Australia’s energy policy options: a realist perspective

If any issue makes me mad it is the environment. Not merely because nothing ever seems to be done to address environmental degradation in a major way, but because it is “the” issue that complicates the goals of liberalism: that being to promote international economic growth and bring peace and prosperity to a greater proportion of the world’s population. The obvious contradiction between economic development and environmental degradation is indeed the prime reason why I choose to write sparingly on the environment as it is difficult to downplay the importance of the economic imperative.

As recent debate indicates, in regards to various environmental policy proposals, it may be that very little is done. While Australian polls indicate majority support for the Labor government’s emissions trading scheme (albeit down to 50 per cent in a November 2009 Morgan poll) consumers may be less supportive once higher costs are disclosed.

My hope is that we will do much more to reduce our carbon footprint, at least in per capita terms. However, such a wish may be unrealistic based on recent policy trends. Australia’s bid to reduce greenhouse gas emissions is complicated by a reliance on the export of raw materials to developing nations (such as China) which will mean that anything Australia does at the domestic level will be merely a bandaid solution.

But can it be any other way in this era where even rich nations (including Australia) are under much greater pressure to maintain their high standard of living as taxation and labour market reform continues?

Let us begin with the nuclear energy option, although it has been argued that such a source will be 20 to 50 per cent more expensive than coal and gas unless a carbon tax was introduced (2006 Switkowski Report).

Given Australia’s vast uranium ore reserves (estimated presently to be 23 per cent of known world reserves), should we utilise the source for domestic energy or merely export it? With the number of nuclear power reactors expected to increase from 443 to 1,000 by 2050 with the nuclear network expected to grow to 50 countries by 2020 (Ziggy Switkowski, “Minds closed to cleanest and greenest energy of all”, The Australian, November 26, 2008), Australia can and will receive important revenue from such a source.

There are many reasons that will complicate any bid for the use of nuclear energy in Australia. First, as the Switkowski report noted, nuclear plants would need to be on the eastern seaboard, near the power grid and close to water. This means that bipartisanship will be needed. It will be far easier to promote a greater sale of uranium or even the potential for a nuclear dump site given that Central Australia has suitable locations for deep underground repositories for the safe storage of high level waste and spent nuclear fuel.

Reasons to oppose nuclear energy were put forward by Professor Ian Lowe (the Australian Conservation Foundation President) at his address to the National Press Club on October 19, 2005. Lowe noted the risk of a nuclear accident, best illustrated by the accident at Chernobyl in 1986 with 350,000 people still remaining displaced by 2005, three-quarters of a million hectares of productive land remaining off limits, and a death toll estimated to be between 4000 or 24,000. He also suggested an increased risk of nuclear weapons proliferation or incidences of nuclear terrorism.

In economic terms, Lowe argued that nuclear energy is not cheap as shown by Sweden, which probably has the best system for storing radioactive waste for the necessary hundreds of years, having to spend an estimated $12 billion to deal with all the fuel used by its existing reactors.

Lowe argues that Australia could reduce greenhouse pollution by 30 to 60 per cent by 2050 without using nuclear energy. He urges government to set a target of at least 5 per cent for the use of biofuels in the transport sector, to invest more in public transport, and encourage the use of best practice for the construction of buildings, and transport vehicles and for operations. Lowe also urges better efficiency by industries and in household appliances to reduce electricity consumption. He also highlights the potential of renewables: just 15 wind farms could supply enough power for half the homes in New South Wales by using less than 0.5 per cent of its pasture land, and that fitting solar panels to half the houses in Australia could supply 7 per cent of all our electricity needs (including that of industry).

Renewable energy has grown in importance in recent years, a reality that suggests that Australia should not miss the boat. After all, global revenue from solar photovoltaics, wind power, and biofuels (PDF 2.23MB) alone expanded from $75.8 billion in 2007 to $115.9 billion in 2008 and is projected to increase to $US325 billion by 2018.

But other evidence highlights (PDF 479KB) just how expensive renewable energy sources (including wind, solar, geothermal, and biofuels) really are, despite them contributing just 2.4 and 3.4 per cent of global energy and electricity in 2006. The US Energy Information Administration reported in 2008 that on a dollar per MWh basis, wind is subsidised at $23.34 compared to natural gas at 25¢; coal at 44¢; hydro at 67¢; and nuclear at $1.59. Another report (focusing mainly on Spain) suggested that for every job created by state-funded support of renewables, particularly wind energy, 2.2 jobs are lost with each wind job costing almost $2-million in subsidies (Michael Trebilcock “Wind power is a complete disaster”, Financial Post, April 8, 2009).