Queensland: renewable one day, not feasible the next

There are numerous intelligent ways to respond to the risk of climate change. Setting costly state-based targets is not one of them.

The Queensland government has set three targets: 50 per cent renewable electricity generation by 2030, a 30 per cent reduction in emissions compared to 2005 levels by 2030, and net zero emissions by 2050. Currently, Queensland’s renewables generation share is 20 per cent, with coal still providing almost two-thirds of the state’s electricity generation requirements and gas a further 15 per cent.

Queensland needs to further reduce its carbon emissions from 160 million tonnes to 138 million tonnes per year in eight years’ time. Renewable electricity generation is meant do the heavy lifting but even achieving its 50 per cent renewables target will not get emissions down to the target in time.

Any reduction will not be easy. Much of the drop achieved since 2005 has been due to lower rates of primary forest clearing — a gain that cannot be repeated. In addition, Queensland’s population growth will make it difficult to reduce emissions from transport. It will take decades to completely switch to battery-powered vehicles. Besides, every battery-powered car on the road has been built thanks to mining industry emissions and, unless the Tesla is kept in the garage, will require mostly coal- and gas-fired electricity generation to run.

While the cost of solar generation has fallen over the past decade, the true cost of electricity generation also includes the cost of guaranteeing supply. As coal- and gas-fired generators shut down, the cost of that guarantee will rise enormously because of the high fixed costs of hydro-electric schemes and large-scale batteries.

Setting aside the probable infeasibility of achieving net zero, and accepting the enormous cost of the task, there are better paths and time-frames to work towards that goal. The threat and costs of climate change are global, and policies to mitigate or adapt to its impacts should likewise be global. States should not be in the business of setting silly goals — especially given that Australia’s electricity generation sector is a single national market.

Queensland should focus on the immediate challenges of drought and flood resilience and get on with agriculture, mining and minerals processing; underpinning Australia’s living standards and giving us the capacity to further invest in adapting to climate impacts.

As the Productivity Commission pointed out more than a decade ago, the heavy lifting should be done by those who bear the least cost. In Australia, it makes no sense for Queensland and Tasmania, for example, to have the same emissions reduction targets. The Queensland contribution could be in more efficient coal-fired generation or, dare we mention it — fourth-generation nuclear power.

Forcing Queensland onto renewables too quickly will put at risk what remains of its export-oriented heavy industry. The net result will be an economy even more dependent on China for manufactured goods at the very time we are trying to reduce sovereign risk.

How did we get into this pickle?

First came the language. Renewables are not completely renewable. All components of renewables — solar panels, wind turbines and batteries — are made from physically limited resources, more limited than coal, gas and oil which, for all practical purposes, are unlimited.

Then came the magic of industry subsidies. The assertion that renewables are the cheapest form of energy  is not true when subsidies and regulations dramatically tilt the playing field. Coal, gas and oil are not subsidised and, in fact, are penalised via higher capital costs to account for regulatory risk.

Next came the economic fallacy about jobs. Switching to renewables cannot possibly permanently lower Australia’s current 3.5 per cent unemployment rate. In the long run, trying to switch to renewables too quickly will simply raise costs and lower incomes.

Then followed the silence on the technical infeasibility. The Australian Electricity Market Operator says it is “working with industry to engineer a power system capable of running at 100 per cent instantaneous penetration of renewable energy”. Let us translate bureaucracy speak: ‘we don’t know how to do this’.

Next came the fantasy that locals will cop this ‘once in a century transformation’. The land marked out for renewable solar and wind projects is frightening in scale. Watch the locals kick up a not-in-my-back-yard stink. Wonder where the Lock-the-Gate mob will be?

Then there were the nation-building dreams, which turned into skills shortages and cost blowouts. The nation-building mindset gave us the NBN and Snowy Mountains 2.0, and every other hare-brained nation building project that takes no account of the skills required.

The politics of the renewables transition this decade will be fascinating. What will happen if one or both of the two 2030 targets are not reached? Will a future Queensland government double down in 2030 determined to reach its target by the Olympic opening ceremony in 2032? Real economic harm could come to the Queensland people, especially in the farming and mining communities across regional Queensland.

Now that most of big business and the universities have rolled over, is there an opposition left in the country prepared to question the costs and benefits of our latest national project?

Dr Gary Johns is an adjunct fellow at the Centre for Independent Studies. Co-author Joe Branigan is an economic consultant.

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