No-coal not the only option for Latrobe Valley
Gavin Lind, Executive Director, Minerals Council of Australia – Victorian Division
Ongoing talk about the potential decarbonisation – code for ‘coal-free’ – of Australia’s electricity sector is seemingly dominating political and media debate about climate change.
Green activists present this ‘transition’ as inevitable, and the only way to reduce Australia’s greenhouse gas emissions. To them, it’s also a chance to kick-start a new clean energy industry, full of new jobs, new business opportunities and new investment.
They also contend that concerns about energy security, reliability and affordability – and the flow-on impacts to existing jobs and industries – are unfounded.
The facts show otherwise.
And the reality for people on the ground, particularly those in energy-intensive and regional industries, such as manufacturing, agriculture (particularly dairy) and mining is very different.
The energy reality
The reality is that coal-fired generation is, and will continue to be, the most reliable and affordable electricity source in Victoria and across Australia. Coal is the country´s principal source of base load power and underpins our energy security.
Currently there is no other fuel, traditional or otherwise, that can perform this lynchpin role in the power generation mix. Pushing out coal will just risk jobs, investment and opportunity. It also prevents regional communities, such as in Gippsland, from taking advantage of their natural assets.
On cost alone, the argument for coal’s central role in the power generation mix is unequivocal.
The cost of building and running wind power averages between $80 and $120 per megawatt hour. Solar costs a staggering $300 per megawatt hour. This compares with the running and maintenance costs of $38 per megawatt hour for an existing coal plant.
Consumers may also not be aware of the cost of Australia’s Renewable Energy Target (RET). The likely cost of building new wind turbines and solar installation is about $22 billion in direct costs to 2030, met by around $24 billion in subsidies from taxpayers.
For large businesses, the cost of government schemes through subsidies and feed-in tariffs can be as much as 20 per cent of their total power bill.
This does not account for the cost of state-based, duplicative schemes, such as the Victorian Renewable Energy Target (VRET) auction scheme. The Victorian Government intends to pass on the cost of subsiding construction of new renewable generation under the scheme to consumers.
Furthermore, once almost unheard off in Australia, security of supply has also recently become a talking point.
Look at our neighbours in South Australia. On average, wind generation accounts for about 40 per cent of energy generation in South Australia. On a gusty day, wind could supply up to 100 per cent of demand. However when there is no wind, or ironically too much wind, supply could fall to zero. That leaves South Australia largely dependent on Victoria and other states in the National Electricity Market (NEM) to meet their demand.
With the closure of Hazelwood power station end-March 2017, it is also possible that Victoria will, at times, become a net importer of electricity. This would be a remarkable turnaround.
The case for low emissions coal technologies
The minerals industry supports Australia’s contribution to a genuinely global effort to address climate change. While ambitious, Australia’s proposed national 2030 emissions reduction target of 26 to 28 per cent off 2005 levels is credible and appropriate.
However this will not be without cost, especially for those in trade-exposed and energy-intensive industries.
Governments must, therefore, deliver Australia’s national target through sensible, transparent and coordinated policies that focus on emissions reductions rather than favouring particular technologies, such as solar and wind, at the expense of others.
Claims that you can’t have coal-fired generation and reduce emissions at the same time are simply not true.
Proven high efficiency, low emission (HELE) technology is already helping countries achieve their emission reduction targets. These plants play a central role of many country’s strategies under Nationally Determined Contributions made under the UN Framework Convention for Climate Change agreement in Paris.
Superefficient brown coal plants are planned, or are already delivering low cost baseload energy around the world, including Germany, Poland the United States and Thailand.
In Germany, for example, the Neurath F and G brown-coal fired electricity generators have two 1100MW units with a net thermal efficiency of greater than 40 per cent.
The new units were opened in 2012 and actively assist Germany in reducing emissions while providing reliable baseload power. State-of-the-art technology allows each unit to increase its output within 15 minutes to help offset intermittent renewable energy.
Canada’s Boundary Dam also shows the applicability of carbon capture and storage (CCS) technologies. By retrofitting HELE and CSS technologies to its ageing brown coal power plant, Boundary Dam has reduced emissions by about 90 per cent – one million tonnes per annum or the equivalent of taking around 250,000 cars off the road.
Furthermore, improving the global average efficiency rate of coal–fired power plants from 33 per cent to 40 per cent, together with HELE technology, would reduce CO2 emissions by 2 gigatonnes a year; the equivalent of India’s current emissions.
A vision for future generations
Imposing higher energy costs simply to support favoured part-time energy generation technologies is not fair on Victorian, and Australian, households and businesses.
And it risks the future of trade-exposed and energy-intensive businesses, from family-run dairy farms to smelters and manufacturers.
There is an alternate path. For governments, taking a technology-neutral approach to achieve emissions targets would be a sensible strategy. By removing ideology and requiring all low emissions technologies to compete on their merits, governments would ensure that climate targets are achieved at the lowest cost to consumers and minimise impacts on jobs and investment.
Taking such an approach would take vision and leadership. But it is not impossible.
Doing so would also enable the full potential of Latrobe Valley’s vast coal resources, some of the largest and most cost-effective in the world, and energy infrastructure to be properly considered.
The best part? These new technologies will provide jobs and use the skills that already exist in the Latrobe Valley.
GAVIN Lind is Executive Director of the Victorian Division of the Minerals Council of Australia. Gavin is a mining engineer with early career experience in both the deep level gold mines and underground coal mines in his native South Africa. He holds a PhD from Witwatersrand in South Africa. He was formerly Director, Education and Training for the MCA’s policy development and advocacy on careers, vocational education and training, higher education, workforce skills and participation.