Money can’t buy me love, but you can put a price on a tree

 
Mountain ash in the Victorian Central Highlands. Takver/Flickr

What is something worth? How do you put a dollar value on something like a river, a forest or a reef? When one report announces that the Great Barrier Reef is worth A$56 billion, and another that it’s effectively priceless, what does it mean and can they be reconciled?

This contrast points to fundamentally different notions of value. Environmental accounting is a way of recognising and comparing multiple sources of value, in order to better weigh competing priorities in resource management.

In practice it is sometimes crude, but it’s been standardised internationally and its scope is expanding to include social, cultural, and intrinsic benefits.

Using environmental accounting we’ve investigated the tall, wet forests of Victoria’s Central Highlands to weigh the competing economic cases for continuing native timber harvesting and creating a Great Forest National Park. But first we’ll explain a little more about environmental accounting, and how we put a price on trees.

What we count

Essentially, environmental accounting involves identifying the contributions of the environment to the economy, summarised as gross domestic product (GDP). In Australia, the Australian Bureau of Statistics standardises the data and reporting of these contributions in the System of National Accounts. The Bureau also produces environmental accounts that extend the range of information presented – e.g. water and energy use and greenhouse gas emissions.

 

But there are other things of value, like positive environmental and social outcomes, worth incorporating into calculations. Ecosystem accounting gives researchers a framework for doing this, extending the accounting to look at the value of different “ecosystem services” – the contributions of ecosystems to our wellbeing – and not just goods and services captured in our national accounts or environmental accounts.

For example, businesses and homes pay a price for water delivery, but the supplier doesn’t pay for the water that entered the dam. That water is an ecosystem service created by forests and the atmosphere. By assessing costs in the water supply industry, we can estimate the value of the ecosystem service of water provisioning.

The value of Victoria’s Central Highlands

Victoria’s Central Highlands are contested ground. Claims and counter-claims abound between the proponents of native timber production and those who are concerned about the impacts of logging on water supply, climate abatement and threatened species.

Our research has, for the first time, directly compared the economic and environmental values of this ecosystem. It shows that creating a Great Forest National Park is clearly better value.

With any change in land management, there will be gains and losses for different people and groups. Assessing these trade-offs is complex, made even more so by patchy and inconsistent data.

Through careful accounting, we synthesised the available data and calculated the annual contributions of industries to GDP. In 2013-14, the latest year for which all financial data were available, these came to A$310 million for water supply, A$312 million for agriculture, A$260 million for tourism and potentially A$49 million for carbon storage. (There is no current market for carbon stored in native forests in Australia – more on that in a minute.)

All of this far exceeds the A$12 million from native timber production. Although timber production is a traditional industry, its contribution to the regional economy is now comparatively small.

 
The GDP contribution in millions of dollars by primary industries in 2013-14. Author provided

The industries that use ecosystem services are classified as primary production – agriculture, forestry and water supply. This classification is comprehensive (it covers all economic activities) and mutually exclusive (there is no overlap of categories). Downstream uses of the products from agriculture, forestry and water supply are an important consideration for the industries as a whole, but are included in manufacturing industries and not in ecosystem accounts.

Older forests are more valuable

Native timber production involves clearfell harvesting (removing the majority of trees at the site) and slash burning (using high-intensity fire to burn logging residue and provide an ash bed for regeneration). Regenerating forests are younger, with all trees the same age, and have lower species diversity.

This means these young forests contribute less to biodiversity, carbon storage, water supply and recreation. Therefore harvesting native timber requires a trade-off between these conflicting activities.

 
Trade-offs between industries in their use of ecosystem services can be complementary (green) or conflicting (red). Author provided

But more than 60% of the native timber harvested in the Central Highlands is used for pulp. This can be substituted by production from plantations that are more efficient and increased use of recycled paper. Both softwood and hardwood plantations can provide substitute sawlogs.

If we phased out native forest harvesting, increases in the value of water supply and carbon storage would offset the loss of A$12 million per year contributed by the industry. (It would also most likely increase profits for the tourism and plantation timber sectors.)

Older trees use less water than young regrowth, and allowing native forests to age would increase the supply of water to Melbourne’s main reservoirs by an estimated 10.5 gigalitres per year. That’s worth A$8 million per year. Security of water supply for the increasing population of Melbourne is an ever-present concern, particularly with projected decreases in rainfall and streamflow.

Older forests also store more carbon than younger regrowth forests. The federal government’s Emission Reduction Fund does not recognise native forest management as an eligible activity for carbon trading, but if this changed the forest could earn carbon credits worth A$13 million per year. This would provide an ongoing and low-cost source of carbon abatement, which could be used to meet Australia’s emissions reduction targets, while the Victorian government could use the money gained to support an industry transition.

Of course, economic benefit is only one way of looking at land. We know that the Central Highlands is home to unique flora and fauna that cannot be replaced (much of which is increasingly under threat). But careful environmental accounting can help explicitly define the various trade-offs of different activities.

It’s particularly important when legacy industries – like native timber harvesting – are no longer environmentally or economically viable. The accounting reveals the current mix of benefits and costs, allowing management of this area to be reconsidered.


This article was co-authored by:
Image of Heather KeithHeather Keith – [Research Fellow in Ecology, Australian National University];
 
Image of David LindenmayerDavid Lindenmayer – [Professor, The Fenner School of Environment and Society, Australian National University]
and
Image of Michael Vardon Michael Vardon – [Visiting Fellow at the Fenner School, Australian National University]

 

 

 

 

This article is part of a syndicated news program via

 

 

 

 

 

 

Australia’s $1 billion loan to Adani is ripe for a High Court challenge

 Questions have been 
raised over why Adani is in line for public money. AAP Image/Lukas Coch

Indian mining giant Adani’s proposal to build Australia’s largest coal mine in Queensland’s Galilee Basin has been the source of sharp national controversy, because of its potential economic, health, environmental and cultural risks.

These concerns were amplified this week when India’s former environment minister Jairam Ramesh told the ABC’s Four Corners:

My message to the Australian government would certainly be: please demonstrate that you have done more homework than has been the case so far.

It’s a valid warning, considering that a Commonwealth investment board is considering loaning Adani A$1 billion in federal money to assist the development of mining infrastructure.

The loan, expected to be announced any day now, will no doubt agitate further political controversy.

It is also likely to pave the way for yet more court challenges against Adani’s proposal.

Why does Adani want Commonwealth money?

One of the major questions about Adani’s mine is its financial viability, and its inability to secure private sector funding. Its proponents blame anti-coal campaigners, but arguably more important are the myriad concerns about Adani’s liquidity, its corporate structure and conduct, and the ever-weakening international coal market.

Against this backdrop Adani has requested A$1 billion from the Northern Australia Infrastructure Facility (NAIF) – a A$5 billion discretionary government fund set up in 2016 to promote economic development in the country’s north.

The timing and geographical focus of the fund have raised fears it is just a government “slush fund”, set up with Adani’s plans specifically in mind. The federal government initially denied this, with Energy Minister Josh Frydenberg stressing that the mine “needs to stand on its own two feet”.

But shortly after the NAIF Act was passed, Adani’s application was made public, although there remains little available detail about whether or why it will be given the money, or the exact amount.

Loan procedures

NAIF’s board will make the decision, not a government minister. Its processes are shielded from scrutiny by a lack of transparency requirements and consistent blocking of Freedom of Information requests.

As the loan decisions are made by a quasi-corporate board, rather than a minister, it is much harder (if not impossible) to challenge them directly in court. Nor does the NAIF Act provide grounds for review or appeal.

Ultimately, this leaves those who object to Adani receiving Commonwealth money with a very limited avenue of legal challenge. The only option is to argue that the NAIF Act is itself unconstitutional.

Constitutional challenge

The Commonwealth has no direct power to make laws that control or support infrastructure or mining directly. Instead, the NAIF Act seeks to do this indirectly using Section 96 of the Constitution, which states:

During a period of ten years after the establishment of the Commonwealth and thereafter until the Parliament otherwise provides, the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit. (emphasis added)

There are two points to note here.

The first is that this granting provision was clearly meant as a transitional measure for the decade immediately following federation, to protect poorer states from bankruptcy while adjusting their economies to a federal model. Note also that the provision was clearly intended to help state governments, not corporations.

The second is the phrase “terms and conditions”, which clearly relates to the repayment of these loans, much like the terms and conditions applied to any banking loan today.

Both of these things were ignored by the early (and somewhat infamous) Engineers High Court from the 1920s to 1950s, which tended to interpret the Constitution in a way that favoured the Commonwealth over the states.

Perhaps most importantly, the court ruled that Section 96 allows the Commonwealth to apply any terms and conditions it likes to the loans, rather than simply setting the terms of repayment. That has meant that states can be compelled to take particular actions – such as accepting national educational standards, building roads or, indeed, infrastructure development – in return for financial assistance. States were also forced to stop collecting income tax in return for federal monies. This resulted in a “vertical fiscal imbalance” which has left the states at the financial mercy of the Commonwealth ever since.

This extremely liberal interpretation of Section 96 has not been legally challenged since the early days of the federation, not least because recipients or potential recipients of money are unlikely to bite the hand that feeds them. But the Adani loan might just change this.

Picture of the High Court of Australia
Critics of the use of Section 96 have long hoped for a High Court challenge to its ever-growing use to expand Commonwealth financial influence. The Adani loan may be the right vehicle. Thennicke/Wikicommons

Adani’s prospective loan seems clearly inconsistent with the wording of Section 96. Any constitutional challenge against it is likely to be complex and nuanced, but two basic arguments present themselves.

First, the Constitution states that it is the Commonwealth Parliament that must determine both the loan and its conditions. However, the NAIF Act grants these powers to a corporate board, which answers only indirectly to the Parliament.

Second, the Constitution states that it is the state that must receive the loan. But the Queensland Government has stated that it will simply pass the NAIF funding straight to Adani, and that:

Commonwealth’s borrowings for the NAIF project will remain on the Commonwealth’s balance sheet and not on Queensland’s.

This is a highly questionable use of a federal power that was conceived as a way to help states with their financing, rather than private multinational companies.

Note also the apparent bypassing of the Senate in this process. Senators may be likely to bring a legal challenge if they feel that federal money meant to benefit their states is being distributed improperly.

More than just federal money at stake

While it is impossible to second-guess the High Court on such a complex matter, its recent decisions indicate a major swing away from unsupervised Commonwealth spending, especially on issues that affect the fiscal balance between the states and Commonwealth. The potential Adani loan certainly seems to fall into that category.


Read moreWhy are we still pursuing the Adani Carmichael mine?


Yet as much as Section 96 has been stretched beyond its original intention, it has also been used to support vital and important national enterprises, from education, to social welfare, and indeed national development projects.

With that in mind, the Commonwealth might ultimately come to doubt the wisdom of granting such a vast sum of money to a questionable company. If it leads to more restrictive reading of Section 96 by the High Court, it might significantly limit Canberra’s ability to fund valuable schemes in other areas.


This article was written by:
Brendan Gogarty – [Senior Lecturer in Law, University of Tasmania]

 

 

 

 

This article is part of a syndicated news program via

 

Why are we still pursuing the Adani Carmichael mine?

Queensland Premier 
Annastacia Palaszczuk  and Gautam Adani are still resolved to press ahead  
with the Carmichael mine, with taxpayers’ help. AAP Image/Cameron Laird
 

Why, if Adani’s gigantic Carmichael coal project is so on-the-nose for the banks and so environmentally destructive, are the federal and Queensland governments so avid in their support of it?

Once again the absurdity of building the world’s biggest new thermal coal mine was put in stark relief on Monday evening via an ABC Four Corners investigation, Digging into Adani.

Where the ABC broke new ground was in exposing the sheer breadth of corruption by this Indian energy conglomerate. And its power too. The TV crew was detained and questioned in an Indian hotel for five hours by police.

It has long been the subject of high controversy that the Australian government, via the Northern Australia Infrastructure Facility (NAIF)that is still contemplating a A$1 billion subsidy for Adani’s rail line, a proposal to freight the coal from the Galilee Basin to Adani’s port at Abbot Point on the Great Barrier Reef.

But more alarming still, and Four Corners touched on this, is that the federal government is also considering using taxpayer money to finance the mine itself, not just the railway.

No investors in sight

As private banks have walked away from the project, the only way Carmichael can get finance is with the government providing guarantees to a private banking syndicate, effectively putting taxpayers on the hook for billions of dollars in project finance.

The prospect is met with the same incredulity in India as it is here in Australia:

FOUR CORNERS: “Watching on from Delhi, India’s former Environment Minister can’t believe what he is seeing.”
JAIRAM RAMESH: “Ultimately, it’s the sovereign decision of the Australian Government, the federal government and the state government.
FOUR CORNERS: “But public money is involved, and more than public money, natural resources are involved.
JAIRAM RAMESH: “I’m very, very surprised that the Australian government, uh, for whatever reason, uh, has uh, seen it fit, uh, to all along handhold Mr Adani.”

Here we have a project that does not stack up financially, and whose profits – should it make any – are destined for tax haven entities controlled privately by Adani family interests. Yet the Queensland government has shocked local farmers and environmentalists by gifting Adani extremely generous water rights, and royalties concessions to boot.

Why are Australian governments still in support?

The most plausible explanation is simply politics and political donations. There is no real-time disclosure of donations and it is relatively easy to disguise them, as there is no disclosure of the financial accounts of state and federal political parties either. Payments can be routed through opaque foundations, the various state organisations, and other vehicles.

Many Adani observers believe there must be money involved, so strident is the support for so unfeasible a project. The rich track record of Adani bribing officials in India, as detailed by Four Corners, certainly points that way. But there is little evidence of it.

In the absence of proof of any significant financial incentives however, the most compelling explanation is that neither of the major parties is prepared to be “wedged” on jobs, accused of being anti-business or anti-Queensand.

There are votes in Queensland’s north at stake. Furthermore, the fingerprints of Adani’s lobbyists are everywhere.

Adani lobbyist and Bill Shorten’s former chief of staff Cameron Milner helped run the re-election campaign of Premier Annastacia Palaszczuk. This support, according to The Australian, has been given free of charge:

Mr Milner is volunteering with the ALP while keeping his day job as director and registered lobbyist at Next Level Strategic Services, which counts among its clients Indian miner Adani…
The former ALP state secretary held meetings in April and May with Ms Palaszczuk and her chief of staff David Barbagallo to negotiate a government royalties deal for Adani, after a cabinet factional revolt threatened the state’s lar­gest mining project.

Adani therefore enjoys support and influence on both sides of politics. “Next Level Strategic Services co-director David Moore — an LNP stalwart who was Mr Newman’s chief of staff during his successful 2012 election campaign — is also expected to volunteer with the LNP campaign.”

So it is that Premier Palaszczuk persists with discredited claims that Carmichael will produce 10,000 jobs when Adani itself conceded in a court case two years ago the real jobs number would be but a fraction of that.

If the economics don’t stack up, why is Adani still pursuing the project?

The Adani group totes an enormous debt load, the seaborne thermal coal market is in structural decline as new solar capacity is now cheaper to build than new coal-fired power plants and the the government of India is committed to phasing out coal imports in the next three years.

Why flood the market with 60 million tonnes a year in new supply and further depress the price of one of this country’s key export commodities?

The answer to this question lies in the byzantine structure of the Adani companies themselves. Adani already owns the terminal at Abbot Point and it needs throughput to make it financially viable.

Both the financial structures behind the port and the proposed railway are ultimately controlled in tax havens: the Cayman Islands, the British Virgin Islands and Singapore. Even if Adani Mining and its related Indian entities upstream, Adani Enterprises and Adani Power, lose money on Carmichael, the Adani family would still benefit.

 

The port and rail facilities merely “clip the ticket” on the volume of coal which goes through them. The Adani family then still profits from the privately-controlled infrastructure, via tax havens, while shareholders on the Indian share market shoulder the likely losses from the project.

As the man who used to be India’s most powerful energy bureaucrat, E.A.S. Sharma, told the ABC: “My assessment is that by the time the Adani coal leaves the Australian coast the cost of it will be roughly about A$90 per tonne.

“We cannot afford that, it is so expensive.”

More questions than answers remain

This renders the whole project even more bizarre. Why would the government put Australian taxpayers on the hook for a project likely to lose billions of dollars when the only clear beneficiaries are the family of Indian billionaire Gautam Adani and his Caribbean tax havens.

My view is that this project is a white elephant and will not proceed. Given the commitment by our elected leaders however, it may be that some huge holes in the earth may still be dug before it falls apart.


This article was written by:
Image ofMichael WestMichael West – [Adjunct Associate Professor, School of Social and Political Sciences, University of Sydney]

 

 

 

 

 

This article is part of a syndicated news program via

Australian household electricity prices may be 25% higher than official reports

Power price pain is worse than we thought. 
AAP Image/Paul Miller

The International Energy Agency (IEA) may be underestimating Australian household energy bills by 25% because of a lack of accurate data from the federal government.

The Paris-based IEA produces official quarterly energy statistics for the 30 member nations of the Organisation for Economic Cooperation and Development (OECD), on which policymakers and researchers rely heavily. But to provide this service, the IEA relies on member countries to provide it with good-quality data.

Last month, the agency published its annual summary report, Key World Statistics, which reported that Australian households have the 11th most expensive electricity prices in the OECD.

But other studies – notably the Thwaites report into Victorian energy prices – have reported that households are typically paying significantly more than the official estimates. In fact, if South Australia were a country it would have the highest energy prices in the OECD, and typical households in New South Wales, Queensland or Victoria would be in the top five.

A spokesperson for the federal Department of Environment and Energy, the agency responsible for providing electricity price data to the IEA, told The Conversation:

Household electricity prices data for Australia are sourced from the Australian Energy Market Commission annual Residential electricity price trends report. The national average price is used, with GST added. It is a weighted average based on the number of household connections in each jurisdiction.
The Australian energy statistics are the basis for the Australia data reported by the IEA in their Key world energy statistics. The Department of the Environment and Energy submits the data to the IEA each September. Some adjustments are made to the AES data to conform with IEA reporting requirements.

But it is clear that the electricity price data for Australia published by the IEA is at least occasionally of poor quality.

The Australian household electricity series in the IEA’s authoritative Energy Prices and Taxes quarterly statistical report stopped in 2004, and only resumed again again in 2012.

Between 2012 and 2016, the IEA’s reported residential price series data for Australia showed no change in prices.

Yet the Australian Bureau of Statistics’ electricity price index, which is based on customer surveys, showed a roughly 20% increase in the All Australia electricity price index over this period.

Australia is also the only OECD nation not to report electricity prices paid by industry.

Current prices

This year’s reported household average electricity prices are almost certainly wrong too. The IEA reports that household electricity prices in Australia for the first quarter of 2017 were US20.2c per kWh.

At a market exchange rate of US79c to the Australian dollar, this puts Australian household electricity prices at AU28c per kWh. Adjusted for the purchasing power of each currency, the comparable price is AU29c per kWh.

By contrast, the independent review of the Victorian energy sector chaired by John Thwaites surveyed the real energy prices paid by customers, as evidenced by their bills. In a sample of 686 Victorian households, those with energy consumption close to the median value were paying an average of AU35c per kWh in the first quarter of 2017. This is 25% more than the IEA’s official estimate. At least part of this difference is explained by the AEMC’s assumption that all customers in a competitive retail market are supplied on their retailers’ cheapest offers. But this is not the case in reality.

Surveying real electricity and gas bills drastically reduces the range of assumptions that need to be made to estimate the price paid by a representative customer. Indeed, as long as the sample of bills is representative of the population, a survey based on actual bills produces a reliable estimate of representative prices in retail markets characterised by high levels of price dispersion, as Australia’s retail electricity markets are.

Pointing to a reliable estimate of Victoria’s representative residential price is, of course, not enough to prove that the IEA’s estimate is wrong. It could just as easily mean that Victorians are paying way more than the national average for their electricity.

But the idea that Victorians are paying more than average does not stack up when we look at the state-by-state data, which suggests that Victoria is actually somewhere in the middle. Judging by the prices charged by the three largest retailers in each state and territory, Victorian householders are paying about the same as those in New South Wales and Queensland, less than those in South Australia, and more than those in Tasmania, the Northern Territory, Western Australia and the Australian Capital Territory.

 
Residential electricity prices. Author provided

The IEA can not reasonably be blamed for the inadequate residential data for Australia that they report, and the nonexistent data on electricity prices paid by Australia’s industrial customers. The IEA does not do its own calculation of prices in each country, but rather it relies on price estimates from official sources in those countries.

An obvious question that arises from this is where Australia really ranks internationally if we used prices that reflect what households are actually paying.

This is contentious, not least because prices in New South Wales, Queensland and South Australia increased – typically around 15% or more – from July this year. We do not know how prices have changed in other OECD member countries since the IEA’s recent publication (which covered prices for the first quarter of 2017). But we do know that prices in Australia have been far more volatile than in any other OECD country.

Assuming that other countries’ prices are roughly the same as they were in the first quarter of 2017, our estimate using the IEA’s data is that the typical household in South Australia is paying more than the typical household in any other OECD country. The typical household in New South Wales, Queensland or Victoria is paying a price that ranks in the top five.

It should also be remembered that these prices are after excise and sale tax. Taxes on electricity supply in Australia are low by OECD standards – so if we use pre-tax prices, Australian households move even higher up the list.

There are serious question marks over Australia’s official electricity price reporting. Policy makers, consumers and the public have a right to expect better.


This article was written by:
Image of Bruce MountainBruce Mountain – [Director, Carbon and Energy Markets, Victoria University]

 

 

 

 

 

This article is part of a syndicated news program via

Want energy storage? Here are 22,000 sites for pumped hydro across Australia

Energy storage Pumped hydro: all you really need is 
some reservoirs and a big hill. 

The race is on for storage solutions that can help provide secure, reliable electricity supply as more renewables enter Australia’s electricity grid.

With the support of the Australian Renewable Energy Agency (ARENA), we have identified 22,000 potential pumped hydro energy storage (PHES) sites across all states and territories of Australia. PHES can readily be developed to balance the grid with any amount of solar and wind power, all the way up to 100%, as ageing coal-fired power stations close.

Solar photovoltaics (PV) and wind are now the leading two generation technologies in terms of new capacity installed worldwide each year, with coal in third spot (see below). PV and wind are likely to accelerate away from other generation technologies because of their lower cost, large economies of scale, low greenhouse emissions, and the vast availability of sunshine and wind.

Graph of New generation capacity installed worldwide in 2016.
New generation capacity installed worldwide in 2016. ANU/ARENA, Author provided

Although PV and wind are variable energy resources, the approaches to support them to achieve a reliable 100% renewable electricity grid are straightforward:

  • Energy storage in the form of pumped hydro energy storage (PHES) and batteries, coupled with demand management; and
  • Strong interconnection of the electricity grid between states using high-voltage power lines spanning long distances (in the case of the National Electricity Market, from North Queensland to South Australia). This allows wind and PV generation to access a wide range of weather, climate and demand patterns, greatly reducing the amount of storage needed.

PHES accounts for 97% of energy storage worldwide because it is the cheapest form of large-scale energy storage, with an operational lifetime of 50 years or more. Most existing PHES systems require dams located in river valleys. However, off-river PHES has vast potential.

Off-river PHES requires pairs of modestly sized reservoirs at different altitudes, typically with an area of 10 to 100 hectares. The reservoirs are joined by a pipe with a pump and turbine. Water is pumped uphill when electricity generation is plentiful; then, when generation tails off, electricity can be dispatched on demand by releasing the stored water downhill through the turbine. Off-river PHES typically delivers maximum power for between five and 25 hours, depending on the size of the reservoirs.

Most of the potential PHES sites we have identified in Australia are off-river. All 22,000 of them are outside national parks and urban areas.

The locations of these sites are shown below. Each site has between 1 gigawatt-hour (GWh) and 300GWh of storage potential. To put this in perspective, our earlier research showed that Australia needs just 450GWh of storage capacity (and 20GW of generation power) spread across a few dozen sites to support a 100% renewable electricity system.

In other words, Australia has so many good sites for PHES that only the best 0.1% of them will be needed. Developers can afford to be choosy with this significant oversupply of sites.

Map showing Pumped hydro sites in Australia.
Pumped hydro sites in Australia. ANU/ARENA, Author provided

Here is a state-by-state breakdown of sites (detailed maps of sites, images and information can be found here):

NSW/ACT: Thousands of sites scattered over the eastern third of the state
Victoria: Thousands of sites scattered over the eastern half of the state
Tasmania: Thousands of sites scattered throughout the state outside national parks
Queensland: Thousands of sites along the Great Dividing Range within 200km of the coast, including hundreds in the vicinity of the many wind and PV farms currently being constructed in the state
South Australia: Moderate number of sites, mostly in the hills east of Port Pirie and Port Augusta
Western Australia: Concentrations of sites in the east Kimberley (around Lake Argyle), the Pilbara and the Southwest; some are near mining sites including Kalgoorlie. Fewer large hills than other states, and so the minimum height difference has been set at 200m rather than 300m.
Northern Territory: Many sites about 300km south-southwest of Darwin; a few sites within 200km of Darwin; many good sites in the vicinity of Alice Springs. Minimum height difference also set at 200m.

The maps below show synthetic Google Earth images for potential upper reservoirs in two site-rich regions (more details on the site search are available here). There are many similarly site-rich regions across Australia. The larger reservoirs shown in each image are of such a scale that only about a dozen of similar size distributed across the populated regions of Australia would be required to stabilise a 100% renewable electricity system.

Picture of Araluen Valley near Canberra.
Araluen Valley near Canberra. At most, one of the sites shown would be developed. ANU/ARENA, Author provided

Picture of Townsville, Queensland. At most, one of the sites shown would be developed. 
Townsville, Queensland. At most, one of the sites shown would be developed. ANU/ARENA, Author providedThe chart below shows the largest identified off-river PHES site in each state in terms of energy storage potential. Also shown for comparison are the Tesla battery and the solar thermal systems to be installed in South Australia, and the proposed Snowy 2.0 system.
Graph showing Largest identified off-river PHES sites in each state
Largest identified off-river PHES sites in each state, together with other storage systems for comparison. ANU/ARENA, Author provided

The map below shows the location of PHES sites in Queensland together with PV and wind farms currently in an advanced stage of development, as well as the location of the Galilee coal prospect. It is clear that developers of PV and wind farms will be able to find a PHES site close by if needed for grid balancing.

Map showing solar PV (yellow) and wind (green) farms currently in an advanced stage of development in Queensland,
Solar PV (yellow) and wind (green) farms currently in an advanced stage of development in Queensland, together with the Galilee coal prospect (black) and potential PHES sites (blue).ANU/ARENA, Author provided

Annual water requirements of a PHES-supported 100% renewable electricity grid would be less than one third that of the current fossil fuel system, because wind and PV do not require cooling water. About 3,600ha of PHES reservoir is required to support a 100% renewable electricity grid for Australia, which is 0.0005% of Australia’s land area, and far smaller than the area of existing water storages.

PHES, batteries and demand management are all likely to have prominent roles as the grid transitions to 50-100% renewable energy. Currently, about 3GW per year of wind and PV are being installed. If this continued until 2030 it would be enough to supply half of Australia’s electricity consumption. If this rate is doubled then Australia will reach 100% renewable electricity in about 2033.

Fast-track development of a few excellent PHES sites can be completed in 2022 to balance the grid when Liddell and other coal-fired power stations close.


This article was co-authored by:
Image of Andrew BlakersAndrew Blakers – [Professor of Engineering, Australian National University];
 
Image of Bin LuBin Lu – [PhD Candidate, Australian National University] and
 
Image of Matthew StocksMatthew Stocks – [Research Fellow, ANU College of Engineering and Computer Science, Australian National University]

 

 

 

 

This article is part of a syndicated news program via

 

More coal doesn’t equal more peak power

 Lake Liddell with power stations.

The proposed closure date for Liddell, AGL’s ancient and unreliable coal power station, is five years and probably two elections away. While AGL has asked for 90 days to come up with a plan to deliver equivalent power into the market, state and local governments, businesses and households will continue to drive the energy revolution.

At the same time as AGL is insisting they won’t sell Liddell or extend its working life, government debate has returned to the Clean Energy Target proposed by the Finkel Review. Now Prime Minister Malcolm Turnbull is suggesting a redesign of the proposal, potentially paving the way for subsidies to low-emission, high-efficiency coal power stations.

But even if subsidies for coal are built into a new “reliable energy target”, there’s no sign that the market has any appetite for building new coal. For a potential investor in a coal-fired generator, the eight years before it could produce a cash flow is a long time in a rapidly changing world. And the 30 years needed to turn a profit is a very long time indeed.

We also need to remember that baseload coal power stations are not much help in coping with peak demand – the issue that will determine whether people in elevators are trapped by a sudden blackout, per Barnaby Joyce. It was interesting that a Melbourne Energy Institute study of global pumped hydro storage mentioned that electricity grids with a lot of nuclear or coal baseload generation have used pumped storage capacity for decades: it’s needed to supply peak demand.

Solar power is driving down daytime prices – which used to provide much of the income that coal plants needed to make a profit. Energy storage will further reduce the scope to profit from high and volatile electricity prices, previously driven by high demand and supply shortages in hot weather, or when a large coal-fired generator failed or was shut down for maintenance at a crucial time.

There is now plenty of evidence that the diverse mix of energy efficiency, demand response, energy storage, renewable generation and smart management can ensure reliable and affordable electricity to cope with daily and seasonal variable electricity loads. New traditional baseload generators will not be financially viable, as they simply won’t capture the profits they need during the daytime.

The government is now focused on AGL and how it will deliver 1,000 megawatts of new dispatchable supply. In practice, appropriate policy action would facilitate the provision of plenty of supply, storage, demand response and energy efficiency to ensure reliable supply. But the government is unable to deliver policy because of its internal squabbles, and AGL looks like a convenient scapegoat.

Demand response is already working

It is astounding that conservatives can continue to blame renewable energy for increasing prices. They are either ignorant or have outdated agendas to prop up coal. A smart, efficient, renewable electricity future will be cheaper than any other – albeit not necessarily cheaper than our past electricity prices.

Along with other studies, CSIRO’s recent Low Emission Technology Roadmap showed that the “ambitious energy productivity (and renewable energy)” scenario was quite reasonably priced.

While the debate continues to focus on large-scale supply, “behind the meter” action is accelerating through demand response, energy efficiency and on-site renewables. As I mentioned in a previous column, the ARENA/AEMO demand response pilot has attracted almost 700MW of flexible demand reduction to be delivered before Christmas, and another 1,000MW by December 2018. That’s nearly as much as Liddell could supply flat out. And there’s plenty more where that came from.

Spending a few hundred million dollars to prop up an old coal plant for a few years would shift it to the high-cost end of coal generators. So when prices fall, it would be one of the first coal plants to have to shut down, and among the last to come back online when prices rebound. This would add to the stress on the facility and the management challenges of operating it – unless it had preferential cheap access to a lot of pumped hydro capacity.

In the medium to long term, we do need to work out how to supply electricity for 24/7 industries but, according to AEMO, this is not urgent. We don’t know how much of that kind of industry will be here in ten years or so, given high gas prices, the age of their industrial plants, and their relatively small scale relative to their international competitors.

On the other hand, they may adapt by investing in behind-the-meter measures. Or they could relocate to sunny places and be part of what the economist Ross Garnaut has called the “low-carbon energy superpower”.


This article was written by:

Image of Alan Pears -

Alan Pears – [Senior Industry Fellow, RMIT University]

 

 

 

 

This article is part of a syndicated news program via

 

What about the people missing out on renewables? Here’s what planners can do about energy justice

Energy Justice Solar panels are integrated into a block 
of flats in the Viikki area of Helsinki, Finland.

The rapid shift to new energy sources is outpacing land use planning in cities. As interest in renewable energy burgeons, another concern has emerged – energy justice.

Improvements in renewable energy generation, energy efficiency and storage technology benefit more advantaged populations like homeowners. These innovations are generally beyond the reach of more disadvantaged groups like renters, pensioners, students and the working poor. Researchers see this as an emerging energy justice concern.

Energy costs hit the poor harder

Image of a woman reading a power bill
Rising power bills hit lower-income households particularly hard. shutterstock

recent report, prepared by the Australian Council of Social Service, The Climate Institute and the Brotherhood of St Laurence, highlighted the disproportionate impacts of energy poverty. Current policy settings and energy price rises make life even more difficult for people who are already struggling to pay their power bills.

Energy price rises can affect residents’ ability to cool or heat their homes, cook food and get hot water. Ultimately, this can have dire consequences for people’s health and wellbeing.

Attention has been drawn to the inability of such households to tap into renewable energy in Western Australia and the Northern Territory. Less well known are the emerging opportunities to reduce energy poverty. These include solar leasing, energy co-operatives and landlord incentives.

Solar leasing

Solar leasing is a strategy where a homeowner signs an agreement with a company to install solar panels. Up-front costs are limited and the system is paid back incrementally over its lifespan. In theory, this could enable landlords and low-income owners to gain access to cheaper solar energy.

There are many variations on such leases. One involves the owner buying power back from the leasing company, which sells surplus power to the grid. Another is where the owner obtains a low-cost loan, such as those offered by the Fannie Mae foundation in the US.

Some caution is warranted before entering such agreements, not least because leases can make homes harder to sell.

The relative vacuum of Commonwealth energy policy in Australia is prompting some local governments to step in. The City of Darebin in Melbourne is an example. Its Solar Saver Program aims to help pensioners and other low-income earners get solar panels on rooftops. The panels are installed up-front and paid back through rates.

Image of a house with solar panels
Some councils are helping pensioners and other low-income earners to install solar panels to cut their energy bills. Michael Coghlan

Community renewable energy co-operatives

A second idea is to increase competition in the energy market by enabling communities to generate their own energy. Community renewable energy projects are an example.

But such projects need not be market-based. A recent innovation in New South Wales has been the development of an energy co-operative in Stucco apartments, a non-profit, student housing complex. This small-scale co-operative generates solar energy and stores it in batteries, selling it to tenants in the building, who are low-income students.

Larger versions exist in Germany. There whole villages have become energy co-operatives of sorts, achieving energy self-sufficiency.

Landlord incentives

A landlord who makes improvements such as double glazing should be able to claim these as a tax deduction. Paul Flint/flickr

Several commentators have identified the need for better incentives and penalties to encourage landlords to retrofit properties to make them more energy-efficient.

This includes changing the tax system. If rental properties are upgraded – with insulation, more efficient hot water systems, energy-efficient stoves or windows – these costs should count as legitimate tax deductions. Currently, these improvements are not treated as repairs and instead are depreciated over time.

Similarly, new minimum standards for energy efficiency in rental properties are needed. The NSW BASIX system is a step in this direction.

The energy justice challenge for planners

Land use planning systems are typically future-oriented. But most of the buildings that will exist in the middle of this century are already built.

We need to update planning systems to better manage systemic changes in existing built environments. These changes include the transition to renewable energy and associated energy justice concerns.

There are possibilities for improvement. For example, planners can learn from early innovations like the Stucco model. Working proactively with community energy co-operatives could reduce uncertainty for all stakeholders, minimise time wasted and maximise returns for participants.

Planners can also develop new policies and processes – such as model town planning schemes – to work with communities in delivering other small-scale renewable energy projects such as community solar farms and microgrids. Another possibility is to alter strata title laws to make it easier to install solar in apartment buildings.

Modern land use planning was driven in large part by a desire to improve public health and social justice by regulating development. Today’s planners should regard efforts to improve energy justice as a new but entirely appropriate professional responsibility.


This article was co-authored by:

 

 

 

 

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New rules for retailers, but don’t sit there waiting for your electricity bill to go down

 Information about discounts will be 
simpler, but you’ll still have to do the legwork to shop around. 

It sounds like good news. After summoning the heads of Australia’s major electricity retailers to Canberra, Prime Minister Malcolm Turnbull yesterday announced that the government will take “decisive action to reduce energy prices for Australian families and businesses”.

But look a little closer. Yes, the retailers have agreed to some small but important measures that will make it easier for customers to find the best electricity deal. But there is no guarantee energy prices will fall. And your electricity bill will only be lower if you, the customer, take action.

Retailers’ current advantage

At the moment, retailers typically encourage consumers to sign up by offering a discount on the bill for a fixed period – normally one or two years. After this period expires, customers usually face higher prices for their electricity.

Some lucky customers will be put on an equivalent tariff and their electricity costs will not change much. Others will lose the discount – which can be as much as 30% of the bill. And some unlucky customers will be placed on the retailer’s “standing offer” – usually the most expensive plans in the market.

All the retailers have to do is to send you a letter informing you of the change. Lots of customers find those letters too confusing or time-consuming to read, and throw them in Electricity retailers current advantage

the bin. Those who do read and understand it don’t necessarily take action: almost half of Australian households have not changed their electricity retailer in more than five years.

How the new deal could help you

Under the deal that Turnbull has brokered with the retailers, every consumer on a lapsing deal will be sent more comprehensive and helpful information that will encourage them to switch. This will include details of cheaper available offers, and information from websites that compare prices across the various plans and retailers.

Second, as the Grattan Institute recommended in our March report, Price Shock, retailers will now have to be more explicit about what happens if you don’t sign up to a new offer. Specifically, that means detailing exactly how much it is going to cost you.

Third, retailers will have to report to the Australian Energy Regulator how many customers are on lapsed deals. This may seem like a lot of red tape for not a lot of impact. But a lack of information on how many customers are on what type of deal has been a major barrier to understanding what is happening in the electricity market. This increased transparency will encourage retailers to reduce the number of customers they have on lapsed contracts.

The new deal includes other welcome measures, mainly designed to help poor households reduce their bills and make sure they do not face increased costs as a result of late payments. (To be fair to the retailers, they already do a lot for customers whom they consider to be “in hardship”.)

It’s still down to you

The deal will doubtless improve the retail electricity market. Retailers will take on more responsibility for helping their customers onto a better deal. And those customers who are most at risk from very high prices will get more protection.

But these are only incremental steps and do not ensure that customers will pay less for their electricity. While more simple information will be available, it will still be up to the consumer to act on it. The bottom line remains the same: if you want to pay less for electricity, you need to search for and sign up to a cheaper deal.

Customers should be under no illusions. Energy prices are still going to be high for as far as the eye can see.

Gas prices remain way above historic levels. Wholesale electricity prices are also high. Network costs – the price we pay for the poles and wires – have grown enormously over the past 20 years, and ultimately those costs find their way onto our bills. And the much-needed policy stability on greenhouse emission reductions that can put downward pressure on electricity costs remains elusive.

Under the new rules, consumers might be able to get a cheaper deal, but this doesn’t mean they will get a cheap deal.

It may be months before we know whether the new measures are enough to encourage consumers to go out and find a cheaper plan or retailer. The danger is that, in a year’s time, too many consumers will still be stuck on expensive electricity deals.

Even if huge numbers of consumers switch, there are still fundamental issues in Australia’s electricity market. Prices won’t come down across the board until these are resolved.

This is a welcome move by the government. But it only addresses a fraction of the problems in the electricity market. The big question for the prime minister is, what next?

 

This article was written by:
Image of David Blowers David Blowers – [Energy fellow, Grattan Institute]

 

 

 

 

This article is part of a syndicated news program via
 

Solar is now the most popular form of new electricity generation worldwide

Solar PV outstripped coal as the leading 
source of new electricity generation worldwide last year. Image/Lukas Coch

Solar has become the world’s favourite new type of electricity generation, according to global data showing that more solar photovoltaic (PV) capacity is being installed than any other generation technology.

Worldwide, some 73 gigawatts of net new solar PV capacity was installed in 2016. Wind energy came in second place (55GW), with coal relegated to third (52GW), followed by gas (37GW) and hydro (28GW).

Together, PV and wind represent 5.5% of current energy generation (as at the end of 2016), but crucially they constituted almost half of all net new generation capacity installed worldwide during last year.

It is probable that construction of new coal power stations will decline, possibly quite rapidly, because PV and wind are now cost-competitive almost everywhere.

Hydro is still important in developing countries that still have rivers to dam. Meanwhile, other low-emission technologies such as nuclear, bio-energy, solar thermal and geothermal have small market shares.

PV and wind now have such large advantages in terms of cost, production scale and supply chains that it is difficult to see any other low-emissions technology challenging them within the next decade or so.

That is certainly the case in Australia, where PV and wind comprise virtually all new generation capacity, and where solar PV capacity is set to reach 12GW by 2020. Wind and solar PV are being installed at a combined rate of about 3GW per year, driven largely by the federal government’s Renewable Energy Target (RET).

This is double to triple the rate of recent years, and a welcome return to growth after several years of subdued activity due to political uncertainty over the RET.

If this rate is maintained, then by 2030 more than half of Australian electricity will come from renewable energy and Australia will have met its pledge under the Paris climate agreement purely through emissions savings within the electricity industry.

To take the idea further, if Australia were to double the current combined PV and wind installation rate to 6GW per year, it would reach 100% renewable electricity in about 2033. Modelling by my research group suggests that this would not be difficult, given that these technologies are now cheaper than electricity from new-build coal and gas.

Renewable future in reach

The prescription for an affordable, stable and achievable 100% renewable electricity grid is relatively straightforward:

  1. Use mainly PV and wind. These technologies are cheaper than other low-emission technologies, and Australia has plenty of sunshine and wind, which is why these technologies have already been widely deployed. This means that, compared with other renewables, they have more reliable price projections, and avoid the need for heroic assumptions about the success of more speculative clean energy options.
  2. Distribute generation over a very large area. Spreading wind and PV facilities over wide areas – say a million square kilometres from north Queensland to Tasmania – allows access to a wide range of different weather, and also helps to smooth out peaks in users’ demand.
  3. Build interconnectors. Link up the wide-ranging network of PV and wind with high-voltage power lines of the type already used to move electricity between states.
  4. Add storage. Storage can help match up energy generation with demand patterns. The cheapest option is pumped hydro energy storage (PHES), with support from batteriesand demand management.

Australia currently has three PHES systems – Tumut 3Kangaroo Valley, and Wivenhoe – all of which are on rivers. But there is a vast number of potential off-river sites.

Picture of potential sites for pumped hydro storage in Queensland
Potential sites for pumped hydro storage in Queensland, alongside development sites for solar PV (yellow) and wind energy (green). Galilee Basin coal prospects are shown in black. Andrew Blakers/Margaret Blakers, Author provided

In a project funded by the Australian Renewable Energy Agency, we have identified about 5,000 sites in South Australia, Queensland, Tasmania, the Canberra district, and the Alice Springs district that are potentially suitable for pumped hydro storage.

Each of these sites has between 7 and 1,000 times the storage potential of the Tesla battery currently being installed to support the South Australian grid. What’s more, pumped hydro has a lifetime of 50 years, compared with 8-15 years for batteries.

Importantly, most of the prospective PHES sites are located near where people live and where new PV and wind farms are being constructed.

Once the search for sites in New South Wales, Victoria and Western Australia is complete, we expect to uncover 70-100 times more PHES energy storage potential than required to support a 100% renewable electricity grid in Australia.

Image of Potential PHES upper reservoir sites east of Port Augusta, South Australia.
Potential PHES upper reservoir sites east of Port Augusta, South Australia. The lower reservoirs would be at the western foot of the hills (bottom of the image). Google Earth/ANU

Managing the grid

Fossil fuel generators currently provide another service to the grid, besides just generating electricity. They help to balance supply and demand, on timescales down to seconds, through the “inertial energy” stored in their heavy spinning generators.

But in the future this service can be performed by similar generators used in pumped hydro systems. And supply and demand can also be matched with the help of fast-response batteries, demand management, and “synthetic inertia” from PV and wind farms.

Wind and PV are delivering ever tougher competition for gas throughout the energy market. The price of large-scale wind and PV in 2016 was A$65-78 per megawatt hour. This is below the current wholesale price of electricity in the National Electricity Market.

Abundant anecdotal evidence suggests that wind and PV energy price has fallen to A$60-70 per MWh this year as the industry takes off. Prices are likely to dip below A$50 per MWh within a few years, to match current international benchmark prices. Thus, the net cost of moving to a 100% renewable electricity system over the next 15 years is zero compared with continuing to build and maintain facilities for the current fossil-fuelled system.

Gas can no longer compete with wind and PV for delivery of electricity. Electric heat pumpsare driving gas out of water and space heating. Even for delivery of high-temperature heat for industry, gas must cost less than A$10 per gigajoule to compete with electric furnaces powered by wind and PV power costing A$50 per MWh.

Importantly, the more that low-cost PV and wind is deployed in the current high-cost electricity environment, the more they will reduce prices.

Then there is the issue of other types of energy use besides electricity – such as transport, heating, and industry. The cheapest way to make these energy sources green is to electrify virtually everything, and then plug them into an electricity grid powered by renewables.

A 55% reduction in Australian greenhouse gas emissions can be achieved by conversion of the electricity grid to renewables, together with mass adoption of electric vehicles for land transport and electric heat pumps for heating and cooling. Beyond this, we can develop renewable electric-driven pathways to manufacture hydrocarbon-based fuels and chemicals, primarily through electrolysis of water to obtain hydrogen and carbon capture from the atmosphere, to achieve an 83% reduction in emissions (with the residual 17% of emissions coming mainly from agriculture and land clearing).

Doing all of this would mean tripling the amount of electricity we produce, according to my research group’s preliminary estimate.

But there is no shortage of solar and wind energy to achieve this, and prices are rapidly falling. We can build a clean energy future at modest cost if we want to.

 

This article was written by:
Andrew Blakers – [Professor of Engineering, Australian National University]

 

 

 

 

This article is part of a syndicated news program via

 

In the absence of national leadership, cities are driving climate policy

Image of Sydney at night The City of Sydney is aiming to get 
50% of its electricity from renewables by 2030. HjalmarGerbig 

Imagine a future in which every one of Australia’s 537 local government areas, including all our capital cities and major regional centres, achieve net zero greenhouse emissions. It might sound like a pipe dream, but it could be closer than you think.

A new Climate Council report, released today, tracks the climate action being taken at the local government level. It gives myriad examples of cities, towns and local shires, in Australia and abroad, setting and achieving ambitious goals for renewable energy, energy efficiency, and sustainable transport.

In a 2016 Climate Institute survey of attitudes to climate change, 90% of respondents indicated that the federal government should shoulder the bulk of responsibility for action, with 67% saying Canberra should take a leading role. Yet given the current policy paralysis at Commonwealth level it is little wonder that some states seem determined to go it alone on setting ambitious clean energy targets.

Meanwhile, it’s at the local government level where enthusiastic action to embrace a more sustainable future is really taking off.

For some, the inspiration for action was a pledge by more than 1,000 mayors, local representatives and community leaders to move to 100% renewable energy. The promise was made on the sidelines of the 2015 Paris climate negotiations, at an event called the Climate Summit for Local Leaders.

Since then, US President Donald Trump’s decision to withdraw the United States from the Paris Climate Agreement seems simply to have strengthened this resolve. More than 350 US mayors responded to Trump’s decision by pledging to reach 100% renewable energy for their communities by 2035.

The International Energy Agency (IEA) has estimated that transforming the way energy is used and generated in cities and towns worldwide has the potential to deliver 70% of the total emissions reductions needed to stay on track for the 2℃ global warming limit set by the Paris Agreement. The IEA has described cities as the key to decarbonisation.

The leaders of some of Australia’s own major cities are certainly no slouches when it comes to climate aspiration:

Ambitions are also high at regional and local council levels. One in five councils surveyed by Beyond Zero Emissions indicated they were aiming for “100% renewable energy” or “zero emissions”. Examples detailed in the Climate Council report include, among others:

  • Yackandandah, Vic: 100% renewable energy by 2022
  • Lismore, NSW: 100% renewable energy by 2023
  • Uralla, NSW: 100% renewable energy in 5-10 years
  • Newstead, Qld: 100% renewable energy by 2017
  • Darebin, Melbourne: zero net emissions by 2020.

Power to cities

To coincide with the report, the Climate Council is also today launching its Cities Power Partnership, a free nationwide program that aims to transform Australia’s energy future from the ground up.

Thirty-five councils, representing more than 3 million Australians (12% of the population), signed up to the program even before it was launched. To join, councils identify five items in the “Power Partners pledge” that they will strive to achieve. These items include increasing the proportion of renewable energy generated within the local area; improving energy efficiency; providing sustainable transport options; building community sustainability partnerships; and engaging in climate advocacy.

The new Cities Power Partnership.

Participants will then complete a six-monthly online survey on progress. In return, the Cities Power Partnership will provide incentives for councils to deliver on their selected targets and to work together to help each other. Members of the partnership will have access to a national knowledge hub and an online analytical tool to measure energy, cost and emissions savings of projects. They will also be buddied with other councils to share knowledge; receive visits from domestic and international experts; be connected to community energy groups; and be celebrated at events with other local leaders.

Ultimately, the CPP is designed to help local communities sidestep the political roadblocks at national level, and just get on with the job of implementing climate policies.

These may be only small projects when considered individually, but the idea is to link them into a network that, together, can make a big difference to one of our most significant challenges. After all, the only way to eat an elephant is to take one bite at a time.

This article was written by:
Image of Lesley HughesLesley Hughes – [Professor, Department of Biological Sciences, Macquarie University]

 

 

 

 

 

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