Archive for November, 2010

Blown away

The wind farm sector will be looking askance at its prospects in Victoria after the Brumby ALP government appears to have been blown away by a voter backlash in Melbourne’s south-eastern suburbs in the State election on 27 November.

Wind farmers, via the Clean Energy Council, took the unusual step (for an industry association) of intervening in the election campaign by advertising in support of the ALP’s policies and against those of Opposition leader Ted Baillieu, claiming they would put between 50 per cent and 70 per cent of proposed wind farm projects in jeopardy.

The CEC said election of the Coalition would threaten the construction of 3,000 megawatts of wind generation and the creation of 650 new jobs each year between now and 2016.

CEC chief executive Matthew Warren said: “There’s no doubt that substantial wind farm investment and jobs will immediately leave Victoria if the Coalition’s current policies are adopted.”

A report commissioned by the CEC from Carbon Market Economics claimed that capital expenditure on wind generation would drop by $2.6 billion under a Coalition government, resulting in a loss of 2,000 gigawatt hours of renewable energy production in 2016.

The consultants said the Coalition policy would make wind farms more expensive to develop in Victoria

Announcing the campaign, Warren said Baillieu had singled out wind farming for attention, proposing standards that would make it tougher to put up a wind turbine in Victoria than to undertake a new coal mine. Victoria already had some of the world’s toughest wind farm developments, he said.

While the Victorian election result has yet to be announced formally, official polling results on Sunday night (28 November) indicated the Liberal and National coalition would hold 45 seats in the Legislative Assembly to the ALP’s 43. The Labor estimate includes four seats in which the party held a narrow lead with thousands of pre-poll votes still to be counted. The Greens failed to win any seats despite widespread media forecasts that they could take up to four.

Powering Australia

Federal Energy Minister Martin Ferguson described the Powering Australia yearbook as providing a catalyst for the robust dialogue needed between industry and policymakers that is critical to ensuring Australia’s future energy security when he launched the publication at Parliament House, Canberra, on 16 November. The 2010 edition’s theme — securing Australia’s energy future — could not be more timely, he said.

Increases in the cost of electricity and increases in demand, particularly peak demand, are headline issues today at a time when more and more Australians face cost of living pressures, he acknowledged. The government is receiving a clear message from industry that policymakers need to get policy settings right, he added.

Ferguson noted that achieving the government’s target of reducing national emissions by 2020 to five per cent below 2000 levels will require a cut of 144 million tonnes from projected business-as-usual emissions and a reduction of 51 million tonnes below actual 2008 emissions. “This is no easy task at a time when uncertainty is clouding investment decisions,” he said.

Australia needs to decouple economic growth from greenhouse gas growth in order to transition to a low carbon economy, he told guests at the launch.

Copies of the Powering Australia 2010 yearbook (RRP $Aust29.95) can be ordered from the publishers Focus Publishing by email to Sam Collier, client service executive, at this address: sam.collier@halledit.com.au.

Darling Downs

The opening of Origin Energy’s Darling Downs power station again highlights the emergence of Queensland’s Surat Basin as an important energy centre for Australia.

The billion dollar, 630 MW combined-cycle plant, fuelled by coal seam gas, joins the largest single coal-fired unit in the country (CS Energy’s 750 MW Kogan Creek plant), InterGen’s 850MW Millmerra coal burner built in 2002 and ERM Power’s gas-fired Braemar set of plants, built and to be built, as only some of the energy developments in the Darling Downs area in what has been described as a modern-day gold rush.

The Surat Basin overall is estimated to hold some four billion tonnes of coal, minable to 80 metres, and about 8,500 billion cubic metres of gas.

Increasingly, coal seam gas developments in the area are becoming the focus for environmental movement attention and this is fuelled by the tensions that arise when the resource development industries move in to a well-established farming region, albeit one that less than a decade ago was plagued by drought and decline of rural communities.

More broadly, the opening of the Darling Downs power station underlines why the gas sector sees itself as a big winner in the next 10-15 years of electricity generation development in Australia. There are more than 17,000 MW of gas-fired projects under consideration for development in New South Wales and Queensland alone.

Oh say can you see — an American RET?

The American mid-term election has nailed shut the coffin of Barack Obama’s version of Australia’s emissions trading scheme — at least until after the next presidential election.

The early conservative view of the outcome is that voters have sent a clear message to DC that cap-and-trade, top-down, command-and-control regulation of fossil-fuelled power is a losing argument with them. “They understand that cap-and-trade is a national energy tax.”

However, this does not mean that Congress and the President can’t find a way to pursue a national renewable energy program or other measures, provided they do not impose large extra costs on American power bills. This step will be pushed by Senator Jeff Bingaman, chair of the Senate’s energy & natural resources committee. Direct subsidies, loan guarantees and extended tax breaks for zero emission generation will be the key areas for attention.

The American right is already focusing on this prospect and warning that any such steps would “increase energy costs, reduce electricity reliability and transfer money from end-users to wind and solar companies.”

An early target for Republican attention in the new-look Congress will be the US Environmental Protection Agency’s attempt to regulate greenhouse gas emissions under the Clean Air Act. Any move by the Republicans to take away the EPA’s capacity in this area could attract a presidential veto and heighten tensions over carbon policy.

A given for the medium term, at least, is that better than 65 per cent of US electricity supply will continue to be fossil-fuelled, with nuclear energy and hydro-electricity accounting for most of the balance.

Despite this, Todd Stern, Obama’s global carbbon negotiator, says that the administration will stand by its pledge to cut emissions 17 per cent by 2020 when the next UN summit convenes in Cancun, Mexico, in December.

Hit the reset button

Now that the techo side is straightened out, this blog is ready to roll. It’s purpose, in addition to this website’s commentary and articles I write elsewhere, is to take a personal look at the Australian electricity scene. My thinking about the issues is aided just now by a series of talks economist Jon Stanford (Deloitte, Insight Economics) and I are giving around the country. There is much interest and much concern among industry managers about where Australia’s energy policy is heading.
A useful piece of reading for anyone interested in the issue is “Post-Partisan Power,” a just-published paper on energy and climate policy from a trio of American think-tanks. (Google the title to find the paper.) It is the product of a year-long debate between the think-tanks and makes a number of points that resonate here, too. “If ever there were time to hit the reset button on energy policy, it is today,” the authors say. True for Australia, too. The authors believe in Roger Pielke Jr’s “iron law of climate policy” — that the public won’t pay much to achieve carbon emission reduction, a very relevant point here, as the media are demonstrating almost daily. They argue that policy should be based around making clean energy cheaper rather than high-emitting energy much more expensive.
It is a paper with much to read and ponder, but one comment will make my friend Jon (and Ziggy Switkowski) smile: “Nuclear power, long reviled by many on the left, is far cleaner and safer than most imagine and holds enormous potential to displace low-cost but high-polluting coal power.” The biggest obstacles nuclear faces (in America, they mean, but the point applies here, too) are public opposition, high construction costs and associated financial risks.
One other perspective is worth a mention here: “While the left wants to cut fossil fuel and nuclear subsidies and the right wants to cut renewable energy subsidies, we propose across-the-board energy subsidy reform, disciplining all incentives for technology deployment and adoption to a new framework that rewards innovation — through real declines in the cost of generating energy — not simply producing more of the same.”
It’s worth a read.