UNSW study says coal has no economic future in Australia

A new study from researchers at UNSW has painted a bleak future for coal-fired generation, saying that it will have little or no economic future in Australia, and would be more expensive than a 100 per cent renewables future in a carbon constrained world.

The study also suggests that a mixture of solar, wind and biomass would also be a cheaper option than a grid reliant on gas-fired generation because of the expected jump in gas prices that will be triggered by the boom in LNG exports.

“The research confirms that policies pursuing very high penetrations of renewable electricity, based on commercially available technologies, offer a reliable, affordable and low risk way to dramatically cut emissions in the electricity sector,” says UNSW associate professor Mark Diesendorf, who co-authored the report along with Ben Elliston and Iain MacGill.

“There is no need to invest in new, expensive, unproven, high-risk, fossil fuel technologies” such as carbon capture, he said.

The UNSW report is the latest in a series of reports that suggest that a 100% renewables scenario would likely offer a cheaper alternative than continuing with fossil fuels, and adding new technologies to try and reduce their emissions.

The Australian Energy Market Operator recently suggested in its recent modelling of a 100 per cent renewables scenario that the costs would be consistent with Treasury estimates of maintaining the current generation mix with a modest carbon price. Bloomberg New Energy Finance went further, and said that wind is already – and solar soon will be – cheaper than building new coal or gas fired power stations, even without a carbon price. An ANU researcher, Andrew Blakers, noted that most of Australia’s generation capacity will need to be replaced in the coming decades, and wind and solar offered a cheaper option to do that.

The UNSW researches said the conclusions of their research were important because the electricity sector accounted for around one third of Australia’s emissions, but probably offered the easiest abatement options. “Achieving the rapid and deep cuts to greenhouse gas emissions that will be required to avoid dangerous global warming is expected to be more difficult in areas such as transportation and agriculture than in the electricity sector,” they said.

The UNSW study looked at a 100 per cent renewables model based largely around wind and solar (both PV and concentrated solar thermal technology. These would be supported by bio-fuelled gas turbines, and hydro electricity (see table to the right).

Three new fossil fuel scenarios were modelled –

“Under a range of plausible parameter values, we find that the majority of cases do not compete economically with the RE100 scenario,” the researchers say. The only time they did was in the highly unlikely scenario that gas prices fell, and CCS costs were low.

The researchers said the results show that coal with carbon capture and storage scenarios are likely to struggle to compete economically with 100 per cent renewable electricity in a climate-constrained world, even if carbon capture and storage is commercialized by 2030.

It noted that CCS had once been one of the principal hopes for mitigating greenhouse gas emissions from electricity generation, but the technology has turned out to be more complicated and expensive than previously believed.

“While tiny pilot plants have been built, the proposed CCS systems are still a many years, possibly decades, from becoming commercially available.” Government funding has also been cut from various CCS programs, including in Australia. The coal industry has invested little in the technology.

“The dominant alternatives to renewable electricity are not substantially lower cost,” the study concludes. “The results suggest that it is not necessary to wait for CCS technologies to emerge.

“Policies pursuing very high penetrations of renewable electricity based on commercially available technology appear a reasonable option given the lower technology risks, lower investment risks, and the ability to reach zero operational emissions in the electricity sector. “