All the bad news the energy industry doesn’t want to hear

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The energy industry will not be enthused by the Climate Change Authority’s report. It says solar alone could reduce emissions by 50 million tonnes, energy efficiency could also lead to a huge reduction, and the generation share of coal and renewables could be swapped within two decades. The message is that business as usual is not tenable, but the mainstream media is ignoring it.

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The energy industry in Australia will not have been best pleased by the conclusions of the Climate Change Authority’s draft report on caps and targets delivered this week. Or at the least the fossil fuel component won’t be pleased, and that’s the overwhelming majority.

The CCA had a simple message for the energy industry.  Business as usual is no longer be tenable. The idea that the integration of renewables has been “too successful” and should be slowed down or halted – for the sole purpose of protecting the revenue models of incumbent generators – is fanciful. Or at least it should be.

The problem is that while this is a message that the energy industry will not want to hear, there is every chance the message will not be heard. And certainly not in the corridors of government.

The CCA report is one of the most crucial reports produced this year – produced by an independent body (a Reserve Bank of carbon, and headed by a former RBA governor), that is looking at the science, the action of other countries, and how Australia should approach the issue.

The government has promised to dismantle it. It may not even get to produce its final report. And the printed media has virtually ignored it.

The Sydney Morning Herald gave the report the most prominence, but even that was on page 9. The Daily Telegraph didn’t report it at all in its news pages, apart from a column in the business section from business commentator Terry McCrann, who described it as “177 pages of sheer drivel” and used it as a platform for arguing that all wind turbines should be pulled down.

The Australian newspaper buried it in a small story in the bottom half of page 8, underneath a story about Treasurer Joe Hockey being “rescued” from protesting students. Its report focused on Environment Minister Greg Hunt’s response to the CCA report and his vow to do nothing, apart from closing down the CCA. The report itself merited just 100 words.

The Australian Financial Review placed its story on page 8, focusing again on Hunt’s pledge of inaction and playing up “industry’s” complaint that lifting the target was all too hard – even though the CCA had pointed out that doing nothing more than what had been agreed by both parties and supported by industry three years early would deliver a reduction of around 14 per cent.

So what readers of the printed press would not learn is that the CCA report says the country cannot afford to delay climate action. If it does so, it risks becoming a “backwater’ to the global economy. It points to an emission reduction target of 15 per cent as a bare minimum, and may even go to 25 per cent should it deliver its final report in February. It says the costs of such a reduction plan would be minimal – and with a carbon price and access to international permits the cost would be barely visible.

The report focuses on the opportunities available in the electricity industry, which it says the greatest single source of domestic abatement. Just to modify this message to the energy industry: Australia cannot afford to wait while the coal-fired generators run to the end of their stated life-spans.

That underlines the CCA’s support for the renewable energy target. The costs of renewables are coming down quickly, and having a support mechanism that guarantees renewables will be built accelerates the exit of fossil fuel generation.

In Queensland, the amount of mothballed and closed coal-fired generation is roughly equal to the amount of solar that has been put on rooftops. Energy insiders say that is no coincidence.

The CCA indicates this is a good thing. New analysis that it will release soon shows that if technology costs for solar are lower than expected, then annual emissions could be about 50 million tonnes lower from the mid 2030s onwards than its medium scenario.  Given that rooftop solar is now being put on household roofs with little or no subsidy, that is a powerful enabler and driver for households, who can also reduce their electricity bills, and cheap abatement.

Energy efficiency has the same impact on the grid as solar PV, because it reduces demand. Which is why some generators have fought so ferociously against such measures, and why the recommendations of the task force for energy efficiency have not been acted on for three years.

The CCA says energy efficiency measures might include standards for electrical appliances and buildings that lower electricity consumption., as well as standards help combat split or perverse incentives for investing in energy efficiency while still allowing consumers the same appliance functionality.

The CCA notes that 40 per cent of sectoral emissions out to 2020 can be achieved by reducing demand. This would deliver abatement at low cost, or even at positive net present value. And it could reduce electricity bills for consumers and offer other benefits such as reduced capital expenditure on grids.

Of course, existing fossil fuel generators can also reduce emissions by upgrading turbines, modifying boiler operations, retrofitting plants with new coal-drying technologies and co-firing with low-emissions fuels. The CCA notes that “several Australian generators plan to do so “ but it is likely that any such plans will now be subject to getting handouts from the government under the emissions reduction fund.

In the meantime, some of the scenarios painted by the CCA are a horror show for the incumbents, or at least those that don’t want to change. These include coal-fired reduction being reduced to 9 per cent by 2030, at which time renewables could account for 69 per cent.

That, though, would rely on a carbon price scenario.  That is likely to go soon. The next policy on the radar, the renewable energy target, will come under attack once the government can finally do away with the CCA, which rejected the fossil fuel industry’s entreaties in its review last year.

Right now, the combination of incumbency and sunk investments, regulatory fiat, and a supportive Abbott government are the last aces they hold in their pack.   And they have nothing to fear from the mainstream media.

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21 Comments
  1. suthnsun 5 years ago

    In summary , it sounds like ‘all the bad news the energy industry does not want to hear’ is like a mosquito bite from the CCA, (soon to be squashed) on the rump of a rhinocerous.

    • MrMauricio 5 years ago

      no-on the rump of a dinosaur!

  2. Savonrepus 5 years ago

    Bad news the environmental industry does not want to hear is that the best solution for the challenge posed by the Climate Change Authority is nuclear. Given our resources, it is the best solution for our economy and given our geological stability and empty space we have the best sites in the world. Convert all our coal fired power stations to nuclear, all environmental targets met and challenge resolved.

    • suthnsun 5 years ago

      Assume we built with same design standards as Hinckley C Savonrepus, how long would it take for the carbon debt through the construction process to be paid back when set against wind at say 20g/kWh?

      In an open competitive market how would nuclear at say, 14c/kWh (based on Hinckley) enter that market and stay in business?

      • Savonrepus 5 years ago

        Sir suthnsun
        1 Payback is the fundamental principle of the environmental movement – all carbon friendly technologies have an initial carbon input in the build well apart from energy efficiency but once payback is achieved then everything is bonus for the environment.

        2 If the cost of nuclear raw materials is going up that indicates that plants are being built elsewhere and I have already listed the reasons it would be better to build the plants here in Australia rather than elsewhere.

        • suthnsun 5 years ago

          Hi Savonrepus,
          1. When comparing renewables or nuclear as a replacement for coal there is a problem for me assessing the lifetime carbon intensity of nuclear simply because what I have seen so far is very vague i.e in the order of 20 – 120g/kWh I think and no real definition of the assumptions. Hinckley C is a new design said to incorporate very robust safety since Fukushima has forced a rethink. The safety of that type of pressurised design as I understand it, consists significantly in a greater amount of concrete being specified, which will add considerably to carbon payback times I suspect. The lifetime emissions intensity of wind and solar are well documented (but I don’t have links ,sorry).
          The short answer to my question is that I believe nuclear can never pay back its carbon debt when compared to wind and solar since nuclear has a continuous carbon intensity in providing the fuel as well as a very large embodied carbon and an ongoing emissions profile for an unspecified (very long) period for storage of byproducts. When compared to coal generation I can’t assess on the information I have but I suspect it is in the order of at least 2 decades since construction is very slow (considerable delays for many years with all recent builds)

          2. Given my assessment at 1 and considering also that wind and solar are already providing energy cheaper than the Hinckley strike price, it seems nuclear of the European pressurised reactor type will have no place in Australia on any basis I can think of. Also Wind and solar price trajectory is firmly down , nuclear is up.

          • Savonrepus 5 years ago

            I replied above to Warwick in relation to the problems of scale for wind and solar. In relation to the carbon debt arising from the construction of a nuclear plant I find it very hard to believe (using the Hinkley Point example) that there is more greenhouse gas production arising from the concrete and other materials in building the plant than is saved producing 7% of the entire UK electrical output for 60 years as compared to building and operating coal production facilities at the same scale. It does not pass the common sense test.

            Bottom line is that a significant reason everyone can keep pointing to Australia as a high per capita greenhouse gas emitter is the fact that compared to other industrialized nations it does not have a nuclear component in its electrical production mix.

          • suthnsun 5 years ago

            Savonrepus, I suggested in the order of 20 years not 60 for carbon payback on Hinckley.
            The point for Australia is that if you propose building an EPR in say Latrobe, Vic. to replace brown coal, the coal will be burned continuously for 10 years say, in parallel to the accumulating carbon debt of the construction process. It is only when the EPR is fully commissioned and operating at designed output and the equivalent coal plant is turned off that we start to get any payback at all. At that point we still have fuel processing ongoing and need to do some calculation for the lifetime storage operations of the byproducts. If the EPR pays back its own embodied carbon in 10 years or so, as I suspect, then we have notionally total self -carbon payback assuming a steady construction spend in roughly 15 years time . In order to compare apples with apples we need to consider how the alternative of wind would compare to that construction schedule. In that case I suggest wind would be operating within 1 or 2 years, have the coal turned off 8 years earlier and have paid its own carbon debt within a few months. So that is say 12 years earlier payback using these ‘hand waving’ assumptions. This 12 years is very important since time really is of the essence, depending on your view of an equitable carbon budget for Australia we have somewhere between 6 and 18 years. I submit that since nuclear is not even legal nor seriously considered yet, there will simply not be enough time to consider it as a feasible route to satisfy our carbon budget constraint.

          • Savonrepus 5 years ago

            Grrrrr – you can produce all the numbers you like but you are not going physically be able to replace the entire electrical output of the Latrobe Valley with wind power. The most feasible alternative for the sake of green house gas emissions to cover what can not be done by wind or solar is Nuclear. I keep saying I am suggesting nuclear over coal so why you come back at me with wind over nuclear is beyond me.

            Show me how you can realistically reduce greenhouse gas emissions on the scale required and I might listen but until you can do that I am suggesting that the most practical way to do it (on the scale required) is nuclear. If one plant in UK can produce 7% of the entire nations electricity requirement that is a hell of a lot of coal produced greenhouse gas emissions taken out of this country. How many wind towers would you need to cover that? Let alone storage facilities (where there is no real scale technology in place yet) for when the wind does not blow.

            It is all very well for someone to say we need to cut emissions by 25% but how about a practical discussion on how to do it. I am offering a practical solution. I can provide a very similar outcome for the dooms day approach. For what 30 years the cry was NO DAMS NO DAMS yet the other side of the debate was never spoken of – what happens when we run out of water?

            So what happens because that issue was never addressed and more environmentally friendly solutions proposed we end up everywhere with relatively last minute solutions that are actually environmental monsters – these desalination plants.

          • suthnsun 5 years ago

            Let’s not conflate the desalination plant issue (on the other hand getting rid of coal would be a big help on that)

            If you are in the ‘renewables can’t do it all’ camp, I submit that orthodoxy is being comprehensively overturned, studies by UNSW, Uni of Delaware, NREL labs. + +

            Look at this article on Renew Economy the other day;

            https://reneweconomy.com.au/2013/disproving-the-sceptics-10x-more-wind-and-solar-no-problem-45231

            I think the simple aggregation of renewables with geographical diversity, longitudinal diversity, orientational diversity (for solar) combined with a smattering of storage and HVDC lines gives a complete answer relatively easily and in quick time if we want it.
            This is all readily available technology now.
            PJM network (linked) is the largest network in the US and is not particularly advantaged for renewables. They are using sophisticated storage and demand response installations and signalling with very fast response and frequency correction. If they say its not a problem I believe them.
            I am not meaning to be argumentative.
            PS look up Carnegie wave energy, they are building the first wave energy (plus power) desalination plant at Garden Island. That process will be far more efficient than current desal plants and continuous operation more or less.

        • Warwick 5 years ago

          Without paraphrasing “suthnsun” too much, I’d suggest he’s trying to point out that the UK signed a deal for Hinkley C nuclear facility for £92.50 which is probably closer to 16c/kWh in Australia.
          http://www.theguardian.com/environment/2013/oct/30/hinkley-point-nuclear-power-plant-uk-government-edf-underwrite
          The UK has only limited opportunities for additional renewables whilst Australia has plenty…so, with large scale PV getting close to the nuclear levels here and wind at about 9-10c/kWh why would you consider nuclear at this stage?

          • Savonrepus 5 years ago

            Warwick this is why the world is in such a mess everyone wants to compare apples with oranges to win an argument rather than reducing it to apples v apples so that the logical choice can be made. I suggest nuclear for the reason of its greenhouse gas emission benefits so it is irrelevant to pretend this is a discussion between nuclear v wind/solar or other such sources. The fact of the matter is that the majority of our power comes from coal and it is logistically impossible to replace it entirely with wind and solar so the logical alternative is nuclear. It does not have the negative greenhouse effects of coal power production and can make significant inroads into the current coal output. Given that fact that the Climate Commission is proposing significant increases in the greenhouse gas reduction requirement is why I am suggesting that nuclear should be considered at this stage. If you can come up with a plan for large scale non green house gas emitting sources then I would be happy to debate the costs but until then nuclear is your best alternative in conjunction with the benefits of other sources where practical.

          • Warwick 5 years ago

            It is apples vs apples, whether it’s c/kWh or $/MWh. If you’re suggesting it’s a baseload argument then that’s weak as much of the need for it was inflated by creating artificial demand for off-peak hot water heating through state government schemes. The main point is that intermittency is the challenge with renewables but this has been manged effectively so far with even high levels of penetration, never mind that all generators will have periods of unavailability be they coal or nuclear. It’s a cost question really and going 100% renewables would be expensive and it may be better to aim for a slightly lower figure and buy international offsets but if the cost of nuclear in Australia would be around the $160/MWh mark for just baseload, then renewables even allowing for intermittent gas peakers or electrical storage look more compelling than nuclear.

          • Diego Matter 5 years ago

            Savonrepus,
            I’d like to answer to some of your statements:

            “Warwick this is why the world is in such a mess everyone wants to compare apples with oranges to win an argument rather than reducing it to apples v apples so that the logical choice can be made.”

            You are wrong in trying to reduce the complex question into one of only comparing ‘replace coal with nuclear’ and the problem is solved. In this context you need to look at the system as a whole to get to the right answer.

            “I suggest nuclear for the reason of its greenhouse gas emission benefits so it is irrelevant to pretend this
            is a discussion between nuclear v wind/solar or other such
            sources.”

            Wrong again, because wind and solar will reduce emissions much quicker. The necessary ramp up of nuclear in Australia to have an impact on emissions is not feasible politically, time wise, and also because of lack of know-how and financing.

            “The fact of the matter is that the majority of our power comes from coal and it is logistically impossible to replace it entirely with wind and solar so the logical alternative is nuclear.”

            For once you are right, but you are still wrong, only because you don’t examine the whole system. Wind and solar alone will not do the trick, but efficiency measures (very important), wind, solar, biomass and storage will succeed.

            Have a look at http://www.youtube.com/watch?v=7IZdWpp26-g , a virtual combi plant study in Germany that showed that it will be able to produce all the energy needed to provide 100 percent of the needed energy only with renewables. And a lot of studies in recent times have showed that this goal is rapidly achievable and financially feasible. Mine reneweconomy for these articles and studies.

            “Given that fact that the Climate Commission is proposing significant increases in the greenhouse gas reduction requirement is why I am suggesting that nuclear should be considered at this stage.”

            A 35% reduction in emissions is only achievable through energy efficiency, no nuclear or other renewables needed. Mine reneweconomy for these articles and studies.

            “If you can come up with a plan for large scale non green house gas emitting sources then I would be happy to debate the costs but until then nuclear is your best alternative in conjunction with the benefits of other sources where
            practical.”

            I hope you have now insight into the plan “for large scale non green house gas emitting sources”. The only difference is that we are talking decentralised energy production instead of your old model of centralised nuclear and base
            load model. I suspect you are quite new to the discussion and have still to make the switch in your mind to the future with a decentralised energy system.

            “I would be happy to debate the costs but until then nuclear is your best alternative in conjunction with the benefits of other sources where practical.”

            You missed this train too? Just for your information, renewables are or are quickly becoming the cheapest form of energy production in more and more countries, especially in Australia. Again mine the available information on reneweconomy for that subject.

            You don’t have to respond Savonrepus, I know you still have to make the journey of knowledge. You have your view and I/we have ours, but I’m sure you will get there, especially when you start to apply a whole system thinking instead of trying to turn a complex problem into a simple one, trying to make simple apple to apple comparisons.

            Think about it. Energy efficiency combined with decentralised renewables and storage (not only battery storage) is the future, not centralised nuclear. And before you start to argue the myths that renewables are intermittent, expensive and not baseload worthy, there are hundreds of studies and articles that dispel these myths.

            Regards,
            Diego

    • Ian Garradd 5 years ago

      At 50 % more expensive than wind and solar, it unlekely to ever happen in Australia. (based on the recently approved reactor in the UK)

      • Bob_Wallace 5 years ago

        More like 300% more expensive than wind and solar based on the UK reactor price and US wind/solar costs.

    • Ken Fabian 5 years ago

      Nuclear requires a strong, sustained, bipartisan commitment to tackle emissions; as long as climate science deniers and obstructors have a stranglehold on Conservative Right politics then it can’t happen. Not just won’t, but cannot. Nuclear’s “best friends” in politics will continue to be nuclear’s worst enemies because they have no interest in tackling emissions or seeing the trade in fossil fuels constrained in any way.

      For nuclear to be accepted, the need to tackle emissions aggressively needs to be widely and strongly accepted yet, even as Abbott publicly says that climate change is real and needs addressing, he and his colleagues continue to do all they can to undermine Australian confidence in climate science and prevent aggressive emissions reductions targets being accepted.The LNP will never push for nuclear as long as it’s primary motivation is protection of the fossil fueled status quo, not even if every scientific body on the planet is saying that’s a near certain road to climate disaster.

      Until they ditch the BS on climate they will never push forward on renewables or nuclear and nuclear will have no mainstream political backing. Worse for nuclear, the LNP’s low cost, do nothing option on emissions has successfully muted the most influential voices that would be loudly calling for nuclear – Commerce and Industry. Dismaying to know that Business can be so easily bought off from doing the minimum necessary at some cost by being offered the option of NOT doing it at lower cost.

      In any case the best the pro nuclear lobby can hope for in Australian is to become the future low emissions backup to renewables; as long as they hitch their wagon to Conservative, anti-Environmentalist politics they will be tied to a political movement that has zero interest in nuclear except as a rhetorical exercise in Green bashing. ie it’s allegedly pro-nuclear rhetoric will be entirely about spoiling it for renewables to the long term advantage of fossil fuels.

      • Savonrepus 5 years ago

        Ken you are being far too fatalistic. There is one thing about a political environment is that it is forever changing. Throughout history those that have stuck to the side of common sense have won. Although unfortunately sometimes not within a life time. However like the climate politics is also becoming more volatile. You just need the right moment to refuse to go down the back of the bus.

        • Ken Fabian 5 years ago

          A decade ago ‘nuclear is the only alternative’ actually had some merit. That was about the time the LNP’s position firmed into climate science denial and obstructionism and unequivocal support for the fossil fuel resources sector. That stole away the only political support for nuclear in mainstream politics.

          A bipartisan, loophole free and steeply rising carbon price is the best thing that could have happened for nuclear – that is, after an unambiguous and clear commitment from the LNP to addressing the climate/emissions problem. But as long as the most influential voices that would call for nuclear – commerce and industry – are offered do nothing alternatives they won’t demand it. It hasn’t been Greens that are getting them to shut up about nuclear, it’s the Conservative Right.

          But I think nuclear’s big moment to shine has been and gone, killed by climate policy obstructionism – no problem = no need. Meanwhile renewables, that don’t require bipartisan support or decades of planning ahead just to get a foot in the door, are doing far better than predicted.

          The well of innovation when it comes to renewables and storage is still deep; just what’s in the pipeline between Lab and factory will ensure costs continue to fall for another decade. And in the Lab the innovations just keep coming.

    • Sean 5 years ago

      the bad news nuke supporters don’t want to hear is that without huge government subsidies no-one wants to touch nuke.

      When you can find a private investment firm who has the resources to pay for a nuke disaster, pay any costs and revert the surrounding countryside to its original state – without statute limitations on payout amount, or government assistance – then tell me how cheap nuke is.

      Solar on the other hand is being taken up by regular punters in droves (much to the displeasure of the newly privatised gentailers, who are suffering a massive dose of buyers remorse.)
      The mantra of “Only nuke can save us” is both boring, and intellectually dishonest.
      Your idea of gerry-rigging a nuke reactor in an old coal plant is laughable. The kind of safety systems that need to be installed at a nuke plant far exceed the ones required for coal.

      All thermal power generators suffer from lack of variability, they have limited areas that they are good at outputting electricity, otherwise they are woefully inefficient.

  3. MrMauricio 5 years ago

    The incumbents could try the revolutionary concept of joining them

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