The Morrison government will tell its refocused clean energy agencies and the clean energy regulator to give priority to investment in five low emissions technologies and report how they are accelerating them.
The technologies are clean hydrogen, energy storage, low carbon steel and aluminium, carbon capture and storage, and soil carbon.
The government last week announced it would legislate to extend the remit of the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC) beyond renewables.
On Tuesday it will indicate the “priority low emissions technologies” they, and the Clean Energy Regulator (CER) – which is responsible for administering the government’s emissions reduction fund – should concentrate on.
Energy Minister Angus Taylor, in a Tuesday speech on low emissions technology, will say the government is putting technologies into four categories. Apart from the priority low emissions technologies, the other categories are emerging and enabling technologies, “watching brief” technologies, and mature technologies.
Priority technologies “are those expected to have transformational impacts here and globally and are not yet mature,” Taylor says in his speech, released ahead of delivery.
“They are priorities where government investments can make a difference in reducing costs and improving technology readiness.
“Technologies where we, as a government, will not only prioritise our investments but where we will streamline regulation and legislation to encourage investment.
“Investors will have confidence that identified priority technologies are of long-term strategic importance for the government.”
Emerging and enabling technologies, such as those for energy efficiency and infrastructure for electric and hydrogen vehicle charging/ refuelling, will also be included in the mandate of the government’s investment agencies.
In the “watching brief” category are those that are for the longer run or are longer odds, such as direct air capture and small nuclear modular reactors. (There is a moratorium on nuclear power in Australia at the moment but the government is watching developments in Europe and the United Kingdom.)
Notably, key renewables and key fossil fuels are in the “mature” category, which includes coal, gas, solar and wind.
The government says it will only invest in them where there is market failure or where such investments secure jobs in key industries.
Last week Scott Morrison threatened to build a gas power station in the Hunter region if private investors left a supply gap for when the Liddell coal-fired station closes, while he also indicated renewables could now stand on their own feet.
Taylor will release an overarching technology roadmap, which he says “arms the government with “four levers to enact change”: an investment lever, a legislative lever, a regulator lever, and international co-operation and collaboration.
“The roadmap will guide the deployment of the $18 billion that will be invested, including through the CEFC, ARENA, the Climate Solutions Fund [which will evolve from the Emissions Reduction Fund] and the CER.
“This will turn that into at least $50 billion through the private sector, state governments, research institutions and other publicly funded bodies. That will drive around 130 000 jobs to 2030,” Taylor says.
The legislative level “is about flexibility and accountability.
“We don’t currently have that. Our agencies are restricted by legislation and regulation to invest in the new technologies of 2010 not the emerging technologies of 2020.”
The regulator lever “is about enablement”.
Taylor says the government’s plan is not based on ideology but “balance and outcomes”.
The government is announcing several “stretch goals” (see table for details). Stretch goals are the point at which new technologies become competitive with existing alternatives. The government announced the hydrogen stretch goal earlier in the year.
“Getting these technologies right will strengthen our economy and create jobs,” Taylor says.
“This will significantly reduce global emissions, across sectors that emit 45 billion tonnes annually.
“Australia alone will avoid 250 million tonnes of emissions by 2040.”
He says “Australia can’t and shouldn’t damage its economy to reduce emissions”.
With up to 226 wind turbines in state-owned pine plantations, the 1,200 megawatt Forest Wind project could power one in four Queensland homes and help the state meet its target of 50% renewable-generated electricity by 2030.
The turbines will be a minimum of three kilometres from the nearest town. Because they’re sited in an exotic pine plantation, impacts on native flora, fauna, and habitats will be minimised. At first sight, Forest Wind looks like a model project. But look a little closer, and Forest Wind embodies many of the contradictions at the heart of Australia’s renewable energy revolution.
The current pace of Australia’s energy transition is breathtaking. But big projects like Forest Wind need to take local communities with them, and build a social licence for the energy transition from the ground up.
But local residents told a parliamentary committee in June they’d been kept in the dark about the project, claiming “it was kept secret from 2016 until the public announcement in December 2019”. They also expressed concern about its visual impact and proximity to bird migration corridors.
“DAD” may be common in current planning processes, but the people of the nearby Wide Bay community may feel that, so far, there’s not enough in it for them.
The Conversation contacted Forest Wind Holdings for a response to this article. A spokesperson said the project will provide the local community a long and ongoing opportunity to continually provide input.
Forest Wind is pleased to have received feedback from hundreds of people so far including at information days, online forums, letters and over the phone. […] Since the project’s announcement, COVID-19 has certainly impacted community consultation activities, as local halls have been closed and a planned wind farm tour has had to be cancelled.
Now that COVID-19 restrictions are easing, Forest Wind is establishing a Community Reference Group […] Forest Wind intends to work closely through the Community Reference Group to continue to understand the needs and interests of the local community and work in a collaborative and multi-stakeholder approach to address community concerns and develop initiatives that leverage the Project and deliver community benefits.
Few community benefits
The Forest Wind website lists no concrete community benefits, no benefit sharing programs, concrete training or education initiatives, and hardly any community engagement besides standard consultation meetings and newsletters.
Elsewhere it’s becoming common for government-led renewable energy auctions to stipulate socio-economic objectives other than just capacity or price. In Victoria, one preference was to use labour and components from the state. In the ACT, one outcome was wider benefit sharing in the form of community co-investment.
The Queensland government has fast-tracked Forest Wind through its Exclusive Transactions Framework, which gives preferential treatment to large-scale infrastructure projects. In other words, it’s picked a winner.
Forest Wind Holdings did not have to go through a competitive tender or auction process. Given the sheer size of the project, the state government had plenty of scope to negotiate better-than-average benefits for Wide Bay and the state.
Then there’s a further issue: jobs. According to the project website, 50% of the jobs in the construction phase (around 200) and 90% during operations (about 50) can be filled by people in the Wide Bay region.
A Forest Wind spokesperson said there are “vast benefits” for the local people in Wide Bay, including job opportunities in the concrete and construction sector.
These are all real jobs, for which on-the-job training and on-the-job management and mentoring can benefit workers to skill-up in working on Forest Wind, on future wind farms, and increase the opportunity to apply skills and qualifications in other areas of the economy.
Forest Wind was originated by local Queenslanders and the development team are based in this local area of Queensland. Already there are real local jobs, with more local jobs to come as the project develops – this is a positive.
But local communities need to see more lasting job creation from big renewable projects, not just “the circus coming to town”.
Consulting with native title holders
One clearly innovative aspect of Forest Wind is the requirement for an Indigenous Land Use Agreement, which provides negotiation rights for titleholders and compensation. Under legislation passed this week, the developer must negotiate a land use agreement where native title exists, and “the project cannot proceed without the free and informed consent of these individuals and communities”.
In contrast, last year the Queensland government extinguished native title over land in the Galilee Basin to make way for the Adani coal mine.
And the Adani mine is now only expected to offer only 100 to 800 ongoing jobs.
So let’s be clear: we should applaud Queensland’s decision to throw its weight behind the energy transition.
A recent report estimates that, with the right stimulus measures now, by 2030 there could be 13,000 Queenslanders working long-term in the renewable sector, and tens of thousands more short term jobs in construction.
Some 75% of those jobs would be in regional Queensland. The challenge is to ensure enough of them go to regions like Wide Bay.
And at a national level, Australia should look to Germany as a model.
Community energy projects
Renewables now employ 304,000 people in Germany. That compares with about 60,000 in the coal industry.
Germany built its energy transition over 30 years. The German experience shows how fostering citizen involvement and ownership will strengthen long-term social acceptance for renewable energy.
Huge clean energy projects, such as the Asian Renewable Energy Hub in the Pilbara, Western Australia, are set to produce gigawatts of electricity over vast expanses of land in the near future.
The Asian Renewable Energy Hub is planning to erect wind turbines and solar arrays across 6,500 square kilometres of land. But, like with other renewable energy mega projects, this land is subject to Aboriginal rights and interests — known as the Indigenous Estate.
While renewable energy projects are essential for transitioning Australia to a zero-carbon economy, they come with a caveat: most traditional owners in Australia have little legal say over them.
Projects on the Indigenous Estate
How much say Aboriginal people have over mining and renewable energy projects depends on the legal regime their land is under.
In comparison, the dominant Aboriginal land tenure in Western Australia (and nationwide) is native title.
Native title — as recognised in the 1992 Mabo decision and later codified in the Native Title Act 1993 — recognises that Aboriginal peoples’ rights to land and waters still exist under certain circumstances despite British colonisation.
But unlike the ALRA, the Native Title Act does not allow traditional owners to veto developments proposed for their land.
Both the Native Title Act and the the ALRA are federal laws, but the ALRA only applies in the NT. The Native Title Act applies nationwide, including in some parts of the NT.
Shortcomings in the Native Title Act
Native title holders can enter into a voluntary agreement with a company, known as an Indigenous Land Use Agreement, when a development is proposed for their land. This allows both parties to negotiate how the land and waters would be used, among other things.
If this is not negotiated, then native title holders have only certain, limited safeguards.
The strongest of these safeguards is known as the “right to negotiate”. This says resource companies must negotiate in good faith for at least six months with native title holders, and aim to reach an agreement.
But it is not a veto right. The company can fail to get the agreement of native title holders and still be granted access to the land by government.
For example, Fortescue Metals Group controversially built their Solomon iron ore mine in the Pilbara, despite not getting the agreement of the Yindjibarndi people who hold native title to the area.
In fact, the National Native Title Tribunal — which rules on disputes between native title holders and companies — has sided with native title holders only three times, and with companies 126 times (of which 55 had conditions attached).
There are also lesser safeguards in the act, which stipulate that native title holders should be consulted, or notified, about proposed developments, and may have certain objection rights.
Negotiating fair agreements
So how does the Native Title Act treat large-scale renewable energy developments?
The answer is complicated because a renewable energy development likely contains different aspects (for example: wind turbines, roads and HVDC cables), and the act may treat each differently.
Broadly speaking, these huge developments don’t fall under the right to negotiate, but under lesser safeguards.
Does this matter? Yes, it does. We know from experience in the mining industry that while some companies negotiate fair agreements with Aboriginal landowners, some do not.
For example, two very similar LNG projects — one in Western Australia and the other in Queensland — resulted in land access and benefit sharing agreements that were poles apart. The WA project’s agreements with traditional owners were worth A$1.5 billion, while the Queensland project’s agreements were worth just A$10 million.
Likewise, Rio Tinto’s agreement for the area including Juukan Gorge reportedly “gagged” traditional owners from objecting to any activities by the company, which then destroyed the 46,000-year-old rock shelters.
A matter of leverage
We also know the likelihood of a new development having positive impacts for Aboriginal communities depends in part on the leverage they have to negotiate a strong agreement.
Legal rights are also very effective: the stronger your legal rights are, the better your negotiation position. And the strongest legal position to be in is if you can say no to the development.
For land under the Aboriginal Land Rights (Northern Territory) Act 1976, this ability to say no means traditional owners are in a good position to negotiate strong environmental, cultural heritage and economic benefits.
For land under the Native Title Act, traditional owners are in a weaker legal position. It is not a level playing field.
A just transition
To remedy this imbalance, the federal government must give native title holders the same rights for renewable energy projects as traditional owners have under the Aboriginal Land Rights Act in the NT.
Recent reports from scientists pursuing a new kind of nuclear fusion technology are encouraging, but we are still some distance away from the “holy grail of clean energy”.
The technology developed by Heinrich Hora and his colleagues at the University of NSW uses powerful lasers to fuse together hydrogen and boron atoms, releasing high-energy particles that can be used to generate electricity. As with other kinds of nuclear fusion technology, however, the difficulty is in building a machine that can reliably initiate the reaction and harness the energy it produces.
What is fusion?
Fusion is the process that powers the Sun and the stars. It occurs when the nuclei of two atoms are forced so close to one another that they combine into one, releasing energy in the process. If the reaction can be tamed in the laboratory, it has the potential to deliver near-limitless baseload electricity with virtually zero carbon emissions.
The easiest reaction to initiate in the laboratory is the fusion of two different isotopes of hydrogen: deuterium and tritium. The product of the reaction is a helium ion and a fast-moving neutron. Most fusion research to date has pursued this reaction.
Deuterium-tritium fusion works best at a temperature of about 100,000,000℃. Confining a plasma – the name for the flamelike state of matter at such temperatures – that hot is no mean feat.
The leading approach to harnessing fusion power is called toroidal magnetic confinement. Superconducting coils are used to create a field about a million times stronger than Earth’s magnetic field to contain the plasma.
Scientists have already achieved deuterium-tritium fusion at experiments in the US (the Tokamak Fusion Test Reactor) and the UK (the Joint European Torus). Indeed, a deuterium-tritium fusion campaign will happen in the UK experiment this year.
These experiments initiate a fusion reaction using massive external heating, and it takes more energy to sustain the reaction than the reaction produces itself.
The next phase of mainstream fusion research will involve an experiment called ITER (“the way” in Latin) being built in the south of France. At ITER, the confined helium ions created by the reaction will produce as much heating as the external heating sources. As the fast neutron carries four times as much energy as the helium ion, the power gain is a factor of five.
ITER is a proof of concept before the construction of a demonstration power plant.
What’s different about using hydrogen and boron?
The technology reported by Hora and colleagues suggests using a laser to create a very strong confining magnetic field, and a second laser to heat a hydrogen-boron fuel pellet to reach the point of fusion ignition.
When a hydrogen nucleus (a single proton) fuses with a boron-11 nucleus, it produces three energetic helium nuclei. Compared with the deuterium-tritium reaction, this has the advantage of not producing any neutrons, which are hard to contain.
However, the hydrogen-boron reaction is much more difficult to trigger in the first place. Hora’s solution is to use a laser to heat a small fuel pellet to ignition temperature, and another laser to heat up metal coils to create a magnetic field that will contain the plasma.
The technology uses very brief laser pulses, lasting only nanoseconds. The magnetic field required would be extremely strong, about 1,000 times as strong as the one used in deuterium-tritium experiments. Researchers in Japan have already used this technology to create a weaker magnetic field.
Hora and colleagues claim their process will create an “avalanche effect” in the fuel pellet that means a lot more fusion will occur than would otherwise be expected. While there is experimental evidence to support some increase in fusion reaction rate by tailoring laser beam and target, to compare with deuterium-tritium reactions the avalanche effect would need to increase the fusion reaction rate by more than 100,000 times at 100,000,000℃. There is no experimental evidence for an increase of this magnitude.
The experiments with hydrogen and boron have certainly produced fascinating physical results, but projections by Hora and colleagues of a five-year path to realising fusion power seem premature. Others have attempted laser-triggered fusion. The National Ignition Facility in the US, for example, has attempted to achieve hydrogen-deuterium fusion ignition using 192 laser beams focused on a small target.
These experiments reached one-third of the conditions needed for ignition for a single experiment. The challenges include precise placement of the target, non-uniformity of the laser beam, and instabilities that occur as the target implodes.
These experiments were conducted at most twice per day. By contrast, estimates suggest that a power plant would require the equivalent of 10 experiments per second.
The development of fusion energy is most likely to be realised by the mainstream international program, with the ITER experiment at its core. Australia has international engagement with the ITER project in fields of theory and modelling, materials science and technology development.
Much of this is based at the ANU in collaboration with Australian Nuclear Science and Technology Organisation, which is the signatory to a cooperation agreement with ITER. That said, there is always room for smart innovation and new concepts, and it is wonderful to see all kinds of investment in fusion science.
You live in one of the sunniest countries in the world. You might want to use that solar advantage and harvest all this free energy. Knowing that solar panels are rapidly becoming cheaper and have become feasible even in less sunny places like the UK, this should be a no-brainer.
Despite this, the Australian government has taken a step backwards at a time when we should be thinking 30 years ahead.
Can we do it differently? Yes, we can! My ongoing research on sustainable urbanism makes it clear that if we use the available renewable resources in the Sydney region we do not need any fossil resource any more. We can become zero-carbon. (With Louisa King and Andy Van den Dobbelsteen, I have prepared a forthcoming paper, Towards Zero-Carbon Metropolitan Regions: The Example of
Sydney, in the journal SASBE.)
Enough solar power for every household
Abundant solar energy is available in the Sydney metropolitan area. If 25% of the houses each installed 35 square metres of solar panels, this could deliver all the energy for the city’s households.
We conservatively estimate a total yield of 195kWh/m2 of PV panel placed on roofs or other horizontal surfaces. The potential area of all Sydney council precincts suited for PV is estimated at around 385km2 – a quarter of the entire roof surface.
We calculate the potential total solar yield at 75.1TWh, which is more than current domestic household energy use (65.3TWh, according to the Jemena energy company).
If we install small wind turbines on land and larger turbines offshore we can harvest enough energy to fuel our electric vehicle fleet. Onshore wind turbines of 1-5MW generating capacity can be positioned to capture the prevailing southwest and northeast winds.
The turbines are placed on top of ridges, making use of the funnel effect to increase their output. We estimate around 840km of ridge lines in the Sydney metropolitan area can be used for wind turbines, enabling a total of 1,400 turbines. The total potential generation from onshore wind turbines is 6.13TWh.
Offshore turbines could in principle be placed everywhere, as the wind strength is enough to create an efficient yield. The turbines are larger than the ones on shore, capturing 5-7.5MW each, and can be placed up to 30km offshore. With these boundary conditions, an offshore wind park 45km long and 6km wide is possible. The total offshore potential then is 5.18TWh.
Altogether, then, we estimate the Sydney wind energy potential at 11.3TWh.
We can turn our household waste and green waste from forests, parks and public green spaces into biogas. We can then use the existing gas network to provide heating and cooling for the majority of offices.
Biomass from domestic and green waste will be processed through anaerobic fermentation in old power plants to generate biogas. Gas reserves are created, stored and delivered through the existing power plants and gas grid.
Using algae arrays to treat the waste water of new precincts, roughly a million new households as currently planned in Western Sydney, enables the production of great quantities of biofuel. Experimental test fields show yields can be high. A minimum of 20,000 litres of biodiesel per hectare of algae ponds is possible if organic wastewater is added. This quantity is realisable in Botany Bay and in western Sydney.
Shallow geothermal heat can be tapped through heat pumps and establishing closed loops in the soil. This can occur in large expanses of urban developments within the metropolitan area, which rests predominantly on deposits of Wianamatta shale in the west underlying Parramatta, Liverpool and Penrith.
Where large water surfaces are available, such as in Botany Bay or the Prospect Reservoir, heat can also be harvested from the water body.
The layers of the underlying Hawkesbury sandstone, the bedrock for much of the region, can yield deep geothermal heat. This is done by pumping water into these layers and harvesting the steam as heat, hot water or converted electricity.
The potential sources of energy from hydro generation are diverse. Tidal energy can be harvested at the entrances of Sydney Harbour Bay and Botany Bay, where tidal differences are expected to be highest.
Port Jackson, the Sydney Harbour bay and all of its estuaries have a total area of 55km2. With a tidal difference of two metres, the total maximum energy potential of a tidal plant would be 446TWh. If Sydney could harvest 20% of this, that would be more than twice the yield of solar panels on residential roofs.
If we use the tide to generate electricity, we can also create a surge barrier connecting Middle and South Head. Given the climatic changes occurring and still ahead of us, we need to plan how to protect the city from the threats of future cyclones, storm surges and flooding.
I have written here about the potential benefits of artificially creating a Sydney Barrier Reef. The reef, 30km at most out at sea, would provide Sydney with protection from storms.
At openings along the reef, wave power generators can be placed. Like tidal power, wave power can be calculated: mass displacement times gravity. If around 10km of the Sydney shoreline had wave power vessels, the maximum energy potential would be 3.2TWh.
In the mouths of the estuaries of Sydney Harbour and Botany Bay, freshwater meets saltwater. These places have a large potential to generate “blue energy” through reverse osmosis membrane technology.
To combine protective structures with tidal generating power, an open closure barrier is proposed for the mouth of Sydney Harbour. The large central gates need to be able to accommodate the entrance of large cruise ships and to close in times of a storm surge. At the same time, a tidal plant system operates at the sides of the barrier.
All these potential energy sources are integrated into our Master Plan for a Zero-Carbon Sydney. Each has led to design propositions that together can create a zero-carbon city.
The research shows there is enough, more than enough, potential reliable renewable energy to supply every household and industry in the region. What is needed is an awareness that Australia could be a global frontrunner in innovative energy policy, instead of a laggard.
Representatives from around the world are meeting in Bonn this week to discuss progress towards the goals of the Paris climate agreement. A large part of this challenge involves rapidly scaling up the deployment of renewable energy, while curbing fossil fuel use – but little attention has been paid to the minerals that will be needed to build these technologies.
Wind and solar infrastructure, batteries and electric vehicles all require vast amounts of mined (and recycled) resources. These range from copper for wires and electric motors, to lithium and cobalt for batteries, to smaller amounts of rare metals like indium and gallium for solar cells.
The problem is that the current system for mining these minerals is not always efficient; it’s polluting and is subject to increased social pressure and public protests. Instead, we need a new international mechanism to coordinate global mineral exploration that looks to our future supply needs.
Challenges for minerals supply
While the Paris agreement has created a global framework for managing carbon, nothing similar exists for minerals. This leaves the pursuit of sustainable resource development largely in the hands of mining companies and state-owned enterprises.
Mining these resources generates significant water and air pollution. This problem is increasing: for example, global copper ore quality is declining over time. That means that copper mining now requires excavating twice as much ore as ten years ago to yield the same amount of copper, creating much more mine waste.
Lack of investment in exploration is driven by short-term thinking, rather than a long-term plan to supply rising demand.
In parallel, resistance to mining, often at a local level, is increasing worldwide. Environmental catastrophes, of which there have been manyexamples, erode social trust, often delaying or stopping mine development.
A new global mechanism to more effectively plan resource supply could help rebuild trust in local communities, limit price spikes to ensure equitable access to metal resources, and balance the international tension which arises as industries and governments compete for minerals from a shrinking list of countries able to tolerate and profit from sustaining a mining industry.
The global community is well aware of the threat that rising sea levels pose to low-lying countries. We need similar awareness of the crucial role minerals are playing in the energy transition, and the risk that supply problems could derail sustainability goals.
To that end, we need to globally coordinate several crucial aspects of mineral development. To start with, while most detailed information on where minerals are mined and sold is privately held, there is publicly available data that could be used to predict possible imbalances in supply and demand internationally (for example copper, iron, lithium, indium). Publicly-funded institutions have an important role here. They can assess how known supply will meet future demand, and deliver insight into the changing environmental impact.
While recycling for for metals like lithium for less than 1%, around 40% of steel demand is met from scrap recycled during manufacturing and from end-of-life products and infrastructure. Thinking smarter about eventual dismantling of buildings at the time when they are built, can support better use of recycled resources.
Geoscience agencies already offer maps of underground minerals, demonstrating that this kind of co-ordinated perspective is feasible. Extending this approach to recyclables can mitigate environmental impact and ease the social objections to new mines.
A global mechanism for mineral exploration and supply could also be an opportunity to promote best-practice for responsible mining, with a focus on social license and fair and transparent royalty arrangements.
It’s a challenging proposition, especially as many countries display less enthusiasm for international agreements. However, it will be increasingly difficult to meet the Paris targets without tackling this problem.
In the decades ahead, our mineral supply will still need to double or triple to meet the demand for electric vehicles and other technologies required by our growing global population.
In short, resource efficiency and jobs of the future depend on an assured mineral supply. This should be a nonpartisan issue, across the global political spectrum.
The authors gratefully acknowledge the contribution of Edmund Nickless, Chair, New Activities Strategic Implementation Committee, International Union of Geological Sciences to this article.
Mention agriculture to many Australians and it conjures up images of mobs of cattle in the dusty outback, or harvesters gobbling up expanses of golden wheat. In reality, much of our high-value agriculture is near the coast, and close to capital cities. Think of the Adelaide Hills, the Lockyer Valley west of Brisbane, Victoria’s Gippsland region and Goulburn Valley, and Sydney’s Hawkesbury Valley.
These centres are where a lot of our agricultural processing happens – near big, eco-conscious populations ready to put their hands in their pockets for quality products.
But besides feeding us, farming can also potentially help us with the move towards cleaner energy. While it’s unclear how agriculture will factor into the federal government’s proposed National Energy Guarantee, it’s obvious that the farming sector can do plenty to reduce Australia’s emissions. An Industry Roadmap released this week by the Carbon Market Institute forecasts that by 2030 carbon farming will save the equivalent of 360-480 tonnes of carbon emissions, generate between A$10.8 billion and A$24 billion in revenue, and create 10,500-21,000 jobs.
One extremely promising area is turning agricultural waste and by-products into energy. This reduces emissions, makes farmers less vulnerable to variable energy prices, and adds value for consumers.
Using waste for energy
In Queensland and northern New South Wales, some sugar mills are making electricity by burning bagasse (sugarcane waste) as a biomass energy source. Other plants in Victoria, like Warrnambool Butter & Cheese, are using whey to produce biogas, thus reducing their spending on natural gas.
Other kinds of waste from viticulture and horticulture are also potentially useful. Even the trash produced when cotton lint fibres are removed from the seed is a largely untapped source of environmentally friendly energy.
The agricultural sector should be aiming to close the loop: to reclassify waste as a resource. Turning trash into treasure is a step towards energy independence, an idea that is gaining momentum overseas. An energy-independent farm seeks to cater for its own energy needs, creating a self-sustaining environment that buffers against fluctuating energy prices.
Australian farms should largely be able to achieve this. The trend towards renewable energy sources, and equipment that can run on biofuels, demonstrates an appetite for sensible, sustainable technology.
Biodiesel, wind and solar energy, and electricity and gas generated from biogas are being implemented globally. From an international perspective, farmers’ consideration for using or increasing renewable energy seems to be independent of the size of their operations but rather stem from their desire for farms to be energy-independent.
La Bellotta farm in Italy, a mixed-energy farm, is a prime example. It’s using a concept tractor powered by methane generated from on-farm waste.
Closer to home, Westpork, WA’s largest pork producer, is about to add wind power and battery storage to its existing solar arrays, and possibly biogas too, as part of a plan to go 100% renewable energy and slash production costs.
The National Farmers Federation is looking to the Government’s 2017 Review of Climate Policy to deliver policy settings that will enable the sector to remain competitive and grow production at the same time as meeting international obligations.
We particularly need policy to encourage investment in agriculture research. Climate-smart practices and technologies can simultaneously reduce emissions and improve productivity and profitability.
Meanwhile, improving the design of carbon-offset markets (like the federal government’s Emissions Reduction Fund) to make them more accessible to farmers could unlock the full carbon potential of Australian farms.
A recent report from Powering Agriculture, produced with international backing, showed that while food production across the world is increasing, the energy required for each unit of food is falling.
With Australia’s relatively small population, huge area and extreme temperatures, it’s hard to compare apples with apples, but the adoption of renewable energy in Australian agriculture is helping to make us look like more efficient food producers too.
Mixing renewable energy sources gives farmers a plausible path to becoming energy independent. Bioenergy, such as biogas, gives flexibility to intermittent power like solar and wind, while reducing waste and creating a home source of biofertiliser.
When you boil it down to basic science, food and fibre are just stored energy. Beyond the animals and crops farmers bring to market, the Australian agricultural sector produces massive amounts of energy – they just need the tools to monetise it.
The topic of Farm Energy Independence will be discussed at the upcoming TropAg Symposium.
Malcolm Turnbull’s government has been wrestling with the prospect of a clean energy target ever since Chief Scientist Alan Finkel recommended it in his review of Australia’s energy system. But economist Ross Garnaut has proposed a path out of the political quagmire: two clean energy targets instead of one.
Garnaut’s proposal is essentially a flexible emissions target that can be adapted to conditions in the electricity market. If electricity prices fail to fall as expected, a more lenient emissions trajectory would likely be pursued.
This proposal is an exercise in political pragmatism. If it can reassure both those who fear that rapid decarbonisation will increase energy prices, and those who argue we must reduce emissions at all costs, it represents a substantial improvement over the current state of deadlock.
Will two targets increase investor certainty?
At a recent Melbourne Economic Forum, Finkel pointed out that investors do not require absolute certainty to invest. After all, it is for accepting risks that they earn returns. If there was no risk to accept there would be no legitimate right to a return.
But Finkel also pointed out that investors value policy certainty and predictability. Without it, they require more handsome returns to compensate for the higher policy risks they have to absorb.
At first sight, having two possible emissions targets introduces yet another uncertainty (the emissions trajectory). But is that really the case? The industry is keenly aware of the political pressures that affect emissions reduction policy. If heavy reductions cause prices to rise further, there will be pressure to soften the trajectory.
Garnaut’s suggested approach anticipates this political reality and codifies it in a mechanism to determine how emissions trajectories will adjust to future prices. Contrary to first impressions, it increases policy certainty by providing clarity on how emissions policy should respond to conditions in the electricity market. This will promote the sort of policy certainty that the Finkel Review has sought to engender.
Could policymakers accept it?
Speaking of political realities, could this double target possibly accrue bipartisan support in a hopelessly divided parliament? Given Tony Abbott’s recent threat to cross the floor to vote against a clean energy target (bringing an unknown number of friends with him), the Coalition government has a strong incentive to find a compromise that both major parties can live with.
Turnbull and his energy minister, Josh Frydenberg, who we understand are keen to see Finkel’s proposals taken up, could do worse than put this new idea on the table. They have to negotiate with parliamentary colleagues whose primary concern is the impact of household electricity bills on voters, as well as those who won’t accept winding back our emissions targets.
Reassuringly, the government can point to some precedent. Garnaut’s proposal is novel in Australia’s climate policy debate, but is reasonably similar to excise taxes on fuel, which in some countries vary as a function of fuel prices. If fuel prices decline, excise taxes rise, and vice versa. In this way, governments can achieve policy objectives while protecting consumers from the price impacts of those objectives.
The devil’s in the detail
Of course, even without the various ideologies and vested interests in this debate, many details would remain to be worked out. How should baseline prices be established? What is the hurdle to justify a more rapid carbon-reduction trajectory? What if prices tick up again, after a more rapid decarbonisation trajectory has been adopted? And what if prices don’t decline from current levels: are we locking ourselves into a low-carbon-reduction trajectory?
These issues will need to be worked through progressively, but there is no obvious flaw that should deter further consideration. The fundamental idea is attractive, and it looks capable of ameliorating concerns that rapid cuts in emissions will lock in higher electricity prices.
For mine, I would not be at all surprised if prices decline sharply as we begin to decarbonise, such is the staggering rate of technology development and cost reductions in renewable energy. But I may of course be wrong. Garnaut’s proposal provides a mechanism to protect consumers if this turns out to be the case.
It seems that the one certainty about any clean energy target set by the present government is that it will not drive sufficient progress towards a clean, affordable, reliable energy future. At best, it will provide a safety net to ensure that some cleanish energy supply capacity is built.
Future federal governments will have to expand or complement any target set by this government, which is compromised by its need to pander to its rump. So a cleanish energy target will not provide investment certainty for a carbon-emitting power station unless extraordinary guarantees are provided. These would inevitably be challenged in parliament and in the courts.
Even then, the unstoppable evolution of our energy system would leave an inflexible baseload power station without a market for much of the electricity it could generate. Instead, we must rely on a cluster of other strategies to do the heavy lifting of driving our energy market forward.
The path forward
It’s clear that consumers large and small are increasingly investing “behind the meter” in renewable energy technology, smart management systems, energy efficiency and energy storage. In so doing, they are buying insurance against future uncertainty, capturing financial benefits, and reducing their climate impacts. They are being helped by a wide range of emerging businesses and new business models, and existing energy businesses that want to survive as the energy revolution rolls on.
The Australian Energy Market Operator (AEMO) is providing critically important information on what’s needed to deliver energy objectives. The recently established Energy Security Board will work to make sure that what’s needed is done – in one way or another. Other recommendations from the Finkel Review are also helping to stabilise the electricity situation.
State governments are setting their own renewable energy targets, based on the successful ACT government “contracts for difference” approach, discussed below. Victoria has even employed the architect of the ACT scheme, Simon Corbell. Local governments, groups of businesses and communities are developing consortia to invest in clean energy solutions using similar models.
Some see state-level actions as undermining the national approach and increasing uncertainty. I see them as examples of our multi-layered democratic system at work. Failure at one level provokes action at another.
State-level actions also reflect increasing energy diversity, and the increasing focus on distributed energy solutions. States recognise that they carry responsibilities for energy: indeed, the federal government often tries to blame states for energy failures.
There is increasing action at the network, retail and behind-the-meter levels, driven by business and communities. While national coordination is often desirable, mechanisms other than national government leadership can work to complement national action, to the extent it occurs.
Broader application of the ACT financing model
A key tool will be a shift away from the current RET model to the broader use of variations of the ACT’s contract for difference approach. The present RET model means that project developers depend on both the wholesale electricity price and the price of Large Generation Certificates (LGCs) for revenue. These are increasingly volatile and, over the long term, uncertain. In the past we have seen political interference and low RET targets drive “boom and bust” outcomes.
So, under the present RET model, any project developer faces significant risk, which makes financing more difficult and costly.
The ACT contract for difference approach applies a “market” approach by using a reverse auction, in which rival bidders compete to offer the desired service at lowest cost. It then locks in a stable price for the winners over an agreed period of time.
The approach reduces risk for the project developer, which cuts financing costs. It shifts cost risk (and opportunity) to whoever commits to buy the electricity or other service. The downside risk is fairly small when compared with the insurance of a long-term contract and the opportunity to capture savings if wholesale electricity prices increase.
The ACT government has benefited from this scheme as wholesale prices have risen. It also includes other requirements such as the creation of local jobs. This approach can be applied by agents other than governments, such as the consortium set up by the City of Melbourne.
For business and public sector consumers, the prospect of reasonably stable energy prices, with scope to benefit if wholesale prices rise and limited downside risk, is attractive in a time of uncertainty. For project developers, a stable long-term revenue stream improves project viability.
The approach can also potentially be applied to other aspects of energy service provision, such as demand response, grid stabilisation or energy efficiency. It can also be combined with the traditional “power purchase agreement” model, where the buyer of the energy guarantees a fixed price but the project developer carries the risk and opportunity of market price variations. It can also apply to part of a project’s output, to underpin it.
While sorting out wholesale markets is important, we need to remember that this is just part of the energy bill. Energy waste, network operations, retailing and pricing structures such as high fixed charges must also be addressed. Some useful steps are being taken, but much more work is needed.
In a new poll of the ESA Monash Forum of leading economists, a majority said that Finkel’s suggested Clean Energy Target was not necessarily a better option than previously suggested policies such as an emissions trading scheme. But many added that doing nothing would be worse still.
One of the Finkel Review’s major recommendations was a Clean Energy Target (CET). This is effectively an extension of the existing Renewable Energy Target to cover power generation which has a greenhouse gas emissions intensity below a defined hurdle. Such generation can sell certificates which electricity retailers (and directly connected large customers) will be required to buy.
The ESA Monash Forum panel was asked to consider whether this approach was “preferable” to an emission tax or cap and trade scheme. As usual, responses could range from strong disagreement to strong agreement with an option to neither agree nor disagree. Twenty-five members of the 53-member panel voted, and most added commentary to their response – you can see a summary of their verdicts below, and their detailed comments at the end of this article.
A headline result from the survey is that a large majority of the panel does not think the CET is preferable to a tax or cap and trade scheme. None strongly agreed that the CET was preferable, whereas 16 either disagreed or strongly disagreed, and four agreed.
Of the four who agreed, three provided commentary to their response. Stephen King preferred the CET on the grounds of its ease of implementation but otherwise would have preferred a tax or cap and trade scheme. Michael Knox agreed on the basis that the CET was preferable to the existing Renewable Energy Target. Harry Bloch unconditionally endorsed the CET.
Of the five who neither agreed nor disagreed, three commented and two of them (Paul Frijters and John Quiggin) said there was not much to distinguish a CET from a tax or cap and trade scheme. Warwick McKibbin, who disagreed with the proposition, nonetheless also suggested that the CET, tax and cap and trade scheme were comparably effective if applied only to the electricity sector.
However, closer examination of the comments suggests much greater sympathy with Finkel’s CET recommendation than the bare numbers indicate. Even for those who strongly disagreed that the CET was preferable, none suggested that proceeding with a CET would be worse than doing nothing. But eight (Stephen King, Harry Bloch, Alison Booth, Saul Eslake, Julie Toth, Flavio Menezes, Margaret Nowak and John Quiggin) commented that proceeding with the CET would be better than doing nothing. Interestingly none of these eight explained why they thought doing something was better than doing nothing. Does it reflect a desire for greater investment certainty or a conviction that reducing emissions from electricity production in Australia is important?
Seven respondents (Stephen King, Alison Booth, Saul Eslake, Julie Toth, Gigi Foster, Lin Crase and John Quiggin) alluded to the political constraints affecting the choice, of which several drew attention to Finkel’s own observations. None of these seven suggested that the political constraint invalidated proceeding with the CET.
Of the 19 economists who provided comments on their response, 16 thought a tax or cap and trade scheme better than a CET. Numbers were equally drawn (three each) as to whether a tax or cap and trade was better than the other, with the remaining 10 invariant between a tax or cap and trade.
My overall impression is that in judging Dr Finkel’s CET recommendation, most of the panel might agree with the proposition that the “the perfect is the enemy of the roughly acceptable”. I surmise that in a decade past, many members of the panel would have held out for greater perfection, but now they think prevarication is more cost than benefit, and it is better to move on and make the best of the cards that have been dealt.
In emissions reduction policy the mainstream advice from Australia’s economists has not been persuasive. But this is hardly unique to Australia, as the pervasiveness of regulatory approaches in other countries shows. Perhaps an unavoidably compromised policy that is nonetheless well executed may be better than a brilliant policy that is poorly executed. Even if they could not have been more persuasive in design, Australia’s economists should still have much that is useful to contribute in execution. Hopefully more can be drawn into it.