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July 20th 2010 print

Alan Moran

Lights out

You might think that these people are deranged but there were 1,400 of them, tertiary educated to a person, clapping and cheering enthusiastically. It’s a sobering thought that these people financed from the public purse and dedicated to destroying the Victorian coal and gas based electricity generation industry are comparable in number to those in gainful employ in that industry. 

On 14 July the Energy Research Institute of the University of Melbourne hosted a seminar on “The Future of Renewable Energy in Australia”. The centrepiece was a report by Matthew Wright (Director, Beyond Zero Emissions) who presented a ten year roadmap for 100% renewable energy from stationary sources. Other speakers were John Daley (CEO Grattan Institute), Keith Lovegrove (Solar Thermal Group Leader, ANU), and Lane Crockett (General Manager, Pacific Hydro).  

I was among the 1,400 who descended on Melbourne University to listen to the four speakers who were discussing how to get to zero or near zero carbon emissions. 

For the other 1399, the meeting was a revivalist session. We were told that we would have this totally sustainable power already had not WW1 led to the suspension of work on parabolic troughs in Cairo and we would again have had it had not George Bush under the influence of Big Coal, Big Oil and Big God knows what scuppered research in the US.  

The fantasies of the group included their technological forecasting that with solar thermal at the size of Hazelwood, prices for solar (the route to baseload power) would be comparable to the costs of wind and on the way to becoming comparable with coal. Oh and don’t you know, it is better for employment since, notwithstanding a spend of $370 billion, it would employ twice as many people as presently are employed in these dinosauristic, cancer causing, pollution belching monstrosities in the Valley? Not for these people any old fashioned notions that higher productivity from conserving on labour usage means higher income levels. Spain, the New Jerusalem, was showing the way – no querying whether this might just have contributed to it becoming the second sickest man in Europe nor any awareness of research showing each job created in wind farms meant 2.2 jobs lost elsewhere 

Nor was there any thought about how the economy might cope with a doubling of the cost of energy, just the usual glib data (a mere $8 per week for the average family). 

Other speakers fanned the flames. Professor Lovegrove from the ANU told us that uranium was a bad business to get into since the raw material earned very little compared to the value of the megawatt hours (he must be mortified about how little of the value of an aircraft our bauxite receives). He pointed out that we don’t really need all the oil, gas and coal we export since a tiny patch of Australia is all that is required to provide the total energy requirements of Japan – he presumably thinks we should tow it, sunlight and all, to Yokohama harbour. Now that’s real sit-down money for us! 

Lane Croker from Pacific Hydro added a bit of a downer pointing out that people did not like these huge wind generators and pointed out that the 20% renewable requirement was not enough (as this has only just been legislated, one is reminded of NSW former Premier Carr who likened his fellow environmental activists to a famished dog which, given a piece of meat swallows it whole and looks for the next one). Mr Croker also thought it would be very handy if the government built all the new transmission lines required as a result of the dispersed generation and perhaps sold them later. 

John Daly from the Gratten Institute, a “think tank” financed by the taxpayer courtesy of ALP Governments, also added a few notes to spoil the party. He was keen to use government manipulation of the price system to promote outcomes but noted (Myki, school buildings, rooftop insulation) that going too fast can present problems. He thought we need a carbon price of $70-90 per tonne for people to see the sense of shifting out of coal but “as a former banker” realized this was difficult to engineer. He was concerned that the “interim” step of gas as baseload might be difficult to sell to people who were financing stations that would soon be turned off. But he was heartened by the general insecurity that the carbon tax created and the impossibility for a new coal (or gas) base-power station it creates; this he recognized will raise the price of electricity and, hip-hooray, increase the viability of the novel forms of generation. 

He did however think there could be a teeny problem in requiring a Stern Report type discount rate of 1.4 per cent in bringing in new plant since, as he recalled, firms had been a bit resistant to accepting a discount rate of 6% for mining projects. In summary, the spokesman for the ALP’s specially created think tank thought we needed a carbon price, somewhere north of $70 per tonne to drive out carbon based generation and was not fazed by the implications of this for the economy. In a rambling piece in the AFR the following day Daley cites his own work as evidence that carbon pricing will have very little cost to households while industry too won’t be affected because their (now profitless) investments are sunk and unable to move offshore. 

You might think that these people are deranged but there were 1,400 of them, tertiary educated to a person, clapping and cheering enthusiastically. It’s a sobering thought that these people financed from the public purse and dedicated to destroying the Victorian coal and gas based electricity generation industry are comparable in number to those in gainful employ in that industry ensuring, with regulatory penalties rather than public subsidy, that the lights are on in their lecture theatres. 

Alan Moran is Director Deregulation Unit at the Institute of Public Affairs