Renewables a better bet than gas for Labor’s $1.5bn transformation plan

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Labor is right – there is a huge opportunity to transform the NT economy through energy development. But it’s renewables that hold the most opportunity, not gas.

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Bill Shorten recently announced that Labor will set aside $1.5 billion to facilitate the development of gas in the north of Australia. In particular this would support the construction of a gas pipeline connecting the Beetaloo basin to Darwin and the east coast.

Beyond Zero Emissions is proposing to redirect this money towards developing a renewables-based NT economy that will provide the foundation for permanent jobs in diverse new industries, including Aboriginal enterprises managing renewable energy infrastructure. This strategy will attract new residents as well as boosting NT government revenue.

The context of this announcement is the NT government’s lifting of their moratorium on fracking in 2018. This decision flew in the face of serious risks to local communities and environment.

The NT government inquiry into hydraulic fracturing found that developing the Beetaloo basin alone would increase Australia’s onshore greenhouse gas emissions by 6.6 per cent. Developing NT’s gas reserves could release over 20 billion tonnes of carbon emissions, four times more than the original Carmichael coal mine proposed by Adani in Queensland.

The inquiry called that risk to the climate ‘unacceptable’. It recommends “the NT and Australian governments seek to ensure that there is no net increase in the life cycle GHG emissions emitted in Australia from any onshore shale gas produced in the NT.”

Yet the Australia Institute has shown that offsetting those emissions would cost $146 billion over 10 years. So this would be an environmental and economic disaster. For those reasons, fracking has no social-license, with a majority of Territorians wanting a moratorium to stay in place.

The NT economy is already over-exposed to the gas industry. Its current budgetary troubles can be directly linked back to the boom/bust model of gas infrastructure development. The end of the construction phase of the massive Ichthys Inpex gas plant last year has given Territorians firsthand experience of the destabilising effect a sudden flood of capital and workers can bring.

Thousands of former workers have now left the Territory, and their departure, combined with a sharp fall in spending on goods and services needed during construction, has led to an economic slowdown.

House prices fell by 19.4% in the three years to June 2018, with further falls expected in coming years. The value of real estate transactions in the Territory fell 53%, from $2.25 billion to $1 billion, with a corresponding decline in stamp duty revenue.

The post-Ichthys hangover has been felt keenly by the government, with the Territory’s budget going deep into the red. However, like an addict looking for their next hit, the NT government is doing everything it can to encourage more short-term gas projects.

The irony of this government interest in gas infrastructure is that we are nearing the end of the gas boom. Gas is no longer competitive in electricity generation, due to competition from cheaper renewable energy. A consequence of this is General Electric losing $400 billion in market value due to huge disruption in its gas generation division.

Australia’s gas demand has been falling since 2012. These trends are only going to accelerate. Recently the Beyond Zero Emissions Electrifying Industry report showed that Australian manufacturing could become world-competitive by transitioning off gas to electrical processes powered by renewable energy.

Australian Labor are going to the election with a climate policy to reduce emissions by 45 per cent by 2030. Given that the gas industry is our fastest growing source of emissions, it is only a matter of time before gas infrastructure becomes a horrendously expensive stranded asset. They are simply not compatible with Labor’s emissions reduction targets.

However, there is one aspect to Labor’s policy that it unwittingly gets correct. There is a huge opportunity to transform the NT economy through energy development. However, it is renewable energy that holds the best development opportunity, not gas.

In June, Beyond Zero Emissions will launch our vision for the NT to become a renewable energy powerhouse. It presents an economic strategy for attracting billions in private investment, creating over 8000 new jobs in a variety of sectors. This strategy can benefit all Territorians by reducing the cost of living, increasing government revenues and revitalising regional areas and remote communities.

The strategy is based on renewable energy, and puts the Territory at the forefront of the global transition away from fossil fuels. This transition is underway, driven by international climate action and investment driven by the remarkable fall in the cost of renewable energy.

Solar and wind energy is now the cheapest form of new electricity generation in Australia, and their cost decline has much further to go.

This moment in history is tailor-made for the Territory, one of the sunniest places in the world with vast areas of managed land with development potential. However cheap solar energy becomes, it will always be cheaper in the Northern Territory. This is the Territory’s comparative advantage in a low-carbon world.

By 2030 the NT’s electricity system can be 100% renewable, with solar PV supported by a range of technologies including solar thermal power, wind power, batteries, pumped hydro storage and high voltage transmission cables.

Beyond Zero Emissions believes the Northern Territory can become a renewable energy powerhouse, building 10 gigawatts (10 GW) of renewable energy by 2030, 10 times more than the Territory’s current generation capacity.

The 10 Gigawatt vision will attract billions in private investment, creating thousands of construction jobs during a 10-year build-out. But it’s real potential is as a catalyst for wider, long-lasting economic renewal, including economic development for remote and rural communities.

An excess of cheap renewable electricity will provide opportunities for competitive onshore mineral processing, electrified manufacturing and hydrogen production. Electrified transportation would be transformative in the NT, which has the highest fuel costs in the country.

HVDC transmission cables are to electricity what pipelines are to gas. They efficiently move electrons without significant losses. An investment in HVDC infrastructure both within the NT, and connecting the NT with the National Electricity Market would be a nation-building project akin to the original overland telegraph completed in 1872. This would be a much more valuable way to spend $1.5 billion and unlock renewable energy development in the NT.

The $1.5 billion earmarked for gas pipelines should be redirected to develop the NT as a renewable energy powerhouse, with long-lasting benefits for the NT community and economy. We only have to accept the truth about the climate emergency to understand that building gas pipelines at this point in time can only lead to disaster. The choice could not be clearer.

Eytan Lenko is Chair of Beyond Zero Emissions

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