Newman wipes climate and clean energy off Queensland map

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Campbell Newman has confirmed the complete dismantling of the state’s climate change and clean energy initiatives – even winding down measures to address peak demand. But he has chosen to take a bite out of coal revenues. Is the party over for the thermal coal export industry?

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The Queensland Government has made good on its commitment to obliterate virtually the entirety of the state’s climate change and clean energy initiatives, the measures Premier Campbell Newman has deemed to be made “redundant” by the Federal Government’s carbon price.

The state budget that was released on Wednesday reads like a scoreboard of victims, although Newman’s team has only been able to identify savings of $431.2 million over four years – below the previous estimates of $660 million – because, it turned out, that it was contractually obliged to continue with some initiatives.

The highest profile victim of these cutbacks was the Solar Flagships project. Newman wanted to withdraw the $75 million contribution immediately, but had to wait until the Solar Dawn project failed to gain financing by the specified date before it could act. The decision effectively brought the project to a close, although it was struggling anyway.

The roll-call of victims also includes the Queensland Climate Change Fund, the Queensland Renewable Energy Fund, the Queensland Smart Energy Savings Fund, the Solar Initiatives Package, the Waste Avoidance and Resources Efficiency Fund, the Local Government Sustainable Future Fund and the Climate Smart Home Service.

Other projects to be brought to an end are the Solar Hot Water Rebate Scheme, the Solar Atlas, the Cloncurry Solar Thermal Trial Site Remediation and a separate Solar PV Farm, the Bright Thing Campaign, the Renewable Energy Industry Development Plan, and Climate Smart Business Service. The Wide Bay Community Solar Farm has been deferred.

Also gone are the Sustainable Energy Innovation Fund, which leveraged $93 of private funds for every $10 of government money, higher than the anticipated ratio of 8:1, and the EcoBiz program, which delivered average percentage savings in greenhouse gas emissions of 18 per cent in 2011/12, according to the budget papers.

The Geothermal Centre of Excellence and the Wide Bay Pilot Community Solar Farm are the only initiatives that appear to have survived the cuts in the Department of Energy and Water Supply. The entire climate change department was wiped out – with bits going to Science and Innovation and some left in Environment and Heritage.

The budget papers also reveal that the government’s expense through the Community Service Obligation to customers of Ergon Energy in regional and remote areas will balloon to $667 million in 2012/13, a near 10-fold rise, presumably as the rising cost of networks push the cost of delivery well beyond the retail prices in the state’s south-east corner, where the benchmark for the CSO is set.

RenewEconomy raised the issue of the CSO in an article a few weeks ago, pointing out the massive diesel bill (up to $4.8 billion) the government was facing in coming decades, just from servicing small isolated communities in the far west and north and islands, let alone regional centres.

It is generally recognised that the best way to reduce these costs is to reduce reliance on an over-stretched grid, and introduce more renewables (already competitive in remote and off-grid sites), and distributed generation and storage options which can reinforce weak grids and prove cost effective.

But the state government is also winding down its demand management scheme. The papers show that in 2011/12, it delivered reductions in peak demand capacity of 87.8MW, well above the 55MW targeted, from a series of energy efficiency and demand management initiatives.

But the 2012/13 budget only envisages an extra 4.2MW to reach a “cumulative total” of 92MW. The reason for the over-performance? Because of a “number of outcomes being achieved ahead of schedule, changes to the MW calculations and as a result of information now to hand which was previously unknown.“

Garnaut’s coal thoughts

Of course, none of these measures got anywhere near the coverage or the indignity expressed in the mainstream media about Newman’s decision to impose a higher royalty on coal mine exports, a measure which might bring in an extra $1.6 billion over four years.

Is Newman simply playing a game with Canberra and calling its bluff over the share of profits from the MRRT, or does he realise that this might be the last chance to extract money from the tail end of the coal boom?

As RenewEconomy has written on several occasions, most recently here, Australian thermal coal miners have simply refused to believe that demand for their produce could ever fall – hence their determination to dig up virtually the entire Galilee Basin and turn the Great Barrier Reef into a giant coal port and freighter super-highway.

But that fantasy should have been dismissed when the Bureau of Energy Economics produced its recent report that suggested solar PV would be as cheap as, or cheaper than, new coal-fired power generation in Australia by the end of the decade. That’s in a country which can access plenty of coal at its doorstep.

Once that coal is sold at export prices, shipped 10,000km and then still needs to negotiate an ancient railway network, the costs become even less attractive. Little wonder that India predicts the cost of large-scale solar will be cheaper than new-build coal by 2017, and China reckons it will happen in its country by 2020 – hence its recent upgrade of its solar deployment and its focus on larger-scale solar farms.

And as the government’s former chief climate advisor Ross Garnaut said on Wednesday, coal companies have effectively been “dudding” their shareholders, by over-investing in mining projects on the mistaken belief that China would not act to diversify its energy sources and reduce its carbon emissions.

“The fact that large elements of Australian business believe that China was never going to get off its high emissions strategy means there has been a chronic over-investment on a false belief in industries that depended on continued emissions intensive growth in China,” Professor Garnaut said in an interview with The Australian Financial Review.

Now, it seems, some of that planned over-investment is going to come up for careful review. At least the miners can read a commodity price graph.

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24 Comments
  1. Alex 7 years ago

    The coal bubble is about to burst, and a huge number of over-financed mortgagees are going to be struggling with their power bills in their poorly insulated, energy-wasteful McMansions very soon indeed. That will of course be a boon to the CSG industry. The short-sighted raping and pillaging of Qld’s environment demonstrates the spirit of Joh is alive and well in the Dark Energy State.

    • Concerned 7 years ago

      I wish we could keep some perspective.
      The state is broke.At the end of this financial year there wil be a debt of $83 billion.Revenue is $44 billion a year.
      Defecit has climbed to between $4 and $6 billion a year over the last 7 years.
      The previous Govt mismanged the economy.
      Essential servcices need to be addressed first.
      That is the reality.

      • Bill 7 years ago

        I always thought it was spelt ‘deficit’.

      • Jason Dow 7 years ago

        http://www.treasury.qld.gov.au/knowledge/docs/annual-reports/2009-10/pdf/docs/financial-position-in-detail-annual-report-2009-10.pdf

        Qld is not broke amigo- you can not trust to receive a responsible economic narrative from a man like Campbell Newman. He over exaggerates the problems and sells a solution that just happens to fall inline with a very idealogical driven agenda identifiable all over the world in Conservatives thinkers.

      • michael r james 7 years ago

        Concerned will believe what he wants to believe. He is resistant to the facts, just like his hero Campbell Newman who on Lateline last night several times wanted to avoid the actual current growth rate and wanted to refer to the rate of more than a year ago. Nuts!

        No doubt he wants to believe the ridiculous Peter Costello “commissioned audit”. But he should read what an actual top economist says (PC is a lawyer). (This article was produced in Crikey but it is also on Quiggin’s website). Below is my extract/summary.

        http://www.crikey.com.au/?p=306762
        Quiggin: Qld isn’t Greece or Spain — acting like it could hurt
        by Professor John Quiggin, Wednesday, 1 August 2012

        The use of gross rather than net debt measures is economically unsound. Queensland has huge financial assets, totalling $41 billion in 2010-11. The largest single component is the fund accumulated to meet future superannuation obligations, an asset which few other governments hold.
        …….Net government debt, taking account of both financial assets and the superannuation liability, is only $41 billion. The inclusion of the debt associated with government business enterprises represents an even larger error. This debt is fully serviced by the earnings of the enterprises concerned.
        ……..
        Over the past 20 years or so, services have been improved to the point where they are now about equal to the national average. But there has been no corresponding increase in tax effort. The Labor government sought to maintain Queensland’s low-tax status while delivering high-quality services. While real estates markets were booming, the revenue they generated filled the gap. But, as the commission correctly argues, this can’t work in the long run. Queenslanders must either pay the same taxes in other states or accept lower-quality services.]

  2. Chris Fraser 7 years ago

    Perhaps there are two factors at play. A reduction in China’s growth in GDP (because they relied on the rest of the world to buy their ‘stuff’), in addition to China’s planned reduction in emissions has come home to roost. If all true – and i don’t doubt that it is – what is needed is better economic feedback through large economies that affect our export industries so we can plan our workforce allocations in turn.

  3. Tim Buckley 7 years ago

    Giles
    Keep at it, you are raising all the legitimate issues the mainstream media is too ignorant or biased to address, well done.
    I find the whole idea of the ballooning Community Service Obligation payment of $667m per annum to Ergon amazing. Is that not a fossil fuel subsidy? But didn’t I read that Australia does not really subsidise fossil fuel usage? So Queensland tax payers subsidise the delivery of fossil fuel power to remote areas in Queensland. At face value, that sounds fair and reasonable. But in doing so, this removes any market price signal that would show the extremely high cost of remote area power delivery. So if a remote community were to put in solar, would Ergon then pass on part of this $667m annual fossil fuel subsidy to help fund the installation of hybrid solar with storage? Of course not! Lets not try and resolve the problem and improve our energy independence – just keep the fossil fuel subsidy in place so we need to keep importing diesel fuel and gold plating the fossil fuel grid instead.
    Tim Buckley, Arkx Investment Mgmt

    • Concerned 7 years ago

      CSO is a social obligation,not a subsidy.All Qld Govts have endorsed same for very good reasons.I believe Beattie consolidated same.Thios was before current advances alternative sources.
      You will also find that regional areas in Qld produce a great deal of the wealth/income for Qld, including Agriculture and Mining. They create real wealth.

      • colin 7 years ago

        So if they have a great deal of wealth, let them pay the full price for electricity. The buyers of the products of miners pay transport costs to get the stuff from a remote location. Is the idea that more and more subsidies will result in the prices in mining towns reflecting city prices?

      • Alastair Leith 7 years ago

        @ Concerned: Space glyphs after full stops come for free, unlike burning fossil fuels which has our climate in grave danger. Previous estimates of climatic feedback effects are now proving as overly conservative estimates and business as usual is economic and environmental heresy.

      • Tim 7 years ago

        Ok, the CSO is not necessarily the problem. But why not charge the real cost of electricity, and provide the CSO money directly to those in the remote areas. This will also encourage energy efficiency, because it’s better to receive CSO money and not spend it on electricity bills!

      • Roger 7 years ago

        ” They create real wealth ” ? with tax payers money , to the tune of $667 MILLION a year subsidy and stealing the coal for peanuts from every tax payer in Australia .
        Did Joe Hockey audit your budget numbers or did you get a catering mob to run over the figures ?

        • Concerned 7 years ago

          Roger, they use investors’ money to create wealth. It is called the Stock Market. You probably have Superannuation?
          Interestingly, you seem to forget that all the population subsidise solar and wind, including the poor. Did you conveniently forget?
          Roger, subsidising power charges in the regions happens in every State.
          It is a “social” program”
          In addition, Coal is sold at market rates in Qld, there is no subsidy. There is a subsidy on gas generation.
          Het , let us up the price of Education and Health in the regions. Make them pay.
          In addition, should you not pay more to use the “subsidised roads” you drive on every day, or the “subsidised public transport” you may use.?

  4. Paul 7 years ago

    And now the Fed’s are doing it. Barely 8 weeks into the new Clean Technology Innovation Program the minister announced funding to this and all similar programs have been ‘temporarily suspended’ subject to a review.
    Their amateurish approach to government seems to know no bounds.

  5. Concerned 7 years ago

    Colin, are you being funny.
    There are many people in the regions on pensions and low incomes.
    The wealth is created by private enterprise, which flows to all of Qld.
    By the way, I was incorrect regarding the deficit, it is actually $10 billion for 2012/2013 in Qld.
    Once again COS is a social obligation like health and education

  6. Eb Flow 7 years ago

    Qld – the Dumb State. Ergon Energy’s CSO of $667m per year would buy a lot of PV, wind and batteries. Maybe an investigative article is required on how the CSO is calculated and how many consumers benefit from it. My previous understanding was that the CSO is only for the 33 diesel powered mini-grids supplied by Ergon.

    However, this website indicates mini-grid generation of 101,000 MWh pa
    http://www.ergon.com.au/community–and–our-network/network-management-and-projects/isolated-and-remote-power-stations
    giving an implausible subsidy of $6.6/mini-grid kWh, so the CSO must also be assisting with the costs of fringe-of-main-grid consumers. Why? Doesn’t the network earn a regulated rate of return?

    • Concerned 7 years ago

      Eb Flow, it happens around Australia. It is a Social Program.
      Maybe you should advocate more expensive medicine and education for regional areas? Make them pay?
      Interestingly, you seem to forget that all subsidise solar and wind. Did you conveniently forget?
      What is this country coming to?

      • Wot energy 7 years ago

        Concerned, I think you’ve missed EBay Flow’s point. He isn’t saying scrap the CSO, rather questioning how it is spent. As others have commented on here, the CSO being used on short term prop up of fossil fuel grid is another of the many hidden subsidies for fossil fuel.

        If we ARE spending the money, why aren’t we looking at the best value for money. We can keep subsidising diesel, or use the money for something a little longer lasting.

  7. Martin Nicholson 7 years ago

    Giles it is perhaps a little duplicitous to suggest that the BREE prediction that solar PV will be cheaper than coal in a decade means that the PV could significantly reduce coal demand. With PV at a capacity factor of 25% and coal at 83% means it might at very best displace 30% of coal demand.

    • Giles Parkinson 7 years ago

      The LCOE estimates relate to cost per MWh (energy produced) not MW (energy capacity)

      • Martin Nicholson 7 years ago

        Capacity factor gives an indication of the proportion of time the plant is operating over the year. PV on average runs for 6 hours a day (25%), coal for 20 hours a day (83%). So PV can only replace 30% of the coal production period.

        • Giles Parkinson 7 years ago

          Time to move on from base load-peak load theory of energy markets to flexible and inflexible. Solar will be part of a portfolio (with wind, biomass in some places, and gas or solar storage). Doesn’t need to act like a coal fired power station.

  8. Regional Bob 7 years ago

    Would everyone who has complained about the CSO in these comments *please* try to understand that there are far more people in regional Qld than cola miners! The CSO covers everyone outside metropolitan Sth-East Qld – all the coastal strip as well as grazing and agricultural towns across the rest of the state. IT COVERS US ALL, NOT JUST BLEEDING COAL TOWNS!

  9. Bruce Gooderham 7 years ago

    The last QLD labor goverment got what it deserved & red heads goverment in canberra has got it coming to her also. As far as renewable enegy goes it is a lot of BULL SH-ONE-T. Industrial wind turbines should not be built near peoples homes because of the noise that drives you mad & you will end up with bad health because of it. It beats me why they don’t build wind turbines in everyones back yard in the cities where the most power gets used. The corrupt wind industry try to make out that they ( wind turbines ) don’t make any noise that efects your health, as they think they are good liers, but they are not, as their lies are catching up with them in a big way. This is why the electricity prices are going through the roof, which is one of the reasons why industry ( for example Ford & Holden can’t compete with the high cost of power ) is closing down all around Australia. The wind companys get big money from red head which is our money & slimey swan is no better.

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