Wind turbines have got Canberra in a spin this week, with hearings underway from the senate inquiry into wind turbines and their possible health impacts. The committee yesterday released an interim report from chair John Madigan with seven recommendations to increase regulation around the wind industry.
A dissenting report from Labor senator Anne Urquhart questioned the political timing of the report.
Meanwhile, a leaked email from environment minister Greg Hunt has offered crossbench senators a “wind farm commissioner” in return for support for the passage of renewable energy legislation.
But behind the politics, how do the report’s recommendations stack up?
The interim report’s recommendations include:
a scientific committee to look into industrial sound
the drafting of national infrasound and noise measures
the development of National Wind Farm Guidelines for planning
making wind’s accreditation under the Renewable Energy Target (RET) dependent on adherance to guidelines and measures (old projects would have five years to comply)
a national ombudsman to handle complaints
a levy on wind farms to fund the scientific committee and ombudsman
data to be made freely and publicly available.
If implemented, these rigorous and extensive recommendations will create wide-ranging monitoring, compliance and review obligations. They are likely to produce a strong national health review framework for the sector. They will, however, also alter the operational dynamics of the industry. This has the potential to affect market progression.
Wind energy accounts for almost a quarter of Australia’s clean energy generation. Investment in wind has the capacity to return fuel savings that significantly outweigh the initial investment cost over the lifetime of the purchase.
This, combined with technological innovations and market subsidies such as the RET, has given the sector a reasonable degree of market force. Fostering wind energy has been crucial for the creation of a greater energy mix in response to growing climate change imperatives.
Health impacts compared
The Senate committee noted that it was “concerned” that the health consequences of wind turbines, in particular, dizziness, nausea, migraine, high blood pressure, tinnitus, chronic sleep deprivation and depression, had been ignored or derided. But how do these compare to other energy industries?
The health consequences of the fossil fuel industry have been ignored for many years. On any comparison, it is unfair to focus exclusively on the health implications of wind turbines and, at the same time, ignore the health implications of other forms of energy production.
Global energy demand is increasing with world energy consumption expected to increase 56% by 2040. Mitigating climate change demands a shift to renewable energy. Subjecting wind energy to a forensic degree of health regulation and ignoring the health risks of other (renewable and non-renewable) forms of energy production is disproportionate. It is unfair.
In Victoria, the Hazelwood Coal Fire Inquiry has been reopened, given the enormity of the health consequences associated with the coal fire last year.
Some of these very serious health issues: respiratory conditions such as asthma and bronchitis, long-term chronic health affects from pollutants including carbon monoxide, oxides of nitrogen and sulphur, and the longer term chronic health effects if the coal undergoes significant distillation and produces measurable amounts of toxic hydrocarbons such as benzene, toluene, xylene, and polycyclic aromatic hydrocarbons.
The likelihood of escalating chronic health conditions and an increase in mortality rates occurring as a consequence of the coal fire is significant. Whilst the coal fire is a catastrophic event rather than an ordinary consequence of the generation of coal-fired electricity, it nevertheless represents an example of the risks associated with the generation of fossil fuel energy.
Compared to the recommendations by the senate committee on wind turbines, the recommendations from the Hazelwood Coal Fire Inquiry were relatively tame. The Victorian government made A$25.4 million available to fund a range of initiatives that include:
a long-term health study in the Latrobe Valley
new air quality equipment to be used by the Environmental Protection Agency, which can be deployed across the state
a boost to the mine regulator’s capacity to assess and monitor mine planning for fire prevention, mitigation and suppression
development of the state smoke framework.
There was no recommendation to appoint a coal ombudsman or to create an Independent Expert Scientific Review of the Health Impacts of the Coal Industry which would be funded by the imposition of a coal levy.
Things are a little different in the gas sector. There has been significant review and regulatory development for coal seam gas extraction at both the state and the federal level.
However, the recommendations proposed have largely centred around the management of resource conflict, environmental assessment and risk allocation. The actual health impacts of coal seam gas extraction upon residents have not been the subject of review in either Queensland or New South Wales.
Indeed, the 2014 Chief Scientists report on coal seam gas (CSG) in New South Wales expressly omitted an examination of the health implications of CSG extraction.
This is despite the fact that toxins in CSG produced water include such volatile organic compounds as benzene, methane, heavy metals and radioactive materials and exposure can potentially have an enormous impact upon the respiratory, endocrine, nervous and cardiovascular systems, can affect foetal development in pregnant woman and may cause cancer.
The health risks of the wind industry need to be reviewed in balance with other social, environmental and economic factors. This is exactly what has occurred in the context of the numerous reviews and reports prepared for CSG across the country. The extraction and production of many forms of energy have health impacts.
A spotlight focus on the health implications of one sector in the absence of context and sector comparability, lacks balance and perspective.
The Australian wind industry is one of the most rapidly growing renewable energy markets given improved technology, relatively low operating costs and minimal environmental impacts. The Bureau of Resources and Energy Economics (BREE) has predicted that onshore wind and solar will eventually have the lowest cost of electricity of all the renewable options in Australia leading up to 2030.
Despite this, the wind industry remains highly susceptible to cognitive barriers; the recommendations and proposals of the Senate Committee are likely to exacerbate this.
Australia, like much of the rest of the world, is in the midst of an energy transition. With falling electricity demand and the uptake of household solar panels in just under 1.4 million homes, the most important question is not whether this transition is happening, but how we manage it to maximise the benefit to all Australians.
Community energy is one of the answers. Community energy projects are those in which a community comes together to develop, deliver and benefit from sustainable energy. They can involve energy supply projects such as renewable energy installations and storage, and energy reduction projects such as energy efficiency and demand management. Community energy can even include community-based approaches to selling or distributing energy.
Community energy projects allow individuals to be involved in clean energy beyond the bounds of their own homes or businesses and in so doing bring a range of benefits and opportunities for their household and for the wider community.
Community energy has and continues to underpin the energy transition in countries like Germany, Denmark, the United Kingdom and even the United States. The first modern wind turbine – Tvindkraft – was literally built by a community in Denmark in 1978.
In Germany, 47% of the installed capacity is owned by citizens and communities while in Scotland there are now 249 community energy projects.
Here in Australia, while the community energy sector is still new, a recent baseline assessment found that there are now 19 operating community energy projects, which have as of the end of 2014 generated 50,000 megawatt-hours of clean energy – enough to power more than 9,000 homes. The community energy sector has already contributed more than A$23 million in funding for sustainable energy infrastructure.
Some prominent examples of community energy in Australia include:
the international award-winning Hepburn Wind in Victoria – Australia’s first community wind farm;
Denmark Community Wind in Western Australia – Australia’s second community wind farm;
Repower Shoalhaven – a community-owned 100-kilowatt solar array on the Shoalhaven Heads bowling club on the New South Wales south coast;
Darebin Solar Savers in Melbourne – a project that saw the Moreland Energy Foundation put solar on the roofs of 300 pensioners, who use the savings to pay back the cost of the system through their council rates;
several donation-funded community solar projects on community buildings across Victoria, NSW and South Australia.
Starting with solar
There are more than 60 groups across every state and territory in Australia developing community energy projects. The most popular are community solar projects.
While it’s clear that Australians love solar, there are more structural reasons why communities are starting with community solar projects.
Firstly, solar’s “scalability” means it can be easily tailored to a community’s energy needs. Groups can start with small projects and build their capacity and know-how.
Secondly, Australia has high retail electricity prices and low wholesale electricity prices. This means that business models such as community solar tend to stack up much better if they can reduce energy consumed at the meter, rather than competing with large coal-fired power generators in the wholesale market.
Indeed, the Coalition for Community Energy has recently released a guide to “behind the meter” models of community solar.
However, while many communities are starting with solar, many have more lofty ambitions, including the Zero Net Energy Town project in Uralla, NSW, the 100% Renewable Yackandandah initiative in Victoria, community bioenergy projects in Cowra and northern NSW, and many more.
This ambition and the potential of community energy in Australia led the Australian Renewable Energy Agency (ARENA) to fund the development of a National Community Energy Strategy, led by the Institute of Sustainable Futures at University of Technology, Sydney. This outlines a range of initiatives that are needed to grow the community energy sector in Australia and maximise the potential benefit of the energy transition to all communities.
Community energy projects are disruptive business models with financial and social value. The motivations for community energy are many and varied including wanting to act on climate change, wanting to reduce the amount of money that goes out of a community in power bills, and increasing social capital and community resilience.
We are starting to see the rise of community entrepreneurs innovating and developing new models, and in doing so reshaping the future of energy in their communities. With the support mechanisms outlined in the National Strategy, there is no reason that Australia can’t follow in the footsteps of other countries, to allow all communities across Australia to benefit socially and financially from the energy transition.
Earlier this week the Grattan Institute released the report Sundown, sunrise: how Australia can finally get solar power right. It looked at the cost of solar subsides and explored emerging challenges and opportunities for solar power to “find its place in the sun”, and generated widespread reports of its headline figure, that the cost of solar photovoltaic take-up has outweighed the benefits by almost A$10 billion dollars.
That figure (A$9.7 billion, to be precise) was generated by comparing the benefits of greenhouse emission reductions from solar, against the capital and maintenance costs. The first part of this calculation is therefore dependent on the assumed carbon price of A$30 a tonne, which gives a total benefit to society of A$2 billion by 2030.
But why A$30 per tonne? And what is the actual cost of carbon emissions?
The real cost of carbon
One metric commonly used is the “social cost of carbon”. This is an estimate of the economic damages from the emission of one extra unit of carbon dioxide (or equivalent). There is a huge range and debate about what the social cost of carbon really is.
Earlier this year, a paper in Nature Climate Change estimated the social cost of carbon to be US$220 per tonne. This significantly changes the cost benefit analysis.
Last year, Nicholas Stern and Simon Dietz updated their internationally renowned model, finding that a carbon price between US$32 and US$103 was required today to avoid more than 2C of warming, (rising to between US$82-260 in 2035).
Other work suggests that should global greenhouse mitigation continue to be delayed, a carbon price of US$40 per tonne of CO2-equivalent would reduce the probability of limiting global warming to 2C by only 10–35%.
The Grattan report argued that “subsidies are expensive and inefficient”, but arbitrarily used a A$30 per tonne cost, significantly underestimating the most important subsidy: the fact that polluters are allowed to emit carbon dioxide for free.
While the choice of carbon price and costs significantly changes the calculus, looking only at the emissions and avoided generation really misses the point of the support mechanisms in the first place.
Why do we have renewable energy support mechanisms?
The Grattan report concludes that “Australia could have reduced its emissions for much less money”.
This is undeniably true. As the report points out, the federal government’s Emissions Reduction Fund has purchased emissions abatement at an average price of A$13.95 per tonne, and the Warburton review estimated the cost of the large-scale Renewable Energy Target to be A$32 per tonne up until 2030.
However, the objective of renewable energy policy is not solely for cheap and efficient emissions reductions. In fact, the objectives within the legislation of the renewable energy target are to:
- encourage the additional generation of electricity;
- reduce emissions of greenhouse gases;
- ensure that renewable energy sources are sustainable.
It is not particularly fair to assess a support mechanism against objectives it was not designed to achieve. Only assessing the efficacy of the renewable energy target against emissions abatement efficiency misses an important component of renewable energy support policy: industry development.
Market mechanisms, such as carbon pricing, are widely acknowledged to be the most efficient method to reduce emissions. However, they are not sufficient by themselves and do not address other market failures.
In fact this is something that the Grattan Institute itself previously reported on in a previous report, Building the bridge: a practical plan for a low-cost, low-emissions energy future, which said:
Governments must address these market failures, beyond putting
a price on carbon
…in order to develop, demonstrate and deploy the technologies that are likely to be lowest cost in the longer time frame of meeting the climate change targets, further government action is essential.
As indicated, deployment policies are an essential policy to tool to develop the renewable energy industry, and ensure the lowest cost in the long term. Typically, in the context of renewable energy deployment policies sit between R&D on one hand, and pure market mechanism (such as carbon pricing) for mature technologies on the other.
Such deployment policies are essential to enable learning-by-doing and realising economies of scale. The cost reductions enabled by this simply cannot be developed in the lab, or be captured in the market by individual companies (due to knowledge and technology spillovers and other similar positive externalities).
The cost of reducing emissions
The report concludes that solar schemes have reduced emissions at a cost of A$175 per tonne to 2030. This figure has been derived by using the net present costs and for the emissions abated to 2030, which includes the capital cost of older and significantly more expensive systems.
If carbon costs were price at A$220 per tonne, the cost of abatement becomes negative, that is, a saving.
An alternative measure looks at the subsidy paid today. Households are currently purchasing solar systems subsidised by the RET at rate of approximately A$0.80 per watt installed, while receiving cost-reflective (unsubsidised) feed-in tariffs. Over an expected 25 year life, and an average grid carbon intensity of 0.85 tonnes per megawatt hour, the cost of abatement would be approximately A$28 per tonne.
Comparing this with the cost of abatement only a few years ago (in the order of several hundred dollars per tonne), the support mechanisms look very successful in delivering on objectives of industry development, and delivering cost reductions.
Most would agree that some renewable policies have previously been poorly implemented, and the Grattan report is right in highlighting these. However measuring their costs against objectives they were not intended to achieve is unfair.
The simple cost benefit analysis fails to incorporate all benefits of renewable energy support policy, and underestimates the avoided costs of carbon emissions.