Why Lomborg’s cleantech ideas should stay in test tube

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Contrary to the claims of the Danish protagonist and other vested interests, the IEA argues that deployment is the key to combating climate change and ensuring energy security. It says it is time to ‘rethink’ the global energy system, and opportunities abound. What is Australia waiting for?

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One of the most laughable views put forward during the ABC’s Q&A debate on climate change last week was Bjørn Lomborg’s oft-repeated contention that $100 billion should be spent a year on clean energy R&D, but that nothing should be let out of the laboratory for another 20-30 years.

Think about that for a moment. Lomborg is suggesting that $2-$3 trillion be spent on research without anyone being able to find out if the technology would really work or not? Aren’t scientists and researchers – and the rest of the world for that matter – a little more curious than that?

The coal, gas and nuclear power industries can be thankful that Lomborg wasn’t around when their technologies were under development. But the most frightening thing about Lomborg’s contention is that it is gaining wide currency; it was actually part of several submissions to the Clean Energy Finance Corp, arguing that the $10 billion it will muster be channeled to R&D rather than deployment, and appears to be the sub-plot to the ill-defined Coalition policy on emerging renewable technologies.

But around the same time as those views were being aired on ABC TV last Thursday, they were being slapped down by an in-depth report released by the International Energy Agency, the august and somewhat conservative organisation charged with ensuring the world has enough energy to go about its  business and leisure.

The IEA has a better way of spending a few trillion dollars. It argues that spending $5 trillion on clean energy deployment between now and 2020 would save $4 trillion that would otherwise be spent on fossil fuels. And therein lies the objections of the fossil fuel industry – $4 trillion is an awful lot to be sacrificed in eight years by the Gina Rineharts and Clive Palmers of the world.

Still, if the IEA says this will result in a net cost of $1 trillion, it says it will be more than offset in savings by 2050 – particularly for those member countries who spend so much on imported fuels.

The IEA report, entitled The Energy Technology Perspectives 2012 2°C Scenario, for which it uses the acronym 2DS, is a sobering reminder of how far short the world is from meeting its stated political targets of avoiding the worst impact of global warming. To do this, and limit global warming to an average 2°C, the IEA says action is needed quickly, or by 2017 the world would have exhausted its “carbon budget”.

The IEA argues that the world needs to “rethink” its global energy system, not just for climate change issues, but also to ensure energy security and rebuild national and regional economies. And it argues that this is technically feasible, as long as emerging technologies are deployed quickly enough? Are emerging technologies making the necessary progress to play an important role in the future energy mix?

This table below shows what the IEA thinks is needed to be done to achieve those goals, and where the world is up to. It makes clear that the only technologies meeting or doing better than their targets are solar PV and wind – along with more established technologies such as biomass and hydro – and the principal reason for that is that policies in some countries have encouraged their deployment.

Below is the graph that most concerns the IEA. Even though the amount invested in renewable energy projects overtook that of fossil fuels for the first time in 2011, the past decade has shown a huge increase in fossil fuel deployment. The IEA says this needs to change rapidly, and emissions from the energy sector need to peak by 2015.

Below is where the IEA would like technology costs to be by 2020. It wants more effort on CCS, which it says is way behind planned timelines, an increased focus on energy efficiency, the dismantling of fossil fuel subsidies, which it says outranked renewable energy subsidies by a ration of nearly 6 to 1, and more effort on innovation and R&D.

And this is how much should be deployed by 2020.

And to get there, this is what the IEA says should be spent each year on the various renewable energy technologies.

One other point made by the IEA has particular relevance for Australia, both in terms of the current debate around complementary policies (renewable energy targets, feed in tariffs, clean energy finance corporation), and the whacky technology cost estimates included in the draft energy white paper.

“Government action is needed in a number of critical areas, such as effective and efficient policy design,” the IEA notes. “An increasing number of governments are adopting renewable energy policies; over 80 countries had renewable energy policies in place in 2011 (e.g. feed-in tariffs, tradable green certificates, tenders, tax incentives, grants etc).

“These policies must, however, be designed to effectively keep pace with technology cost reductions, to keep policy costs to governments moderate and maintain investors’ confidence , all while helping renewables to compete.”

In other words, without a proper understanding of the technology costs, there is no hope at all of crafting a suitable policy. And the task at hand, the IEA notes, is quite feasible – it just requires ambitious policies that prioritise the development and deployment of cleaner energy technologies at a scale and pace never seen before.

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  1. Gary 7 years ago

    Excellent discussion. I wonder though, if we might think a little more, and consider equations that relate the capacity of our planet to continue to “grow”. Where somewhere in the equations, there might be reference to population, water and food production, and not just accept that market capacity is the only driver of the limits to how much energy is needed, and where it is delivered. Without such consideration, dare I suggest we are headed for extinction.

  2. We should have done the same with computers: spent $100bn a year for 20 – 30 years before they were let out of the lab!
    (removing tongue in cheek…) Lombourg clearly doesn’t understand innovation or industrial R&D.

  3. Peter Hanford 7 years ago

    One of the many interesting take homes from last Thursday night’s program was the agreement from the skeptics that their is a need for an energy reorientation.

    Clive Palmer and Nick Minchin and their types say this will happen when solar and other technologies can compete with fossil fuels.

    However as Matthew Wright from BZE pointed out renewables are travelling down the average cost curve and some pundits believe that parity between solar and coal is less than 5 years away.

    Reduced costs are achieved through the deployment of technological advances. Deployment also creates jobs, and investment.

    The obstacles to energy reorientation are not technological but sociological and this in turn shines a light on the robustness of the democratic process to accommodate change which rubs up against vested commercial interests.

    By removing fossil fuel subsidies and supporting renewable energy deployment we can hasten our energy reorientation and generate immediate economic benefits.

  4. Hayden 7 years ago

    Spot on Gary. I rarely see anything referring to population, yet to me, it is one of the elephants in the room.

  5. BillZ 7 years ago

    Good analysis. Thanks.

    Bjorn Lomborg should not be listened to on any issue. He claims one thing – e.g. “I accept climate change science” – and then goes on to make an argument that shows he does not, because his arguments all amount to the same thing: do nothing other than what we have always done, which is consume more and more and more.

    Lomborg is definitely part of the problem, not part of the solution… which is why the muddled and clueless Nick Minchin chose him for the program.

  6. Matt Ruffin 7 years ago

    IEA reported that taxpayers subsidised fossil fuels to the tune of $557bn in 2011. The planned investment table above adds up to $235bn/yr. Eliminate fossil fuel subsidies, send all that money in the direction of renewables, and you could get the job done twice as quickly!

    I know I’m oversimplifying, but I’m sure you get the point.

  7. Gary 7 years ago

    Good point Matt, why is the Government continuing to throw $billions of our dollars at the corporates of fossil fuel resource. Peter, the references you make to are also very valid. These questions deserve an answer to us all. The contradictions when “Reduced costs are achieved through the deployment of technological advances. Deployment also creates jobs, and investment”. “The obstacles to energy reorientation are not technological but sociological and this in turn shines a light on the robustness of the democratic process to accommodate change which rubs up against vested commercial interests.” Would the companies receiving the financial relief to the tune of $billions, not be giving a little something back? Could they be doing this without undermining our democratic process? One of my thoughts is that maybe we might have a Public Interest Ethics committee to facilitate evaluating where the priorities are driven, and what reference they have to direct public interest? A Public Interest Ethics Council could meet and have input into evaluating public interest obligations by Government in every situation that has involved outsourcing too….there are lots now. We have absolutely no evaluation of how such responsibility is met. The auditor general offices focus on just finance, not any of the moral questions, and no one is able to challenge this.

  8. Richard Simpson 7 years ago

    Could someone refer me to the references regarding fossil fuel subsidies in “Australia”.Not transport.
    I have yet to find any sources.

    • Peter Hansford 7 years ago

      A paper by Dr Richard Denniss and Andrew Macintosh (Complementary or contradictory? An analysis of the design of climate policies in Australia) totalled up concessions in areas such as fuel tax credits for vehicles used in mining, agriculture and other non-road purposes ($5.1 billion), fringe benefits tax treatment of company cars ($1.1 billion), exemption from fuel tax for aircraft ($1 billion) and accelerated depreciation for specific classes of assets ($915 million).

      In Western Australia the standardised electricity pricing is an effective subsidy to gas and diesel electricity generation.

      According to the Economic Regulation Authority report the average cost of generation in a town like Broome is 36 cents per kwh. Customers are charged 22 c per kwh (inc GST) and paid (from 1st July) just 10c per kwh for solar energy exported to the grid.

      • Richard Simpson 7 years ago

        I aware of transport subsidies.
        Evening tarrifs over a State is the City consumer subsidising the Country consumer.Would not matter how it was genererated, social policy.
        I was wondering what subsidies are given to fossil power generators?
        There is a dearth of papers on the subject.

  9. Gary 7 years ago

    The web address for the article Peter relates is here;
    Complementary or contradictory? An analysis of the design of climate policies in Australia, Richard Denniss and Andrew Macintosh, The Australian Institute, Policy Brief No. 22, February 2011, ISSN 1836-9014 http://observgo.uquebec.ca/observgo/fichiers/69936_B.pdf

  10. Richard Simpson 7 years ago

    I have read the original full paper.
    What I am after is what sudsidies we are giving current power plants?Not transport, another subject.
    Subsidy to date on PV is somewhere between 4 to 7 billion, plus ongoing FIT.

    • Peter Hansford 7 years ago

      The relative level of support afforded to fossil fuels vis a vis renewables is an extremely complex question.

      Support for the fossil fuel industry is longstanding and shared between different levels of government however recent reforms have stressed the need for increased competition suggesting that existing players have enjoyed monopolistic rents for too long.

      Support for fossil fuels has come in many forms.
      In Victoria this includes taxpayer funded an expansion of brown coal production and connection of the grid to Portland to enable the investment by Alcoa in the Aluminium smelter.
      In Western Australia it was the WA taxpayer the funded the establishment of the North West Interconnection (electrical grid) System to service the mining sector of the Pilbara
      Research and development concessions, the preferable tax treatment of oil and gas exploration, through to monies spent on developing Carbon Capture and Storage technology and support for the petrol car industry are just some of the less immediately obvious subsidies afforded the fossil fuel industry.

      Above and beyond direct and indirect subsidies has been the lack of accounting for and compensation of adverse externalities in the form of air, water and ground pollution which have diminished the ability of the ecological system to repair itself, created health hazards across many communities and jeopardised the future productivity of entire regions.

      Support for the fossil fuel sector continues through programs such as the Major Project Facilitation program, designed to encourage productive and sustainable private sector investment in projects, the Regional Infrastructure Fund established to support investment in infrastructure for the resources sector and the establishment of an Energy Security Fund to provide $5.5 billion in transitional assistance through to 2016–17 and funding under the Contract for Closure initiative.

      Whilst the quest for accuracy in fossil fuel and renewable subsidies is an interesting academic pursuit that could fuel debate over balance and equity it is unlikely to produce a bi-partisan acceptance of what is fair.

      Even the most sceptical of sceptics (Nick Minchin) recognises that fossil fuels are by nature a scarce resource and there is a need to transition to cleaner forms of energy. Minchin and Palmer both identified cost and its impact on Australian industry competitiveness as the limiting factor to a speedy transition.

      Notwithstanding the century of support for fossil fuels renewable sources of energy generation are travelling down the cost curve. It is through deployment that we can hasten this reorientation. Given the threats to livelihoods of ever increasing costs of fossil fuels as well their impact on climate change I for one favour a heavy investment in renewable deployment for increased energy security, longer terms energy savings, the creation of local jobs and the mitigation of climate change.

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