TiP

The Federal Treasurer was waving the Climate Institute’s latest claims on green energy jobs in the House of Representatives this week, apparently asserting that the proposed carbon tax would deliver what it proposed.

A few moments spent reading the document might have given him pause for thought.

Yes, the Climate Institute does claim that a transition to cleaner power generation could deliver 34,000 new jobs in regional Australia by 2030 – but it could not be achieved from any level of carbon charge the Gillard government is thought to be proposing.

The Institute claim is based on Australia moving to having 43 per cent of its power production coming from renewable resources by 2030.

Using the national energy resource assessment produced by the government last year – which predicts that demand in 2030 will be 366,000 gigawatt hours annually – this would require the renewables sector to deliver 157,000 GWh a year.

By comparison, the existing renewable energy target is straining to deliver 35,000 GWh annually by 2020 – with the supporting certificates well below the value needed to drive development – at a capital cost estimated at $20 billion.

According to the government assessment, published by Energy Minister Martin Ferguson, the suite of government policies, including carbon charge proposals under the Rudd administration, could help increase the green power share of the generators’ output in 2030 to 19 per cent, or less than 70,000 GWh a year, including the contribution of existing hydro-electric plants (13,000 GWh).

Delivering more than four times as much new green power as the present RET is designed to achieve is not going to be done via a 20 per cent target, and certainly not by the $26 a tonne carbon price that is claimed to be under negotiation between Gillard and the Greens.

Trying to come up with a capital cost for the necessary level of renewable generation (wind, solar and perhaps geothermal) to meet the Climate Institute’s proposition is not easy when one is dealing with a 20-year time frame and the potential for improvements in the cost of technology, but a guess at $50 to $70 billion does not seem unreasonable.

To which would need to be added multi-billion dollar investment in back-up open cycle gas plants and a major roll-out of new transmission lines to bring the green energy to the load centres. Using the recent costings for the suggested South Australian “Green Grid” project on the Eyre Peninsula as a guide, the transmission outlay alone might be of the order of $12 to $20 billion.

The existing RET, which is due for review in 2014, will deliver a “hit” on end-user prices estimated to be about six per cent by 2020 – the impact of the Climate Institute concept would be much larger than this.

To put it mildly, it is disappointing that the Instute does not provide estimates of capital costs or the flow-on effects to end-user prices in the material now available on its website to support this jobs claim.

Still more so that the Federal Treasurer and his advisers do not appear to be able to comprehend what is involved and believe that the claim can be used to support the government’s carbon charge.

By comparison with the Institute approach, a half dozen nuclear power plants located relatively near the existing transmission system (and near ample water supplies, of course) could be built for perhaps $30 to $40 billion and their product sold to the market for between $80 and $110 per megawatt hour, depending on the source for the technology.

On numbers recently quoted to me by a senior executive in an international company with strong nuclear experience, this level of development could provide work for up to 7,000 people, assuming the political, siting and regulatory problems could be overcome.

My informant, however, thought that finding this number of specially-skilled people in the global labour marketplace, given the level of increasing international interest in developing new nuclear power stations, would be by itself the biggest hurdle an Australian nuclear industry would have to jump.

Also, the Climate Institute workforce numbers do not include any estimate of jobs that would be lost if the generation trajectory it proposes was embraced – in fossil-fuelled power operations and in industries that could not bear the pain of the combined effect of a much higher RET and a substantial carbon charge.

The Grattan Institute, meanwhile, has nominated two energy-intensive sectors it believes will depart Australia under a substantial carbon price – aluminium production and petroleum refining – with a combined employment level of 10,000 people.

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