The fossil fuel lobby has ramped its push to put a halt to the rollout of renewables and instead reinforce the position of the incumbent coal and gas fired generators.
Just a day after the Abbott government intensified its attack on clean energy policies, re-submitting its attempt to dismantle the Clean Energy Finance Corp, leading mining groups and a former energy minister now taking his pay from the fossil fuel lobbyists have launched a blistering attack on efforts to reduce the amount of coal dug up and burnt in this country.
Rio Tinto led the charge, with its newly appointed head of energy Harry Kenyon-Slaney telling a conference in Sydney on Friday that it was time to abandon “idealistic discussions” about climate change, and accept that coal will remain the leading source of power.
“It is clear we can’t just wish away fossil fuels,” he was quoted as saying by the Australian Financial Review, a day after the company renewed its application to expand a major coal mine in the Hunter Valley.
Kenyon-Slaney also wants the renewable energy target to be wound back – claiming it is pushing up costs – and wants more government money to go towards carbon capture and storage.
His comments were echoed by former Energy Minister Martin Ferguson, now an advisor for the Australian Petroleum Production & Exploration Association, who also wants the RET watered down because it was “undermining” the national electricity market.
“The RET is distorting the proper price signals that the NEM (National Electricity Market) relies upon to attract efficient investment and to supply energy at the lowest cost,” said Ferguson, who supported the RET as a Labor minister.
His view echoes that of the coal and gas generators whose revenues and profits are being eroded because the renewable energy target is succeeding in lowering the wholesale price of electricity, as they all have admitted.
As if to highlight Rio Tinto’s own lack of faith in the CCS, Kenyon-Slaney said the company had invested $100 million in the technology. This from a company that earns billions from coal mining each year – earnings that most analysts say is at risk if the world get serious about climate change.
To put that investment into context, a Perth-based start-up, Carnegie Wave Energy, has invested a similar amount in its new technology. It has yet to earn a dollar, but at least it has faith it will work.
The attack by Rio Tinto is interesting, given that the industry has recently abandoned its voluntary levy to fund low emission coal. That levy amounted to 20c a tonne of coal – a commodity which sells for between $80 and $100/tonne.
This came after US President Barack Obama called the coal industry’s bluff by proposing to enforce emissions legislation that would require carbon capture and storage. The coal industry responded by claiming that CCS was either impossible or too expensive.
Rio Tinto is also forgetting that most energy intensive industries are exempt from the RET, and have actually benefited from the fall in wholesale prices that the coal and fossil fuel generators say is caused by the introduction of wind and solar generation. Those exemptions have pushed an extra $7.1 billion in costs onto the household sector, according to some estimates. A similar impact has occurred in Germany, where renewable energy policies have brought down the wholesale cost of electricity – the benchmark for industry electricity contracts – by half.
In any case, many mining and manufacturing operations – such as Rio Tinto’s own Gove alumina refinery in the Northern Territory, rely on expensive diesel or gas for their power source. This was the case with Gove, which is to close because it can no longer afford those spiraling costs. Some miners are now looking at renewable technologies and hybrids in an effort to reduce fuel costs.
The Climate Institute was dismissive of the Rio Tinto claims.
“It is likely that Rio Tinto has put more money into burying sensible climate change and clean energy policy than it has put into carbon capture and storage,” deputy CO Erwin Jackson said in an emailed statement.
“Scientists and increasingly investors and analysts from the World Bank to the International Energy Agency are very clear we can’t ignore the physics of the atmosphere and only a small proportion of existing coal resources can be burnt if we are to avoid levels of climate change that would set back economic development in many nations.”
“Rio Tinto’s real concern is that globally around half of new power generation investment is now based on renewable energy and this eats into future growth in coal demand. In Australia, changing the Renewable Energy Target will have next to no impact on power bills on only really benefit companies who want to sell more coal power.”