Peter Dutton’s nuclear accounting trick #4: Assume climate change has no cost

This is the final part of a five part series of articles examining the four accounting tricks that the  Liberal-National Party employed in the costing of their energy plan to slow the roll-out of  renewables and rely instead on nuclear power. The first article, which provides the overarching context is published here. Part 2 is here. Part 3 is here, and part 4 is here.

These four accounting tricks act to mislead voters that the Liberal-National Party could lower energy bills through a shift to nuclear when in reality it is likely to increase power bills. 

This article focuses on number four and the last of the accounting tricks covered: Assume climate change is not an important and urgent problem that is worthy of costing.

Most types of greenhouse gases last decades to centuries once released in the atmosphere and so the overall level of global warming the planet experiences will be a function of our cumulative emissions over time.

While it would be great if we can reach net-zero emissions in 2050, the level of warming we’re in for will be a result of not just emissions in 2050, but also the years prior to 2050. 

The Liberal-National Party’s preferred plan for the electricity system involves slowing the replacement of coal with renewable energy over the next decade and instead waiting until the 2040’s to undertake a concerted replacement of coal with nuclear power. This leads to almost 1 billion extra tonnes of CO2 emissions compared to the so called Labor Scenario (AEMO’s Step Change) from the electricity sector. 

There’s also substantial additional emissions from outside the electricity sector due to the Coalition’s preference to maintain consumption of petroleum for transport and natural gas for heating in homes and industry.

The Coalition’s consultant didn’t elect to provide any information to calculate these extra non-electricity emissions. However as detailed in part 3 of this series, it’s possible using AEMO data and the average fuel efficiency of EVs and petroleum-fueled vehicles to estimate extra petrol consumption in the Liberal Party scenario of 203 billion litres. This would add an extra 466 million tonnes of CO2 to atmosphere.

The extra CO2 carries a cost in terms of the damage global warming is expected to inflict on people.

It is interesting to note that the consultant who prepared the Liberal-National Party costing has acknowledged the existence of data prepared by the Australian Energy Regulator that would allow them to attribute an economic cost on this extra CO2.

Yet the consultant explicitly chose to place no economic value at all on carbon emissions. If they had applied the value recommended by the regulator then it would have added $392 billion in extra cost to the Liberal Party Scenario compared to an extra $75 billion to the Labor Scenario. 

The end result for the aggregate cost (also taking into account the extra petrol expense to consumers) of the Liberal-National Party’s system versus that of Labor is shown in the chart below.

Overall, the Liberal-National Party system ends up close to $400 billion more expensive than that claimed to be the Labor system (AEMO’s Step Change scenario). Note this doesn’t correct for the fact that the Liberal-National costing has vastly understated the cost of nuclear power plants, which means it’s cost disadvantage is far higher than $400 billion.

No doubt for many people all of this modelling of possible alternative power systems and their cost 25 years into the future is a bit abstract and theoretical. They are right to be sceptical given the uncertainty which surrounds these estimates.

But one thing that isn’t at all uncertain is that the Liberal-National Party decided it was sensible to place a value of zero on avoiding carbon emissions in an economic evaluation of different policy options.

This is potentially far more informative about their energy and climate change policies than the 45 pages of economic modelling that supports their claimed energy policy costs.

Tristan Edis is director of analysis and advisory at Green Energy Markets. Green Energy Markets provides analysis and advice to assist clients make better informed investment, trading and policy decisions in energy and carbon abatement markets.

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