Australasian Science: Australia's authority on science since 1938

White Washing Energy Policy

By Ian Lowe

The draft energy white paper would have looked out of date 25 years ago, when we already knew about the problems of “peak oil” and climate change.

The draft energy white paper was released quietly in the pre-Christmas silly season by Resources and Energy Minister Martin Ferguson. He was right to try to play it down. It suggests that energy policy is still being written by the so-called “greenhouse mafia” documented by Guy Pearce in his book High and Dry.

The paper sets goals for Australia to be the world’s number one coal exporter, the world’s number one gas exporter, and to crack the global top three sellers of uranium. We already contribute massively to climate change by our coal exports, but the government wants to sell even more.

The white paper goes back on the ALP’s election commitment to apply pollution standards to new power stations, advancing the ridiculous argument that the $23/tonne charge on CO2 released is enough to drive clean generation.

Faced with the trade-off between short-term economic goals and long-term issues that affect every Australian, our politicians continue to subsidise fossil fuels. In his speech announcing the draft paper, Ferguson effectively dismissed renewable energy as a viable means of providing cheap, clean electricity to Australians.

He is out of touch with public opinion and commercial reality. Reports from all over the world confirm that heavy investment in fossil fuels is, quite simply, bad business. According to US financial analyst Bloomberg, the average price of photovoltaic solar cells has decreased by 70% since mid-2008, well beyond expectations. Likewise, clean energy investment has outstripped fossil fuel energy investment over the same period. The white paper is so bad that even The Australian published Bloomberg’s criticism.

Yet Australian leaders are not uniquely out of touch with this century. Around the world, governments have collectively spent ten times as much propping up fossil fuels as they have invested in clean renewable energy. According to International Energy Agency data, in 2008 and 2009 $550 billion was spent globally on fossil fuel subsidies and only $50 billion on renewable energy development.

That’s why the government’s new Clean Energy Finance Corporation is so important. It has the potential to harness Australian innovation, so advances in technologies like solar thermal, geothermal and wave power are developed here at home instead of going overseas.

Australia has massive untapped renewable energy resources. Sound engineering studies have confirmed we could power the nation completely by clean energy. It’s time to look forward and capitalise on this natural competitive advantage.

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There was uninformed media comment at the end of last year about rising electricity bills. Some attacked the cost to consumers of incentives to install solar panels. Other commentators even blamed the jump on the government decision to introduce a carbon price, but that doesn’t apply until July. So I was interested to read an analysis by the Essential Services Commission of South Australia of increasing power costs in that State.

The Commission found that the average household electricity bill had gone up $515 in the past 3 years, a staggering increase of 44%. What has caused the increase? Well, there is a $47 contribution from subsidies of renewables, but that is less than one-tenth of the increase. There are three larger contributions.

The cost of retailing has gone up by $65. Instead of a public retailer, there are now commercial firms competing for business, with consumers paying the increased costs.

The cost of generating power has jumped by $183, mainly because the industry has been privatised and has to earn profits rather than operating as a public service.

And distribution has added a massive $220 to the average bill, partly again due to company profits and partly due to the investment needed to cope with population growth.

So consumers are paying a high price for the ideology of privatisation. Ironically, the energy white paper supports selling off those bits of the power industry that are still in public hands.

Ian Lowe is Emeritus Professor of science, technology and society at Griffith University.