Australia’s boom in cheap renewables has destabilised the energy grid by destroying the business model of coal-fired power stations, and has also led to the doubling of electricity prices since the 2010s, undermining the viability of energy-intensive processing industries such as aluminum smelting.
This is all the legacy of the policy failures of the 2010s, and the lack of a stable market-based mechanism – an economy-wide carbon price or a National Energy Guarantee framework – that has deterred investment in clean, reliable and lower cost electricity.
Political failure has compounded the costs of Australia’s transition by undermining investor confidence.
But the result now is the mutiny on the rural flank of the Coalition by the rebel Nationals flexing the electoral muscle of quiet Australians in regional Queensland seats, and demanding more taxpayer-funded coal-fired power to protect the jobs of coal miners and manufacturing workers.
The state governments that have committed to net zero emissions by 2050 have created a de facto national target. What’s missing is the policy framework to turn aspiration into action in the least-cost, most efficient way, as a politically taboo carbon price or the NEG would do. Energy and Emissions Reduction minister Angus Taylor says that Australia will have a tech rather than tax-focused low-emissions strategy to take to the UN Climate Change Conference in Glasgow in November, and that a decision on a formal commitment to “net zero by 2050” target is pending a review into the cost.
Business Council CEO Jennifer Westacott rightly says that after a decade of political chaos, business needs more policy stability. Ms Westacott also suggests that the climate change bill of independent MP Zali Steggall would increase certainty by establishing a target and a timetable to get to net zero by 2050. Ms Steggall’s bill would establish rolling five-year emissions reduction plans to be overseen by an independent climate change commission.
But would a new bureaucracy do more than hand out subsidies and pump more unco-ordinated renewables into a more unstable grid? Would it assume responsibility for the Morrison government’s “technology road map” and guide investment in lower-emissions back-up generation, storage and carbon-capture solutions?
More importantly, in practice, will this result in diminishing returns? As The Australian Financial Review has warned, an explicit price on carbon would provide a market signal for business to invest in the lower-emissions technology that the Coalition’s technology plan would encourage.
Is it technically possible to get to a zero-emissions electricity system on renewables and batteries alone? Or, as an industry super fund-backed analysis of the pathway to modernising the grid suggests, does nuclear power need to be part of the mix to guarantee baseload power when all the nation’s coal-fired power stations are shuttered?
The political uncertainty in Canberra is only one of the questions hanging over how Australia might get to net zero emissions by 2050 in the most efficient and least costly way.