Big Coal’s fight to the death with renewables

Coal, coal, coal, coal, coal, coal, coal … how the Australian Coal Association’s RET Review submission really should have read. Instead, its commentary is riddled with errors, inconsistencies and a giddy sense of entitlement.

A closer look at the Australian Coal Association's bemusing submission to the renewable energy target review...

Market manipulation is unacceptable… unless it suits coal

The initial focus of the Australian Coal Association's submission to the RET review is on letting the market do its work, while the government supports R&D.

“The RET effectively picks winners in the form of mature and expensive renewable technologies, instead of supporting R&D and motivating market players to commercialise the most efficient low emissions technologies,” the industry body’s submission reads.

Commercialise the most efficient low emissions technology? Like carbon capture and storage, for example?

“Carbon capture and storage is essential to reducing emissions from the use of fossil fuels – including both coal and gas – yet it is discriminated against by the RET and other complementary measures such as the Clean Energy Finance Corporation,” its submission reads.

This is the same carbon capture and storage that many years and many billions of dollars after being claimed the great hope for governments to reduce emissions, has yet to get close to being commercially viable.

The market is not to be touched, according to the ACA. Yet, it continues to push for more government support for CCS so that the technology can transform the energy sector. A delicious dose of irony.

Interestingly, according to recollections from Climate Spectator Editor Tristan Edis, the Coal Association was offered the opportunity back in 2006 to lobby jointly with the renewable sector to expand the renewable energy target, but amend it so power generation with carbon capture and storage would be eligible. But it declined, believing the sector could continue to get direct budgetary support solely for CCS, and avoid having to compete with renewable energy.

Hot air

“In theory, at least, [the RET] allows all renewable energy technologies to compete for the market established by the scheme. In practice however, it mandates the deployment of costly, mature technologies, notably wind, rather than supporting R&D for all low emissions technologies and leaving the market to deploy the most efficient options,” the ACA contends.

“… The expanded RET has had the effect of bringing forward investment dominated by wind due to its cost advantage relative to other available renewable technologies.”

Later on the ACA adds that, “Moreover, all low emission technology solutions will be costly.”

So wind has a cost advantage against all other clean techs yet it is a costly, mature technology that should be avoided? Meanwhile, we should plough our funds into ‘more efficient’ low emissions tech that need R&D and are more expensive than wind. And we should focus on these despite their lack of market readiness and the fact they will be “costly”.

Does anyone read this before it is sent?

If you want cost efficiency in a renewable energy scheme – as the ACA contends must be achieved – surely you must focus on the cheapest clean tech (wind). Not on tech that is still in the R&D phase.

Perhaps the ACA craves R&D over deployment because it slows progress toward a clean economy? Indeed it sets it back many years.

All products go through a five-point life cycle, from the development phase (R&D), to introduction, growth, maturity and finally, decline. At the R&D phase the product isn’t even available to the market. During introduction the cost is high (think computers, plasma TVs and mobile phones back in their infancy). And it is only through the growth stage (and beyond) – when competitors start to jostle and economies of scale come into effect – that prices start to fall.

Wind is likely in the late growth stage and its cost has fallen dramatically – so far that it is now cost-competitive with coal in some regions. It is forecast by the government’s Bureau of Resources and Energy Economics to be the cheapest electricity source in Australia come 2020.

In other words, the RET is working to encourage the development of the most cost-effective renewable energy option: wind power. This was largely expected when the legislation was introduced, although there were forecasts indicating geothermal would play a sizeable role – which is now a forlorn hope.

Levelised cost of electricity in New South Wales (2012). Source: BREE.

Forecast levelised cost of electricity in New South Wales (2020). Source: BREE.

What was the review about again?

The most bemusing aspect of the organisation’s recommendations was the focus on urging changes to the carbon pricing scheme and Clean Energy Finance Corporation (see: page 4 and pages 16-20). The Climate Change Authority is assessing the renewable energy target, not climate policy as a whole. The six pages dedicated to carbon policy outside the RET is largely a waste of the CCA’s time.

Never let the review guidelines get in the way of a good rant.

It’s all about coal

The last sentence says all you need to know about the submission: “[Energy market] reform should have regard to Australia’s comparative advantage in fossil fuel, its underpinning of Australia’s base load power supply for the foreseeable future and the need to adopt a principled framework to ensure the reforms yield outcomes that are of net benefit to Australia in the context of the growth and investment prospects for coal mining activities.” [emphasis added]

That is the final thing the industry body leaves the CCA to get its head around.

Any reforms of our crucial energy market must be made for the net benefit of coal mining activities. Not for the net benefit of the people, nor the country, nor the world. Instead it must take into account first and foremost the coal sector. Indeed, if the ACA gets its way, Australian politicians will eternally be asking themselves: ‘what would Big Coal do?’

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles