The biggest game in town, electricity wise, is coal – how it will be managed in a carbon-constrained environment is far and away the main energy issue for the federal government and three state governments in particular. What this will cost is the biggest energy issue for consumers, especially major users. Whether the change will impact on supply security is a big question.
The cold truth in autumn 2009 is that we are not really a whole lot nearer coming to terms with this challenge than we were five years ago. There is a certain amount of movement, but not much meaningful action. In terms of delivering abatement at 135 million tonnes a year by 2020 – which is the Rudd government’s target, as revealed to the Senate by Department of Climate Change officers – a decade is not much time in which to introduce fundamental technological change.
Where coal for power really matters is in Victoria, New South Wales and Queensland.
Using the latest official industry stats, consumption in these three states account for 160,000 gigawatt hours per year versus 200,000 GWh for the country as a whole. As important, on the industry’s forecasts, the trio will account for 210,000 GWh a year of the national demand of 260,000 GWh by 2017. Meeting that demand growth will require substantial investment in new baseload capacity.
At present, the comparatively low cost of coal-fired power is a key factor in the economy (that spluttering beast Swan and Rudd spend their time trying to keep from drowning).
The numbers above are for consumption. Actual generation production figures are higher – to account for the power stations’ own needs and for line losses in delivery to end-users. Actual total national generation now exceeds 226,000 GWh annually (with 183,000 GWh of it in the trio of states) – and it’s the emissions from gross fossil-fuelled production that count.
To achieve their share of this level of supply the Victorian generators are burning more than 64 million tonnes of brown coal a year. In Queensland and NSW the black coal generators are getting through 51 million tonnes a year.
Leaving aside Victoria and the possible closure of two old power stations under emissions trading pressure (with all that entails for the state consumers), Queensland and NSW have 20,500 megawatts of black coal-burning generation. What happens to them is a key question in delivering even the “soft” Rudd/Wong target for 2020, let alone any larger target – and bear in mind the government has committed to a 15 per cent abatement plan if Copenhagen delivers a new carbon treaty.
The current going price for a capture-ready IGCC coal plant is $3 billion per 1,000 MW capacity, so the feds and the two ALP state governments are looking at a $60 billion plus to build new power stations, to which needs to be added the not-inconsiderable cost of clearing existing sites and the currently unknown level of investment required to convey captured CO2 from plants to its burial point and to keep it down there.
Then there is the large cost of providing “bridging” capacity while each power complex is torn down and replaced – and this has to be baseload capacity too.
End-use energy efficiency proponents – eg Jon Jutsen of Energetics, the acknowledged leader in the field in Australia – argue that we need a plan to ensure zero electricity growth so that we don’t have to worry about new baseload generation except to reduce emissions. Energy efficiency, he says, should be the centrepiece of Australian carbon policies (see Powering Australia yearbook 2008 interview).
Regrettably, right now, no such far-reaching plan exists and there is no sign of the Rudd government producing it, so we come back to what to do about the coal generators, in what time frame and at what cost – both capital and end-user prices.
In this area, there is a lot of aspiration about at the moment, a lot of worthy intentions, but there is no viable game plan that would even start to replace existing plant in the next decade. Muddling through is not an option when you are dealing with security of electricity supply