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Not Even Dutton Can Save Coal

Written by:

Michael Bones

5 February 2019

#Divestment#Ethical Investing#Activism

We’ve spent the past decade watching politicians squabble for the top job like seagulls scrapping for chips.

Since 2007, Australia hasn’t had a prime minister stick around for a full-term.

This time it’s Dutton vs Turnbull. Before now the tussle was between Turnbull and Abbott. And who can forget the double back-stabbery of the Rudd-Gillard-Rudd saga.

The leadership debacle is beyond frustrating. Particularly when we keep returning to the same flashpoint - climate and energy.

Climate and energy are so important they should be beyond political playthings, and yet here we are...again.

The Liberal party backbench has already vetoed the best policies for making energy more affordable, reliable and sustainable. Not satisfied with scraping the bottom-of-the-barrel, they’ve torpedoed their own national energy guarantee in a last ditch effort to lash Australia to coal.

Despite all this, I’m still optimistic.

Here’s why.

Even Dutton Can’t Stop Clean Power

“Australia’s power sector is rapidly reorienting itself based on the economics of clean energy.” Kobad Bhavnagri, Head of Bloomberg New Energy Finance Australia

Every year, the energy investment experts at Bloomberg New Energy Finance make long-term forecasts for Australia’s power market.

Far from being tree-hugging greenies, these hard-nosed energy finance analysts base their projections on rigorous technical and financial data. And not even Dutton will be able to change the direction of these forces.

The recent 2018 New Energy Outlook (NEO) report contains some insanely positive news on the growth of renewable energy.

Coal generation will fall 99% as cheap renewables and storage power the future grid. Batteries are being hailed as “the final nail in the coffin for Australia’s coal-fired power stations”.

It’s worth keeping in mind that Bloomberg’s analysis is based on the assumption that Australia has no change in energy policy that helps renewables, and that our national emissions reduction ambition remains low.

Even with low ambition and no policy change, by 2030 power sector emissions will enter rapid decline. In 2050, it will be almost three times cheaper to install new renewable energy than to keep existing coal plants going.

Bloomberg predicts that Australia’s energy mix will be completely transformed by 2050. Coal generation will fall 99% as cheap renewables and storage power the future grid. Batteries are being hailed as “the final nail in the coffin for Australia’s coal-fired power stations”. Based on current trends alone, renewable energy is projected to generate 92% of electricity in 2050.

The key findings from this year’s energy forecast for Australia are:

  • Wind, solar, batteries and pumped hydro replace retiring coal: Renewable capacity grows sixfold as utility and small-scale solar surge to 75GW, and wind to 48GW in 2050, whilst battery storage capacity grows to at least 27GW in 2050, with the vast majority (23GW) installed by households and businesses behind-the-meter.

  • Large amounts of affordable renewables undermine the business case for building new coal: Coal sees capacity fall 98% to just 0.4GW in 2050. A total of 23 coal plants should reach the end of their asset life, but only 1 is partially life-extended. Right now NEO estimates that existing coal can be refurbished for around US$57/MWh, new low-cost solar can be built for US$48/MWh and low-cost wind for US$44/MWh. By 2050 the costs of new low-cost solar and wind will fall to US$20/MWh to US$21/MWh, while the cost of refurbishing coal will remain around US$56/MWh.

  • Reliability through diversity: Despite the loss of coal, the system maintains reliable supply as pumped hydro (assuming Snowy 2.0 is constructed), batteries, gas and demand response are all added to support the uptake of variable wind and solar. Australia’s vast land mass also means that geographically dispersed wind and solar can provide relatively stable supply.

  • Nearly half of all capacity is located behind-the-meter in 2050: Together with demand response, behind-the-meter PV and storage will make up 44% of total power capacity in Australia in 2050. The solar capacity on household and business premises will supply more energy than coal in 2035, and nearly one quarter of Australia’s energy needs in 2050.

  • The future of transport is electric: By 2050, electric vehicles make up around 76% of all new car sales in Australia, and 75% of the total car fleet. Some 47 TWh (14%) of national electricity production will be used to charge EV batteries.

  • The power sector is on track to meet government emissions target: The above factors result in power sector emissions falling 28% below 2005 levels by 2030 on a business-as-usual basis, without further policy. But if the Paris Agreement 1.5 degree ambition is to be upheld, Australia will need to pledge a deeper emissions reduction target than this, and in practice, the power sector needs to do more of the heavy lifting. With no change to business as usual, Bloomberg sees power sector emissions in steep decline from 2030, to 72% below 2005 levels by 2040, and 94% below by 2050.

  • Renewables dominate: Renewables overtake fossil fuels as the major source of energy generation in Australia in 2031, and supply 92% of the total in 2050. Renewables and storage make up 87% of all new capacity additions to 2050, representing a US$138 billion investment opportunity.

In summary, renewable energy and battery storage are going to smash the fossil fuel industry, particularly coal and oil. But is it too little, too late?

For those of us concerned about a liveable planet, 2030 is too late for deep cuts to power sector emissions. 100% renewable power by 2030 is entirely possible and completely necessary for Australia to uphold its global responsibility to rein in runaway warming.

The exciting thing is that we don’t have to wait for the federal government to ramp up its renewable efforts.

States like the ACT, Victoria and Queensland have strong renewable ambitions, and are supporting clean energy with policy initiatives. And there’s a great way that Australians can contribute meaningfully to climate solutions with very little effort...

Investing in Renewables

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Just 7.7% of super could get Australia to 100% renewable power by 2030, and yet most funds are nowhere near that.

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Politicians will keep treating our votes like a greasy potato snack to peck at.

But they don't have the last say. 

We do.

And we can vote for a renewable future everyday.

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