The critical climate summit in Glasgow just began, and Scott Morrison, the Australian Prime Minister, is bringing his highly criticized plan to net-zero emissions by 2050 back to the table.
The plan, released last week, promises to reduce Australia’s greenhouse gas emissions. It relies on new technology and avoids mandates and taxes. This plan will fail, according to the Grattan institute.
Clean hydrogen, ultra-low-cost solar, energy storage and low-emissions metals are the priority technologies in this plan.
The plan lacks detail and long-term planning. The plan provides only support for technology in the initial stages of research and development. It does not provide sustained support during the commercialization process.
Many of these technologies are closely tied to the progress in renewable electricity generation. The plan relies on 91-97% emission reductions occurring in the electricity grid by 2020.
Australia must dramatically increase renewable electricity generation to reach net zero. However, the sector is constrained by its competition in a system originally built for fossil fuels.
In 2020, Only 24% of Australia’s electricity was generated from renewable sources, despite Australia’s immense potential to be a world leader in this sector due to its abundance of sunlight, wind, and space.
These are the four reasons why the current electricity system favors higher-emitting technologies. These issues must be addressed to reduce Australia’s carbon emissions and prevent the worst effects of climate change.
Redefining renewable as a problem
Australia’s dependence on fossil-fuel energy is a deeply rooted problem that resists any attempts to change. Renewable are seen as a problem that must be controlled. The Australian Energy Market Operator identified rooftop solar and renewable generation as threats to the stability of the electricity grid.
Even though the net-zero government plan emphasizes the importance of coal and gas for grid stability despite goals to increase emissions-free storage technologies such as batteries or pumped hydro, that could also support this stability.
This is an example of how the system is entrenched at work. A transition to renewable energy will require that the grid be re imagined. This is technically feasible and should be seen as an opportunity, not a problem.
The existing electricity grid has many problems that have not been fully addressed in the strategy. Coal and gas, for example, can pollute free of charge, with the consequences falling on society as a whole rather than those who pay for coal-fired electricity.
Secure long-term investors
Although renewable generation can be expensive upfront, it is cost-effective once installed. Investors in renewable energy need to plan for long-term sales throughout the plant’s lifespan.
A researcher from Switzerland interviewed 40 investors in renewable energy in the UK and Germany for a 2022 study. The risk of investing was higher when they used variable spot price prices instead of fixed prices that were agreed upon.
Spot market energy prices in Australia are highly volatile. They change approximately every 30 minutes. Prices can rise to A$14,000.50 per megawatt-hour. However, if there is an oversupply of power, prices can drop as low as A$1,000 per megawatt-hours.
The net-zero plan does not provide any mechanisms to ensure investors in renewables have stability regarding their return on investment. However, there are many examples of this type of mechanism worldwide, and even in Australia.
For example, the Australian Capital Territory has a reverse-auction renewable feed-in tariff. This guarantees a fixed price per unit of electricity for 20 years. It is produced by contract renewable energy investors (about A$80 for the most recent wind investments).
There is no real plan for energy storage
The “non-dispatchable” technologies of solar and wind mean that they cannot be turned on at the right time. This is a problem because the electricity grid depends on a constant balance between electricity supply and demand and has limited storage capacity.
Renewable generation could be cut if there is insufficient storage, increasing the risk to investors in renewable energy and creating financing difficulties.
More storage can solve this issue, and the plan correctly names storage as a priority technology. The plan’s emphasis on early-stage development is only the beginning. Australia needs a plan for commercializing and deploying storage technology. However, the plan lacks details.
It cites co-investment into the Power Reserve South Australian battery storage program and the Victorian Big Battery.
None of these projects represents any new action or commitment. I was completed in September 2020, and the Big Battery was committed in February of this year, long before the plan was published.
Without legislation, there is little to no imperative
According to the plan, “Australia will not legislate net-zero by 2050.” It will not be necessary to dig as deep to mobilize enough resources (funding and time) to meet the target if there is no legislation.
Five-yearly reviews are required to assess progress toward meeting emissions targets. These reviews are not detailed enough to be useful. However, they will help you make real progress towards reducing emissions.
The plan does not specify how these reviews will be conducted or what happens if progress isn’t made. The Australian government promised no consequences if it failed to achieve the net-zero target without enacting legislation.