As many of you will know, I publish a free daily summary of news about developments in sustainability. I felt compelled to comment on an news this morning (16 August 2016) that we’re almost certainly going to pass 1.5C of warming and, in Australia, a theme across a range of newspapers, telling a story of unrest Australia’s energy markets. Below is a summary of my observations.
Passing 1.5 Degrees
A safe level of CO2 in the atmosphere is considered to be around 350ppm (which is why 350.org is called 350.org). We passed 400ppm earlier this year. Temperatures are skyrocketing, especially as a consequence of the very strong El Nino of 2015-16. The Paris Agreement, signed by 90-odd countries in December 2015 called for countries to introduce legislation to reduce the emission of greenhouse gases with the aim of keeping the warming of our planet well below two degrees and ideally under 1.5 degrees.
Well, it looks unlikely we’re going to achieve that. Due to inertia in the system the planet will continue to warm even if we stop emitting warming gases today. Daily, we’re seeing extreme, historical weather events around the world, many with catastrophic consequences and most with hefty financial costs. Passing 1.5 degrees means more of this and I don’t like what’s happened to the Gold Coast summers so far and certainly don’t want to be around for the effects of two degrees.
Action around the world
There is a LOT of activity to get renewables in place. Most especially in China, who is also concerned about other environmental areas. There are hiccups, like the Hinkly Point nuclear power station in the UK. Obama has put in place some really bold legislation and made ballsy decisions on big issues. Of course that’s all in jeopardy if Trump wins the next election.
Even though renewable energy generation has increased by 70 percent in the last five years, the G20 on average still only produce eight percent of their electricity from renewables. In New Zealand, it’s sitting at 74% (PDF) but the per capita emissions are still high due to a sparsely distributed population, very successful farming practices and high car ownership with very little in the way of public transport outside of major cities. This highlights that we mustn’t forget about emissions outside the electricity sector. In Australia, renewables make up about 15 percent of electricity (PDF) generation but there are some very interesting things happening there.
So what about Australia?
Under the Paris Agreement, the Australian government has a committed to an emissions reduction target of 26-28% reduction from 2005 by 2030. This target is rated poorly compared to the rest of the world and Australia is a very sunny continent. Australia has endured nearly ten years of political unrest with five changes of Prime Minister creating such instability for energy policy that renewable energy investment had pretty much stalled. I’ll focus on the climate issues here but all areas of people, planet and profit have suffered as a result.
It all started after Labor won the 2007 election from the long-standing and stable Howard administration. Then the squabbling began with the unseating of a bullying and divisive Kevin Rudd by Julia Gillard in 2010 who announced an election a month later winning 72 seats (76 are required to reach a majority). For the next three years, Gillard managed a minority government with a significant involvement from the Greens party and some Independents. During her term, Gillard managed to push through a myriad of robust but poorly communicated legislation, including a carbon tax (to become an emissions trading scheme), and she progressively lost the support of the people. Kevin Rudd was reinstated prior to the 2013 election where Labor suffered a resounding defeat by the conservative Coalition.
A disastrous two years followed dominated by far-right politics from Tony Abbott before Malcolm Turnbull grabbed power in September 2015 before the 2016 election. From day one of his leadership, Tony Abbott introduced legislation to repeal the Carbon Tax and went on to shut down the Climate Commission, who were an advisory group and provided public information on climate change, he reduced the Renewable Energy Target (RET) but dragged the decision out for many months due to opposition (he would have liked to abolish it altogether). He restricted the CEFC (Clean Electricity Finance Corporation) from investing in existing technologies, and tried to dismantle the very successful ARENA (Australian Renewable Energy Agency) that is tasked with making renewable energy more affordable through funding renewable energy projects. Oh, and he ordered a parliamentary inquiry into wind turbines.
Hope ensued when Turnbull became Prime Minister as he is a long standing supporter of climate action. However, he appeared, and still appears, to be under the influence of the far-right in his Coalition and hamstrung with an inability to provide clear leadership. He won the recent July 2016 election by the minimum 76 seats but remains vulnerable to political challenge. He has a tough job ahead of him and Australia’s emissions are on the rise according to several sources. Turnbull has created a new Energy and Environment portfolio headed by Josh Frydenberg. Frydenberg has been criticised for his past support for coal but appears to have changed his mind somewhat in acknowledging that coal is in decline “and that’s not a bad thing.” A review of the Paris target has been taken off the table but clearly Australia needs, and certainly has the potential, to do much, much more.
The long awaited rise of renewable energy in Australia?
There does appear to be more confidence in the renewables market despite the lack of political direction. And perhaps letting the free market have it’s way may actually start to work as the price of solar and particularly storage continue to plummet. But progress would most certainly be helped by some positive policies. Right now there are a few things happening that I’m finding interesting reading.
1. There’s been a big hoo-haa over the electricity price spikes in South Australia
South Australia, like some other states and city councils, is going ahead with it’s own legislation to reduce carbon emissions. Recently there was a huge spike in the wholesale price of electricity there that was blamed in some quarters by their very high percentage of renewable energy on the grid with intermittency being blamed. It was subsequently found that it was actually a gas plant at fault. It did raise the issue of how the electricity market will handle more intermittency due to renewable energy and the need to plan carefully, including storage. There are generally rumblings of dissatisfaction with the generators.
2. There’s a lot of support for community solar
Community owned solar farms are popping up all over the place. There are great investment returns. Two council backed projects will turn out to be even bigger than planned due to strong support in Wangaratta, VIC, and most recently Lismore, NSW, where they will build an extra solar farm. There are even opportunities for business tenants to participate in solar schemes.
3. Feed-in tariffs are being repealed
In New South Wales, Victoria and South Australia, Feed in Tariffs (FiT) that were set high to encourage investment in rooftop photovoltaic arrays (solar panels) will be reduced by about 80% leaving the owners with an increase in electricity bills or a reduced income from their array. This makes battery storage more attractive and could lead to more independence from the grid. It may also encourage leasing, both for suppliers and customers. In a new development, blockchain technology will be trialled in Western Australia where neighbours can sell excess energy to each other for a higher price than the FiT.
4. Battery storage is becoming more affordable
Storage is the obvious answer to the problem of intermittency from renewables. There are several ideas out there but the most advanced is the battery. Late in 2015, Tesla burst onto the Australian market with the (pretty much) affordable Powerwall and was greeted with great enthusiasm from home owners, property developers and even whole suburbs. There appears to be an increase in interest in storage at a much larger scale as well with business and state government. The world’s largest solar and storage plant is being built in… you guessed it… South Australia and in an Australian first 512kW of battery storage will be installed in Adelaide government buildings. South Australia’s distributor are also trialling rooftop solar and storage with the purpose of defraying network costs. Related to this, again in South Australia, the still functioning ARENA has loaned up to $5m to AGL to install batteries in homes, again in South Australia.
The implications from these developments is a serious disruption and possible increase in decentralisation of the Australian grid. Really, not such a bad thing given the huge expense of covering such a vast country with poles and wires. Even mining companies are getting into solar.
This is very much early days but there does seem to be a lot more activity that I would attribute to a) the perception of a government more amenable to climate action b) the reducing costs of solar, wind and storage.
South Australia is positively shining as an exemplar of what can happen with strong policies and a stable government. If the Turnbull government can keep the politics adult-like for the next while and give the impression of some semblance of stability, perhaps the market will continue to take heart, even if no policies change. Imagine how the pollies would revel in not only achieving but beating Australia’s little emissions target (if only they would beat it by two times!). And with the latest Reserve Bank rate cut and jobs outlooks not promising, Australia’s renewable energy revolution could be over the next hill.
Today I am optimistic.