A vitriolic argument last week between the Coalition and the CSIRO is just another battle in the long-running climate wars. For the Coalition it’s the application of the age-old philosophy: ‘Why put off until tomorrow what you can put off forever?’
Opposition leader, Peter Dutton, announcing the Coalition was serious about nuclear power for Australia, attacked the CSIRO’s latest GenCost Report as “discredited” for failing to include some of the transmission costs for renewables.
Even a quick read of the CSIRO’s report, which was developed in cooperation with the Australian Energy Market Operator (AEMO), confirms that the analysis does include estimates of all transmission costs.
Indeed, the covering page of the document says: “In response to feedback on the previous report, the 2023-24 draft report incorporates pre-2030 integration costs, such as storage and transmission for variable renewables in the levelised cost of electricity (LCOE) data. This addresses the concern that leaving out pre-2030 projects under-estimates the cost of the renewable transition.
The CSIRO hit back, pointing out this fact, and so the brawl began.
Initially, the Coalition was advocating nuclear small modular reactors (SMRs) rather than giant nuclear power stations, but more recently the big ones have been put on the agenda.
This would save on new transmission costs, which must be included when comparing nuclear with firmed renewables. Yet after taking account of the savings on transmission costs, the GenCost Report estimates the levelised cost of electricity from SMRs to be 4.2-4.9 times that of solar and wind power.
Moreover, no plausible analysis suggests a nuclear SMR commencing operations before 2040. The only SMR being developed in a market economy was in the US state of Utah. It was scrapped in November last year owing to large cost overruns.
Advocates of nuclear power point to the many large-scale plants in operation in northern Europe, East Asia and the US. Those countries have much bigger and denser populations than Australia and most do not have Australia’s endowments of solar and wind resources.
From regulatory approval to commissioning to training an entire workforce from scratch, conventional nuclear power stations would not be generating electricity in Australia within two decades.
Here the law of comparative advantage is relevant. Noting that another country produces computer chips is not an argument that Australia should do so. China has its own deposits of iron ore yet buys huge amounts from Australia. Why? Because Australia has a comparative advantage in iron ore production.
Australia no longer has large factories producing textiles, clothing and footwear. That happens in countries such as China, Bangladesh, India and Vietnam, which have a comparative advantage in producing those goods.
Similarly, it makes no economic sense for Australia to produce nuclear power simply because other countries do so.
The Australian Nuclear Science and Technology Organisation has joined an International Atomic Energy Agency project to appraise the costs of nuclear SMR. The project is due for completion in December this year.
By all means, let’s examine the results of that appraisal.
But there is a political strategy underlying the Coalition’s commitment to nuclear SMRs. Many if not most Nationals MPs are strongly opposed to renewables with transmission lines going through their electorates.
And some in the Coalition remain convinced that human-induced climate change is a hoax. This weekend’s relegation of moderate shadow minister Anne Rushton on the Liberal Party’s Senate ticket behind climate change denying Senator Alex Antic is evidence enough of that.
Yet in 2021 the Morrison government committed the Coalition to zero net emissions by 2050.
Support for nuclear power is a convenient way of keeping Coalition MPs and Senators inside the net-zero tent without having to do anything but talk about nuclear arriving sometime in the 2040s.
Meanwhile, AEMO expects every one of Australia’s remaining coal-fired power stations to be retired well before 2040.
While waiting for nuclear to appear on the national horizon, the Coalition would have a ready-made excuse to keep coal-fired power stations going by subsidising them and even building a new one, like the one the Morrison government mooted for Collinsville in Queensland.
Such a political strategy to mollify the Nationals and the Liberal Party’s hardliners against renewables is a gift for Teal MPs and candidates at the next election. But at least it holds the Coalition show together.
For Labor’s part, rooftop solar still has a large amount of untapped potential and, in built-up areas, does not need a lot of extra transmission capacity. With surpluses of solar power available during most days, battery storage is essential. But why oblige each household to buy its own battery when local community batteries can store excess solar electricity and provide power to the people in the evenings? That Albanese government policy warrants expanding.
Community batteries and big batteries can lessen the need for long transmission lines. They certainly make more sense than nuclear power in the 2040s and refurbishing ageing coal-fired power stations in the meantime.
Craig Emerson is managing director of Emerson Economics. He is director of the APEC Study Centre at RMIT University, visiting fellow at the ANU and adjunct professor at Victoria University’s Centre of Policy Studies.