Earlier today, Scott Morrison announced that the government would provide support for new coal-fired power stations “where they meet all the requirements” of yet-to-be determined mechanisms to boost investment in new electricity generation.
This has the usual hyperventilators … hyperventilating. (They’re all over Twitter. No need to clog your life with their caterwauling here.)
The Guardian goes on to say that Morrison told reporters the investment mechanisms would be technology neutral, but when asked about an ongoing push by the Nationals for new coal-fired power stations, he said they could be part of the mix “where it stacks up” and “where it meets all the requirements”.
“We’re for lower electricity prices and for people generating more reliable power in Australia. We don’t take positions on the source of the fuel.”
What is technology neutral?
Technology neutral is the dream of coal and gas generators. It means that government intrusion into the market won’t favour one technological solution over another; instead, the solution that wins will be the one that meets certain criteria because the rules of the game won’t favour any one ‘solution’. Power providers will live or die on what they deliver, not whom they please.
In the current environment that means a preference for price and reliability over sustainability.
As the ACCC has noted often, an energy system should be sustainable, affordable and reliable. The bad news? You only get to choose two. At this stage, you can’t have all three.
Morrison knows this is a big deal. This afternoon he released another Twitter video:
You asked about how we're getting electricity prices down.
Here's my answer. pic.twitter.com/LFrxFLcLpR
— Scott Morrison (@ScottMorrisonMP) October 23, 2018
The discarded creator of the NEG, Kerry Schott, spoke at a conference today and was quoted in Fairfax:
The federal government’s top energy adviser Kerry Schott says the plunging cost of renewables will force Australia’s remaining coal plants to close even earlier than planned, as mining giant BHP renewed calls for a price on carbon to urgently slash national emissions.
This is hardly a surprise. BHP has virtually no coal investments.
On the other hand, BHP has a lot of oil and gas assets. This is pure self interest. Always follow the money.
Speaking at the same conference, BHP head of sustainability and climate change Fiona Wild said the company accepted the latest findings of the Intergovernmental Panel on Climate Change that the “warming of the climate is unequivocal, the human influence is clear and physical impacts are unavoidable”.
This is simply not true. it’s shorthand, though, and easily quoted without the need to be supported. Such claims have been well tackled on virtually every page at Watts Up With That. Make sure you read Climate and the Hysterical And Confused Media.
Energy Security Board chair Dr Schott on Monday predicted that renewables would force many of Australia’s remaining coal-fired power plants to make an early exit from the energy market, by beating them on price.
This is great. When it happens. If it happens. But it needs to meet the criteria we set for it. Including reliability. Until then, we are being sold a bucket of bull. We are sold it because people like Alex Turnbull – who now has a huge megaphone – are easily quoted in the media and can be used to bash the Liberals. That’s a two-fer for Turnbull: his views on climate support the prevailing media orthodoxy as well as the political orthodoxy.
Expect to see a lot of more of Turnbull.
When you talk win-win, you’re talking China.
China understands market forces better than we do. The Chinese authorities also understand the value of a dollar. Perhaps it is our comparative wealth which means we think we can avoid market fundamentals and buy our way out of any mess we tread in. We can’t. It’s a lesson we should learn from China.
Yes, this involves Wentworth
First, back to Wentworth.
One of the great intrusions in the campaign was Alex Turnbull, the young buck of the Turnbull clan.
When he’s not tormenting the party that made his father PM, he’s a fund manager in Singapore.
In fact, he says he’s returned to that. We’ll see.
His specialty is renewables and low carbon energy. You might think this means he analyses financials and the like.
Not so. That’s what it sounds like, but renewables is more like farming. But instead of farming animals or produce, you farm subsidies.
This is because when proponents of clean energy say that renewables are competitive with coal and other traditional energy sources, they never include the asterisk. The asterisk says “competitive with lotsa government subsidies”.
Subsidies are popular with the green lobby. Keep that in mind while you are reminded that China is held out as the prime example of a major economies ‘investing’ in renewables.
China fools the gullible greens
Renewable proponents love China because China says all the right things about supporting renewables. China talks a big game.
In September, Bloomberg reported that:
China is stepping up its push into renewable energy, proposing higher green power consumption targets and penalising those who fail to meet those goals to help fund government subsidies to producers.
The world’s biggest energy consumer is aiming for renewables to account for at least 35 per cent of electricity consumption by 2030, according to a revised draft plan from the National Development & Reform Commission seen by Bloomberg. Previously, the government has only set a goal for “non-fossil fuels” to make up 20 percent of energy use by 2030 …
In recent years, China has pumped more money into renewable energy than any other country, leaving the government with a hefty subsidy bill.
Oh. That’s a problem. You see, China doesn’t like hefty bills, which is why they’re changed course.
That might come as a surprise because it wasn’t reported very widely, was it?
Follow the money
There is good news and bad news for the likes of young Alex Turnbull coming out of China.
The good news is that China is encouraging renewable manufacturers and developers to drive down costs through technological innovations and economies of scale. this is how it should be (depending on the form encouragement takes).
The bad news is that the subsidies are grinding to a halt.
There are two reasons. Again, there’s good and bad news.
The good news for Alex is that there’s a lot of solar and wind energy.
The bad news is that there’s a lot of solar and wind energy.
This creates pressure on electricity grids. Grids like steady energy flows, not peaks and troughs, so even though the energy is there it needs to be there when there’s demand. Solar and wind doesn’t work that way. Yet.
A such, the more renewables you have in the system at a subsidised price, the more pressure it puts on the baseload power generators. Typically, these are coal fired. At the moment, baseload is either coal, gas or nuclear. If the renewables subsidies are too great and, say, coal can’t compete, then you have to pay for them to remain in business.
Essentially, you are paying the coal ower to compete against the subsidised renewables.
This is great if you want to feel good about your energy source. Bad if you’re running an energy grid that needs to be reliable and globally competitive. And you’re the government writing the cheques. Sorry, if you’re the taxpayer paying the tax that goes to the government to support two industries competing against each other.
See the problem?
There are more.
The really bad news for renewables supporters is that China hasn’t stopped building coal-fired power stations. This has enormous global implications.
Do as I say, not as I do
Never listen to what politicians say. Watch what they do. Especially in China, which has restarted coal-fired projects that had been put on hold.
Oh … that might come as a surprise.
Approximately 46.7 gigawatts of new and restarted coal-fired power construction has been spotted through satellite imagery. In other words, not officially reported. The coal-fired power plants are either already generating power or will soon be operational, increasing China’s coal-fired power capacity by 4 per cent. So not a lot, really. Unless you look at what this represents.
If you’re keeping score at home, 47 Gw is about exactly all of Australia’s generating capacity in 2017. Kind of puts a lot of things into perspective, doesn’t it?
Coal consumption in China has also increased 3.1 percent in the first half of 2018 compared with the same period last year due primarily to coal-fired generation.
The result was that electricity consumption increased 9.4 per cent during that period. This is good news for the global coal market, especially Australia. Even though China isn’t our biggest customer, Chinese demand provides baseline demand for global coal. It props up the price.
And these power stations will be around for decades, and Australia’s coal mines can produce for generations (geddit?)
Industrialisation on China’s scale needs reliable, affordable energy. Sustainability? Not so much. You don’t lift millions out of poverty with ‘feels’. China knows this.
Lessons for Australia
If Australia fell into the sea tomorrow and all our emissions ceased, China’s new generation capacity would soon replace all our emissions in a heartbeat. This has been known for at least a decade but is rarely admitted to. If you accept this, it makes any cuts to Australia’s emissions futile. An empty gesture.
Even Alan Finkel agrees.
Yes, it would be a nice gesture if we cut our emissions and ‘did our bit’ and became ‘good global citiziens’, but until the catastrophists can explain how our cut of two-fifths of bugger all can compensate for the epic growth in Chinese emissions, they are not seeking environmental ends. They are seeking ideological ones.
And in the case of some of the most vocal proponents of renewables, they are pursuing financial ends.