Economics of Australian Clean Energy
Summary
The change to clean energy is a ‘no brainer’ because of the enormous cost savings, profits, new jobs and negated damage costs. It is too easy to continue ‘Business As Usual’ (BAU,). Fortunately, there are smart technology companies, entrepreneurs and venture capital firms out there. They will make it happen because of the opportunities and profits available. This always drives change.
Governments need to create policies that facilitate change, e.g., looking after the workforce transition. The rest of the world needs to do the same but the potential in Australia is exceptional in its ability to export clean energy – see below.
This Channel 9, ’60 Minutes’ video is revealing. (Much shorter than 60 minutes!)
Australia’s Unique Opportunity
Australia has a large land mass, variable time zones and low population. It is generally bathed in sunshine. Because of its size, wind is always blowing somewhere, more so offshore. However we still need storage batteries, see ‘Climate Change Shouldn’t be Political‘
We need a transmission system, networked continent wide so that for example, WA can feed the east coast at peak times and vice versa. Because of our size, we can generate enough energy to export power to the world, whether by undersea cable or shipping hydrogen.
We can also mine most of the components for new technology EVs, large storage batteries, solar panels etc. and could value add by low cost automated manufacturing in Australia. Automation largely negates our high labour costs.
What those wedded to fossil fuels miss is the protection from price variations, which is causing havoc in Australia at present. Renewable sources from the sun and wind are free and always available in quantity here in Australia, immune from forces out of our control.
The Cost of Business As Usual (BAU)
The climate change damage to Australia for BAU is estimated as:
- $585 billion in 2030
- $762 billion in 2050
- >$5 trillion in cumulative damages by 2100.
But the cost of effective emissions reduction, based on a carbon price or renewables target is estimated at $35.5 billion from 2019 to 2030, or 0.14% of cumulative GDP, a negligible impact. While this applies to all emissions, the majority is from fossil fuels, so clean energy is by far the most important.
The best emissions reduction over BAU is 627 million tonnes from 2020 to 2075. The total cost is $3.6 billion with a net benefit of $16.2 billion.
Overseas businesses are less likely to invest in countries that do not address climate risks.
Job Opportunities
An assessment by Ernst & Young (EY) says government focus on renewables to drive recovery from the Covid-19 pandemic could create more than 100,000 direct jobs in Australia.
The EY report recommends fast tracking wind and solar farms and nation wide transmission networks. Also manufacture of batteries, electric buses, hydrogen and general manufacturing by renewables.
A more conservative climate council report says 50% renewable electricity by 2030 will lead to over 28,000 new jobs, 50% more than BAU. Transport, agriculture and land use will create new jobs as they undergo drastic change.
Job losses in coal electricity will be replaced by renewables. NSW and QLD will have the largest growth in jobs, around 11,000 and 6,000 respectively. SA and NSW will experience the largest per capita job growth. VIC will gain around 4,000 jobs by 2030. Automotive manufacturing and much steel smelting have gone offshore, but these could return. Automation overcomes high labour costs in present Australian manufacturing.
Most new jobs will be in rooftop solar, located in areas where people already live.
Stimulus programs for clean energy would create nearly three times as many jobs for every dollar spent on fossil fuel developments.
References
10 Responses
hi Campbell
re the report above it reports on job creation and benefits but not much on the difficulties of doing this (eg retraining workforce) and time frame of executing as well as cost and who pays
It can all be done but these changes all take longer than planned
Good Comment Phil
I guess this has been the case in all industrial revolutions. it is already happening in Oz. see:
“In gold mining town Ballarat, companies including Vestas Wind Systems — the world’s biggest turbine manufacturer — have funded the country’s first wind power training tower, where students and ex-coal workers can use a 23-metre-high platform to acquire the expertise needed for roles in renewables.”
See also:https://www.smh.com.au/business/companies/australia-starts-retraining-coal-workers-for-the-clean-energy-future-20220420-p5aenm.html
and
https://reneweconomy.com.au/coal-workers-retrain-solar-says-study-41930/
Campbell,
Another good piece.
A generation from now, thinking individuals will wonder why there was ever any resistance to the inexorable movement towards cheaper, safer and abundant energy sources.
Already that transformative process is well underway!
Tony Eames
Thanks, Tony
I couldn’t agree more. There is always a reluctance to change, but the young will insist on it and there is already a ground swell towards it.
Whilst there are opportunities for Australia to be a leader in energy renewables, the question is who has the guts to implement the necessary actions to achieve the desired goals to be a World leader in sustainable energy such as Hydrogen.
To date I am not aware of any Politician or Australian entrepreneur prepared to accept this challenge
Thanks, Don
Your comment is appreciated. I think the video in the blog demonstrates that Twiggy Forrest is the entrepreneur that is pushing ahead with Hydrogen. He has been setting up partnerships around the world. Already his trucks in the Pilbara run on Hydrogen.
I understand that right now approximately 1 in 6 people living in Australia are on some form of welfare.
Clearly even a small increase in the cost and the availability of energy will have a profound affect on people’s attitudes at the ballot box.
Practically speaking most don’t like change and this change will take time and cause some pain.
It seems to me however that none of this should not stand in the way of the urgent development of green energy technologies here in Australia.
The trick for government is to support the development of these technologies whilst at the same time managing the transition away from fossil fuels in a way that makes the change palatable.
If Forrest and Cannon-Brookes are right, and I think that they are, government should get on with it with all urgency but sell the message loud and clear as to why.
Thanks Stuart
I agree, but renewables and storage are cheaper (they are here in Oz and free) and more reliable cost wise than fossil fuels. Fossil fuels are subject to price fluctuations due to circumstances beyond Australia’s control, such as the Ukraine war. Once coal, gas and oil are eliminated, clean energy will save Australians thousands of dollars a year. I agree some help is needed meanwhile.
Hi Buddy,
As usual a very incisive and interesting article. It amazes me however that only two of our rich entrepreneurs are prepared to take up the challenge on green energy. It. Is obvious that there is tons of lovely money to be made plus of course the positive exposure to those who have the money and take the plunge by investing in renewables. Where are James Packer and Gina Reinhardt and the other individuals who have used this country to enrich themselves. Non of these billionaires seem at all interested in using some of their ‘hard earned ‘ dough in not only making a profit , but also contributing to saving the planet. Apparently, they, like so many of our politicians have no interest in the future of the world let alone that very same world their children and grand children will inherit from them and their selfish ideals.
Well said Michael
Gina Reinhart is a known denier and James Packer would probably have no interest, knowing his personality and other problems. I have little time for anyone that devotes their life to gambling! As for politicians, at least some now recognise that climate change is real and serious and are forging policies to direct action. But as we have always said, shareholder driven business and profits are where the action will come from.