Energy policy: can we have a Carbon-Cutting Reliable Affordable Programme (C-CRAP)?

Shifting priorities within the Government's energy policy 'trilemma'

The Commonwealth Government says we have an energy policy 'trilemma': trying to deliver lower emissions, reliable electricity, and affordable power, all at the same time.

But now it has also ranked these objectives. Apparently, they're not equal. Now, reliability and affordability are most important (well, d'oh!). Reducing emissions seemingly ranks third (a reversal from the last decade or so).

The Government wants to 'keep the lights on', at a price punters can pay. But it still wants to reduce emissions as per our international commitments.

Here's the thing. With foreseeable technologies, we can choose to achieve any two of these objectives, to any extent we like, if we are prepared to pay the price. But we can't do so for all three. One (or, two, or all, to some extent) must miss out.

Why? Each of these objectives has been chosen independently, for political reasons. Sure, we want to keep the lights on. Sure, we want cheap power. (We had both before.) Reducing emissions these days is Holy Writ (for believers if not sceptics and deniers).

However, technical trade-offs between these conflicting objectives didn't get a look-in when they were set. Let's look at some specifics.

Renewables are not only intermittent: more importantly, the intermittency is usually uncertain

The root cause of the 'trilemma' is renewable energy. We could deliver reliability and affordability, as we have in the past, if we didn't have renewable energy targets.

Why? First, as the resident cockie in every pet shop screeches, it's intermittent. With blackouts, polly doesn't want a cracker – not yet, anyway. It wants candles plus a log fire. Second, this on-and-off intermittency is uncertain. We can't be sure when the sun won't shine or the wind won't blow.

The recently rediscovered reliability objective requires government action, not just talk. We need urgent measures to insure against this uncertain intermittency, to which governments have allowed us to become much more exposed.

The reliability-emissions reduction trade-off

There's a trade-off between reliability and emissions reductions – at least given political proscriptions on sources like nuclear power (for local application anyway).

The first requires base-load, and/or the equivalent, immediately dispatchable, power. The second implies renewable energy that begets intermittency and uncertainty.

What's the trade-off between these two objectives? If reliability is non-negotiable (at least in today's government-speak) what are the policy options?

Dealing with the trade-off: two broad options define the policy playing field

This is complex stuff, but two broad policy options define the scope of policies delivering reliability plus emissions reductions.

Whatever the emissions reduction target, the first option is to match the maximum renewable generation capacity in the system with the same base-load/dispatchable generation capacity using fossil fuels of whatever kind. This configuration (grid issues aside) guarantees system-wide reliability regardless of weather, if total base-load/dispatchable supply matches demand. However, this system must duplicate the maximum renewables generation capacity with base-load/dispatchable capacity.

The second option is increasingly to use yet more renewables themselves as generation (and storage) back-up to primary renewables generation capacity. This option multiplies system capacity duplication for the reasons illustrated in my earlier opinion piece, dated 22 August 2017, entitled 'Does renewable energy save the earth – or just cost it?'.

The costs of the reliability-emissions reduction trade-off

Clearly, insisting on reliability, but also pushing for increased use of renewables, must increase costs.

Options range between (i) duplicating the maximum generation capacity of renewables once, or (ii) doing so multiple times. Punters pay more either way.

What about affordability?

Affordability – the A in C-CRAP – doesn't get a look-in, Government lip-service to it notwithstanding.

Power costs are high now, and restoring reliability (whether done piece-meal as governments are doing now, or more systematically) will push them higher. The only option is to minimise further cost increases.

The smallest further cost increase would be delivered via the first policy option noted above: matching renewable energy generation capacity with back-up base-load/dispatchable fossil fuel power.

Emissions reductions are delivered when the sun is shining or the wind is blowing. If they aren't, blackouts are avoided.

Implications for RETs, CETs and other scheming

Taking (very recent) Government words at face value, could affordability be improved while restoring reliability?

Yes. Reduce the targets set by Commonwealth, State and Territory governments (and oppositions) under RETs and similar schemes.

Cost reductions are maximised (ie, duplication/multiple duplication cost increases are eliminated) when these schemes are abolished.

Summary: what are our practical policy choices?

So let's sum up the 'trilemma' practicalities. What's technically possible?

We can have reliability and emissions reductions, if we are prepared to pay for them.

We can have reliable and affordable power, if we don't have to pay for emissions reductions.

We can have emissions reductions at lower cost, if we forgo reliability.

But we can't have all three to the degree politicians are promising punters.

In short, three into two won't go.

I learned that in primary school.

Being honest with punters: why won't politicians tell us the costs and benefits of trade-offs?

The challenge for governments (Commonwealth, State and Territory) – and even more so Labor and the 'Greens' – is to explain to the punters who are paying for their mistakes why this opinion piece is wrong. And they need to do so with hard, verifiable numerical evidence, not generalised, number-free, assertion-heavy, waffle as hitherto.

Lots of 'green' readers will complain about going back on RET targets, and argue we should do more. I have my own views about the best way, if we must, to deliver emissions reductions, anyway. (See my papers entitled Effective climate change policy: the seven Cs. Paper #1: Some design principles for evaluating greenhouse gas abatement policies. Paper #2: Implementing design principles for effective climate change policy. Paper #3: ETS or carbon tax?.)

But in a democracy surely the trade-offs and cost implications of different policy options should be made clear up-front to the punters who will pay for them. Not so in Australia at present. Unless this information is provided, the 'Tower of Babel' nature of our energy policy debate (sic) will continue. The religious nature of the 'substance' will encourage the ranting on all sides to continue (wonder what Galileo would think?).

And, maybe this summer, while politicians of all stripes are still blaming each other rather than doing their jobs, we can continue this fruitless debate – by candle-light.