Consultant Dan
19 July 2011
The Clean Energy Future carbon price package is good for large-scale solar in Australia
This was published today by Climate Spectator.
Droll comedian Stephen Wright had a joke about a dog he named ‘Stay’. He would go to the park and yell out, ‘Come here, Stay! Come here, Stay!’
There are other, more astute explanations of why sunny Australia fails to invest in its solar competitive advantage, but the come/stay joke gets to the core of it.
For 30 years, successive Governments have praised Australia’s solar innovators at the same time as preventing their commercial success and driving them offshore. Both conservative and Labor Prime Ministers have talked about wanting clean energy but remained loyal to dirty coal.
Bob Hawke’s consensus to nowhere
The extent of our cultural cringe against eco-innovation was first revealed over the course of the Ecologically Sustainable Development process. Who remembers ESD, which Labor Prime Minister Bob Hawke kicked off in 1989?
Hawke convened ESD to advise Government, through consensus, what Australia’s greenhouse gas commitments should be, in the lead up to the 1992 Rio Earth Summit (UNCED). The Earth Summit wrote the foundation treaty of international climate law, the UN Framework Convention on Climate Change (UNFCCC).
ESD Working Groups were established, with members chosen from the public service, research community, business, unions and NGOs (primarily Greenpeace, Australian Conservation Foundation and WWF). The Working Groups debated how to save the world without pushing the stop button on the global economy. The purpose was to cut through the tired old frame of Jobs v Environment and find a new, cleantech BAU to replace pollution-as-usual.
The consensus that emerged during the ESD Working Group conversation was relatively radical. Even the polluters had to concede that it should be possible to achieve economic growth through the substitution of ecological unsustainable industries with ecologically sustainable ones. 500 recommendations were made and passed to the public service via the National Greenhouse Steering Committee and 37 inter-governmental committees, where they went MIA.
With hindsight, the Hawke Government’s embracing of ESD and commitment to the UNFCCC, whatever the political circumstances and motivations, was farsighted. But Hawke’s leadership waned in the face of short-termism, in particular from the coal industry, mining union, aluminium lobby, conservative think-tanks and cowardly politicians. Australia failed to set credible greenhouse targets for Rio and we threw away our valuable lead in solar PV technology.
The rest, as they say, is history; the mining sector behaves like it runs the country, our solar innovators all go offshore to make their millions and billions, our per capita pollution is just about the worst in the world, our electricity sector is based on geriatric technology and completely exposed to the carbon cost risks that were already staring us squarely in the face in 1992.
A Greenhouse Mafia?
Large industries have an important role to play in contributing to Government policy, but Australia’s fossil fuel sector has dangerous and disproportionate influence with both Liberal and Labor Governments and the public service. Australian government has developed a mentality that energy is something that you dig up from a big hole in the ground. It has had trouble hearing the more intelligent, scientific paradigm of ecology, which teaches us that free, harvestable, inherently sustainable energy is all around us.
So the test is whether our unions and Government will learn from past lack of commitment, and this time get on board a train that our major trading partners boarded years ago. Failure to do that will condemn current union, business and Government leadership to a legacy that will surely be assessed harshly by our children and grandchildren.
Former Liberal advisor Guy Pearse documented our problem in ‘High and Dry’. Pearse argued that Canberra has been carbon captured by the big polluters and is thus unable to respond to climate imperative. Left-wing commentator Dr Clive Hamilton’s ‘Scortcher’ tells a similar story, of a Greenhouse Mafia that run Canberra for private gain.
Martin Ferguson, our current Minister for Energy and Resources, was a key player in the ESD politics. Ferguson seems to have formed his strong views about the green movement around the time of the ESD process. His approach is a classic example of ‘paradigm’ thinking. He sees a real economy of steel and coal and jobs for working class men and imagines that the alternative is an idealistic, green fantasy.
Setting the new agenda
As the ink was drying on the Clean Energy Future (CEF) deal, Minister Ferguson hosted, and to his credit remained for the whole duration of, a Large Scale Solar Deployment Roundtable (Canberra, 8 July 2011). The Roundtable was held to listen to solar technology companies, construction firms, developers and others who, seeing the opportunities, have put their money where their mouth is and invested in large scale PV and solar thermal industries.
This Roundtable was always going to be controversial and difficult. It was held as the result of a commitment made by the Government to the Australian Greens, in return for passing the flood levy package earlier this year. When the Greens passed the flood levy, they won $100 million for Solar Flagships and a roundtable, where the solar thermal and solar PV industries could explain their frustration with the Flagships program and other policies for large scale solar power.
More than over 200 businesses attended. Media who were told they could attend had this withdrawn and so it was a closed meeting. I would love to reveal the names of some of the companies who attended, but suffice to say that it was all the giants in the burgeoning global renewables industry and the companies associated with that growth. You can download the presentations made during the morning sessions.
What the industry asked for at the Roundtable is the same as it has always asked for, which is a clear policy framework that encourages the sector to grow sustainably.
The Department of Resources, Energy and Tourism (DRET) did everything it could to be loyal to its Minister but the morning’s papers had revealed that the Clean Energy Future (CEF) package takes all the renewables funding from the Department and puts it in the new Australian Renewable Energy Authority (ARENA).
Prime Minister Gillard has agreed to establish a new public service authority, at arms length from the Minister, to build solar and other renewable energy (RE) and energy efficiency (EE) industries. This one move is perhaps the boldest indicator of the shifting political economy in Australia and lays to rest the ghosts of Bob Hawke’s failed ESD experiment. It is one of a suite of clever, detailed measures to protect solar from the Greenhouse Mafia, which were designed largely by Greens Deputy Leader, Senator Christine Milne and her senior energy advisor Oliver Woldring.
Getting the cost projections right for solar
One of the first tasks for ARENA will be to commission accurate cost projections for solar technologies. The current figures used by government agencies come from a paper commissioned from a nuclear and coal think-tank in the USA (Electric Power Research Institute) by DRET’s predecessor DEWHA in 2008.
The think-tank’s figures were overly optimistic about nuclear and fossil fuel technologies and pessimistic about solar, yet this is the data set endorsed by DRET and the Minister and thus the whole of government. For example, the Productivity Commission advised the Multi-Party Climate Change Committee (MPCCC) that the cost of emissions reduction achieved via solar PV is $432–1043/tonne CO2. According to the Australian PV Association, the figure is more like $90-95/t CO2.
DRET’s discussion paper for the Roundtable stated that solar thermal’s cost as LCOE will be $220-730/MWh in 2015. A survey of various cost projections by Patrick Hearps and Dylan McConnell for the Garnaut Review this year found that the band of costs in authoritative studies is more like $150-270 /MWh.
Your correspondent distributed a briefing note at the Roundtable, which contrasted the Hearps and McConnell survey to the DRET paper.
At the CSP Today USA Conference this month, SENER was confident that it could deliver solar thermal power tower for less than USD100/MWh before 2020.
So what should large scale solar and other renewable firms be advocating for now?
As Ross Garnaut said in his Review, there is ‘a general economic case for exceptionally large fiscal support for firms that invest in research, development and commercialisation of new low-emissions technologies in the world as a whole and in Australia, through a transitional period.’ (Garnaut Climate Change Review – Update 2011 Update Paper seven: Low-emissions technology and the innovation challenge, p.8)
The energy industry measures in the CEF have been carefully designed to bring about this transition, buildilng a bridge across the commercialization ‘valley of death’, which Giles Parkinson has often written about here.
Ross Garnaut says that Australia’s contribution to low emissions technology support should be $2-3 billion per annum. The Clean Energy Council and other industry associations should now start lobbying for renewables funding to be increased, by taking subsidies from the old, fossil-fuel industries.
History is rapidly proving the Greenhouse Mafia wrong. Science and technology have their own momentum, outpacing and foiling the prejudices of ideology. Humanity is leaving the fossil fuel era and entering the ‘Solar Age’. The Solar Age was coined by the physicist Fritjof Capra in The Turning Point (1983) to encompass not just solar panels and solar thermal, but the whole range of ecologically sustainable forms of production.
The solar industry believes the Clean Energy Future package represents a genuine opportunity to get the settings right for large scale solar power development to deliver major economic benefits in Australia’s 21st century energy mix. The Clean Energy Finance Corporation in particular has the potential to deliver sustainable solutions to address market failures relating to sharing of of technology risk and revenue volatility that are the fundamental blockers to large scale solar power in Australia.
Those toxic cost projections used by government to assess solar technology must be reviewed immediately, using the latest international experience and research. False projections are polluting the national debate and frequently repeated by the Murdoch press, in its disinformation campaign against renewable energy and a carbon price.
Let’s hope that our solar innovators and developers have enough faith in their country to work here now and help turn ESD into BAU.
Thanks Peter!
Its good to know that there are people out there, reading and thinking.
Great article Dan – thanks!
Did you notice this from Mayor Bloomberg in NYC? http://thinkprogress.org/romm/2011/07/21/275378/mayor-bloomberg-sierra-coal-plants-kill-people-and-harm-our-kids/
I appreciate your support, Guy.
That Bloomberg donation is wonderful news! I did not know about it, thanks for sharing.
RSS
Excellent commentary Dan!