Already the shrieks of outrage have sounded in response to Anthony Albanese’s announcement that Labor is committed to a target of zero net carbon emissions by 2050. The government is claiming it will send jobs overseas and put up electricity prices. These dire warnings are reminiscent of the president of IBM predicting the world market for computers would be limited to five and a 20th Century Fox executive prophesising that the television market wouldn’t last six months because people would get tired of staring at a plywood box.
While announcing a zero net-emissions target doesn’t automatically make it happen, trends and technologies are pointing Australia in that direction. Consider two major contributors to Australia’s carbon emissions – electricity generation and transport – which together account for more than half our total.
Coal-fired power stations are Australia’s dominant source of dispatched electricity. But the Australian Energy Market Operator forecasts coal-fired capacity to fall by almost two-thirds by 2040. These forecasts are based on an assumed life of 50 years for coal-fired plants unless otherwise specified by the owners. Yet most owners assume an economic life of no more than 40 years. At that life span, the entire Australian fleet of coal-fired power stations will be gone by 2050.
That is, unless an Australian government intervenes to fund, insure and inoculate from future national and international policy a new coal generator. The private sector has indicated emphatically it will not build a new coal-fired power station in Australia. Not one of the existing owners has plans to build a new coal-fired plant. The only way, therefore, that coal will be generating electricity in 2050 is if a government builds and owns a new coal-fired plant, or if it underwrites the price of electricity from that plant and indemnifies it against a change in climate policy. The cost of building a 1000-megawatt coal plant is $3-4 billion and its expected 40-year revenue stream is around $17 billion. That’s a lot for taxpayers to subsidise.
The Morrison government is considering a new coal-fired plant at Collinsville in Queensland, which the prime minister has said strikes him “as being a particularly useful project.” https://www.standard.net.au/story/6470780/pm-morrison-talks-up-qld-coal-fired-power/ The government would need both to underwrite the electricity price for the Collinsville plant and indemnify it – meaning taxpayers, not the private developers, would bear the risk.
Government subsidies for new coal-fired power stations would definitely result in the imposition on Australia of the carbon tariffs foreshadowed by the European Union and US Democrats.
As existing coal-fired power stations wind down and retire, gas will play an increasing role in generating electricity during peak times and when renewables are unavailable, at least for a time. Pumped hydro and ultimately batteries will step in to provide firming capacity. Gas has lower emissions than coal, while renewables and hydro have none.
To sum up, in the absence of government subsidies Australia is unlikely to have any coal-fired power stations in 2050.
Next, consider transport. In early-2018, now federal treasurer, Josh Frydenberg, likened the future of electric vehicles in Australia to “what the iPhone did to the communications sector.” That was before Labor announced in the lead-up to the 2019 federal election a target of half of all new car sales in 2030 being electric vehicles – not all cars but all new car sales.
Within a year or so, the Coalition had flipped from enthusiasm about the future of electric vehicles in Australia to warning that tradies and four-wheel drive owners would have to surrender their vehicles and say goodbye to their beloved Aussie weekend.
A report on electric vehicles prepared for the government’s Australian Renewable Energy Agency https://arena.gov.au/assets/2018/06/australian-ev-market-study-report.pdf models three scenarios. All of them result in 100 per cent of all new vehicle sales being a combination of electric vehicles and plug-in hybrid electric vehicles well before 2050. Under a moderate-policy scenario, electric vehicles are projected to comprise more than 90 per cent of the Australian vehicle fleet by 2050.
The Business Council of Australia and the AiGroup are calling for a commitment to zero net emissions by 2050. Many corporations have already signed up to it. This is creating a market for offsets for corporations’ own emissions. They are entering into contracts with rural landholders to sequester carbon by growing trees on their properties.
As the climate continues to change and drought becomes more prevalent in southern Australia, graziers on marginal lands will be able to make good money from allowing hardy native eucalypts, such as mallee, and acacias including mulga, to grow on their properties. The European Union, too, will look to Australian graziers to help offset its emissions.
It’s hard to imagine even the most dedicated climate change deniers within the Nationals standing between graziers and businesses wanting to pay them to sequester carbon on their properties.
Add to these developments renewable energy proposals such as the Asian Renewable Energy Hub south of Broome that would export Australian wind and solar energy as hydrogen-based fuels for power generation and shipping fuels, and the broad hydrogen commercialisation opportunities outlined by chief scientist, Alan Finkel.
Who could argue with the proposition that Australia has a comparative advantage in renewable energy with its vast open spaces, year-round sunshine and ideal sites for wind power?
As all Australian states and territories, together with federal Labor, have committed to a target of zero net emissions by 2050, only the federal Coalition government stands in the way. By all means, let’s do modelling. But the time has come for a bipartisan commitment to effective action on climate change to seize the opportunities that Professor Ross Garnaut has identified for a new era of lower energy prices, sustainable jobs and national prosperity.
Craig Emerson is Director of RMIT’s APEC Study Centre, a Distinguished Fellow at the ANU and an Adjunct Professor at Victoria University’s College of Business.