Planning to fail: how 'percent renewables' policy threatens the energy transition

There's an old adage: Failing to plan is planning to fail. Australia's clean energy policies based on a 100% renewables target are failing, demonstrably. This time there's no lack of planning. But objectives and strategy are wrong. The "100% renewables" target cannot possibly eliminate the use of fossil fuels. "Percent renewables" works for the electricity sector; for the energy transition, and for emissions as a whole, it fails.

How can this have happened?

Primarily, energy and electricity got confused. "100% renewables" works for the electricity sector. But there's more to energy than electricity. Clean electricity is most certainly part of any solution. It is versatile and has low associated emissions. But to succeed the strategy must focus on fossil fuels. Framing the objective as "eliminate fossil fuels and decarbonise the economy" immediately reveals the deficiencies of the "% renewables" target.

Clean electricity is essential to strategy but it is the means, not the end.

To eliminate fossil fuels it must be recognised that Australia's electricity supply sector accounts for only 40% of total fossil fuel consumption. "100% renewables" cannot possibly align with "zero fossil fuels" as it ignores the 60% of fossil fuels consumed outside the electricity supply sector.

There are other defects in the "100% renewables" target. Right from the start it prescribes renewables as the solution and dismisses other possibilities. What's more, it unwittingly sets the bar low. Decarbonising the power generation sector is the easiest starting point; alternatives to fossil fuels have been known for centuries. Starting off at the easy end may suit the politics. But it's bad strategy and just defers inevitable disappointments.

"Energy transition" is useful shorthand for "eliminating fossil fuels and decarbonising the economy". Climate change is the driving force. The world burns billions of tonnes annually of coal, oil and natural gas. These fossil fuels contain 75-90% carbon, which on complete combustion becomes carbon dioxide CO₂ that gets released to the atmosphere at the combustion site. Global mixing follows and CO₂ concentration in the atmosphere rises.

Climate science tells us that rising CO₂ levels affect how radiation from the sun warms our planet, the "greenhouse effect". Some remain doubtful about this claim. But it is respectable and quite old (dating back to the mid-1800s) atmospheric physics, not to be discarded lightly.

Should any residual disagreement about emissions and climate change affect energy policy? I don't think so. We know there are clean energy alternatives to fossil fuels. Fossil fuel combustion products other than CO₂ do have adverse health effects. The fuel extraction industry can be unpleasant. Huge rates of usage of fossil fuels could spell shortages for the future.

So, all things considered, reducing fossil fuel consumption and CO₂ emissions where feasible seems an entirely reasonable ambition for a modern world.

Then why not just do it? The brake is that modern prosperity is undoubtedly the product of fossil fuels. Everything we own, everything we do, has depended not just on energy from fossil fuels but also on their use as raw materials for vital commodities like fertilisers, plastics and other major industrial products.

Our current fossil fuel base came from plant life. Over 200 million years ago, ancient vegetation was heated, compressed and metamorphosed over geological time, producing the huge bonanza of fossil fuels humans are exploiting. New plant growth cannot match this. Without a plan for alternatives we cannot simply abandon fossil fuels tomorrow. It will take time. And simply demonising the industries that extract and supply fossil fuels is a destructive and ultimately futile strategy for reducing their use.

One proposed solution is to catch and dispose of emitted CO₂ before it gets into the atmosphere. Carbon Capture and Storage (CCS) is an old idea dating back to the 1970s. It has been made to work in small operations. But scale is the challenge. In volume and mass these emissions exceed even those of their sources, the initial fossil fuels. That is, there's more waste than starting material. CCS represents the greatest conceivable technical challenge. In my view it's a very long shot.

A small fraction, around 6%, of the world's fossil fuel consumption is not combusted but gets incorporated into various petrochemical products like plastics. These relatively stable materials can lock up their carbon content for quite long periods. But not forever. The technical challenge for substitutes is probably greater than for energy applications.

Energy comes in many largely interconvertible forms – heat, mechanical, electrical, chemical, etc. Electricity is generally regarded as the most desirable and useful of these. Electricity doesn't occur "naturally" (with minor exceptions like lightning). It is produced, or generated, from natural sources via one or more conversion steps. Some produce CO₂, all result in energy losses. Properly calculated the sum of all those CO₂ emissions makes up the "life-cycle emissions" for that technology. The smaller that sum the "cleaner" or "greener" that electricity is.

The choices for clean energy in Australia have been converging towards clean electricity produced from solar, wind and hydroelectric energy. These are classified as "renewables" because in principle their energy sources, solar radiation, wind and rainwater captured in rivers and dams, are being continuously renewed and unlimited, in contrast to the Earth's mineral resources.

These renewables are the focus of Australian energy policy. Elsewhere other significant clean sources are exploited, like nuclear energy and bioenergy. Nuclear is illegal in Australia. Bioenergy is a small contributor, 1.2% of electricity last year from multiple small sources.

There is occasional debate over nuclear energy's clean credentials. The debate is political. Scientifically, as measured by CO₂ emissions, nuclear energy is clean.

So in Australia the energy transition has come to mean the progressive replacement of today's energy systems by clean electricity from the three dominant and popular renewables; solar electricity (almost always via photovoltaic technology), wind electricity and hydroelectricity. Progress of the energy transition is routinely quantified in terms of the metric "% renewables". It measures the proportion of total electricity generation over a given period sourced from the three approved clean sources.

To see how well the "% renewables" metric conveys progress we must look at data for energy production (not power, which measures rates of output or usage, not quantities). For conveying the overall picture it's best to use the larger units for electrical energy, like terawatt-hours and petajoules (1 TWh = 3.6 PJ), as in the common energy statistics compilations. This table uses data from the official publication Australian Energy Update.

The driver of clean energy growth is mainly addition of new capacity in solar and wind electricity generation. The bottom line of the table shows annual energy increments produced by that expansion.

I have previously published a similar analysis. The above expanded table, with two more years, confirms the previous conclusion. When expressed in energy units clean energy growth looks slow; over the last four years annual solar + wind output seems to be reaching a growth limit around 35 PJ per annum. In contrast growth of "% renewables" looks relatively fast, doubling over the five-year period.

Another source of electricity statistics is the OpenNEM website. That's where AEMO, the Australian Energy Market Operator, publishes in real time energy source and generation data for the National Electricity Market. The NEM represents the electricity supply into Australia's large east coast grid, presently comprising around 83% of the national supply. OpenNEM is popular with energy analysts.

Let's see how national and NEM outputs and growth rates compare. In the table below generation in gigawatt-hours from OpenNEM is converted to petajoules and annual growth for solar and wind deduced, as above.

The patterns for both "% renewables" and numerical increments in solar plus wind outputs (bottom rows) in the two tables are similar. Both can be reliable sources for drawing conclusions about Australia's clean energy performance. One such conclusion is that the "% renewables" metric flatters the real contribution of solar and wind energy as measured in physical units per annum. To borrow from Australian Consumer Law, it is "misleading and deceptive".

Consumers are also influenced by excited renewables commentary, especially about periods of unusually high renewables content over a narrow interval or region. For example: "Australia's main grid reached a new record for renewable energy production on Friday – for the second working day of the week – with a peak of 71.3 per cent, according to the Australian Energy Market Operator" (21 October 2023)". These cherry-picked data seem intended to raise morale about renewables within the electorate.

Overall there is a pattern of exaggeration of clean energy progress, supported by governments, regulators, media and industry.

How can true progress be established? Can Australia's energy policy succeed?

The answers lie in the proper setting of clean energy targets.

The current target is simply "100% renewables". Using the above data this means that for 2022 if Australia's total renewables had reached 983.8 PJ it would have hit its 100% target. Actual clean output was 317.5 PJ, just under one third of that target. Not bad. But as already noted 983.8 PJ cannot possibly be the amount of electrical energy that would replace all 5249.6 PJ fossil fuel energy Australia consumed in 2021/22 (see Australian Energy Update 2023). The correct amount for that purpose must be far greater.

The crucial question is, how much greater? What quantity of electricity would we need to replace, or displace, all of Australia's fossil fuel consumption? That's much the same as asking "how much electricity would a fully electrified Australian economy require?" Let's call that the clean electricity target.

At the moment there is no shortcut to answering that question directly. We need an educated guess. Here is one approach.

A key fact is that fossil fuels are now converted to electricity by combustion in thermal power stations. The laws of thermodynamics require that all such energy conversion processes suffer losses. That is, efficiencies must be less than 100%, usually far less. Losses appear mostly as heat.

In 2022 the world average thermal generation efficiency was 40.7% according to the latest Statistical Review of World Energy. Australia's is probably lower because it relies more than others on coal, especially brown coal.

For simplicity let's assume an average Australian thermal conversion efficiency of 40%. In 2022 Australia's total fossil fuel consumption, rounded, was 5250 PJ. Some of that went into generating 666.3 PJ electricity – that's the official fossil fuel electricity figure for that year. If all available fossil fuels had been consumed just in electricity generation at the same 40% thermal efficiency the output would have totalled 2100 PJ.

In this "educated guess" 2100 PJ electricity becomes the bare minimum for a fully electrified economy replacing fossil fuels. Why a minimum? Because anything less means that the sum of all new electrified process routes would consume less electricity than we could generate right now from fossil fuels. Unfortunately that's something only a wild optimist could hope. While not a strictly scientific explanation it's realistic. And if it turns out to be wrong everyone should be happy.

The above calculation is not complete. We still need to add the 2022 clean (from non-fossil fuel sources) generation figure of 318 PJ (rounded). The total electrification target then becomes 2418 PJ, or about 2.5 times total electricity generation for 2022.

In other words electrification of all fossil fuel usage calls for at least 2.5 times, or 250% of, present generation of electricity.

So it's easy to show that "100% renewables" cannot possibly be the correct target. The real target cannot be less than 250%. 100% looks no more than a fraudulent self-serving slogan.

To avoid ambiguity clean energy policy needs a clean electricity target defined as a quantity of electrical energy. It is helpful to see that quantity as the product of today's total electricity generation, from fossil fuel and all other sources, and a "multiplier". That multiplier is the key parameter. It will be derived using comprehensive knowledge of future electricity requirements. Today's best guess for the multiplier is 2.5. That is, if we could switch from a mixed electricity/fossil fuels economy to a fully electrified one we will need 2.5 times more electricity than we use now, plus of course a swag of new technologies.

The 2.5 multiplier must still be refined and confirmed. It won't be less than 2.5 and may well turn out higher than 3. It's very important to get it right. All clean energy planning will depend on it.

One thing is clear. The current "100%" policy metric has helped to flatter clean energy progress. For example with a target of 2418 PJ for 2022 as estimated above, the "percent renewables" performance indicator drops from 32.3% to 13.1 %. That's quite a difference.

With numerical targets and growth rates we can calculate how long it will take to reach policy objectives. For example, clean electricity output in 2022 was 317.5 PJ. With a target of 2418 PJ, the gap to be filled would be 2100 PJ. At the present average output growth rate of 35 PJ per annum it would take 60 years to reach the target!

The numbers are clear. Present growth in clean electricity output is far too slow for reaching fossil fuel abatement ambitions. There will surely be a need for additional clean electricity sources if the real objective is zero fossil fuels. The obvious candidate is nuclear energy.

Australia should drop its objections to nuclear, make it legal, and join the global growth of nuclear energy. One traditional 1 gigawatt nuclear power stations, like its coal counterpart, produces about 30 PJ clean electricity per annum. That's about the output of all solar and wind now installed in Australia. If smaller nuclear units gain in popularity, more will obviously be needed.

In summary Australia is using a defective performance measure in its clean energy policy that completely ignores the total picture for eliminating fossil fuels by means of clean electricity. Clean energy policy needs to be overhauled if the necessary targets are to be reached in any sensible period.

It is hard to see how the obvious deficiencies in the current "% renewables" measure were overlooked in policy setting. Policymakers, regulators, energy lobby groups, energy academics, the electorate, the energy industry, should all share the blame. Whatever the explanation, "100% renewables" must now be abandoned as a policy objective and replaced by a well-defined numerical clean electricity target.