Australia can’t lose in the global race for cheaper, cleaner energy

Paul Graham, CSIRO

Despite our sometimes heated national debate about our energy future, Australia is well positioned to benefit from innovative low emission technologies. No matter which avenue we take to cleaner energy, our energy-rich resources means there are opportunities for Australian businesses – and cheaper energy for Australian consumers.

That’s the conclusion reached by CSIRO in our Low Emissions Technology Roadmap, which outlines potential pathways for the energy sector to contribute to Australia’s emissions reduction target.

Our target under the Paris climate agreement calls for a 26-28% reduction of emissions by 2030 from 2005 levels. Our analysis also considers how the energy sector could meet the more ambitious aspiration of avoiding 1.5-2℃ global warming.

Looking past the political wrangling

Perhaps one of the reasons the energy debate in Australia is so vehement is that, with the exception of oil, we are rich in energy resources. While we cannot wait indefinitely, the lack of resource constraints means we can monitor and test what options emerge as the most cost effective. Technology neutrality is often called upon as a key policy design principle.

Another reason for caution is that technological change is inherently unpredictable. For example, at the start of this century, few would have expected solar photovoltaics to be one of the lowest cost sources of electricity. Current expectations of sourcing cost-effective bulk electricity storage would have seemed even less likely at the time.

However, there are two key choices that will determine how we reduce greenhouse gases, and the shape of our energy future.

First, we must decide how much weight we give to improving energy productivity, versus decarbonising our energy supply. This is essentially a policy decision: should we use our existing energy more intelligently and efficiently in our buildings, industries and transport, or aggressively pursue new technology?

Whatever strategy we pick, we also need to choose what technology we emphasise: dispatchable power, from flexible and responsive energy generation, or variable renewable energy (from sources like solar, wind and wave), supported with storage.

From these choices four pathways are derived: Energy productivity plus, Variable renewable energy, Dispatchable power and Unconstrained.

There are four broad pathways to cheaper, cleaner energy. (Click to view larger image.)

Our electricity market modelling found the different pathways lead to comparable household electricity bills. High energy productivity scenarios tend to delay generation investment and reduce energy use, leading to slightly lower bills in 2030 (including the cost of high efficiency equipment).

Weighing risk

The main attribute that separates the pathways is the mix of risks they face. We’ve grouped risks into three categories: technology, commercial and market risk, social licence risk and stakeholder coordination risk.

Risks identified with each pathway to cheaper renewable energy. (Click to view larger image.)

Energy productivity plus combines mature existing low emissions technology with gas, so there’s no significant market risk. However there is a social license risk, as many will protest a stronger reliance on expanding gas supplies.

Gas-fired generation is high in this scenario. If improved energy productivity reduces emissions elsewhere, the electricity sector will have less pressure to phase out highly polluting generators.

This scenario would also require a high degree of cooperation between government, companies and customers. We would need to coordinate, to make sure incentives and programs work together to bring down household and business energy use.

Variable renewable energy invites more technical and commercial risk, as our electricity grid will need to be transformed to accept a high level of energy from fluctuating sources like wind. There’s also considerable community concern around the reliability of variable renewables.

While the evolution towards a secure system with very high variable renewable generation has been modelled in detail for the Roadmap, its final costs will remain uncertain until demonstrated at scale. Whether stakeholders will have the appetite to demonstrate such a system (with some risk to supply security and electricity prices) represents a coordination risk for this pathway.

Dispatchable power is perhaps the most risky option. Solar thermal, geothermal, carbon capture and storage and nuclear power are all relatively new to Australia (although other countries have explored them further). Developing them here will mean taking some technological and commercial gambles.

Carbon capture and storage and nuclear power are also deeply unpopular, and there’s a risk of dividing community consensus even further.

While solar thermal – and potentially nuclear power – could be deployed as small modules, in general the technologies in this category require high up-front capital investment. These projects may need strong government guarantees to achieve financing.

Unconstrained would mean both improving energy productivity and investing in a wide range of generation options: solar, efficient fossil fuels and carbon capture and storage.

Unfortunately there is no objective way of weighing the risks of one pathway against another. However, we can narrow risks over time through research, development and demonstration.

Between now and 2030 we are likely to rely on a narrow set of mature technologies to reduce greenhouse gases: solar photovoltaics, wind, natural gas and storage.

The ConversationAs the world, and Australia’s, greenhouse gas reduction targets ramp up after 2030, we’ll be well positioned to adapt, with the capacity to incorporate a broader range of options.

Paul Graham, Chief economist, CSIRO energy, CSIRO

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


Want to see the business case for green energy? Just look at China

John Mathews and Hao Tan, University of Newcastle

The narrative around renewable energy sources is typically framed almost entirely in terms of their contribution to reducing carbon emissions and thereby providing a means to tackle climate change. From this perspective, the drive for renewables is inseparably linked to international negotiations over reducing carbon emissions, which will come to a head at the United Nations summit in Paris towards the end of this year.

But this framing of the story struggles to explain the rise of China as the world’s renewables superpower. It is investing more in renewable energy production and manufacturing of renewable energy devices than any other country. Is China making these huge investments – not to mention launching a national emissions trading scheme – purely to accommodate the world’s desire to see carbon emissions reduced?

This is the question that we address in our new book, China’s Renewable Energy Revolution, published this month.

Our argument is that China is motivated by much more immediate concerns. Because of the dominant role played by coal in its rise as the world’s largest manufacturing economy, China suffers from catastrophic air pollution, particularly the toxic mix of tiny particulate matter that penetrates deep into the lungs of people breathing the air of Beijing, Tianjin, or other major industrial cities. The issue has prompted anger and social agitation, with the public demanding that environmental laws be enforced. (See, for example, the explosive impact of the documentary Under the Dome, by investigative journalist Chai Jing.)

Yet the real problem for China in continuing on a “business as usual” pathway is that it would become increasingly dependent on imports of coal, oil and gas – and therefore grow more vulnerable to price fluctuations and sudden interruptions to supply. More pointedly, as a relative newcomer to the global fossil fuel market, China is forced to locate supplies from more and more unstable parts of the world, putting it at financial risk from war, revolution and terrorism even in distant lands.

These concerns over energy security, and the immediate issue of air pollution, are in our view likely to be weighing more heavily on the Chinese leadership than concerns about climate change.

New paths to growth

Our view is that China is running into the limits of a predominantly fossil-fuelled expansion and now needs to find a new development pathway based on green growth and clean technology. This, we argue, is what lies behind its vast investments in renewables.

In per capita terms, China is of course not yet abreast of the developed countries in its overall energy consumption or its renewable energy use. But this is not evidence that China is going “light” on renewables; on the contrary, as a rising middle-level power, it still has plenty of room to grow its already large renewable energy industries.

Solar energy looks like having a bright future in China.
Reuters/William Hong

Even though per capita use is still modest, the absolute size of the renewables investment in China allows new industries to scale up, which in turn leads to lower costs as efficiencies are captured. Through the principle of circular and cumulative causation, this leads to further market expansion and further cost reductions. The cost reductions then create opportunities for countries in the rest of the world to become involved in renewable energy as well.

China is already on the record in viewing its clean technology sectors as key drivers of future prosperity and export platforms. The 12th Five-Year Plan, which ends this year, set out the comprehensive goals for China’s economic development. It featured seven Strategic Emerging Industries (SEIs) that were earmarked for special promotion, including three industries closely related to the burgeoning energy transition: energy saving and environment protection; new energy sources; and new-energy-powered cars.

The plan laid out a target that production value-added from these seven SEIs should reach 8% of China’s gross domestic product (GDP) by 2015. This target has since been raised to reach 15% of GDP in 2020. There could be no clearer demonstration of how China views the link between building energy security, improving environmental protection and creating the export platforms of tomorrow.

There’s a lot of financial mileage in battery-powered cars.
Reuters/Stringer China

China’s green business case

As we see it, China has a lot more riding on its renewables revolution than (just) climate change concerns. Important as these are, it is a profoundly convenient truth that the more China builds its export platforms around renewables, smart energy grids, and clean transport technologies such as fast rail and electric vehicles, the more it drives down its own carbon emissions and the costs of these clean technologies for everyone else.

The lesson for industrialised countries such as Australia is that renewables do not have to be framed solely as an issue of climate change and its mitigation. In keeping with the new emphasis of the Turnbull government on a 21st-century agenda, with the focus on tackling the challenges and seizing the opportunities created by industries of the future (such as renewables) rather than sticking with those of the past (coal), it is the business case that needs to be made.

China has shown very clearly that renewables make excellent business sense in the 21st century. Now it is up to Australian leaders, such as the new energy minister, Josh Frydenberg, and assistant innovation minister, Wyatt Roy, to act on the same understanding and help build – finally – a great renewables industry in Australia.

The Conversation

John Mathews, Professor of Strategic Management, Macquarie Graduate School of Management and Hao Tan, Senior Lecturer, Faculty of Business and Law, University of Newcastle

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

Earth Hour 2012: Tonight

The link below is to an article on Earth Hour 2012, which is being held tonight. The article below includes a history of the event, which is now a global movement for ‘change.’ However, just how much change is brought about by Earth Hour is still a matter of debate. There seems to be more of an emphasis on going beyond the hour this time round, which is a far better way of drawing awareness to the need of green energy for the future and the major issue of climate change that is facing the planet. If the event is to is bring lasting change, we need to move beyond the hour as just a fun thing to do and actually bring about change to the way we live our lives the world over. There is a long way to go, as can be seen with the great difficulty of reaching any useful agreements on CO2 emission reductions and the like. Hopefully awareness can bring about real change through this event.

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