What are the remaining issues at play?
On Thursday the 4th of August the Albanese Labor Government passed through the House of Representatives a climate bill that enshrined that Australia would commit to reducing emissions by 43 per cent from 2005 levels and to reach net zero by 2050. The bill passed the lower house 89 votes to 55. One Liberal member crossed the floor to vote with almost every other member of the house, bar the Liberal National Coalition.
The bill has been passed up to the Senate where it is expected to pass with the help of Labor, the Greens and a number of independent senators, and minor parties. The passing of this legalisation with the vast majority of lower house members and what will end up being a comfortable majority of senators is a referendum on the previous slow-moving government who was forced into committing to net zero, in name only without legislation. The referendum on climate will need to keep the pressure on the Albanese Government to ensure that as it moves onto other legislative priorities it maintains focus on moving Australia towards decarbonising its electricity sector. The passing of the climate legislation caused media stories which spoke to the sense that, at last, the Commonwealth Government is getting on with the job and ticking off the easy wins. Where the previous government was powerless to move forward, stuck in trying to govern in the now, this new government have allowed the wind to fill their sails and have started to plan for the future, and there is a lot of planning to do.
Victoria and NSW still produce the majority of their electricity from black and brown coal, with these power stations set to close and no alternative source of power locked in, time is running out. Transition planning should have already happened, with AEMO doing the lion’s share of the work. It’s time now to begin building the ginormous upgrade to Australia’s transmission grid as the rest of the world begins to decarbonise in unison, and supply chains and materials are getting harder to locate and lock in. As Australia scrambles to get on with the job and hurtle towards realising what a 43 per cent reduction in our emissions means there are a number of outstanding issues that the Commonwealth Government and the leading emitting states and territories will need to tackle.
1. The pace of change
Building new power stations, wind and solar farms takes time and there needs to be commercial confidence and certainty on where they will be located, what price they can expect to get from their investment and what transmission will look like. Governments have work to do to ensure the private sector have a level of certainty that will allow for the degree of investment into Australia. This means building a floor for prices, allowing for easy transmission of power generated and committing to some form of subsidies for larger producers.
2. Transmission
The National Energy Market (NEM), running from Queensland down the east coast to South Australia is set to have a major upgrade as AEMO outlines that the NEM will need an extra 10,000 km of new transmission to allow the connection of around 320 terawatt hours a year. Building this transmission is essential to decarbonising Australia’s energy generation, yet with planning only just beginning this should have occurred a decade ago.
3. Social license
Building this transmission is set to be difficult as gaining social licence to build huge transmission lines through people’s farms and properties is not an easy task. Yet, it is essential to stop the ‘spaghetti’ effect of each generator connecting themselves to cities. Gaining this social license has already proved problematic in western Victoria as AusNet released plans for the Western Victoria Transmission Network Project. Complicating matters is a fact hidden in Victoria’s Offshore Wind Discussions Paper, there is not enough land in Australia to build onshore renewable energy generators. Victoria has low agricultural land area relative to other states. Aiming for 60GW using only onshore wind and large scale solar could require up to 70 per cent of agricultural land, or four times the area of Greater Melbourne. This is also assuming that farmers and land holders won’t resist their land being turned into solar farms.
4. Maintaining pressure
There is still a lot of work to be done to decarbonise Australia’s energy generation. This process is not helped by members of parliament and the media spruiking nuclear power, which rests on shaky economic grounds and the jury remains out on whether it will ever stack up. Nuclear power would also require states to remove legislation on nuclear proliferation, and the Commonwealth Government passing legislation to allow for nuclear technology. It would also require the sector to have the knowledge and skills to build and operate the stations and somewhere to put the spent materials. Several states in Australia have already legislated against using their land as a repository for nuclear waste, can we really expect them to change? Maintaining pressure on the Commonwealth Government is imperative to ensure that as they move onto the next legislative priority they continue the work that the previous government ignored to commit to building the transmission required and project the certainty needed to allow the private sector to invest in the Australian energy market.
Ross Dennis is a Policy Analyst at FPL Advisory.
FPL Advisory is a team of specialists resolving risks and creating opportunities with respect to government. We work with public sector and corporate clients to execute strategies for owning and managing change.