Opposition leader Peter Dutton’s CEDA speech on Monday provided no more detail on the Coalition’s nuclear policy. Dutton had already confirmed he would renationalise Australia’s baseload Australia’s power generation. His speech simply reaffirmed it. Sir Robert Menzies, a champion of free enterprise, would not recognise the modern Liberal Party.
Instead of setting out the cost of the seven nuclear power plants he has promised, Dutton stated yet again that the costings will be released before election day.
Nor did he provide any indication of the generating capacity of the seven proposed nuclear power stations. It would be constrained to the 12 gigawatts of capacity of the coal plants at the seven sites identified by the Coalition.
The seven nuclear plants, which include small modular reactors, therefore will fall massively short of replacing the coal-fired generators that will retire by then – let alone meet increasing demand as the economy and population grow.
There is currently 21.3 gigawatts of coal capacity in the national electricity market. Dutton's policy is effectively to replace half the current coal capacity, after 2035, in a market that the Australian energy market operator estimates will be 50 larger by that time.
Under Dutton’s optimistic scenario, the nationalised nuclear power plants wouldn’t be generating electricity before 2035. A more realistic start date is 2040.
But let’s stick with the 2035 fantasy.
The youngest coal-fired power station in eastern Australia was completed in 2007. The energy market operator’s latest Integrated System Plan expects up to 90 per cent of the national electricity market’s coal-fired power stations will be gone before 2035 and the entire fleet by 2040. Not because the government is shutting down these assets, but because their owners are choosing to replace them as they are ageing, increasingly unreliable, and increasingly unable to compete with lower cost renewables generation.
Taxpayers in NSW and Victoria are already funding a total of three coal-fired power stations to stay open for a finite time while renewables, firmed by gas, pumped hydro and big batteries step, into the breach.
But Dutton isn’t keen on large-scale renewables. He attacked them again in his speech.
Dutton’s nuclear power plants, with nowhere near the generating capacity of the fleet of existing coal-fired generators, cannot come online before 90 per cent of the coal generators have closed, all in the context of rapidly growing electricity demand as the economy grows and households and businesses choose to electrify.
The only way of bridging the huge baseload coal-fired generating gap is to call on taxpayers to pay the owners of ageing coal-fired power stations to keep them open long after the end of their economic lives.
None of these costs are quantified or even recognised in Dutton’s speech.
This is a reckless gamble, and it will not solve the capacity gap that slowing down renewable and related investment will create.
By the mid-2030s these coal generators will become old, accident-prone clunkers that simply can’t be refurbished. When the Liddell Power Station in the Hunter Valley closed, its owner explained it had reached the end of its technical life.
The only remaining option then would be to build new, taxpayer-funded coal-fired generators.
The Coalition’s nuclear plan is a plan for taxpayer-funded continuous refurbishment of very old coal-fired power stations and the construction of one or several new ones.
A few months ago, Dutton appeared to reject Australia’s 2030 emissions reduction target made as a commitment to the Paris Agreement. His coal-to-nuclear policy ensures that, if elected, the Coalition would not only ditch it, but would not be able to meet the nominally bipartisan commitment to net zero emissions by 2050.
Far from becoming a renewable energy superpower, producing green iron for China and other countries of East Asia, Australia in 2030 would be heavily reliant on coal-fired power, ensuring we were locked out of the European market by its Carbon Border Adjustment Mechanism and in any other major country with carbon pricing mechanisms.
Households and industry would experience sharply rising electricity prices and supply interruptions during the 1930s coal-nuclear hiatus – an economy killer.
The sound approach, as identified by the Australian energy market operator, is for renewables supported by battery storage and pumped hydro, firmed up by gas, to replace the fleet of ageing coal-fired power stations. According to the energy market operator these are also the lowest-cost options to deliver a reliable energy grid.
Under the Coalition’s policy, Australian manufacturing industries would face a decade of uncertainty, foreign investment in manufacturing and allied industries would dry up and taxpayers would be called upon the finance the renationalisation of Australia’s electricity-generating sector.
Craig Emerson is managing director of Emerson Economics. He is director of the APEC Study Centre at RMIT University, a visiting fellow at the ANU and adjunct professor at Victoria University’s Centre of Policy Studies.