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Energy policy: can we have a Carbon-Cutting Reliable Affordable Programme (C-CRAP)?

By Geoff Carmody - posted Wednesday, 20 September 2017


There's a trade-off between reliability and emissions reductions – at least given political proscriptions on sources like nuclear power (for local application anyway).

The first requires base-load, and/or the equivalent, immediately dispatchable, power. The second implies renewable energy that begets intermittency and uncertainty.

What's the trade-off between these two objectives? If reliability is non-negotiable (at least in today's government-speak) what are the policy options?

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Dealing with the trade-off: two broad options define the policy playing field

This is complex stuff, but two broad policy options define the scope of policies delivering reliability plus emissions reductions.

Whatever the emissions reduction target, the first option is to match the maximum renewable generation capacity in the system with the same base-load/dispatchable generation capacity using fossil fuels of whatever kind. This configuration (grid issues aside) guarantees system-wide reliability regardless of weather, if total base-load/dispatchable supply matches demand. However, this system must duplicate the maximum renewables generation capacity with base-load/dispatchable capacity.

The second option is increasingly to use yet more renewables themselves as generation (and storage) back-up to primary renewables generation capacity. This option multiplies system capacity duplication for the reasons illustrated in my earlier opinion piece, dated 22 August 2017, entitled 'Does renewable energy save the earth – or just cost it?'.

The costs of the reliability-emissions reduction trade-off

Clearly, insisting on reliability, but also pushing for increased use of renewables, must increase costs.

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Options range between (i) duplicating the maximum generation capacity of renewables once, or (ii) doing so multiple times. Punters pay more either way.

What about affordability?

Affordability – the A in C-CRAP – doesn't get a look-in, Government lip-service to it notwithstanding.

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About the Author

Geoff Carmody is Director, Geoff Carmody & Associates, a former co-founder of Access Economics, and before that was a senior officer in the Commonwealth Treasury. He favours a national consumption-based climate policy, preferably using a carbon tax to put a price on carbon. He has prepared papers entitled Effective climate change policy: the seven Cs. Paper #1: Some design principles for evaluating greenhouse gas abatement policies. Paper #2: Implementing design principles for effective climate change policy. Paper #3: ETS or carbon tax?

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Creative Commons LicenseThis work is licensed under a Creative Commons License.

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