Conservative politics ... a mining-renewables matchmaker?

The times are now right for a renewables leap of faith in the mining sector, and conservative governments are perfectly placed to lead the way.

A little over a week ago I sat in the audience of the All Energy Conference listening to the finance and investment session by Rob Macalister from Gulf Savannah Development, a Queensland-based NGO whose charter it is to facilitate the development of energy across the northern part of Queensland. As I did this I could not help but think that both the renewable energy sector and the conservative governments at both state and federal level might not be missing a trick here.

Macalister outlined in his talk some of the familiar problems faced by developing remote parts of Northern Australia, the tyranny of distance associated with linking in to the grid in Townsville and Cairns, some 700-800km away, supplying reliable power to assist in the exploitation of mining resources as well as threats to diesel supply chains in the wet season. What he also mentioned is that a lot of these mining projects are still awaiting approval from the state government.

Rather than exempt mining companies from the national renewable energy target, the state government could mandate that all new mines in North Queensland will only be approved for development if they are powered by a minimum 20 per cent renewable energy. This would be in line with the national target and also create a huge market for the technology that would benefit not only the country, but also leave a lasting positive legacy for the region.

With the right sort of policy settings at a state and federal level this could be done at no cost to the state government, provide a helping hand to Greg Hunt’s 5 per cent emissions reduction target and a boom for the renewable energy sector that would then trickle through to the rest of the economy.

One of the points Macalister raised in his talk at the All Energy Conference was that “the significant costs associated with diesel transportation and the impacts on road infrastructure is one of the factors that must be considered in assessing any new mineral developments”.

While the heavy vehicle road user charge is meant to cover the costs of maintaining these roads, by reducing their diesel transportation load by 20 per cent and sourcing that power from renewables it should, at the very least, be cost neutral from a state government perspective. Having lived a good part of my life in North Queensland I have seen first-hand the damage that heavy vehicles cause to roads especially in the wet season. Indeed, as Macalister's comments indicate, a case could be made that the state government may even come out slightly ahead if they were to take pressure off this more susceptible part of the road network allowing them to deploy the road user charges upgrading other parts of the highway system.

Strategically, it fits very well with Tony Abbott’s plan to develop the northern part of Australia by stimulating new industries and job growth, creating a set of market conditions that could unleash a wave of innovation and productivity gains that could enhance the nation’s prosperity and leave a lasting legacy of sustainable power infrastructure for the region.

At the mining company level there would also be significant benefits to such a policy – given the good wind and solar resources in the region along with the high cost of diesel there are already significant economic drivers pushing them in this direction anyway. Once they are forced to dip their toe in the water they might find out – like the one in five other Queenslanders who source their power from PV cells – that it isn’t actually that unreliable and is very competitive with the cost of diesel.

There are also longer term economic factors from the national perspective that must be considered here. While we in the renewable energy sector might all bang on about how good it will be for the planet if this technology gets deployed, the mining sector must also realise that it is in their long term economic interest to deploy this technology too, have it come down the cost curve and make their regional operations more profitable.

If they are going to continue to gamble against a global carbon price, rely on increasingly expensive diesel or hope that state governments will run wires to the middle of Cape York every time somebody discovers copper, then the high costs of doing business in Australia that they complain of are only going to get worse. One of the other policy options available to oil the wheels of the transition, while it may not be popular with all readers, could be to provide tax incentives for the deployment of renewable energy technology systems above 5 MWh.

Even without any government intervention there have already been some success stories for the region with Infigen being given development consent for the proposed installation of the Forsayth wind farm with an expected installed capacity of 60 to 70MW – comprising around 20 to 30 wind turbines, a substation, access tracks and an electrical collection system of underground and overhead cables. One of the only wind farm developments not to receive a single community objection as part of the planning process.

Unfortunately, as with the tragedy of the commons scenario so frequently discussed in the context of climate change, no individual mining company will want to pay for the innovation needed. But perhaps with the right policy settings an outcome can be achieved that will benefit not just the sector, but the country as well.

What we need are those true conservative values of a policy that encourages taking responsibility for yourself in a way that spurs on economic regional development, only time will tell if Campbell Newman and Tony Abbott are up to the task.

Matt Grantham is a radio presenter, political comedian and contributor at Beyond Zero Emissions.