Coal-ition in delusional denial on electricity

IN THE past fortnight I have been reminded of Comical Ali, Iraq’s former information minister Mohammad Saeed al-Sahhaf , whose broadcasts and media conferences denied the presence of US troops and tanks in Baghdad even as they could be seen behind him. The delusional in denial. What reminded me of him, of course, were all the climate change deniers spouting their nonsense while high-temperature records were broken and bushfires raged across the country.

The US tanks are in Baghdad. The climate has already changed.

But still they want to open new coal mines and build new coal-fired power stations.

How do you explain it? Perhaps we are looking at these people the wrong way. We assume that they do not think climate change is happening, therefore it is fine to continue to mine and burn coal. But it seems to me that it is the other way around. They first want to continue to make money by mining and burning coal (or receive donations from those who do) and therefore they must deny that climate change is happening, even in the face of overwhelming evidence and the appalling economic and health costs.

We have seen it before. People wanting to make money by selling tobacco have to deny that it causes lung cancer, even in the face of overwhelming evidence.

Unfortunately, therefore, it does not matter if, climate change aside, there are other reasons for stopping the mining and burning of coal. Those too, will be ignored.

This is what we have seen recently. There are solid reasons based on economics and energy technology for stopping the mining and burning of coal for electricity generation. But this government is ignoring the obvious.

Let’s look at technology. We have an existing technology that seems to work quite well. Let’s call it coal, or taxis, or hotels, or vinyl records, or CDs or books. Then something comes along which delivers to consumers what they want more efficiently and cheaper.

Usually governments play a role. They have regulatory regimes, taxes and other mechanisms which usually help the status quo against the newcomer, at least for a while. But invariably the new technology wins. Horse and buggy gives way to car. CDs, tapes and vinyl give way to MP3. Coal power stations give way to solar, wind and batteries.

So it is going to happen, and these things have a history of happening very rapidly. Battery technology will become cheaper and more effective. And governments need to deal with it.

But the Coalition (let’s call it the Coal-ition) has gone backwards, starting in late 2016 when it ruled out a carbon-intensity trading scheme for electricity generation, against the advice of the Chief Scientist, just because then Coal-ition Senator Cory Bernardi said it was “economic suicide”. In fact, not implementing it would be economic suicide.

Cow-towing to Bernardi has proven to be futile, now he has left the Coal-ition.

Compare this to the good sense put out by then Environment Minister Greg Hunt in 2015 when he said, “Australia has the highest rate of household solar in the world. This makes Australia an ideal place to develop storage and battery technology.”

In fact, Australia has 1.6 million Australian households with rooftop solar already installed and most of them say they intend to install battery storage.

They are saying this for several reasons. Electricity is very expensive in Australia and looks like it is going to get more expensive. Many have a moral conviction that we should reduce carbon emissions. Further, like all humans they like getting something for free.

Once the capital equipment is installed, the sun and wind are free. So it is quite galling to see the paltry amounts electricity generators pay for household-generated surplus electricity, at least outside the ACT.

How much better to store that excess and use it later, perhaps even to charge the electric car and cut fuel bills.

The market and technology are all pointing one direction and it is not down a publicly subsidised railway line to coal mine or to a coal-fired power station.

But if you start from a position “I want coal” (or to use a US analogy “I want a gun”) no rational economic or health-and-safety argument has a chance.

And that is where we are with electricity generation in Australia at present – as mad and irrational as Americans with their guns.

This Government is allowing Australia to fall behind on technology and exposing us to trade sanctions if we do not meet our Paris targets.

There is a further point about the Government not embracing and encouraging battery technology. People will go it alone if necessary as the financial case for household batteries gets inevitably stronger. If that happens government will lose what should become a very important grid-security mechanism.

With government regulation and incentives you can ensure that household battery systems are open to the grid, not just the excess off the roof after the batteries are fully charged, but a full-scale system of households selling some or all of the power in their batteries at times of peak demand.

In the long run that is going to be a far cheaper and easier way of easing the strain on the grid than using coal.

Ultimately, real energy security can only come through renewables. Financiers and business realise this. This week they joined environmentalists in crying out for sensible energy policies. Even without those policies, financiers are not going to put long-term money into a technology that will be priced out of the market.

So the question for our politicians is not, childlike, to go vermillion in the face (Barnaby Joyce) or, stuntlike, to bring a lump of coal into the parliamentary chamber (Scott Morrison). But to deal with the market. Coalition Governments are supposed to be masters of the market. But on renewable energy they are dunces.

Footnote: Our rooftop solar system is now four years old and has generated 25,000 kilowatt hours of electricity worth about $7000. The system cost $9000. We thought it would take nine years to pay for itself, allowing for forgone interest and lower prices for power sent back to the grid. But with the rising cost of electricity it now looks like it will be less than six years.
CRISPIN HULL
This column first appeared in The Canberra Times and Fairfax Media on 18 February 2017.