By Keith DeLacy AM, Queensland business identity and former Labor Treasurer of Queensland.
First published by The Australian [$ Paywall]
One policy which seems to have escaped scrutiny during this election campaign is Labor’s commitment to increase the Renewable Energy Target (RET) to 50% by 2030.
I am surprised because it is a proposal that has enormous ramifications for economic growth and living standards, and disproportionate impacts on traditional Labor constituencies.
The problem we have in Australia is when we talk renewable energy we are talking wind and solar only – low value, expensive, unreliable, high capital cost, land hungry, intermittent energy.
According to the Department of Industry and Science wind currently generates 4.1% and solar 2% of Australia’s electricity. But even this is highly misleading because it is such low value power. You could close it down tomorrow (which it regularly does by itself) and it would make no difference to supply.
If we talk about total energy, as opposed to just electricity, wind and solar represent 1% of Australia’s energy consumption. This despite billions of dollars of investment, subsidies, creative tariffs, mandates, and so on.
Solar and wind simply don’t work, not here, not anywhere. The energy supply is not dense enough. The capital cost of consolidating it makes it cost prohibitive.
But they are not only much more expensive because of this terminal disadvantage, they are low value intermittent power sources – every kilowatt has to be backed up by conventional power, dreaded fossil fuels. So we have two capital spends for the same output – one for the renewable and one for the conventional back up. Are you surprised it is so much more expensive, and inefficient, and always will be!
So wind and solar, from a large scale electricity point of view, are duds. Now I know that will send the urgers into paroxysms of outrage. But have you ever seen an industry that so believed its own propaganda. Note, when they eulogise the future of renewables they point to targets, or to costly investments, never to the real contribution to supply.
Let’s look overseas where there are many countries that have been destroying their budgets and their economies on this illusion for longer and more comprehensively than we in Australia.
The Germans are ruing the day they decided to save the world by converting to solar and wind. Germany has spent US$100 billion on solar technology and it represents less than 1% of their electricity supply. Energy policy has been a disaster. Subsidies are colossal, the energy market is now chaotic, industry is decamping to other jurisdictions, and more than 1 million homes have had their power cut off.
It is reported that electricity prices in Germany, Spain and the UK increased by 78%, 111% and 133% between 2005 and 2014 as they forced additional renewable capacity into their electricity markets.
Sunny Spain used to be the poster boy for renewables in Europe – photovoltaic cells and wind turbines stretching on forever. Now they are broke, winding back subsidies, even the feed-in tariffs which were guaranteed for 20 years.
But wait, what about the green energy jobs that everybody gushes about? Spain has an unemployment rate of 21% with a youth rate of 45.5%.
The UK is little better. Subsidies are being wound back, and a Department of Energy report points out that in 2013, the number of households in fuel poverty in England was estimated at 2.35million representing approximately 10.4% of all households.
It is no better in the US either. States with Renewable Energy Mandates (REMs) are back-tracking faster than Sally Pearson can clear hurdles!
Ohio has halved its mandate level (was 25% by 2025) because of high costs. West Virginia has repealed its REM because of high costs, and New Mexico has frozen its mandates. Kansas was repealing its mandate which reportedly would save ratepayers $171 million, representing $4,367 for each household, and so the dismal story goes on.
The US Department of Energy has found that electricity prices have risen in States with REMs twice as fast as those with no mandate.
As of 2013 California was the only State to adopt a feed-in tariff for solar power. It was immediately dubbed a failure by the renewable energy community because it offered only 31 US cents per kwh, only 5 times the rate for conventional base load power!
Ah but Asian countries are jumping on the band wagon! Maybe. China built one new coal fired power plant every week in 2014, and India’s coal powered investment in that same year equaled the total electricity capacity of NSW and Qld.
To summarize – with all of the trillions spent world wide on wind and solar, wind currently (2015) represents 1.2 % of global consumption of energy, and solar 0.2%.
The good news, it is possible to reduce fossil fuel use in electricity generation – through hydro-electricity and nuclear fuel. Plenty of countries have done it – Canada 60% hydro and 15% nuclear; Sweden 45% hydro and 48% nuclear; Switzerland 54% hydro and 41% nuclear; France 11% hydro and 79% nuclear.
But Australia has zero tolerance of these two workable alternatives to fossil fuels. At least we are consistently inconsistent!
So where does that leave us. On the basis of evidence everywhere we could easily double the price of electricity and get nowhere near the 50% target. What would that mean?
Firstly, it means rapidly disappearing blue collar jobs in high energy industries like manufacturing, car and ship building, smelting and refining, steel making and food processing. There may be still some construction jobs, but they will largely be assembly only, as all of the components will come from those countries more interested in growing the economy and eliminating poverty than stoking the warm inner glow!
Make no bones about it, a clean green economy has no place for high viz shirts!
Secondly, rapidly rising electricity prices and the subsequent increase in the cost of living, disproportionately affects those at the bottom of the income scale.
Policies like this are OK for the Greens. They can keep their virtue intact because they never have to deliver. As Gough Whitlam once said, only the impotent are pure.
Mainstream parties don’t have that luxury. They need to look at the true costs, and benefits, of all policy proposals.