Last year was dismal in many respects but it was a landmark for renewables in Australia
As we kick off 2021, state governments are embracing decarbonisation to popular acclaim
In his speech to the Smart Energy Summit in mid-December 2019, New South Wales energy minister Matt Kean fired a shot that has reverberated all year.
As Kean spoke, smoke from the bushfires enveloping Sydney permeated the hotel conference room such that a cone of illuminated particulates appeared to hang beneath every ceiling light.
“This is not normal and doing nothing is not a solution” said Kean, breaking ranks with his federal counterparts. “We need to reduce our carbon emissions immediately”.
Australia’s electricity predicted to be cheaper in 2023, helped by green power and lower gas prices
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Kean was pilloried by the Murdoch press, but stood firm. In July, he announced a plan to build transmission lines opening up two massive new renewable energy zones, and in November he legislated a plan to underwrite the $32bn of renewables and storage required to fill them.
Kean’s ambitious moves, which prepare NSW for the coming wave of coal power station retirements, received almost no pushback from conservative media. Whimpers of protest from federal energy minister Angus Taylor barely registered. (To nobody’s surprise, a recent poll of AFR readers voted Taylor “worst minister” of 2020.)
Other Liberal states have stepped up too. Tasmania, already at 100% renewables, announced plans to double renewable generation. In 2019 South Australia announced a goal of 100% net renewable generation by 2030 and in 2020 announced a 500% renewables target by 2050.
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Labor-led governments haven’t sat still either. Victoria announced a “humongous” new battery for Geelong, a huge housing energy efficiency program and development of six renewable zones. Queensland committed to developing three new zones and appointed a minister for renewables and hydrogen.
Refreshingly, Australia’s conservative media have largely bitten their collective tongues. It is now politically safe to pursue clean energy.
Globally, the decarbonisation drumbeat has become impossible to ignore. The number of countries committing to net-zero emissions reached 121. The number of globally significant financial institutions announcing coal-exit policies almost doubled to 155. Oil companies conceded that oil’s best days are behind us. The International Energy Agency declared solar as “the new king” of electricity. US president-elect Joe Biden has made it clear that he’ll be aggressively pursuing climate action and will rejoin the Paris agreement on day one.
Watch Morrison gradually reposition on climate in 2021, just as Howard did before the 2007 federal election
Our three biggest coal customers — Japan, China and South Korea — each committed to net-zero emissions. And with the pool of debt, equity and insurance providers shrinking, the long-term decline of our coal sector is now certain.
Australia’s energy transition continues apace. In 2009 Kevin Rudd’s government extended the Howard era renewable energy target (RET) to a nominal “20% by 2020”. Worried that the RET would be too successful, Tony Abbott took an axe to the scheme in 2015, cutting about 40% of the remaining demand. Despite years of sustained attacks, and thanks to states, corporates and literally millions of households and their solar panels, we’ve blown past Rudd’s target. In 2020 more than 26% of energy in the national electricity market (NEM) was delivered by renewables.
2020 marked the lowest coal use in the NEM this century and the lowest gas usage since 2006 — so much for the “gas led recovery”. It’s increasingly clear that multiple coal power stations will close this side of 2030.
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In 2020 the residential solar sector smashed all previous records, no doubt buoyed by housebound families turning their attention to their homes and yet another year of falling system costs.
South Australia continued to power ahead with an average of 59% of demand met by wind and solar. In earlier years, renewable generation exceeded the state’s total demand for moments — in 2020 it did so for 10% of the year. In a marked turnaround, over the last half-year South Australia recorded the lowest wholesale energy prices in the country.
Despite dire warnings from (inexpert) pundits, record heat and fire-related transmission outages, our grid performed exceptionally well over summer. A freak storm at the end of January knocked out a major power line between Victoria and SA. Thanks to new levels of preparation and conservatism in the wake of the 2016 blackout, this time SA didn’t skip a beat, and ran “islanded” from the NEM for 17 days straight.
Sadly, Audrey Zibelman, CEO of Aemo, the electricity market operator and system planner, returned to the US. Zibelman leaves behind a transformed organisation, no longer struggling with the pace of change, but one approaching the transition with the rigour required to manage such a critical service.
One of Zibelman’s crowning achievements at Aemo is the integrated system plan, one of the most detailed network planning processes globally. The ISP models multiple “least cost” development pathways for our national grid. The “step change” scenario, arguably the most plausible, has our grid at 96% renewable energy in 2042 — solving the energy trilemma of affordable, reliable and clean power.
Two massive renewables projects were granted major project status. Between the 26GW Asian Renewable Energy Hub (which plans to produce cheap power for the Pilbara and massive quantities of green hydrogen for export) and the 10GW Sun Cable project (which aims to send power by undersea cable to Singapore) the projects would increase total electricity generation in Australia by more than 50%.
Australia’s energy transition continues to play out between the states, business and households
Despite our great progress in greening the electricity system, Australia is floundering in the transport sector. Preliminary 2020 sales numbers indicate flat growth in electric vehicle sales, in stark contrast to much of the rest of the world.
While a growing number of countries are introducing future bans on new fossil-fuelled car sales and have provided subsidies on EVs for years, Australia has no federal electrification policies and disincentivises with high taxes on electric vehicles.
Without federal electrification policies, states and territories are going their own way. At one end of the spectrum, the ACT is removing taxes and providing interest free loans for EVs. Victoria, on the other hand, is planning to impose a new tax on EVs. Given the mess, it’s no surprise that Volkswagen has chosen to pass over Australia for their new EV range.
When Matt Kean prodded Scott Morrison to sharpen up his climate stance a year ago, the prime minister shot back dismissively that “most of the federal cabinet wouldn’t even know who Matt Kean was”.
As we kick off 2021, every cabinet member has seen how Kean and his state counterparts have deftly transcended the party’s historical opposition to renewable energy and are instead embracing decarbonisation to popular acclaim. The emergence of centre-right advocacy group Coalition for Conservation and thinktank the Blueprint Institute have emboldened MPs acutely aware the party’s position is untenable.
Credit where credit is due, the government dropped plans to apply Kyoto carbon credits against our Paris agreement commitments and re-committed to funding clean energy research and development, including for the nascent hydrogen industry. But after seven years in government, the federal government still has no credible emissions reduction plan, so it was no surprise that when UK prime minister Boris Johnson held the Climate Ambition Summit in December, Morrison was denied a speaking slot.
For all his failings, Morrison knows how to read the room. His many “micro-pivots” indicate that he knows coal’s best days are behind us, that his advisors over-egged the promise of gas, that renewable energy is extremely popular and climate science denial a major turn-off.
Watch Morrison gradually reposition on climate in 2021, just as Howard did before the 2007 federal election, and for the same reasons. The need for economic stimulus provides Morrison with the perfect opportunity to complete his slow pivot and the conservative media appear ready to give him the requisite leeway.
In the meantime, Australia’s energy transition continues to play out between the states, business and households.
Veteran environmentalist Bill McKibben makes the point that, on climate action, winning slowly is the same as losing. Are we winning fast enough? No, but we are accelerating.
Are we accelerating fast enough? Maybe.
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