Confronting energy realities

Australia — a net exporter of energy — today finds itself in the absurd position of being in the midst of an energy crisis. Households and businesses are facing rising electricity costs, while the electricity grid faces increasing stability issues. This is particularly so during summer as households and businesses crank up the air-con to keep cool as the mercury rises, placing further demands on a fragile electricity grid . The nation’s political leaders are either too clueless or too gutless to confront the issues of the crisis, hostage to the woeful state of debate in Australia.

Like many other areas of public policy in Australia these days, the climate change and energy debates have become dominated by gesture politics and political tribalism. These debates have become toxic to the point that the ‘debate’ is limited to binary ‘renewable vs coal’, ‘climate catastrophist’ vs climate denier’ type arguments. From green groups to political activists, different interest groups have hijacked the discussion for their own ideological ends, more interested in debating what side you are on, than looking at the evidence and putting forward practical solutions. In all of this noise and hysteria, the actual policy objectives — be it reducing pollution, protecting the environment or lowering power prices — have been lost. Politicians are no longer interested in following the principles that have guided energy policy in the past — reliability and affordability — if they do not allow for any grand gestures of saving the planet and halting climate change, regardless of the practicalities of such ambitions.

Such an environment has fuelled Australia’s mishmash of misguided and flawed energy policies over the past decade. Policies such as arbitrary renewable targets, carbon taxes, gas exploration bans and market distortion in favour of renewable generation. The effect of such policies has been to disincentivise investment in baseload-generation, which in turn has undermined the stability and reliability of the grid as old coal-fired generators exit the market. This has then contributed to rising electricity costs, as backup generation (gas and diesel) has been sourced to offset the intermittency of wind and solar.

Throughout all of this, the most fundamental question has been conveniently ignored — ‘if carbon dioxide is bad, where are we going to get carbon free energy from that we can deliver 24 hours a day, 7 days a week, 365 days a year, at a cost consumers can afford?’

An inconvenient truth?

Renewables are seen as the future of electricity generation in Australia. However, despite the rhetoric, it remains an outlier source underpinned by fossil fuel generation. As highlighted in the lastest Australian energy update, renewable energy (hydro, wind, solar and biomass) makes up 15% of electricity generation, with the bulk of this being hydro at 7%, while wind is 5% and solar is 3%. When taking into account Australia’s entire energy consumption, the share of renewables falls to 6%, with oil, coal and gas making up 94%.

Electricity generation percentage by state

Granted that renewables will continue to claim more market share and this is of course a good thing. However, as the South Australian experiment has highlighted, there are practical limits to wind and solar as a result of intermittency and capacity-factor issues. In the case of South Australia with its 40% wind capacity, the state will remain dependent on natural gas, diesel generators and the Victorian interconnector (brown-coal) to prevent blackouts when the wind does not blow. This is despite all the fan fare of the Elon Musk battery. Victoria itself is now facing similar issues. Both Victoria and South Australia are fast becoming the diesel states, rather than the green energy states that the Premier Weatherill and Premier Andrews proclaim they are.

To quote British physicist David MacKay, “I am not anti-renewables, but I am pro-arithmetic”. We need to appreciate advantages and limitations of renewables. Unfortunately, too few promoting the 100% renewable fantasy, predominately the Green left, fail to grasp these points. They fail to grasp the scale of Australia’s energy demand, let alone future demand. They fail to acknowledge the environmental and technical shortcomings of different renewable technologies such as wind or solar or batteries. They happily turn a blind eye to hydro being counted as “renewable”. They fail to acknowledge the essentiality of cheap, abundant and reliable electricity to modernity, prosperity and social mobilisation. Nor are they willing to admit that increases in solar and wind does not necessarily lead to reductions in carbon emissions — see Forbes and New York Times articles. Finally, they are happy to demonise other energy sources that do not fit their energy narrative.

The nuclear option

To quote American energy commentator Robert Bryce, “to be anti-carbon and anti-nuclear, is to be pro-blackout”. One of the most glaring omissions in the Australian energy debate has been nuclear power. The anti-nuclear movement led by the Greens has waged a successful campaign over the years based on fear, intimidation and lies, building up this power source as monster in the minds of the public. This is in stark contrast to the actual evidence. Nuclear power does not emit air pollution and is able to isolate its small amount of waste from the environment. Thanks to the energy density of uranium, nuclear power plants require a small amount of land area. Finally, contrary to popular belief, nuclear power is one of the safest forms of energy, with one of the lowest ‘death by Terawatt hour’ rates of any power source.

The graph below highlights that it is predominately countries (e.g. France, Sweden, Switzerland, Slovakia, Canada) with a large share of nuclear power , which have low emission electricity generation. Hydro is also significant, but is restricted to places with high mountains, rivers and large bodies of water (e.g. Norway and New Zealand). Note that the renewable wunderkind Germany is not even in the top 10. This is why leading scientists and environmentalists such as James Hansen, Ken Caldeira, Barry Brook, Michael Shellenberger, Mark Lynas and Ben Heard have argued in favour of nuclear power.

Source: BP Statistical Review — 2016 Data, https://www.bp.com/content/dam/bp/en/corporate/excel/energy-economics/statistical-review-2017/bp-statistical-review-of-world-energy-2017-underpinning-data.xlsx

Many continue to point to innovations in solar and wind, yet ignore the innovation in reactor designs. In the US and Canada, there is plenty of venture capital flowing into new startups with smaller, safer, cheaper and more efficient designs. Companies such as Terrestrial Energy, Terrapower(Bill Gates), and NuScale, through new generation 4 designs, are aiming to tackle the main issues that have plagued the nuclear industry for the past few decades — cost, build time, safety, weapon proliferation and waste.

To date, Australia refuses to be part of this narrative thanks to bans found in the Environment Protection and Biodiversity Conservation Act and the Australian Radiation Protection and Nuclear Safety Act. This is despite being a world leader in lifesaving nuclear medicine, despite having the world’s largest known supply of uranium and despite exporting four times its electricity demand in clean energy (uranium) to the rest of the world in 2015–16 (3,683 Petajoules of uranium equals roughly 1,029 TWh and Australia generated 257 TWh).

Alternative Narrative

There is an alternative narrative if our political leaders are truly interested in cheap, reliable and clean energy. It starts with Australia getting over its hang up with nuclear energy. It also means acknowledging that renewables and batteries alone are not going to clean up the electricity sector, let alone any other sector, while coal and gas continue to be the main game in town. Finally, it means stop sacrificing Australia’s comparative advantage in cheap energy on the alter of carbon emission reduction. The reality is if Australia shut up shop tomorrow, its impact on global carbon emissions would be negligible. It would not stop climate change.

It is time our political leaders confronted these realities and find the courage to break away from gesture politics and return to real pragmatic policy making that actually delivers for consumers and businesses. If we want future generations to have jobs here, for Australian companies to flourish and others to continue to invest here, having an energy policy that delivers cheap, reliable and clean energy will underpin this. At the end of the day, most people do not care where their energy comes from as long as they can afford it. As the hot summer days continue, all they will care about is that the beer is still cold and the air-con is running.