Australia shows how policy can stifle renewable energy future

Australia shows how policy can stifle renewable energy future

One of the themes emerging as the world looks to recover from the coronavirus pandemic is that this is a once-in-a-lifetime opportunity to reboot the global energy system and embrace a future of renewables.

But the debate in Australia over energy policy and emissions shows that in the absence of supportive, or even neutral, government policies, achieving the goal may be difficult.

In theory it’s hard to find a country more suited to switching to renewable power than Australia, given its long hours of sunshine for solar power and extensive coastline suitable for wind power developments.

Add to this a natural resource base extremely rich in the minerals needed for renewable energy and battery storage, such as lithium, cobalt, copper and iron ore, as well as a deep-rooted culture and expertise in mining.

And if that wasn’t enough, Australia has deep reserves of capital, with its private, compulsory superannuation system believed to be the world’s fourth-largest pool of savings.

But what the country doesn’t have is a federal government willing to embrace these advantages and drive investment in a clean-energy future.

Enamoured of fossil fuels

Two recent developments have underscored just how deeply enamoured the Morrison government is of the fossil fuel industry.

Prime Minister Scott Morrison set up a commission of business leaders and bureaucrats to map a way forward for the economy as it emerges from the coronavirus lockdowns that have, similar to other countries, resulted in massive job losses and a body blow to economic growth.

A leaked draft plan, obtained by media outlets including The Sydney Morning Herald and The Age , shows that the commission is proposing a recovery in manufacturing led by boosting the availability of natural gas.

The paper is believed to call for an end of state bans on natural gas exploration, as well as government subsidies for exploration and investment in infrastructure, such as pipelines. It reportedly calls for “underwriting new gas supply with government balance sheets” to allow gas producers “to invest with confidence and new pipelines to be built to get the gas to markets”.

The possibility of building a pipeline thousands of kilometres from the gas-rich north of Western Australia to New South Wales and Victoria was also raised, even though prior studies have found this would be vastly uneconomic.

Perhaps it’s not surprising that the report advocated for gas, given its chair is Neville Power, a former chief executive of iron ore miner Fortescue Metals Group and the current deputy chairman of natural gas producer Strike Energy.

The commission also features Catherine Tanna, the managing director of EnergyAustralia, a major electricity and gas retailer, and Andrew Liveris, who counts among his current roles a position of the board of Saudi Aramco.But finding energy experts outside the fossil fuel industry who believe a natural gas-led recovery in Australia is a good idea is challenging.No road to cheaper electricity

Unlike the United States and its shale gas revolution, natural gas in Australia is generally more expensive to produce and has to travel along pipelines over vast distances, further adding to costs.

Australia is also the world’s largest exporter of liquefied natural gas (LNG), and while the projects along the north and west coasts tend to be low-cost and efficient in comparison with the rest of the world, the three ventures in eastern Queensland use coal-seam gas as a feedstock, and are seen as having driven up domestic prices and crimped availability.

It’s hard to see how enough natural gas could be produced near enough to the major southeastern markets at a price that would be competitive in order to drive a manufacturing renaissance, or deliver cheaper electricity prices.

Why not renewables?

The commission would probably be better served by examining how the government could invest in renewables, through subsidies to households for rooftop solar, or to developers of utility-scale wind and solar and battery storage.

In the Australian context, renewables with storage back-up would almost certainly be more cost-effective than exploring for and developing new natural gas infrastructure.

If there is a positive for those who advocate for a greener future, it’s that the government appears to be moving away from its love affair with coal, perhaps recognition that any new coal-fired power plant would be massively expensive and unpopular with the majority outside the coal industry.

A report released this month by the government on a roadmap to accelerate low emissions technologies did raise the old unicorn of carbon capture and storage, which has been unsuccessful wherever it has been tried, mainly because it’s too expensive and difficult to scale up.

The report was in favour of using natural gas in the energy transition, and was largely technology neutral in its recommendations, but critics believe the government should shift to a pro-renewables stance.

This would allow Australia to still support and advocate for a strong mining industry, but the emphasis would switch away from supporting coal and towards the metals needed in the new energies.

But it would appear that the current government is still some way from embracing renewables as the main source of future energy.

While some regions, such as Europe, are much further down the path, the concern for renewable energy advocates is that more governments across the globe will turn out policies more like Australia’s, especially in populous Asian countries still grappling with how to meet future energy needs.

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