Archive for January, 2013

Tar baby on poll long march

Now that one of the biggest questions of 2013 has been answered – when will we have a federal election – it will be interesting to watch the political players attempting to turn electricity issues to their advantage.

To the extent that you can be bothered to follow the media commentariat’s reaction to the election news – and there must have been a hundred thousand words written just overnight – the stand-out issue for all players is what happens in the 54 federal seats deemed to be marginal. (The swing needed for them to change hands is less than six per cent.)

Julia Gillard’s election date announcement was preceded by a JWS Research public opinion poll in these seats. The outcome, say the pollsters, is that the federal government will have a net loss of 18, more than enough to give the Coalition a comfortable victory.

Two of the major battlegrounds for these seats are New South Wales and Queensland, the north of the Murray States with a heavy leaning to fossil fuels (black coal and gas) and a State government grip on delivery of electricity.

These are the States where the power price rises of the past five years have bitten consumers hardest, increasing more than 50 per cent in inflation-adjusted terms.

Where peak demand has been a key issue in rising network charges.

Where the age of delivery assets is a continuing problem – testing security of supply all the time.

Where the Coalition State governments, like their ALP predecessors, jib at introducing smart meters and time-of-use charges – and where deregulation of retail pricing remains apparently untouchable.

These are the States where the Prime Minister’s promise of a $250 cut in power bills for households should have the most traction – and accountholders are so far oblivious (thanks to apathetic media coverage of the promise) that she has hung it on tendentious interpretation of a draft Productivity Commission report.

That commission report will appear in its final form in April.

Having been cited by Gillard, the commission is obliged, I think, to make clear why it believes a cost saving can be effected, how much it can be, when this could occur and what is needed to bring it about.

The exact words in the commission’s draft report – ignored by the Prime Minister in making her pledge – are: “Critical peak pricing could produce savings of around $100 to $250 per household each year after accounting for the costs of smart meters.”

Perhaps the Gillard spinners should have read more carefully the qualifying statement in the report: “Some 25 per cent of retail electricity bills are required to meet around 40 hours of critical peak demand each year. Avoiding this requires a phased and co-ordinated set of reforms, including consumer consultation, the removal of retail price regulation and the staged introduction of smart meters accompanied by time-based pricing for critical peak periods.”

Back in August, after the Prime Minister’s famous (infamous?) rant about “gold-plating” networks – at an Energy Policy Institute of Australia forum in Sydney – I asked Gillard in question time whether her speech indicated support for this approach?

She evaded giving an answer.

Paraphrased, she said it was a matter for the States, not her.

Since then, the Australian Energy Market Commission’s “power of choice” review has emphasized the centrality of the PC’s views in energy reform.

Since then Gillard has made the $250 promise – which represents an aggregate saving of $1.25 billion a year for the almost five million households in NSW (including the ACT) and Queensland.

She has qualified it by adding “by 2014.”

The very political question for 2013 is how will this be delivered?

Is Gillard’s get-out-of-jail card blaming the O’Farrell and Newman governments for non-delivery of the necessary framework?

How will this play against a counter claim that she implicitly wants these households to spend several billion dollars on meter installation and to accept a need to change their power consumption habits in order to get access to the savings?

What makes her think the framework could deliver savings in 2014?

How will those users who find it difficult (or impossible) to change their patterns of power use be compensated?

Now that we know the election is on September 14, it is worth pointing out that it will be preceded by State regulatory decisions in both NSW and Queensland on changes to power prices – they will be delivered in May and can be expected to reflect a slowing in the rate of growth of network charges, but not cuts in bills.

In the weeks ahead, households also will receive their summer electricity bills for a period of high use of air-conditioning.

Around the time of the election, winter electricity bills will start being delivered.

In short, power prices are going to continue to be in the news – with the Coalition promising to cut carbon charges as their contribution to reducing them.

On the Gillard government’s side, the next tranche of compensation for carbon costs will be delivered to most (but not all) households in mid-year.

However, small businesses will be getting the hit but not the pat – no compensation for them and they will be copping higher gas bills in NSW from 1 July, too.

Meanwhile the April report of the Productivity Commission can be expected to re-iterate a call in the draft for consumers to be given “much more power in the regulatory process.”

The Prime Minister was spinning away in late 2012 on the consumer advocacy issue.

How she delivers in 2013 will be another pre-poll test – and, while she is about it, will she continue to ignore the call from ombudsmen and other consumer representatives for a national summit on energy affordability?

Power prices are a political tar baby.

Did the Prime Minister reall appreciate this when she deliberately embraced the issue in the last third of 2012?

How far the tar baby will blemish her long march to the ballot box is anyone’s guess – but it will be hard for her to pretend it is not there when the bills dropping on to the kitchen table keep reminding voters

Gold! Black gold!

As an example of just how mad the modern media can become, it would be hard to go past the the hype and hysteria of the past few days over the prospects for shale oil development in the depths of South Australia’s desert country.

And not just locally. This is a story that has won overheated headlines the world over.

Here for example, is the version in London’s tabloid Daily Mail: “Australia could be sitting on trillions of dollars of oil as massive reserves are found in the Outback.”

The conservative London Daily Telegraph was at it too: “Up to 233 billion barrels of oil has been discovered in the Australian Outback that could be worth trillions of dollars, a find that could turn the region into a new Saudi Arabia.”

And then there was Mumbai’s Daily News in India: “Huge,huge oil find in Australia.”

While I don’t speak Norwegian, it wasn’t hard to get the point of Nyheter’s “Gigantisk oljefunn i Australia.”

In all, some 400 stories like this appeared here and around the world in 48 hours.

(It is interesting, by the way, how the mind works. I didn’t see any media using the comparison with Alberta’s Athabasca oilsands, which are reckoned to contain almost 170 billion barrels of proven or probable reserves and might be considered more relevant to the mooted Australian resource.)

Among the many versions of the story at home, an honourable (!) mention should go to Melbourne’s Herald Sun for “$20 trillion shale oil find surrounding Coober Pedy can fuel Australia.”

Now, in fairness, not everyone in the media went crazy.

The Reuters news agency, for one, quoted sharemarket analysts “zeroing in on an estimate — the 3.5 billion barrels that are likely to be recoverable — that was on a chart on the third page of Linc Energy’s release and which they said gave a more accurate picture.”

It also reported Johan Hedstrom of Sydney’s Bell Potter Securities as saying: “I think the industry is becoming ill-disciplined in talking about volumes of oil that are in place (which) is so different to what is actually recoverable.”

But these pockets of sanity were not going to stop the last gasp of the 2013 holidays’ “silly season” in the media.

The Arckaringa Basin – or “Ackargina Basin” as one over-heated scribe called it – so far as ordinary readers, viewers and listeners are concerned is now the “new Saudi Arabia.”

Naturally, the immediate winners are the shareholders in Brisbane-based Linc Energy, which released the analyst reports ahead of a roadshow to “whet the appetite of investors” over the next few weeks.

Share values rose about 20 per cent in the wake of the media carry-on.

Anyone who cares to read the independent consultants’ reports at the heart of this fuss, of course, will find the usual conservative language about prospective resources – not “reserves,” dear Daily Mail and others.

One sentence suffices: “The prospective resources estimated are those quantities of petroleum that are potentially recoverable from accumulations yet to be discovered.”

Lost in the uproar was the voice of South Australian minister Tom Koutsantonis: “It is much too early to say if it can be profitably tapped.”

And resources analyst John Young of Wilson ATM said: “We still have some significant way to go before (there are) actual commercially-recoverable resources.”

The existence of these potential resources, in fact, is not a new story in the upstream petroleum industry.

Australia’s unconventional and tight gas prospects are well known to geologists and governments, but the exorbitant expense of extracting them has kept explorers away until quite recently.

The “shale revolution” in America has clearly sparked a new attitude, as has the success of coal seam methane development in Queensland, but the fact that new technology is making shale stuff easier and cheaper in the United States does not necessarily mean it will do so here.

One could write a book rather than a column on the differences in the operational environment between America and Australia.

For one thing, the size of the Arckaringa area to be explored is rather large and very remote while the number of suitable drilling rigs available onshore in Australia is few relative to the US.

Linc, through a subsidiary SAPEX Ltd, has licences covering 54,970 square kilometres in an area south-east of Coober Pedy.

This is nearly the size of Tasmania (68,400 square kilometres).

Our petroleum costs are high. Drilling a shale well in the US costs about US$10 million, while in Australia prices are about US$15 million.

The US has a massive domestic market. We don’t and no refinery able to deal with this alleged flood of oil.

As Alexis Clark of Paterson Securities points out, for starters Linc will need to find a major petroleum company as a partner to fund the size of exploration program needed to really establish what reserves are capable of being exploited.

So what’s the upside?

Well this fuss again underlines that Australia has an amazing range of energy resources that will be best exploited if we can produce a world-class policy and regulatory system to guide their development and find ways to reduce the costs of working on this continent.

This will help deliver the second critical factor in all resource development: finding investors with deep enough pockets and a sufficient appetite for risk to fund the years of work that lie ahead of success.

Arckaringa Basin is not the only shale oil prospect.

There are similar opportunities in Queensland, west of Mackay and Gladstone. There are plans to drill 22 exploration wells in the Galilee Basin.

South Australia’s Cooper Basin, a veteran source of petroleum for the east coast, still holds substantial potentially recoverable unconventional gas resources and it has the Moomba production plant.

The Southern Georgina Basin in the Northern Territory basin is another attracting increasing interest from bigger players for unconventional gas exploration and up to 20 wells will be drilled in it by 2017.

Over in the West, there is ongoing (and not new) interest in both the Perth and Canning basins for unconventional “plays.”

Arckaringa, by the way, at least until now, has been called “the forgotten basin” by the upstream petroleum industry because it wasn’t actively explored for about a quarter century from the mid-1980s.

All of which goes to illustrate the core maxim for energy developments, not just oil and gas ones.

Investors are always confronted by three four-letter words – time, risk and cost.

There are far more cases when one factor or the other dictates a loss of interest rather than lucrative success.

To which one must add that, in the current political environment and not least because of the way the mass media have handled the issue for more than a decade, any carbon-based development has to also deal with the global warming question and its attendant elves prepared to do almost anything to run interference against developers.

If Greenpeace can label our proposals for new coal mines and our LNG projects as “carbon bombs” for the planet, what might it say about the Arckaringa prospects?

By the way, the sub-bituminous coals in the Arckaringa Basin have features that make them appealing for coal seam methane exploitation, too.

There is a lot of low-rank coal in South Australia and companies are looking at these prospects, too.

And, of course, deeper down (physically) the State is home to “hot rocks” that remain one of the most hopeful prospects for the federal government’s ambitions for a “clean energy future.”

The Bureau of Resources & Energy, in its latest projections of power generation, asserts that geothermal energy could account for 17,000 gigawatt hours of power production in 2035, rising to 29,000 GWh annually by mid-century.

And then there is all that domestic nuclear potential inherent in the Olympic Dam mine, which is located south of the Arckaringa Basin.

And all those wind farm prospects on the Eyre Peninsula, a “world-class resource” for this form of power generation.

So South Australia has the potential to be a powerhouse for the east coast well beyond its present contribution and for a long time – it just doesn’t pay to get over-excited about prospects unless you are a media type in search of some summer excitement in a couple of days beyond the immediate drama of bushfires and ahead of the impact of the new Queensland floods.

Booming tensions over gas

When Jamie Turmanis of Quest Events and I came up with the idea late last year of running a conference on gas issues, we didn’t have much doubt that there would be plenty of grist for our mill – but the first few weeks of 2013 are indicating that even we may have under-estimated the boom in national tensions over domestic supply.

A sign of the importance of the debate is that we have been able to attract as speakers at the forum two State energy ministers (Chris Hartcher of New South Wales and Mark McArdle of Queensland), the federal Coalition spokesman (Ian Macfarlane), a swag of senior executives from industry (AGL Energy managing director Michael Fraser, Santos vice-president eastern Australia James Baulderstone, Origin Energy CEO energy markets Frank Calabria, APA Group chief executive strategy & development Ross Gersbach), other leading energy figures and the National Farmers Federation vice-president Duncan Fraser plus the heads of five industry associations from the energy sector and manufacturing.

(You can find out all about the conference, “Australian Domestic Gas Outlook 2013” in Sydney on 10-11 April, at www.questevents.com.au.)

Some thought this debate on domestic gas supply had exhausted itself late last year when the final version of the federal government’s energy white paper said “No” to the resource reservation policy sought by manufacturers, but this is obviously far from the case.

What’s more, while we are expecting a pretty lively debate at the Sydney forum, it will be followed at the end of May by the annual conference of the Australian Petroleum Production & Exploration Association in Brisbane in May – to be opened by Queensland Premier Campbell Newman and including a keynote address by Federal Resources & Energy Minister Martin Ferguson – where an anticipated 3,000-plus delegates and perhaps four dozen journalists will giving the elephant in the room all the attention it could possibly desire.

Meanwhile the Energy Supply Association (ESAA) and Energy Retailers Association (ERAA) have both put up their hands as sponsors of the Sydney event, an indication of the flow-on concerns of this situation for the electricity supply industry.

What has really put the issue back on the front burner in recent days is Santos’s Baulderstone giving a newspaper interview in which, in effect, he told manufacturers to get a grip on reality.

Gas prices on the east coast, said Baulderstone, have been stable for about 10 years. Australian companies have had access to cheaper gas than in economies in Asia and “there was always going to be a need to adjust prices.”

Baulderstone dismisses claims from some manufacturers that they will be forced to pay as much as consumers in Japan as the LNG developments in Queensland start to hoover up east coast supplies mid-decade.

He predicts prices here will rise to $6 to $9 a gigajoule, pointing out that (in our money terms) they are $15 in Japan.

Australian manufacturers, he argues, will still have an ongoing “tremendous advantage” in terms of gas prices in competition with Asian rivals.

In response, the Alcoa Australia chairman Alan Cransberg is in the media deploring as “perverse” the fact that local gas prices are “among the highest in the world” and arguing that this shouldn’t be the case in a country with some of the world’s biggest resources.

Governments, of course, find this whole situation a hot potato.

In Victoria, the State government has employed former Howard era minister Peter Reith to head a task force investigating gas supply and prices.

The review will report mid-year and is looking at costs for manufacturers and households.

One of the core accusations from the factory corner is that gas suppliers are unwilling to sell to manufacturers at present, something APPEA rejects as “demonstrably untrue,” with Baulderstone inviting calls from companies, saying there is gas to be bought between now and 2018.

This is a response to among others,the company Brickworks, which claims it can’t extend contracts beyond two years in Queensland, NSW or Western Australia “for love or money.”

This claim has also got a dusty answer from the former Arrow Energy CEO, Shaun Scott, who told “The Australian” newspaper that the LNG developments on the east coast were initially pursued because the sector couldn’t get support from major domestic users.

Scott says CSG producers early in the piece were offering long-term domestic contracts at $3 per GJ and were knocked back because big users thought there was so much gas it would get cheaper than this.

At that time, the now-abandoned gas pipeline from Papua New Guinea was seemingly a done deal, given the attitude of the Beattie Labor government in Queensland.

Today the manufacturers’ big card, of course, is the perceived threat to jobs in a politically-charged environment.

Brickworks and other complainants are backed up by the DomGas Alliance lobbying group, based in Perth, which argues that, unless the federal government changes its mind on a reservations policy, tens of thousands of jobs are “potentially vulnerable.”

APPEA chief executive David Byers points out that both the government and the Coalition find the reservations argument “unconvincing.”

He attributes higher prices to higher costs of exploration and production as well as rising demand.

However, the association and Brickworks do have one point of agreement: the best way to create downward pressure on gas prices is more gas.

Byers, who will be a speaker at the Sydney forum while preparing for the huge APPEA event six weeks later, says too much red and green tape is constraining the upstream petroleum industry’s efforts – and he points in particular to the situation in NSW, where most long-term supply contracts are approaching their expiry date and his industry is struggling to win approval to exploit major resources of coal seam gas.

(The critical issue here is rural community concerns over the alleged effects of fracking to produce CSG, a situation being played up by the environmental movement, and politically still highly sensitive. Done properly, says, the petroleum industry, there is no material threat to groundwater resources – but this message hasn’t won the day so far.)

Meanwhile, APPEA and its members – as well as Martin Ferguson – have received support this week from the new Deloitte national director of oil and gas, Geoffrey Cann, who argues that governments shouldn’t intervene in gas supply, that the free market is the “engine” to find the right domestic price and that manufacturers should take comfort from the fact that higher prices will “coax marginal suppliers on to the market and drive prices down again.”

The factory folk are not showing any signs of taking comfort at the moment.

This debate has a long way to run.

Watts happening in Queensland?

Summer means turbulence for Queensland electricity supply and 2013 is living up (or down) to expectations.

For example, Ergon Energy, the government-owned network business that serves 97 per cent of the State, having dispatched line crews to Tasmania to help deal with the bushfire damage, has been confronted by wild storms across its home region, disrupting power to several Outback towns.

Those of us living in big cities are accustomed to the networks repair workers zipping around when the lights go out and we get a bit shirty if they stay out for too long.

Restoring power in the Bush takes a little more effort and often several days.

As Ergon’s media statement observes: “Access (last week was) an issue for (our) ground crews due to boggy conditions from heavy rain and, in some cases, heavy field response vehicles had to be towed by earth-moving machinery.”

The alternative, used a fair bit in the latest clean-up, is flying not only the crews but also equipment, including poles, to damage areas by helicopter.

The conditions for response teams last week, Ergon observes dryly, were “very trying.”

It’s no darned fun for the affected consumers either and it’s telling that Ergon’s standard advice to its regional customers is to be prepared to cope for three days with roads, power and telecommunications cut.

A different world to the streets of Marrickville or Prahran.

Meanwhile, down in Queensland’s south, conspiracy theories have been flying in Brisbane over spikes in wholesale power prices in the regional market – and political sparks have been flying over the prospect of privatisating the State-owned generation businesses (CS Energy and Stanwell Corporation).

Wholesale prices spiking to $12,000 per megawatt hour compared with an average of $45 to $50 for Queensland do tend to have your average consumer ask “What’s going on?” when the local media drums start beating.

This, said the biggest State tabloid, “comes less than a month after Queensland shed 10 per cent of its baseload capacity by mothballing two generators at Tarong.”

Responding to the prompt, the Electrical Trades Union called for “a federal inquiry in to the issue,” arguing that Queensland should “have enough baseload capacity to meet demand and prevent excessive peaks.”

A bit over a year ago, you could have expected the Coalition to chime in to kick the unpopular State Labor government, but they’re in office now and Acting Premier Jeff Seeney was out and about to argue that “the market is operating as it should” and dismiss “conspiracy theory nonsense.”

ACIL Tasman CEO Paul Hyslop weighed in with a commentary asserting that mothballing 700 MW at Tarong power complex has been “a sensible economic response to an over-supplied market.”

In today’s market environment, said Hyslop, with overall demand growth slowing and operating costs higher for coal-fired power plant as a result of the carbon price, the economically sensible thing is to invest in gas-fired peaking plant to deal with consumption surging on average 175 hours a year when Queensland temperatures are higher than 33 degrees Celsius.

It’s probably also worth pointing out that, overall, there is about 2,000 MW less available capacity in Queensland this summer than in 2011 and that the power flow in to the State over the interconnections from the south reached its maximum in the recent sweltering weather.

The existing main interconnector, the QNI, has been operating since 2001 and capacity has been increased incremently so that it now enables transfer of 700 MW north and 1,078 MW south. Not enough to stem the recent wholesale price spikes.

Debate and reviews have been going on for several years over the merits of uprating the QNI with no conclusion remotely in sight.

Meanwhile again, the national business media suspect they spy a split between Premier Campbell Newman and State Treasurer Tim Nicholls over privatising the two government-owned generation businesses.

The “commission of audit” the government set up after it thrashed Labor at the polls – appointing former federal Treasurer Peter Costello as its chairman – is due to deliver its final report in late February and it is hardly a secret that it will recommend sale of the generators. (The claimed sales value is $10 billion.)

However, the community may not sight the report until the State budget in June, so there will be plenty of room for further gossip and pot-stirring, with the Labor rump in parliament already querying who is speaking for the government, Nicholls having made it clear he wants a “full and frank” public discussion on asset sales while his premier keeps saying he is “philosophically opposed” to privatisation.

Nicholls told an ABC radio program last week that taxpayers have spent $300 million keeping CS Energy solvent over the past two years – money that could have gone on the cash-strapped schools, health services and police operations, he pointed out.

At the same time, the State government isn’t exactly championing smart meters, time-of-use tariffs and retail price deregulation either, using the 30-year electricity strategy inquiry it has launched as a reason for sitting on its hands in the CoAG power reform process.

Predicting that it may be summer 2014 or later before we really know watts happening (sorry) in Queensland doesn’t seem too pessimistic, I fear.

Plenty of time, then, for the solar lobby to continue to persuade Queensland households that, rather than rely on “filthy fossil-fuel based power stations” (to quote one booster of alternative energy last week), they should seek to “slash their summer power bills” with a nice photovoltaic array on their rooftops.

Will this be before or after they buy more air-conditioning?

(In passing, Queensland burns between 21 and 23 million tonnes of black coal a year to keep the lights on. Coal-burning for electricity generation in New South Wales is now down to about 26 Mt annually. Queensland consumption of gas for generation has risen about 70 per cent over the past six years.)

World according to BREE

The new energy projections for Australia out to the middle of this century, as modelled by the federal Bureau of Resources & Energy Economics, must make strange reading if you are among the Greens.

On the one hand, BREE expects the production of renewable energy to quadruple in volume terms over 37 years, led by solar power and wind farms.

It predicts coal’s share of the overall, domestic energy market will fall from 31 per cent today to six per cent in 2050 and, in a major shift of view from its previous predictions a little more than a year ago, expects renewable energy, including rooftop solar power, to meet 54 per cent of electricity supply by mid-century.

On the othe hand, the research agency sees coal and gas accounting for 96 per cent of total national energy production in 2050, driven by long-running high demand overseas for these fuels.

In BREE’s eyes, the “golden age of gas” is going to be a long one – it forecasts that Australian LNG exports will more than triple over nearly four decades, reaching about 113 million tonnes in 2050, with coal seam gas a continuing contributor and floatiing production coming in to its own.

The agency sees western gas operations continuing to dominate Australian production, even though growth in output there will be slower than that of the eastern and northern markets.

It sees total gas production rising to almost 8,600 petajoules a year of which more than 6,100 PJ will be sold overseas.

Despite the demands of the Greens and others for an end to our coal trade – actually our fossil fuel trade – and the ongoing hand-wringing over potential global warming trends, BREE believes that world coal demand will continue to grow, especially for metallurgical coal.

It says that Australian production of black coal – both metallurgical and thermal (for power production) – will be about 539 million tonnes a year by 2049-50.

BREE’s view of Australia’s domestic energy consumption is also interesting.

Growth in demand, it points out, has been rising at about two per cent a year since the turn of the century – but the rate of growth has been declining for the past half century.

During the 1960s the growth rate averaged five per cent a year, falling to four per cent in the 1970s, largely as a result of the two major global oil price shocks.

During the 1980s and 1990s, the growth rate fell back to 2.3 per cent.

This long-term decline in the Australian economy’s energy intensity – that is the ratio of energy consumption to GDP – can be attributed, BREE says, to greater efficiency through technological improvements and fuel switching plus moderate growth in energy-intensive manufacturing and processing sectors even while there has been rapid growth in the commercial and services sectors.

The commentariat chatter about going green is so loud that it is useful to have BREE provide a snapshot of Australian energy as it really is today: 40 per cent of total primary energy consumed here makes electricity and, even with growth in energy consumption “severely moderating” between now and mid-century, primary use will rise from just over 6,000 PJ now to almost 7,400 PJ in 2050.

There are, of course, a whole raft of assumptions built in to the BREE modelling.

Its scenarios envisage the continuation of carbon pricing and of the renewable energy target (how could they do otherwise, given government policy?).

They adopt the federal Treasury view that our population will be 36 million mid-century.

They don’t include domestic use of nuclear power (it’s not government policy) – and they assume strong economic growth.

They assume that efforts to achieve a commercial future for carbon capture and storage technology will succeed.

By 2050, the agency believes, CCS power plants and renewable generation will account for three-quarters of our electricity supply.

In BREE’s world, there will be a “considerable decoupling of the energy/GDP nexus” over four decades, driven by an expected step change in renewable energy generation costs and commerce and services pushing ahead of manufacturing.

The agency’s outlook for manufacturing is less than sunny.

The sector accounts for 30 per cent of energy demand today and BREE sees it growing at just 0.3 per cent a year over the next four decades.

By 2050, it says, the manufacturing share of energy consumption will be 24 per cent.

For those of us who have wondered if the long run of New South Wales as the dominant State may be sliding towards an end, BREE sees NSW remaining the largest consumer of energy – with annual demand rising from 1,557 PJ now to more than 1,900 PJ in 2050 – even though the highest State growth in energy use will occur in Queensland and Western Australia.

As I have reported before, BREE sees energy consumption falling back in Victoria, declining from almost 1,500 PJ now to 1,260 PJ in mid-century.

“This,” says the agency, “is primarily due to the decline of the share of brown coal in Victoria to zero.”

Summing up its new report, BREE says the outlook it has created “represents a significant structural change in Australia’s energy landscape.”

This transition, it adds, will need to be “underpinned by significant investment in supply chains to allow for better integration of renewable energy and emerging technologies in to our energy systems.”

Even for those of us who think that projections to 2050 are the equivalent of standing in 1976 and trying to see today, and therefore a stretch, to put it mildly, this picture of the future makes interesting reading – so long as we bear in mind just how many things can occur to alter it over the next 13,500 or so days……………

Brownout for the Valley?

There’s bad news for the Latrobe Valley about its potential for a long-term powerful future lurking in the some new modelling undertaken for Julia Gillard’s government.

What the trade union movement will think about this news is not hard to guess because they have been reacting to something much less during the holiday season.

The bad vibes are to be found in the latest power generation projections produced by the Bureau of Resources & Energy Economics.

In publishing the modelling, BREE wants to look out to the middle of the century, but that’s not where the Valley bombshell lies.

The Bureau predicts that the brown coal industry there is for the high jump by the ‘Thirties, prey to carbon policies and the advance of green technologies.

While this may draw cheers from the likes of Christine Milne and the Greens, it won’t endear the federal government to the locals.

The BREE numbers look like this:

At present power generation in Victoria delivers 49,000 gigawatt hours a year to the east coast electricity market, 81 per cent of it coal-fired.

By 2034-35 this will fall back to 40,000 GWh – but only 5,000 GWh will be brown coal generation.

At present there is 6,630 megawatts of brown coal capacity in the Latrobe Valley – the Yallourn, Hazelwood and Loy Yang power stations (the latter a double act with two plants, separately owned, using the same mine).

As elsewhere, the Latrobe generators have been feeling the pinch of a depressed demand for electricity. In 2010-11 their output was 51,000 GWh and it was slightly higher in 2009-10 – but this is 10 times what BREE sees being produced within two decades.

By contrast, BREE now predicts that black coal generation – predominantly in New South Wales and Queensland, but also in Western Australia – will decline only slightly under the Gillard government’s “clean energy future” policies, with output falling from 109,000 GWh in the current financial year to 100,000 GWh in 2034-35.

(This, by the way, implies that about a billion tonnes of black coal will be burned to make electricity in NSW and Queensland between now and the mid-Thirties.)

The new numbers will come as a particular shock to the Latrobe Valley because it is only a year since BREE produced its first set of power projections (since being separated from the Australian Bureau of Agricultural & Resource Economics) and those forecast that 2034-35 brown coal output would be 20,000 GWh.

That was hardly a surprise because it took in to account closure of the Yallourn and Hazelwood generators and assumed that the Loy Yang twins would still be operating at a substantial level.

Overheads are such that, at a quarter of the production, as now forecast, barely one of the two Loy Yang plants would be limping along.

(The turnaround in prospects for the Valley over the past eight years is stark.

(Back in 2005 a Victorian government study, part-funded by what is now the federal energy and resources department, was modelling that, in a carbon-constrained future, Yallourn and Hazelwood would operate until 2025 and the Loy Yangs in to the ‘Forties.

(The core scenario saw Victorian electricity output reaching 66,000 GWh a year by the ‘Thirties and the Valley power stations still providing almost 60 per cent of it.

(More recently, of course, the federal government has been seeking an accelerated shutdown for Yallourn and/or Hazelwood but the plan to buy closure has not gone ahead.)

While not happy a year ago, the trade union movement in the Latrobe Valley at least had the solace that EnergyAustralia intended to replace its Yallourn coal operations with a new baseload gas power station.

But that idea is now also mothballed.

EnergyAustralia, having initially scaled back the project to an open cycle (peaking) plant perhaps half the size, has decided a fortnight ago that the current market conditions don’t justify even this step.

This decision got the Gippsland Trade & Labour Council going in the holidays – it has called for the re-establishment of the State Electricity Commission to ensure energy producers stay in Victoria.

Lord knows what it will say when it finds out that, in addition to forecasting doom for the Latrobe coal generators, BREE is also asserting that it expects New South Wales to become an exporter of electricity to Victoria.

The bureau’s 2034-25 modelling sees New South Wales generators increasing production from 72,000 GWh a year now to 110,000 GWh, which would include new gas plant and wind farm output – while most of the Victorian production, it appears, would be from gas generation and wind power.

Origin Energy has recently commissioned an open cycle gas-fuelled generator in western Victoria, with the option to both expand it and to turn it to baseload production, while both AGL Energy and Santos have been investigating the feasibility of gas developments nearby.

Should the Yallourn gas plant not go ahead, this outlook would leave the Latrobe Valley, after decades, along with the Hunter Valley in New South Wales, as the powerhouse of south-eastern Australia, with a new, bleak electricity future beyond its current worst fears.

The BREE 2034-35 modelling is also notable for forecasting increases in power production in South Australia (up 44 per cent from today), Tasmania (up 57 per cent) and Queensland (up 22 per cent).

The latter will be mostly more gas-fired generation while the South Australian and Tasmanian increases will be renewable generation.

Having recently reviewed long-term generation costs for a range of technologies, BREE has decided that, under present policies, there is going to be a big jump in renewables output over two decades.

This will not only involve even more wind generation than it forecast a year ago but the strong emergence of utility-scale solar power and of geothermal energy, the pair going from zero now to almost as much output as Victoria has today.

Curiously, the Greens don’t seem to have yet spotted this prediction.

They will be chuffed by it – but the Gillard government can expect to be hearing loudly from its trade union base in Gippsland.

One can only wonder how pleased Victorian Labor leader Daniel Andrews will be to be told the news?

At the height of the carbon tax row in 2011, Julia Gillard held a closed-door meeting with power station union members at Hazelwood and reportedly promised them the Valley workers “will not be left in the lurch.”

In the light of the BREE modelling, a return visit in the 2013 election campaign would be interesting.

Peering in to power future

Thirty years is two lifetimes for your average cat and a jolly long time for us humans – longer than most modern marriages last.

Politically, it is an eternity.

Consider 1983, for example.

That’s the year Labor knifed a federal political leader (Bill Hayden) who had good hopes of winning the next election, installed Bob Hawke and soundly defeated Malcolm Fraser’s Coalition.

We have had five prime ministers since then and, should Tony Abbott win this year’s poll, you can make that six.

It was also the year Neville Wran stepped down as NSW Premier. We have had five in the job since, including Barry O’Farrell.

Guess who was the American president in 1983?

Ronald Reagan. We are on to his fourth successor now.

In January 30 years ago Australians were about to be plunged in to mourning over the February Ash Wednesday fires that killed 76 people in Victoria and South Australia. And no media blamed it on global warming.

At the another end of the scale, “Yes Prime Minister” was still three years from being put on the small screen – Jim Hacker was still just a scheming minister in 1983.

Foundation laid, I now point to the fact that we have governments and others engaged today in trying to foresee electricity supply in 30-40 years.

The federal government’s “clean energy future” policy seeks to look out to 2050.

The new Bureau of Resources & Energy Economics generation projections purport to tell us what power supply we will have in 2049-50.

The Queensland government has launched an attempt to devise a 30-year electricity strategy.

The federal energy white paper also scans the 2030s horizon.

And so on.

For an energy context, go back to 1983 again.

Then we were still discussing the possibility that we might start an LNG industry offshore Western Australia.

We certainly were not discussing fuelling Queensland from coal seam gas, let alone exporting it as LNG to Asia.

Anyone suggesting that the US could rely on a shale gas revolution, with associated oil supply, not just to see off the coal industry (for power generation) but potentially OPEC (for transport fuel), was asking to be fitted in a sleeveless white coat.

No-one was talking about the “NEM.”

The “QNI” interconnector between NSW and Queensland was 18 years away from commissioning.

Eraring and Bayswater power stations were being built. Construction was about to start on Loy Yang A and commissioning of Loy Yang B was a decade away.

Privatisation of the Victorian electricity industry was not on anyone’s horizon.

Origin Energy was 17 years away from being formed in a demerger of Boral Limited.

All of which, and a lot more, suggests that we may be several sandwiches short of a strategy picnic in trying to peer out over the next 30 years, let alone longer.

Of course, it is important to look beyond today’s environment because power supply is an industry where it can take five to seven years from planning to commissioning for major generation and transmission developments.

Most of the kit we will have in 2020 is on someone’s drawing boards now.

But a key feature of the current environment is that projects wax and wane even more than they have done in years past.

The AGL Energy gas plant at Dalton in NSW and the EnergyAustralia one at Yallourn are current cases in point.

Projecting future demand on the east coast has never been a doddle, but for decades it has been about how clever the modellers could be with a growth number. Now it’s about when we might see real growth again?

Technologies have always had their flyers of fancy, with the gas sector spending the past two decades telling themselves and the rest of us that, finally, the “golden age” of gas in power generation has arrived.

Now the aviators are mostly wearing green, with BREE joining them to tell us in its new generation projections that, in addition to the many wind farms we can expect to see built, we are also going to get a boom in utility-scale solar PVs and geothermal energy.

The federal agency wants to focus on 2049-50 – its media statement about the new forecasts does that – but I prefer to look at 2034-35 for which BREE offers some quite startling perceptions:

Utility-scale solar and geothermal, it says, will be delivering 42,000 gigawatt hours of electricity by then (that’s as near as dammit the current Victorian brown coal generation output).

The brown coal business, it also says, will have gone to Hell in a hand basket, crashing to production of just 5,000 GWh in the mid-Thirties.

Thirteen months ago, in its December 2011 projections, BREE saw national generation output in 2034-35 being 348,000 GWh a year. Now it says 324,000 GWh.

Two Decembers ago it said we could expect to see all renewables, including hydro power, contributing 84,000 GWh to supply. Now it says 130,000 GWh.

Then wind farms would contribute 49,000 GWh by 2034-35. Now it forecasts 64,000 GWh.

When you consider that the Owen inquiry, launched by the Iemma government, said just five years ago that NSW must build new generation capacity by 2015 to meet the State’s power growth this decade and should aim to invest about $8 billion before 2020, this sort of stuff is quite courageous (cf “Yes Minister.”)

It also tends to obscure the really important challenge we face.

What we badly lack in the present situation is the ability to impose order on the multitude of programs and policies being pursued by the federal government and the five jurisdictions on the east coast. (WA is a whole other story, which can be left for the moment.)

The CoAG process may make some progress on NEM networks oversight, peak demand curtailment and retail deregulation this year.

It may not.

But this is only part of the story.

The overall approach to our energy future lacks cohesive design and over-arching management.

The attainment of our energy goals while minimising the costs for consumers should be the over-riding strategy, but, despite all sorts of good intentions and a great deal of rhetoric, we do not have a solid plan in place after a decade of work in this arena and two white papers (the other was Howard’s in 2004).

Already we have Tony Wood of the Grattan Institute – his presentation to a forum on 6 December is on the institute’s website – posing the throat-tightening question: where should the next energy white paper focus?

His choice includes rationalisation of the policy framework, reconciliation of markets and regulation, determining the rationale and mechanisms for public funding and other interventions in demand and energy efficiency – and the need to solve the “carbon capture and nuclear conundrum.”

I take leave to doubt that 2034-35, still less 2049-50, is a workable horizon for the task.

If I had to pick a date for the important next step it would be 2022 (why not?) and it would centre on an expert, independent assessment of the total cost of the proposed program as well as genuine agreement between the jurisdictions.

This plan would identify what actions need to be taken, and in what order, to deliver the stated goals for the east coast – and should overtake the current approaches that have been piled upon each other piecemeal, often over-lapping.

Three prime ministers in a row have failed to seize the role of energy statesmen over the past decade.

Events of the past 12 months only serve to underscore this lack of genuine leadership and to highlight, for any objective observer, the risks of continuing this sprint in all directions rather than embracing a measured march forward.

Playing mind games on the far horizons is not the way to go.

Not there yet

Having spent 2011 and 2012 fretting about energy policy as never before, we can now expect to see it hijacked by politics still more in 2013 – which unfortunately means it’s possible it will not be very far advanced in 12 months’ time.

The timing of the election is important – an early one could allow a new government to get on with energy developments this year, a late one threatens a lost year.

When Julia Gillard will ask the Governor-General for permission to go to the polls is anyone’s guess.

Will she go really early on the basis that things are unlikely to get any better politically and may get worse? Some senior people I know in business think she will.

Will she and Wayne Swan produce a “fist full of dollars” federal budget and go to a winter election? Some people I know in politics suspect she might be tempted.

Will she keep a promise and let the parliament run full term? Several political observers I know ask why she would want to chuck aware very nearly a year in the top job by going early?

The last federal election was held on 21 August 2010, only the second one ever held in this month, and the new parliament sat for the first time on 28 September that year.

The ABC analyst Antony Green says that 25 of our 43 federal elections have been held between October and December.

He points out that, if the writs are issued for the next election in early September, October 5 is out because of football finals and school holidays, so later that month could be the likely time.

Assuming that we don’t get another hung parliament, on this basis, government will be in caretaker mode from a point in September until perhaps mid-November.

In effect, this means that energy policy will be a political football for the whole of 2013, hardly the happiest thought.

The underlying problem politically is summed up in two sentences in the IPART initial review for its next decision on household power prices:

“At this stage it is not clear which policy and regulatory settings will apply over the next three years and what the associated impacts on prices will be. However, the steep price increases that have occurred over the past five years are unlikely to continue at the same rate.”

In the electricity arena, big markers through this year will be regulatory decisions on retail prices for New South Wales and Queensland, the key battleground States in the federal poll, an Australian Energy Regulator determination of network outlays and charges for NSW, delivery of the final Productivity Commission report on networks (due in April) and ongoing efforts through the CoAG energy ministers meetings to deal with a swathe of reforms, including the much-hyped customer advocacy arrangements.

February will see South Australia deregulate electricity retailing and NSW will spend 2013 continuing to wrestle with whether or not it should.

The first half of the year will also see the Newman government produce the draft version of its 30-year electricity strategy for Queensland. The chances of the State opting for price deregulation is not high.

The national argument about a carbon price and about the renewable energy target will roll on. This week the Coalition’s Greg Hunt has again committed it to killing the tax within six months of taking office.

We may also see the O’Farrell government close some generation privatisation deals, although the selling propositions are bedevilled by the current state of demand.

As well, gas supply and cost will take more space on the stage.

Household gas prices on the east coast rose by 62 per cent over the past five years while all and sundry emoted over a 90 per cent rise in power bills.

IPART will also decide gas prices in May.

The NSW government has to see some real action in the exploitation of coal seam methane reserves this year or the “energy crisis” (Chris Hartcher last May) that could occur as interstate contracts run out will start getting more attention.

Writing in “Business Spectator” this week, business commentator Bob Gottliebsen said he couldn’t remember such a combination of misjudgements and bad policy affecting energy.

He has been writing about business issues, including energy, since the 1970s (when he was “Chanticleer” for the “Australian Financial Review,” and, for a time, I was PR manager of Associated Pulp & Paper Mills, experiencing his forensic skills at first hand.)

As it happens, I think Bob is wrong in this regard.

The 1970s brought us both the Whitlam government, which handled energy really poorly, and a supply mess in NSW because a lacklustre Liberal government (eventually crushed by Neville Wran) lost the power generation plot.

That said, a combination over the past 5-8 years of economic factors and ill-conceived policy decisions plus a comprehensive mismanagement of the necessary investment in power networks (in the sense of failure to win public understanding of what was happening and more recently use of the issue for base political purposes) has created what Gottliebsen dubs “an energy morass.”

The path out of the swamp is still not at all clear and we are really only talking about the shortish term – the rest of this decade.

The policy steps that we should take to ensure that the ‘Twenties and the early years of the ‘Thirties deliver an efficient path towards energy decarbonisation are far from bedded down.

Meanwhile, even as we watch the massive current LNG developments and weigh their considerable benefits to the national economy, we can see that the coal industry is struggling in the global trade environment – and the prospects for still further major energy developments have to be weighed against a minefield of potential failure points, many of them home-made.

Australian parents at this time of year are only too familiar with the backseat call of “Are we there yet?”

When it comes to reaching our optimum energy destinations, the sad truth is that we can’t offer the placatory “Be there soon” response.

Are we even sure we know where “there” is?

Feeling some heat

Julia Gillard was still at it barely four weeks ago, using the Council of Australian Governments meeting to repeat her accusation that reform is needed to tackle the “gold-plating” of power networks, initially a Ross Garnaut slur she had picked up and run with back in August.

In particular, she focused her ire in August on New South Wales and Queensland, which had recently become Coalition-governed States after more than a decade each under Labor management.

This week,as the “gold-plated” network serving Greater Sydney, the Illawarra and the Hunter Valley, together the country’s largest load, as well as rural areas coped with one of the worst heatwaves in living memory, Gillard was down in Tasmania expressing sympathy for fire victims and had nothing to say about the performance of the NSW power industry.

(Although one of her ministers, in probably the week’s most egregious piece of political posturing, managed to label Tony Abbott volunteering for service with his local fire brigade – of which he has been a member since 2000 — in the State’s fire-drenched south as a stunt, a reminder, if we needed it, of how awful 2013 is likely to be on the poll front.)

How interesting then to see one of the Gillard government’s fervent supporters, the Electrical Trades Union NSW, belling the Prime Minister’s cat on the networks issue.

By way of background, generators and the NSW network system needed to deliver production from as much as 13,051 MW of capacity on Tuesday afternoon (8 January) with the temperature stuck on 42 degrees Celsius (and where I live in The Hills district in Sydney’s north-west still registering above 30 degrees at 3am Wednesday).

This is far from a peak supply record – for NSW it stands at 14,820 MW on 3 February 2011 – because on Tuesday quite a lot of industry was still on summer holidays and schools and tertiary institutions were still shut.

In such conditions supply was not flawless, of course, with the media reporting a half dozen cases of suburban powerline failures in Sydney and environs, affecting some 12,000 homes for up to two hours – a pretty horrible experience for those without service.

However, for the bulk of the State’s three million households, the essential service was readily available – although it is possible many will blench when the summer power bill arrives in 2-3 months’ time.

I will go”hee” quite loudly the day the media, and the tabloids in particular, report something along the lines that “most of the State’s millions of residents, hospitals and commercial services were able to cope with today’s extreme weather thanks to sustained, near-record electricity supply although a number of powerline failures had network crews scurrying to undertake repair work in savage heat.”

The NSW branch of the ETU unsurprisingly saw Tuesday’s combination of heat-driven demand and faithful service as an opportunity to score points even it meant that Gillard lost some political skin along the way.

A reduction in network investment, accompanied by reduced reliability standards, the union said, could mean that future extreme heat day experiences are “very different.”

“Some politicians” are pushing to reduce network investment, the ETU went on, and it challenged those from all the major parties who have done so to come out this week and repeat calls for reduced reliability standards.

(Yes, Prime Minister?)

Needless to say, the union also was not going to lose the opportunity of insisting that a government-owned network system is best placed to deliver what consumers need in these conditions – a claim that flies in the face of high-level delivery standards in Victoria and South Australia, where networks are privatised.

The 2009 Victorian bushfires, some still the subject of legal actions, are always brought in to this debate. “We can’t let this happen in NSW,” asserts the ETU.

Now of course there is a large degree of self-serving in the union’s attitude – it is hardly R.Crusoe in this respect – and perhaps the headline in “The Australian” reporting the ETU’s statement (“Gillard power play torched”) is somewhat OTT, but the broad point that investment in power supply reliability is best appreciated during crises needs some underlining.

So does the fact that finding a way to lop the power peaks remains a paramount concern.

Somehow the media seem to lose sight of the fact that, if the doomsayers, who have been using this week’s weather to emphasise that there is more and worse to come later in the decade, are right, then peak demand will continue to soar.

In this respect, the Energy Supply Association 2012 yearbook is projecting that NSW/ACT peak summer demand will exceed 17,500 MW in 2020-21.

Time is hardly a friend for policymakers or power suppliers in confronting this.

For policymakers, the challenge remains to demonstrate how residential consumers won’t face a cost shock from proposed time-of-use tariffs on days like Tuesday and in summer high heat and humidity periods that can last a week in some areas.

That there has to be a balance between overall consumer cost and service reliability is a given – and it is a week like this that highlights how little the glib talk and posturing about investment (and “gold plating”) contributes to a safe landing.

Tip point for a green strategy?

For the Greens and their fellow travellers, it is a pipedream and “a dangerous distraction from real solutions.”

Ironically, one of sectors they hate almost as much, the nuclear power lobby in Australia, sees it in broadly similar terms.

However, for Australia’s Climate Institute, it’s time for environmentalists to stop treating it as the “unpopular cousin at the party.”

Meanwhile, for the International Energy Agency, it is “a necessity in a world hooked on fossil fuels.”

Last month, while much of those around the world who could be bothered to pay attention to the event were writing it off as just another UN talkfest, proponents of the highly debatable technology, carbon capture and storage, were getting a lift from the Doha climate change talks in Qatar.

On the Doha meeting fringe, a group of environmental NGOs for the first time advocated the inclusion of CCS in the fight to reduce the growth of greenhouse gas emissions in the atmosphere.

For Richard Aldous, CEO of Australia’s Co-operative Research Centre on Greenhouse Gas Technologies, this is a sign of an imminent “tipping point” where CCS becomes accepted as “a green strategy.”

John Connor, the Climate Institute CEO, has also come out as a supporter of the view that CCS should be seen as part of the abatement “solutions mix.”

For him, and many others, this mix has to include renewable generation, energy efficiency, cleaner transport and increasing the uptake of carbon in forests and soils – and there are a growing number who can see nuclear power, especially if it is on a smaller scale than conventional reactors, having a role in Australia, too.

The local CCS long march inched forward in Queensland last month when Martin Ferguson tipped another $13 million from the federal government in to the Callide oxy-fuel project in the Banana shire.

The project at Biloela, 120 kilometres inland from Gladstone, is based on a 30 megawatt segment of the Callide power station complex, a unit of a 1965 plant that has been in mothballs for a decade.

At a cost of $206 million, the Callide CCS experiment is now moving towards a demonstration phase, one supported by Japanese as well as Australian interests and by the coal industry.

It is a small, but not unimportant step, towards an electricity supply future envisaged by the federal government in which, from the mid-2030s, perhaps as much as a third of the nation’s power is generated from fossil-fuelled plants (burning coal or gas) capturing and storing their carbon dioxide emissions.

Politically, Callide also can be seen as the sharp end of a stick still being poked at Julia Gillard, Wayne Swan and Greg Combet for allowing themselves to be bullied by the Greens in to excluding CCS from the $10 billion (and more) Clean Energy Finance Corporation they set up in the past year.

The Climate Institute, hardly part of the coal industry lobby, says now that the CEFC mandate should be extended to allow the financing of such technologies that “have negative net emissions” even while arguing that coal has a role as an electricity fuel for the “short and medium term.”

This, of course, is not the view of the International Energy Agency.

In a commentary issued on new year’s day, the Paris-based agency says that, despite all the attention given to renewable energy, the bulk of global supply is fossil-fuelled “and there is only one way to burn it without adding emissions: CCS.”

The agency adds that “perhaps the most critically important short-term issue” for the technology is “to develop practical incentive policies, with successful policies for renewable energy potentially serving as models for (its) deployment.”

The IEA is revising its “CCS technology roadmap” and aims to have a new version available in the northern spring – that is, April to June, another awkward bit of timing for Julia Gillard in planning when to head to the polls.

The challenge for coal miners and coal-fired generators as well as the federal and State governments in New South Wales, Queensland and Victoria is that it is difficult to create an effective CCS story for the community (leaving aside Gillard’s problem with caving in to the Greens on the CEFC).

I recently read a blog on this that made some cogent points.

It noted that proponents struggle to explain to the community what CCS is and why it is important when so few have even a basic understanding of energy, geology and chemistry – and almost none about our climate except what the media (and politicians on the make) feed them in panic stories.

The blogger added that CCS lacks strong, memorable images.

None of the technologies being pursued are especially visually interesting (unlike wind turbines), carbon dioxide is invisible and capture plants are “just large industrial kits.”

All true, so how do proponents succeed in selling the message – as put in recent days by Eurelectric, the EU big brother of our Energy Supply Association – that “there needs to be a sense of urgency about CCS” if we are not to be locked in to a high-cost trajectory towards decarbonisation.

Eurelectric is wrestling with the fact that EU funding for CCS is a tale of mismanagement and delay (not a real surprise when you consider the Europeans track record in other areas).

Most recently EU bureaucrats and politicians (and that tends to be the order of influence there) opted to throw money from their emissions trading revenue at more renewables rather than CCS at all.

The International Energy Agency, which is also vocal in arguing with the EU mob, says that carbon capture is not a substitute for renewable energy and greater attention to energy efficiency, but a “necessary addition” that is “particularly important in a world showing absolutely no sign of scaling down fossil fuel consumption.”

It is worth noting that the IEA estimates that global coal use will increase by an average of 500,000 tonnes every day over the next five years – and it would be a lot more except that the Americans have turned in a big way to shale gas, another industry the Greens hate.

The world, the IEA says, will burn 1.2 billion more tonnes of coal per year in 2017 than it does today.

Fuel for thought, eh?