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Coal has a role yet in keeping economies as healthy as possible

By Gary Johns - posted Friday, 24 February 2017


There is a war over energy policy in Australia. A Pyrrhic victory is in sight, whoever wins. The Coali­tion, slowly waking from its torpor, has vowed to stop renewable energy at 23.5 per cent and open the way to keep coal as a source of baseload energy. Labor backs 50 per cent renewable energy and wants to exclude coal.

As aluminium smelters close and coal and some gas generators close, as we slide to a post-industrial economy, we may well ask: What was it for?

The abatement strategy - carbon dioxide emission pricing and, by proxy, renewable targets - has helped destroy our cheap energy. We cannot get it back. Once coal was demonised, and we began ­exporting gas as LNG (the alternative fuel for electricity generation) and locking up new sources of gas, our energy costs were sure to rise.

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Martin Moore, chief executive of Queensland CS Energy, has volunteered that his company had "no intention of building any coal-fired power plants" and, moreover, "it would surprise me greatly if there was any more coal-fired technology built in Australia" (ABC's 7.30, February 16).

He could not say otherwise: a Queensland Labor government committed to a 50 per cent renewable target owns CS Energy. The political risk of federal Labor's 50 per cent scheme (and Victoria's) has undermined fossil fuel generator investment in the ­National Electricity Market.

Making a late stand for coal will cost, but it may be the price of security. Nor can we exult in renewables. They are causing real damage to the economy.

"We know for a fact that reliance on renewable energy is not what's causing these blackouts." This was Charlie Pickering's invitation to Kitty Flanagan to make fun of 90,000 houses blacked out in South Australia (ABC's The Weekly, February 15).

Pickering and Flanagan selected the first report of the Australian Energy Market Operator (October 5, 2016), which blamed the outage on the destruction of power lines. The pair did not disclose the later report (October 19), which showed nine of the 13 wind farms did "not ride through the six voltage disturbances".

Sorry, Charlie, we know for a fact that renewable energy is a cause of the blackouts.

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The delicious irony is that the renewable policies will destroy the value of existing renewables. Victoria's state-based renewable ­energy target, for example, will force a significant amount of ­additional renewables into the market in a short period, which will suppress wholesale prices on windy and sunny days.

The same winds blow across Victoria and South Australia, so existing wind farms in Victoria tend to generate at the same time. Not good for business.

Having buggered the energy market, the Coalition and Labor will return to their corners to fight over the carcass.

Meanwhile, each party can tell its remaining branch members what Bangladesh, a nation most prone to rising seas, is likely to do.

The mindset in Australia, the US and Europe, is to stop digging and burning coal to lower the emissions from coal. The Bangladesh priority, however, is that it needs not less coal, but more.

According to Copenhagen Consensus Centre economists Herath Gunatilake and David ­Roland-Holst, the benefits of ­increasing energy supply by importing coal are more than 24 times the cost, even when ­accounting for the cost of added greenhouse gas emissions.

The question is, assuming that climate hazards increase with time, what will be the best strategy for a poorly developed country like Bangladesh? The answer is that building resilience to climate change should be a top priority.

A developing country could spend its money trying to abate carbon dioxide emissions or it could invest in carbon-intensive energy, buy productive technologies and accumulate enough ­resources to tackle climate change successfully.

The question for Bangladesh is how much it should spend on abatement and how much on ­adaptation. Should it build cyclone shelters or shift the population to higher ground? Should it build higher barriers to withstand rising waters or build a stronger economy to pay for them?

In a parallel Copenhagen exercise, Alexander and Elena Golub found that relocation of the population inland was the most effic­ient risk mitigation intervention. They recommended that over the next 20 years one million people now exposed to a high cyclone threat (and these occur regardless of climate change) should be relocated.

And what would help drive the climate change responses? Cheap energy: gas and coal. Among those in the world who take climate risks seriously, most will do what we have chosen not to: keep a healthy economy, and adapt.

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This article was first published in The Australian.



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About the Author

Gary Johns is a fellow of the Australian Institute for Progress and an adjunct professor at QUT.

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