Wind, solar, coal and gas to reach similar costs by 2030: report

Paul Graham, CSIRO

By 2030 renewable energy sources such as solar and wind will cost a similar amount to fossils fuels such as coal and gas, thanks to falling technology costs, according to new forecasts released in the CO2CRC’s Australian Power Generation Technology (APGT) Report.

The report also shows that technology costs will fall faster under climate policies that limit the concentration of carbon dioxide in the atmosphere to 450 parts per million. (The current CO₂ concentration is around 400 parts per million).

While the practice of forecasting is often derided, with multi-billion dollar assets that can last 50 years or more, the electricity industry and the policy-makers, academics and stakeholders who study it have no choice but to get involved.

Updating the data

A key input to all energy crystal-ball gazing is the cost of generating electricity, and performance data. However the last comprehensive update of electricity generation costs was the then Bureau of Resource and Energy Economics’ Australian Energy Technology Assessment (AETA) in 2012 (followed by a minor update to selected data in 2013).

The lack of consistent up–to-date data disadvantages technologies such as solar photovoltaic power systems whose costs have been improving rapidly since then.

To avoid misrepresenting the possible future role of fast-moving technologies, many analysts have had to slowly abandon use of the old data and create their own more up-to-date estimates.

While diverse opinions are sometimes useful, a proliferation of inconsistent alternative cost data sets creates confusion for the industry as it makes each published study less comparable.

The delivery today of a new and consistent electricity cost data set therefore is an important and long awaited addition to the electricity industry’s toolkit. The new report was conducted over the July-November period and utilised an electricity industry reference group of around 40 organisations to provide input and feedback along the way.

Given the often heated debates in Australia around energy sources, the CO2CRC recognised that it is crucial that studies like these are conducted in an open and unbiased manner.

The report includes key “building block” data such as capital and operating costs, and performance data such as emissions intensity, water usage and expected usage rates.

The cost of energy

Whenever a new electricity generation technology cost and performance data set is created there is an opportunity to update our view of the relative competitiveness of each technology.

This is calculated using a measure called the Levelised Cost of Electricity (LCOE). The LCOE captures the average cost of producing electricity from a technology over its entire life. It allows the comparison of technologies with very different cost profiles, such as solar photovoltaic systems (high upfront cost, but very low running costs) and gas-fired generators (moderate upfront cost, but significant ongoing fuel and operation costs).

The LCOE is the best technology comparison measure available but is not without limitations. It cannot recognise the different roles technologies might play in an electricity system (e.g. such as supplying everyday, baseload power, or power for periods of peak demand) or the relative flexibility of plant to increase or decrease power supply as needed.

Accepting the limitations, the updated LCOE analysis finds that in 2015 natural gas combined cycle and supercritical pulverised coal (both black and brown) plants have the lowest LCOEs of the technologies covered in the study. Wind is the lowest cost large-scale renewable energy source, while rooftop solar panels are competitive with retail electricity prices.

It is interesting to note that all 2015 LCOE estimates are higher than the current wholesale price of electricity of around A$40 per Megawatt-hour. The reflects reduced demand in the electricity network, which is putting downward pressure on electricity prices.

By 2030 the LCOE ranges of both conventional coal and gas technologies as well as wind and large-scale solar converge to a common range of A$50 to A$100 per megawatt hour. This outcome is consistent with observations from many commentators noting that the continuing reductions in wind and solar photovoltaic costs must inevitably lead to an intersection with the costs of the existing mature technologies before too long.

Of course, equality in LCOE will not necessarily translate to an equal competitive position in electricity markets, given differences in the flexibility of renewable and conventional coal and gas plants (which LCOE does not capture as already noted).

Falling technology costs

The convergence of conventional and renewable energy costs depends on the capital costs of these energy sources. These were modelled for the new report by CSIRO’s Global and Local Learning Model. This model is a relatively objective way of projecting costs based on historical learning rates. Learning rates show that for each doubling of installed capacity of an energy source, costs fall by a particular amount.

We can model these costs across different climate policies, as you can see in the chart below.

Projected electricity generation capital costs assuming a 550ppm consistent global carbon price signal
CO2CRC

CSIRO’s projections included carbon price signals consistent with either concentration of 550 parts per million or 450 parts per million of greenhouse gas emissions. However, we found the total amount of cost reduction was fairly similar, but more accelerated in time, by approximately five years, in the 450 ppm case.

With the future policy environment of the electricity industry potentially becoming a little clearer after the COP21 meeting in Paris next week, the new report makes the job of understanding the role of different technologies in that future a little easier.

Paul Graham, Chief economist, CSIRO energy, CSIRO

This article was originally published on The Conversation. Read the original article.

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India should not be allowed to hold the world to ransom at the climate talks

Clive Hamilton

No one is going to allow the Paris climate talks to collapse. The memory of Copenhagen is still raw, and US President Barack Obama has invested enormous political capital in a successful outcome.

This situation hands great bargaining power (or rather, blackmailing power) to India. On the final day of the conference, whatever India insists on will be acceded to.

And India, although talking up its renewables investments, is taking a confrontational approach aimed at watering down the final Paris agreement. As the New York Times put it, Indian Prime Minister Narendra Modi can “make or break Obama’s climate legacy”.

India is refusing to endorse what would be the centrepiece of a Paris agreement: five-yearly reviews of emissions reduction commitments, which are essential to giving the post-Kyoto “pledge-and-review” system teeth – or at least more effective gums.

Part of the answer to India’s intransigence is money – it wants more funding for new energy investment and compensation for loss and damage – but at its core, the refusal to cooperate arises from a nationalist chip on the shoulder left over from colonialism.

But it has to be asked: why is the world community allowing India to hold it to ransom? The simple answer is that it is commonly accepted that when the chair brings down the gavel on the final agreement, there must be consensus.

This answer is not a good one. The expectation of consensus among major powers is inherited from the UN Security Council and the early practice of UN climate conferences to ensure that developing countries felt included.

But consensus is not needed to make a Paris agreement legally binding. In fact, “legally binding” is a fiction and its constant deployment here at the talks is something of a puzzle. The Kyoto Protocol was legally binding under international law, but that did not stop the United States and Australia from refusing to ratify it, and Canada from ratifying then repudiating it. Nothing happened.

Climate law is among the weakest elements of international law. Bolivia refused to endorse the Cancun agreement, declaring it too weak, and a footnote records its dissent. Even some of the strongest international law, the UN Refugee Convention, is flouted with impunity (think Australia and asylum-seekers).

International law is most effective when there are material losses from opting out, such as the loss of most-favoured nation status for countries that do not join the World Trade Organization. That kind of mechanism is the only way to give a climate agreement real bite.

So whatever the words on paper say, anything that comes out of Paris will reflect voluntary commitments, and compliance mechanisms – inventories, reporting and reviews – will also be voluntary. But the strength of those voluntary commitments is vital. “Consensus-minus-one” on a stronger agreement is surely preferable to a weaker agreement with full consensus. So let India dissent, and have its dissent recorded in a footnote to the Paris agreement.

If that is India’s sovereign decision, so be it; but it should be made clear that it will be opting out of all the elements of the agreement, including financial flows. A few years out in the cold (so to speak), while the rest of the world gets on with it, is likely to persuade the emerging giant to adopt a less intransigent position.

Clive Hamilton, Professor of Public Ethics, Centre For Applied Philosophy & Public Ethics (CAPPE)

This article was originally published on The Conversation. Read the original article.

Just how hard will India push in Paris?

Matt McDonald, The University of Queensland

India has emerged as one of the key, and most intriguing, voices at the COP21 talks in Paris.

In the first three days of the conference, Prime Minister Narendra Modi has committed to playing a constructive role in negotiations and has outlined a significant renewable energy program in partnership with France. India has also, however, outlined a plan to expand fossil fuel consumption while calling on developed states to significantly reduce theirs. And today, Indian officials accused the OECD of overestimating developed states’ contributions to climate aid, which promises to be a crucial point of contention in Paris.

India’s position is complex, and it has been complicated still further by the changing approaches of other states.

While positioning itself as a leader and voice of developing states, this role was undermined by the declaration by dozens of other developing states on day 1 of the negotiations, a combination of small island and “climate vulnerable” states. These states argued for stronger global action on climate change, with a commitment to keeping temperature rises to 1.5℃ rather than 2℃.

If this is one club to which India belongs in the context of climate negotiations, the other is that of the world’s largest current contributors to climate change itself. Yet the position of the only two larger national greenhouse gas emitters – the United States and China – is almost unrecognisable from their stances at Copenhagen in 2009. In Paris these states have outlined a commitment to strong climate action in cooperation with each other. In Copenhagen they were accused of scuppering the agreement between them.

All of this puts India in a difficult position.

At one level, their interventions so far haven’t fundamentally challenged the Rio Declaration principle of “common but differentiated responsibility”. This dictates that while a shared global problem, the extent to which individual states bear responsibility for addressing it is determined by factors ranging from historical responsibility to vulnerability, adaptive capacity and developmental imperatives.

And India’s position is more than understandable. With hundreds of millions living in poverty and without access to electricity, and with per capita emissions around 10% of those of the United States in 2012, India surely has grounds to suggest that the onus for making sacrifices to address climate change should be on others.

Yet the extent to which India has drawn attention to concerns about climate finance, including by questioning assessments of aid allocated to date, suggests it is willing to push hard to have these concerns addressed.

Just how hard India is willing to push could well be the money question for the outcome of the conference as a whole. The position of other states raises the real prospect of an isolated India, potentially serving as a fall guy for any failure to reach robust agreement in Paris. How desperate will India be to avoid this outcome?

Matt McDonald, Associate Professor of International Relations, The University of Queensland

This article was originally published on The Conversation. Read the original article.

El Nino

COP21: Waste of Time?

Bangladesh: Climate Change Impact

Coal could still kill us

Mark Beeson, University of Western Australia

Was it Confucius who said it’s a funny old world? If he didn’t he might well do so now. Having spent part of the last couple of weeks trying to breathe in Beijing, one can’t help but be struck by the remarkable contradictions – as the Marxists used to say – that characterise global politics these days.

Despite the dangerous levels of pollution that are currently affecting some of China’s most important cities, its government is currently enjoying unaccustomed praise in Paris for its more constructive-looking approach to the international climate talks. Without wanting to add too greatly to the inflated rhetoric that surrounds these discussions, it’s not unreasonable to suggest that our collective fate really does hang in the balance.

That’s why China is so important. As it demonstrated in Copenhagen, little of consequence will happen if China is not on board. Not only is China famously the biggest contributor to the problem, but it’s also actually doing the most about it – despite all the unbreathable evidence to the contrary. Few governments can command policy change in quite the way China can if that’s what its authoritarian leaders decide to actually do.

And yet when I put it to a group of smart, well-informed Chinese scholars that Australia’s greatest contribution to the problem of global warming (and pollution) might be to simply stop exporting coal, they smirked knowingly at my naivety. China would simply replace Australia’s “clean” coal with its own dirty variety or source their seemingly insatiable demand from some less scrupulous supplier.

This is not to say that China is not making an effort. On the contrary it is. China is collectively (and encouragingly) the largest investor in renewables in the world. And yet its citizens frequently live in a noxious cloud of poisonous gasses that are condemning them to an early grave. At times like this I wonder why I ever bothered to give up smoking.

Rather alarmingly, China is not the worst offender. India – the other economy that sends the “international investment community” giddy with anticipation at the thought of all those development opportunities – has just announced that its use of coal will actually double by 2030.

Thanks to China’s much-criticised one-child policy, India is also about to overtake the Middle Kingdom as the world’s most populous polity. Providing jobs and energy for a rapidly expanding workforce is likely to take precedence over concerns about the long-term impact of C₀2 emissions and any notion of international responsibility and solidarity.

Despite the apparent evolution in China’s thinking about the possible impact and importance of climate change and pollution, therefore, it is far from clear that this will be enough to achieve the sort of immediate, rapid action that is required to stabilise global warming. The divisions between north and south, rich and poor that proved such obstacles at Copenhagen may not be easily overcome this time around either.

No doubt the coal lobby will cry foul about demonising a single commodity that undoubtedly provides cheap energy for developing countries. But the fact is that coal epitomises all of the challenges and – yes – contradictions that threaten to make the planet unlivable.

If we can’t do something about the most egregious and visible forces that are poisoning the planet, what hope is there?

Despite the uplifting and thoughtful commentary from some of the brightest minds in the country on these pages, the answer increasingly looks like: not a lot. There really is an implacable logic about significant population growth, especially when symbiotically linked to a developmental and social model that continues to rely on economic growth.

It is generally considered rather poor form and defeatist to be negative and pessimistic about our collective prospects. Believe me, I would much rather be writing some optimism-inducing commentary on the ability of our leaders to transcend narrow national interests in pursuit of the common good.

Sadly, I fear the message has to be: don’t hold your breath – unless you’re in Beijing, of course.

Mark Beeson, Professor of International Politics, University of Western Australia

This article was originally published on The Conversation. Read the original article.