But emissions must peak and decline rapidly. There is no space for any new fossil fuel projects, coal, oil or gas.
Third, “clean coal” is neither new nor clean. These technologies can reduce emissions by up to 40% relative to conventional practice, but that does not solve our problem when the global carbon budget has already been exhausted. Further, costs are increased by up to 30%, rendering coal even less competitive with renewables.
Fourth, years of research into CCS has failed to establish the basis for its expansion at scale. CCS works where emissions are stored in depleted oil and gas reservoirs, which the oil industry has practised for decades. Storage in other types of geological structures is far harder.
The few commercial operations in the world today are in the former category. The substantial additional costs of CCS again reduce coal’s competitiveness, particularly if you refuse to price carbon, as the Coalition are doing. CCS will be useful at the margin, but it will not save fossil fuels from their inevitable demise.
The PM should not be surprised that Australia has spent $590 million on these technologies since 2009 to no effect, or that the industry has never shown much appetite for investing its own money.
Fifth, energy prices rose largely because our flawed regulatory framework for years allowed power companies to invest heavily in unnecessary infrastructure on which they were guaranteed a return.
Gas prices have risen because of the exposure of the East Coast to the higher priced international gas market with the construction of export facilities at Gladstone, the headlong rush into CSG resulting in substantial processing overcapacity.
Economic pressures were further compounded as the assumption of readily available CSG was dashed by community objection to the horrendous damage to arable land and water availability which CSG represents. Further, high methane leakage rates result in CSG having a greater warming effect than using coal, thereby negating its supposed benefit.
Sixth, there is nothing “agnostic” about the choice of energy sources when the fossil fuel industry continues to enjoy a massive subsidy, far greater than anything ever received by the renewables industry, by dint of the government’s refusal to price carbon to cover the external costs of coal use.
A subsidy the IMF estimate to be around 60% of coal’s market price. And this is the nub of the problem. Our climate and energy policies are a disconnected and dysfunctional shambles, brought about by years of denial and inaction from Federal Governments of both persuasions.
The current government and its financial backers in the fossil fuel world still will not accept that climate change is happening, thus we end up with policies offering lip-service to placate an increasingly concerned electorate, but doing nothing of substance.
But that game is up. Climate change has moved from the twilight phase of much talk and relatively limited impact. It is now turning nasty as we have seen in recent weeks here and overseas. Events are moving far faster than expected as irreversible climate tipping points are crossed.
The economic and social costs of inaction can no longer be swept under the carpet, with regulators here and overseas demanding action to head off a climate-induced financial crisis In the political vernacular, Australia, never a “lifter”, is now the world’s biggest “leaner“as far as its climate response is concerned.
The only way the world, and Australia in particular, can avoid catastrophic climate change impact now is to initiate emergency action, akin to a wartime reorganisation of economies.
Fanciful perhaps given current political negligence, but we will reach that point shortly as climate impact bites and low carbon technology undermines the fossil fuel industry. In the meantime we have to minimise the damage created by our political ideologues. So no Adani, no coal-fired power, no CSG.
We need a new narrative, built around Australia’s enormous potential to prosper in a low-carbon world. We have arguably the best renewable resources in the world which we barely use, in itself a major geopolitical risk if we persist in using coal. We have the science, the technology and engineering expertise to seize what is the biggest investment and job-creation opportunity this country has ever seen.
Of course our antiquated electricity grids are in need of overhaul after years of neglect, to be “fit-for-purpose’ to handle renewable power. 100% renewable grids are being constructed around the world providing genuine energy security and making traditional concepts of base-load power irrelevant.
Other countries are capable of making such transitions in the space of a few years. It is only blinkered ideology, weak and ill-informed political leadership and an overly powerful fossil fuel lobby, which prevent it happening here.
As for affordability, it is irresponsible to suggest that energy prices can be prevented from rising given the extent of change required and the speed at which it has to happen.
However they will rise far faster with coal-orientated policy than with renewables, and the latter offer far greater prospects of cost reduction in the medium term as technology continues to improve.
Climate change is not just another item on the political agenda. It is already affecting every facet of our lives and every policy area of government. If we do not get our response right quickly, the future of large numbers of Australians will be in peril and the rest of the political agenda becomes irrelevant.
In addition to the narrative, we need a task force which will pull together the resources and expertise required to initiate emergency action.
In an ideal world where statesmen still existed, they would provide bipartisan leadership. Given today’s dysfunctional politics, those statesmen or women will have to come from elsewhere in society.
Ian Dunlop was formerly an international oil, gas and coal industry executive, chair of the Australian Coal Association and CEO of the Australian Institute of Company Directors. He is a Member of the Club of Rome.
