Fossil fools in the Sunshine State

In the backlash against rising electricity prices, renewable energy has often been singled out as the convenient scapegoat, particularly by a conventional power industry keen to protect their economic position.

While the industry is entitled to their opinions, they are not entitled to their own facts, which are anything but supportive. While the spotlight has been rightly applied to infrastructure ‘gold plating’, the real elephant in the room is the corporate welfare doled out to already profitable sectors. Queensland is a prime example.

The coal and gas industries in the highly ironic Sunshine State are rapidly expanding under archaic laws that give mining right of way over other land uses. Their development has not only faced far fewer restrictions but these mature industries have been greatly subsidized. In his review of energy policy in Queensland, Clean Energy Pathways, energy systems expert, Trevor Berrill, has identified State subsidies to the coal and gas industry of at least $6.9 billion over the past 5 years, including hundreds of millions of dollars for the development of the oxymoronic ‘clean coal’.  Another $13 billion to be spent on infrastructure to support the industry in the next 20 years.

By contrast, renewable energy and energy efficiency industries have received about $900 million in the same period. The industry, however, still faces many barriers such as access to land for large-scale wind and solar thermal electricity projects, none of which are yet ‘off the ground’.

Look deeper into the data and Queensland is just the tip of the fossil fuel subsidy iceberg. In 2011, total fossil fuel subsidies by the Australian government were calculated by the Grattan Institute to be $12.2 billion. This compared to just $1.1 billion spent on climate policies, including support for renewable energy in 2010–11. In the previous three year period, fossil fuel subsidies also outpaced funding for government climate change initiatives by $1 billion.

When federal and state subsidies are combined with the cost of pollution, every Queensland home is paying $3475 per year to use fossil fuels. That is not a misprint. The figure includes Queensland Government subsidies of $1.42 billion per year ($750 per home), federal government subsidies of $10 billion per year ($1250 per home) and the $6 billion pollution cost of burning coal and gas ($3150 per home).

Even if the pollution cost is reduced by a factor of 4, the cost to support a profitable and highly polluting industry is more than $2000 per year per home.

Compare this to the cost of renewable energy support nationally at $100-200 per year per home and the Queensland solar feed in tariff that adds $54 per home by 2014.15, according the State Energy and Water Supply Minister. Hon. Mark McArdle.

The solar feed in tariff, however, has helped create highly successful solar PV industry in the 18 years after Solar One on the Sunshine Coast became the first rooftop solar PV system connected to a power grid. Queensland now boasts 250,000 solar homes and there are nearly 1 million nationally – a 100% annual growth rate of that has created a real industry sector with thousands of clean energy jobs.

The renewable energy support, however, does not factor in a number of benefits that electricity distributors are now starting to realize. In his analysis of electricity demand from 2008 and 2012, John Davidson calculates that the solar PV installed in Queensland is actually saving households without solar $56/year.

This is consistent with comments made by Energex’s Mike Swanston said on ABC radio after the temperature hit the high 30’s in Queensland recently.  The 500 megawatts of rooftop solar was, he said, “….making a big difference in reducing the peak demand across south-east Queensland.” Peak demand power is the most expensive power to generate.  With the generation cost of roof-top solar now at grid parity with domestic retail prices, solar is cheaper than gas generation to offset summer peak demand.

Coal and gas industries have a rightful competitive and unsubsidized place in the market, but let’s stop the fossil fooling that masquerades as real competition.

Our children will look back and wonder how such bipolar insanity could pass as intelligent policy. To paraphrase the Irish Proverb: if you are in a fossil fuel hole and you want to get out, the first thing to do is stop digging. Literally.

By removing subsidies and making prices tell the environmental truth, we can move steadily to a clean energy economy while contributing to climate change efforts internationally. That’s a win-win for us… and our kids.

Peter Fries is an environmental journalist and filmmaker. In 1994, he coordinated the Solar One Project, the first rooftop solar PV system connected to a state power grid.

Copyright 2012 Peter O. Fries