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Issue #1782      June 21, 2017

Blueprint for a bleak energy future

Federal Chief Scientist Alan Finkel’s report on energy generation in Australia, Blueprint For the Future, places primary emphasis on energy price and security, and secondary emphasis on dealing with climate change.

But the priorities should be reversed, with primary emphasis on mitigating climate change by reducing our carbon emissions as rapidly as possible, while limiting the cost and securing energy supply within that objective.

Finkel’s report dismisses the “business as usual” approach. It recommends a Clean Energy Target (CET) scheme, which would entitle power producers to use renewable energy or a mix of fossil fuel and renewable energy to generate power.

The scheme would set a minimum standard or benchmark for the amount of carbon emissions per unit of energy produced by power generating organisations. It sets the benchmark so that the organisations must use zero or low emission technology in order to meet it, and rewards them with credits according to the degree to which they exceed it.

Organisations that produce all their power from renewable energy (zero emission) technology are entitled to the maximum credit. Details are still unclear, but taxpayers would almost certainly foot the bill in the process. Those who fail to meet the minimum standard will not receive a government certificate and presumably won’t be permitted to operate.

Until 2070, when Australia is supposed to have reached the overall zero emissions stage, organisations that meet the CET requirements by using a mix of fossil fuel and renewable energy will not be penalised for polluting the environment, and they will even be entitled to build new gas or coal-fired power plants.

The CET scheme would also require abolition of the current renewable energy targets.

Finkel examined but rejected an alternative, the Energy Intensity Scheme (EIS), the objective of which is to penalise high emitters and reward those who use zero-emission technology. That approach would undoubtedly have been attacked by coalition MPs as unfair to the coal industry.

The burning question

The government may attempt to prolong the life of the coal industry by raising the Finkel report’s emission benchmark, so that new high intensity coal-fired power plants could qualify for partial credit without having to be accompanied by renewable energy generation.

High intensity power stations have certainly achieved a substantial reduction of carbon emissions, compared with traditional coal-fired plants. However, even the “ultra supercritical” plants would fail to gain a credit, because they still emit 765 kilograms per megawatt hour (kg/Mwh), well above Finkel’s CET benchmark of 700 kg/Mwh for an individual plant.

“Clean Coal” (carbon capture and storage) technology traps a large proportion of the gas emitted by burning coal, converts it into a fluid and thereby prevents its release into the atmosphere. However, the process produces huge amounts of highly toxic waste fluid that may endanger aquifers if buried in the ground.

The plants are also extremely expensive to build and operate. Adding them to coal-fired power stations would make the overall process even less economically competitive with renewable energy generation than at present.

Clearly, the best way to reduce emissions from coal is not to burn it in the first place.

The last time we saw Paris

Two years ago, during the bitterly-fought Paris climate conference, the coalition federal government was forced to agree, albeit very reluctantly, to a 26 to 28 percent reduction of Australia’s carbon emissions by 2030 compared with the 2005 emission levels, and to achieve zero emissions by 2070.

The Finkel report makes identical recommendations for the energy industry. But that only accounts for 35 percent of our emissions, so implementation of those recommendations will fail to meet our Paris commitment unless an equivalent reduction is achieved in other carbon-emitting industries, i.e. transport, heavy industry and agriculture.

However, electric vehicles comprise a tiny minority of the total in Australia. Fossil fuels will almost certainly retain their dominance of road, long-distance rail and air transport for decades, and heavy industry is likely to migrate to low-wage countries if threatened with legislative control to reduce emissions.

Cattle and sheep produce huge amounts of methane gas, which is a very dangerous greenhouse gas, but feeding the world will necessitate the expansion of current stocks, not a reduction.

The energy industries must therefore do most of the work in reducing emissions. The Climate Council says that in order for Australia to meet its Paris commitment, renewable energy production must quadruple to well over 50 percent of the total energy output.

Energy bipartisanship and other fictions

Determined government action and effective policy is crucial to the success of any carbon-reduction scheme. Starting in the 1990s, the very successful US acid rain emissions price scheme reduced emissions by 50 percent over 17 years, in large part because it was enforced by the federal government, and was not simply left to the vagaries and corruption of the market.

Labor has offered the government bipartisan support for the Finkel scheme, but the government hasn’t achieved bipartisanship within its own ranks. During last week’s angry coalition party room meeting the scheme was favoured by only ten MPs. Twenty expressed reservations or outright opposition.

The government assumes that future investment in the energy industry will be limited to the private sector. But the energy industry is a crucial national asset. It should be controlled by government for the public good, not treated as a cash cow by private corporations.

Energy corporations have cut production in uneconomic coal-fired plants on short notice, without worrying about shortfalls in the public energy supply. Despite Finkel’s optimistic predictions, their never-ending series of power rate hikes will continue, even if the CET scheme is implemented.

The Turnbull government has not backed the development of renewable energy, which would create jobs, boost the economy and help to mitigate climate change.

The most important step in the climate change struggle is to replace the Turnbull regime as rapidly as possible with a new, bold and environmentally-inspired government that will impose rigid controls over the private energy corporations – or better still, resume direct control over the industry – and dramatically cut our emissions in the interests of the nation and the planet.

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