The thing I’ve found most fascinating about the responses to the Treasury’s ETS modelling released yesterday is how, all of a sudden, a pile of big coal’s biggest fans are agreeing with us that coal with geosequestration isn’t going to come cheap!
Malcolm Turnbull, for example, told the media yesterday that “The cost of carbon capture and storage is probably the biggest single assumption in this whole analysis… There is no full-blown demonstration plant employing carbon capture and storage so estimates of its costs are speculative.”
Well-known climate naysayer, Brian Fisher, writes in today’s Australian that “The Treasury’s assumptions on the capital cost of construction of a CCS-ready coal-fired power plant appear to be about half those estimated by well-qualified industry experts.”
What’s that? Those geosequestration advocates who have been telling us that renewables might be nice, but “clean coal” is nicer, have decided that it’s more important to try to prove the Treasury modelling wrong than to stand by their previous argument? Or are they just feeding the new climate scepticism – sure climate change exists, but it’s just too difficult to do anything about it…
They are right, of course. Even if geosequestration can be proven (which it hasn’t been), and even if it proves socially acceptable (which it hasn’t), and even if companies seeking to profit from burying carbon go ahead without a legislative promise from governments that they will be absolved of all future liability for leakage (for which there is no evidence), it ain’t gonna come cheap.
And here’s the rub – it’s already being overtaken by renewables. There are plenty of renewable energy technologies which are now or will be soon cheaper than Treasury’s extremely optimistic price projections for geosequestration.
The modelling evens itself out, though. While underestimating the cost and overestimating the potential of geosequestration, it overstimates the cost and underestimates the potential of renewables.
Treasury puts solar thermal costs at twice geothermal costs, which doesn’t match international evidence. They don’t model any rooftop PV at all – only concentrating PV power stations – even though major PV players are now saying they will achieve parity with coal in less than five years! Introduce a good feed-in tariff, and rooftop PV will boom here, as it has in Germany.
Bizarrely, Treasury puts black coal with CCS as cheaper than solar thermal power is now! And yet, somehow, even in the context of entrenched pro-coal bias, over a dozen large-scale solar thermal plants are in construction now, whereas not one single commercial CCS plant is actually being built. Solar thermal is booming, particularly in places like Spain and the southern USA, while CCS plans are falling over due to going over budget, over time, and simply not working.
The Prime Minister, meanwhile, is completely incoherent on renewable energy, as his interview with Kerry O’Brien last night demonstrated:
KERRY O’BRIEN: On the one hand the Treasury modelling appears to make a heroic assumption that science will have found a way to produce acceptably clean coal by 2020. But on the other hand it appears to ignore the impact of meeting 20 per cent renewable energy targets by 2020. Don’t both of those factors, or the absence of them, represent serious flaws in the Treasury modelling?
KEVIN RUDD: When you come to, for example, clean coal technology, CCS – carbon capture and storage, on which this Government has done a lot of work in recent times, with our proposal for a global carbon, capture and storage institute.
It’s quite clear from previous work that’s been done by the International energy agency, for example, both carbon price in the vicinity of $20 to $40 per tonne, that the use of clean coal technology becomes economically feasible. One of the reasons that we are doing this work through the global carbon capture and storage institute, is in fact to work out how governments and industry work together to close any financial gap in this very important, exciting and revolutionary technology.
The other part of your question was about renewable energy. Renewable energy, of course, is important for the future for this reason: that if you bring in renewables through a renewable energy target, what you do is bring forward a lot of investment in those new energy producers early on.”
Got that?
This exchange goes some way to explaining why the huge renewable energy sources of zero emissions energy are sidelined in the Treasury modelling, pushing the costs unnecessarily higher. And that’s before we even get to the tremendously understated (and cost-saving) energy efficiency opportunities which Brian Fisher bizarrely reckons “breach the laws of thermodynamics”. Presumably, the laws of conservation of energy mean that energy conservation is impossible, I guess.
In fact, on the energy side of the ledger, the analysis comes out looking deeply conservative and overstating the costs. On the other hand, the costs may be understated by the carbon colonialism inherent in the plan to get developing countries to do our dirty work and buy in well over half our emissions reductions! Evening it out, the costs are still vanishingly small, particularly when set next to the tremendous costs of failing to act.
What we are still missing, however, is any kind of analysis of the economic implications of meeting the real emissions targets that we need if we are to avoid catastrophic climate change – at least 40% cuts below 1990 levels by 2020, heading towards carbon neutrality as soon thereafter as feasible, with the bulk of emissions reductions being met at home (because there may not be many permits to buy on the international market if we’re all trying really hard to reduce emissions!). There is good reason to believe that, with the accelerated ‘learning’ that will be triggered by really stringent targets, the costs could actually be lower than with the mediocre targets.
I say it’s important to get that analysis done. And it is important, politically, so that we are open and accountable about the decisions we will make. As Richard Denniss of the Australia Institute told 7.30 last night “I think what we should be able to do today is draw a line under this concern with the economy and just start listening to the scientists.”
But, on another level, working out whether or not we can afford to reduce emissions enough to prevent catastrophic climate change is an exercise in futility. Because, when it comes down to it, if we don’t do it, we won’t have an economy…
2 Comments
Thanks Tim Hollo for publicising the reversal of position on CCS by Malcolm Turnbull, Brian Fisher and other supporters of fossil fuels. These people have also reversed their position on the validity of the macroeconomic computer models that were previously used by the big greenhouse gas emitters to argue that it would be too expensive to reduce Australia’s emissions substantially. Now, when the models give the “wrong” result, they are being labelled as invalid!
However, I have to inject a note of caution on several other points made by Tim.
Wind power is cheaper now than most international projections for the price of coal power with CCS, but solar thermal electricity and solar PV are still very expensive and that won’t change overnight.
We hope that the first (tiny: 1 MW) hot rock geothermal power station will commence operation in 2009 in South Australia and that the first large geothermal power station (500 MW) will be operating by 2015. Until then, we don’t really know what it will cost. However, it is much simpler than coal with CCS and so is likely to be much cheaper.
Kerry O’Brien was poorly advised, since some of the Treasury scenarios DO include the proposed expanded 20% Renewable Energy Target for 2020. What Kerry should have asked Rudd was “Why hasn’t this expanded RET been implemented? Why did the first Rudd budget allocate nothing for solar energy research from the new Energy Innovation fund when $100 million over 4 years was an election promise? Why was nothing allocated in the budget to solar, wind or bioenergy from the new Renewable Energy Fund of $500 million over 6 years? Why is money being allocated to CCS and not renewables?”
Thanks for the comment, Marco. I’m not sure where we disagree, I have to say!
Completely agree that wind is the cheapest option now. I was simply noting that the Treasury modelling reckons CCS will be cheaper than solar thermal and that geothermal will also be cheaper than solar thermal, neither of which is backed by the evidence.
Agree that O’Brien may have been poorly advised. However, that being the case, Rudd was pretty damn poorly advised, too! If MRET was factored in to some of the scenarios, as indeed it was, Rudd should have known that and told O’Brien that it was. End of story. And your proposed questions are excellent ones!