Opportunity

• Fall in cost of solar, wind, battery storage
• "Per person, Australia has natural resources for renewable energy superior to any other developed country and far superior to our important economic partners in northeast Asia"
  • Direct electricity transmission to Singapore
  • Hydrogen export to Japan and Korea
• Need for low-carbon metals — we already mine the ores, add renewable-powered processing
• "Immense opportunity for capturing and sequestering, at relatively low cost, atmospheric carbon in soils, pastures, woodlands, forests and plantations"
  • Could be a rural industry at least as big as wool
  • Also, biomass replacing fossil hydrocarbons as inputs to industrial processes (e.g. plastics)
• Renewable production and carbon sequestration are capital intensive, so historically low interest rates have been very helpful
• Initial policy activities to get started
  • Focus on reliability when most electricity comes from intermittent renewables
  • Support transformation of transmission so that supplies can be dramatically expanded in areas with high-quality renewable sources
  • Underwrite new investment in firm electricity supply
• "After a dozen years of close acquaintance with the Australian and global energy tarnsitions, I now have no doubt that intermittent renewables could meet 100 per cent of Australia's electricity requirements by the 2030s, with high degrees of security and reliability, and at wholesale prices much lower than experienced in Australia over the past half-dozen years. More importantly, I now have no doubt that with well-designed policy support, firm power in globally transformative quantities could be supplied to one or more industrial locations whenever it is required in each state at globally competitive prices... No other developed country has a comparable opportunity for large-scale firm zero-emissions power, supplied at low cost beyond domestic consumption requirements."

History of climate/energy policy in Australia

• 2011-12: Gillard Clean Energy Future package established:
  • carbon price covering electricity and industry - ~60% of emissions
    • free permits provided to trade-exposed industries
    • free permits also given (against Garnaut's design) to coal-powered generators, in order to maintain energy system security; but generators passed on cost of carbon price to consumers anyway, and just kept the subsidy money
    • $7B p.a. revenue was largely used on income tax cuts and social welfare, but government didn't make much attempt to explain this link, which made carbon pricing seem entirely negative from cost-of-living perspective
  • Australian Renewable Energy Agency (ARENA) - fund innovative projects
  • Clean Energy Finance Corporation (CEFC) - provide loans for development
  • Carbon Farming Initiative - enabled agricultural industries (~20% of emissions) to undertake carbon reduction to receive credits they could sell to the carbon price industries
  • Climate Change Authority
• 2013: Abbott government removed carbon pricing, but Palmer blocked repeal of the other institutions
  • Renewable Energy Target was reviewed and lowered to 33 from 41 TWh by 2020, but investment in renewables has meant that original target was met anyway
  • Worth noting that expanded renewable supply always reduces prices, because they have ~zero marginal cost of operation
  • State governments brought in major programs for renewable purchasing
• Electricity price rises were not mainly due to carbon pricing, but rather:
  • Regulatory mistakes following the privatisation of electricity utilities increased cost to users of transmission and distributions (i.e. "gold-plating" network infrastructure). Regulated Asset Base infrastructure expanded by $40B in 2006-11, despite no increase in demand; Grattan suggests half of this was wasteful.
  • Opening up Qld and NSW coal and gas to export, when they had previously been reserved for domestic generation use, made them much more expensive for generators.
    • Note that "increase in gas prices fundamentally reduced the role gas could play in balancing growing proportions of intermittent renewables".
  • Each state market was dominated by a small number of generator-retailer players, so there was insufficient competition to drive down prices.
  • Inflation-adjusted wholesale prices (the only component affected by carbon pricing) have actually been higher anyway since the abolition of carbon pricing! Policy uncertainty has blocked investment in generation and transmission.
• Coal and CCS
  • "Australian coalminers attached much more importance to blocking action to reduce global warming than to building a long-term future for their industry. Despite the commitment of large financial support from the Australian govenrment, the Australian coalmining industry hardly invested at all in the research, development and commercialisation of CCS"
  • CCS unlikely to have a role in coal-fired power generation (i.e. because coal will disappear anyway), but may have a role in bioenergy combustion, gas power, and industrial activities.
• 2016: China overtakes Europe as home of most solar installations
• 2018: Renewables highly competitive, producing power at total costs comparable to coal generators' operating costs as long as they had access to internationally competitive cost of capital.
• By 2019, "no prospect of commercial investors building new coal generators without large direct subsidies - in addition to the subsidy inherent in the failure to tax external environmental costs".
• Many official bodies, including AEMO, have consistently underestimated the pace of falling costs of renewable generations. Estimates often adjusted each year but assume levelling out, whereas it keeps falling.)
• Energy security
  • Sep 2016 South Australian blackout - destruction of transmission and interconnector with Victoria, then backup diesel generators (maintained at great cost to consumers for years) didn't work when needed.
  • Dec 2016 transmission failure from Latrobe damaged Portland aluminium smelter, which then rippled over into SA again.
  • Feb 2017 supply issues in NSW almost caused major failure at Tomago aluminium smelter.
  • Subsequently, increased attention on security - 5-minute wholesale pricing period created more incentive for batteries; longer notice periods for generator closure; etc. SA has taken bipartisan approach to making heavily renewable generation secure - battery + govt-owned gas power generator.

Electricity

• Rooftop solar
  • As of 2018, 8GW of rooftop solar in 2M premises
  • Aus has highest proportion in the world of households with rooftop solar