If Trump loses Australia rejects cheap energy and embraces economic decline

I have a piece in Quadrant examining the new faultline in Australian politics and where it might shift following next Wednesday. Here are some extracts

Victoria Bitter, Bunnings and miner South32 have joined the banks in being the latest to proclaim their carbon free emissions, signalling a certainty, at least from firms’ PR departments, that the future belongs to renewables.  Nations around the world – the latest being South Korea – are committing to carbon neutrality thirty years hence.

One of the few pure wind plays is Hepburn Wind. In 2020 the business earned $111.5 per MWh in energy revenue, 37 per cent of which came from the subsidy from generation certificates.  This level of subsidy is seen elsewhere – the US subsidy for wind and solar is estimated at 50 per cent.

CSIRO and the Paris based International Energy Agency (IEA) are declaring solar/wind to be the cheapest source of power.  Yet, Lobbyists are estimating a €50 per tonne 2030 carbon price (at over $A80 per MWh nearly double the total cost of supply from coal generators) when, if renewables were competitive, no such subsidy would be earned. How can this be?

The answer is that there are very limited circumstances in which wind and solar could be close to coal in terms of cheapness.  Those circumstances rely on customers making use of the wind and solar when it is available not when they need it.  Even then, at least in Australia, a coal-based system like that which governments have spent the past two decades undermining, would still produce electricity cheaper than wind/solar.

This sets the framework for the new faultline of politics.

While, led by Craig Kelly, large numbers of Coalition MPs plus minor parties are aware of the economic demise renewable subsidies bring, most Coalition members support a subsidy to carbon emission reductions and technology assistance for low cost emission-light energy sources.  The “Turnbull Liberals” support NSW Energy Minister Matt Kean, who this week launched a report by the left wing Australia Institute calling for more renewables subsidies, which would supposedly promote growth and stop bushfires.

At the same time, a minority of Labor politicians, representing coal constituencies, are seeking to dilute the preferential treatment for wind/solar that the party supports. These MPs are supported by Australian unions representing coal and gas workers, in calling for Labor to support those industries.

The outcome will depend on the US Presidential election.  A victory for Biden will resurrect the Obama Paris Agreement on climate change and bring even greater pressures on all nations to curtail emissions.  A Trump victory will bring the dismantling of the Paris Agreement as a US fossil fuel powered economy progressively outcompetes others in the developed world and gives licence to China, India and other third world countries to adopt the cheapest forms of power.

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30 Responses to If Trump loses Australia rejects cheap energy and embraces economic decline

  1. RobK

    A Trump victory will bring the dismantling of the Paris Agreement as a US fossil fuel powered economy progressively outcompetes others in the developed world and gives licence to China, India and other third world countries to adopt the cheapest forms of power.
    They will have to repurpose all that lithium to the pharmaceutical industry.

  2. Squirrel

    The most jaw-dropping aspect of the current media/PR push is that people are using a “commitment” by the CCP to reduce emissions by 2050 as a reason for the rest of the world to cut its economic throat.

    That has to be close to a textbook definition of insanity.

    Boris is obviously looking to distract attention from his many other problems, so we can ignore his reported finger-wagging on this subject.

  3. Mad Dog

    A strong Morrison Coalition government could withstand any impetus generated by a Biden/Harris win. They would have to be iron willed of course to stick to their long term coal-gas-renewables strategy so as to push it through to 2050 and beyond.

    Morrison personally can do it during his tenure;
    he was the Minister who stopped the boats,
    won the ‘surprise’ election victory last time around, and
    held his nerve in Jan-Mar this year when he acted early and decisively in closing down international borders to howls of outrage and attacks of ‘racism’.

    If Frydenburg, Hunt, Morton etc. can keep the lightweights in line too, as seems to have been the case more generally, Australia’s mid-term move to more gas in a stepped, gradual transition from coal would protect our competitive position. Gas is very flexible too and new plants or modules can be paused, or established relatively quickly as required.

    Two things on my wish list though:

    1. Cormann changes his mind and stays (I know, I know: it won’t happen)
    2. We build a few Gen 3 and later, Gen 4 nuclear reactors (see above…probably)

    Thanks for you post.

  4. miltonf

    Finish Gorton’s nuclear power station at Jervis Bay.

  5. Boambee John

    miltonf

    Nothing there but a concrete slab, exposed to sea air for 50 years, probably need to start again.

  6. John Brumble

    gives licence to China, India and other third world countries to adopt the cheapest forms of power.

    wtf? They already are. And what the west does will have no effect on that.

  7. Rex Anger

    Finish Gorton’s nuclear power station at Jervis Bay.

    Simplest fix might be to find the most isolated clump of desert out past Woomera, or somewhere even the trad. owners won’t bother going.

    And build enough current-spec, modular reactors and generation kit that the sheer amount of power available bulldozes clean through the calculated transmission losses of the interconnector lines.

    And with 7 or 8 dispersed satellite sites (including one around Nimbin or [insert East Coast Hippy Holy Site here] to upset the Greenists) for redundancy.

    And the engineering expertise will also benefit the RAN’s submarine arm.

  8. miltonf

    I imagine the attraction of Jervis Bay for Gorton was
    1. Commonwealth territory
    2. Sea water for cooling

  9. John Brumble

    The issue is water, Rex. Nuclear still requires water.

  10. Rex Anger

    The issue is water, Rex. Nuclear still requires water.

    Absolutely. The only difference between steam generation using coal/gas and nuclear is the type of fire… 😁

    In which case- Maybe Ceduna? Or somewhere down on the Eyre Peninsula?

    Or even worse- A series of subterranean dams in the far North to trap a goodly portion of the Wet Season’s downpours?

    There are some very clever ways of doing catchment work out in the drier central parts of Australia. The WA Government Railways have used some very ingenious solutions with minimal earthworks, to trap rainwater for locomotive use inland during the Steam Era. Many of them still exist today, and some in the Goldfields region, have been adapted to charge town water reservoirs instead of Railway dams.

    Clever tricks like using existing granite features with low, cemented retaining walls (quarried from the same rock) to channel runoff into dam sites, and even roofing dams over to prevent evaporation. There is an example of one up around Walkaway (I think), or Mingenew. It has just about rotted away and collapsed, but if it could be done between the turn of the 20th Century and Great Depression, and survive to be archaeologically examined in 2019-20, I think more modern and permanent structures would be a doddle!

  11. The Sheriff

    If Trump wins, ScoMo should immediately abolish all funding for renewables, all green regulation, and focus on economic development in the same manner as Sir Joh, Sir Charles Court, and the other great statesmen of the past.

  12. nb

    Biden -> unreliable and expensive energy in western countries -> decline -> China takes us over.
    Who funds the campaigns for unreliable and expensive energy?

  13. Rex Anger

    @ nb-

    Who funds the campaigns for unreliable and expensive energy?

    The Pythons beat me to it...😁

  14. Lazlo

    VB are advertising that their beer is brewed with 100% solar energy.
    Do CUB breweries close down at sunset?

  15. Nob

    China and India, not to mention Indonesia and all of Africa, are not waiting for a licence from the USA to build power stations using whatever source they see fit.

    Or “what John Brumble said”.

  16. Nob

    Not sure what landed the above comment in moderation (maybe very wordy links) but I am patient. Or maybe the second part of the word Wiki….

  17. RobK

    From the Spectator article:
    IEA says, “solar PV is consistently cheaper than new coal- or gas-fired power plants in most countries, and solar projects now offer some of the lowest cost electricity ever seen.” Yet, these agencies don’t take the logical step of saying, “ergo, we should no longer have subsidies”.
    They also don’t acknowledge the royalties paid to the state for the right to use the coal rolled into the price…along with paying the RET fees directly to the RE (not via the government budgets rather a string of bureaucratic schemes). Coal has been made to dig its own grave and fund its competition.. A rude shock will come to those who believe electricity will be cheaper or better after coal’s demise.

  18. Joanna Smythe

    Why on earth would Donald Trump lose? Why would all those millions of people who voted for him in 2016, not vote for him this time. They voted for change, they got it. They had just put up with 8 years of Obama and Biden, why would they vote Biden in again. Donald Trump has delivered on his promises. Those he couldn’t deliver have been thwarted by the Democrat Congress. Nearly 60% of people say they are better off since Trump was elected. More black voters, latinos, hispanics and even Vietnamese voters say they will vote for him this time. COVID came along, sent at a very convenient time by the Chinese but I doubt if any of Trumps supporters even contemplate things would get better under Biden. The next couple of days will see the media and the Democrats at their apoplectic worst, which is only to be expected. They are losers.

  19. Fang

    Trump 2020 by 100 million + votes!
    😁

  20. Nob

    They also don’t acknowledge the royalties paid to the state for the right to use the coal rolled into the price…along with paying the RET fees directly to the RE (not via the government budgets rather a string of bureaucratic schemes). Coal has been made to dig its own grave and fund its competition

    Oil & gas companies in much of the world pay these fees too. It can be seen in their published accounts..
    It’s hard to trace exactly who the money goes to but certainly some of it goes to various wind, solar, geothermal (I know about that one) and other schemes.

  21. Even Democrats are acknowledging that they have no interest in Biden. It is all hate for Trump. There is big money involved and one wonders the motives.

  22. Mark M

    Yesterday I voted in Qld election, and voted PHON.

    Then I came home and watched this by Malcolm Roberts.

    Boy, am I glad I voted PHON.

    Watch the smarmy bastards squirm …

    CSIRO – Senate Estimates, Oct 28, 2020

  23. Herodotus

    We might all have to have our own off grid wind+solar+battery sets before long, because the idiots the people elect seem to have no concept of the damage they have done and will continue to do.
    Saying no to nuclear after saying no to coal is the ultimate post modern bullsheise.

  24. Terry

    John Brumble
    #3637112, posted on October 29, 2020 at 9:40 pm
    ‘The issue is water, Rex. Nuclear still requires water.’

    Molten Salt Reactors do not – but the technology is unproven and underdeveloped.

    Which is perfect for Australia, since we are 10-15 years away (if we started right away).

    So, the strategic energy plan (if anyone with any competence at all were in charge) would be:
    1. Immediate deployment of HELE Coal (to replace the aging baseload fleet) and cover the nuclear development/deployment gap – we need cheap energy now;
    2. Cease wind and solar subsidies immediately to give the industry “certainty” – permanently ban them from the industry, as in the previous nuclear-like ban on the premise of their environmental damage (here and abroad);
    3. Commence Nuclear capability development immediately (including practically free nuclear science degrees for students, young and old – funded by a surcharge on pretend degrees);
    4. Scrap conventional submarine replacement purchase and pivot towards Nuclear boats (preferably Virginias);
    5. Aim at first Small-Modular Reactor deployment before the decade ends.

  25. Entropy

    The first step is to trash the French boondoggle Jokes and buy American Virginias.
    Our ADF offers cadetships in nuclear engineering, embedding them with US crews, and US crews do stints with the ADF. In fact, full integration of the submarine fleet with the US probably should happen.
    Northern Universities specialise in nuclear engineering schools, probably with appropriate affiliation with US schools (waste of time with any uni in SE Australia).
    Off the shelf portable reactors (similar to nuke subs’) be set up to power medium sized towns or new industrial development in northern Australia. These can be returned for servicing, but importantly, show what real power generation looks like and provides the long term skill upgrading required in the civilian space.
    We develop uranium processing on shore.
    We lease uranium for full life cycle to other countries. Storage here for reprocessing on return.
    We build large scale reactors.

  26. Rob

    Bunnings hypocrisy writ large – virtue signalling executives standing before their huge stores right across Australia, chock full of Chinese products made using coal generated electricity while proclaiming their “carbon free emissions”.
    Liars, liars, pants on fire.

  27. Annie

    @MarkM: Thanks for that video of Malcolm Roberts. Brilliant.

  28. egg_

    virtue signalling executives standing before their huge stores right across Australia, chock full of Chinese products made using coal generated electricity

    Da ironing!

    And the virtue signalling Bank numpties screwed by a halt in the immigration Ponzi scheme.

  29. John A

    Squirrel #3637070, posted on October 29, 2020, at 8:43 pm

    The most jaw-dropping aspect of the current media/PR push is that people are using a “commitment” by the CCP to reduce emissions by 2050 as a reason for the rest of the world to cut its economic throat.

    That has to be close to a textbook definition of insanity.

    Especially since it represents a shift from their previous target of 2030 as reported for the purposes of the Paris agreement…

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