Fossil Fuel Industry Holding Australian Economy to Ransom

Illustration by Greg Foyster, greg.foyster@gmail.com

by Giles Parkinson, Renew Economy: http://reneweconomy.com.au/2016/fossil-fuel-industry-holding-australian-economy-to-ransom-58128

 

How often do we hear it? Australia, with its world-leading renewable energy resources, particularly wind and solar, and its technological know-how, has the opportunity to become a global energy superpower in a global economy committed to rapid decarbonisation.

 

Is it an opportunity the country is likely to seize? Probably not.

 

Australia has an opportunity to accelerate that shift at a critical meeting of the federal and state energy ministers on Friday, but it is highly unlikely that the status quo will be troubled. There are still too many powerful vested interests at play.

 

Take, for instance, the situation in South Australia. This so-called “energy crisis” - July’s big spike in prices that used to be common before the advent of wind and solar - was predicted, hoped for, and possibly even confected in the hope of illustrating the limitations of renewable energy.

 

Instead, it has simply proved that the fossil fuel industry is holding Australia’s transition to a clean energy economy to ransom, and that consumers are being gouged at every level of the energy industry.

 

Numerous reports have pointed to the market manipulation by a few powerful interests. The Melbourne Energy Institute outlined how a few generators “gamed” the system, exploiting their unusual market power to charge “monopoly rents”, with parallels to the energy crisis confected by Enron in California more than a decade ago. 

 

The Clean Energy Council has complained about stratospheric prices extracted by fossil fuel generators in the name of “energy security,” while RenewEconomy’s own David Leitch and the MEI have pointed to the huge lift in margins.

 

A new study to be released tomorrow by Bruce Mountain of research group CME will show that one-third of capacity was “deliberately” withheld at the peak of the south Australian energy “crisis”, at a time when the generators knew that they could cash in on high prices.

 

The first part of his report, released on Tuesday, showed how the big three retailers - pretty much the same companies that own the state’s gas generators - were price gouging in South Australia, charging $650 more than the cost of generation and delivery, just to act as a go-between for wholesalers and network companies.

 

And, of course, there are the network costs, the gold plating of which has seen consumer bills skyrocket in recent years. Even as regulators attempt to crack down on spending plans for yet more poles and wires, the network owners - and particularly the NSW government - is taking the regulator to court to enable them to spend more and pass those costs on to households and businesses.

Little wonder, then, that the ministers’ meeting in Canberra on Friday is being asked to look beyond more fossil fuel solutions - i.e. drilling for more gas - to solve the NEM’s problems, and to open the markets to more competition. Such measures might include new interconnectors, encouraging more battery storage and “complementary” renewables such as solar towers with storage. In short, they want more competition for the incumbents.

“The future of the national energy market is 100 per cent renewable,” says Tom Quinn, the CEO of the Future Business Council. “The grid must be re-imagined with this reality in mind and built to enable diversified generation and simple import and export throughout the national energy market.”

Quinn says Australia needs to rapidly transition from to its “dumb grid” to an “adaptive grid” and embrace those new technologies, which could include solar, storage, electric vehicles, pumped hydro and ocean energy. “The country has the world’s richest renewable energy resources and the opportunity to create the lowest cost base of energy for industry in the world,” he notes.

The Labor states appear to recognise this. South Australia’s Labor government says its economic future depends on transitioning to a clean energy economy. It is already nearly half way there, a benchmark that the incumbents and ideologues are keen to demonise rather than celebrate.

The ACT is half-way to its 2020 target of sourcing the equivalent of all its electricity from renewable energy, a remarkably canny and visionary strategy that will provide its homes and businesses with an effective hedge against volatile fossil fuel prices and price manipulation in the market.

Victoria and Queensland are keen to follow, and Tasmania is keen to use its massive hydro resources as a clean-energy battery for the mainland. Even Western Australia realises that the future lies in solar and storage.

But there is no sign of this transition at the federal level. Our interview with Josh Frydenberg last Thursday confirmed the worst fears of many in the industry. Frydenberg understands some of the dynamics that are working in the industry, but there is no sign that the Abbott era policies on climate and renewable energy are about to change.

Frydenberg may be less willing than some of his coalition colleagues to blames renewable energy for soaring electricity prices, but he shows he is not about to accelerate the push – ARENA will be stripped of funds; next year’s review of climate targets will be a stocktake, rather than a launch-pad; and there will be no long-term setting of targets, be they for renewable energy or for the decarbonised economy that the Coalition signed up for in Paris last year. The answer for everything appears to be: more gas.

This is depressing stuff. Everyone knows that the transition to new technologies is unavoidable, the question is over the shape, the pace and the cost of that change. The federal government’s role is critical: it can seize the moment and work towards becoming a world leader and renewable energy super-power, or it can be dragged along as it hits the brakes on change to suit the narrow business interests of a few powerful players.

It would, of course, be unfair to blame only Frydenberg for this mess. He, and Turnbull, are constrained by the right wing of the party who, far from wanting to accelerate the transition to clean energy, are reluctant to even accept the science of climate change. The actors may have changed, but the script remains the same.

The role of mainstream media is also important. In short, it has been appalling. Since when has the media considered its role to turn a blind eye - as it has done, quite literally - to the abuse of power of a few key players in the energy market.

The Murdoch press splashed a front page “scoop” about the absence of wind power at critical moments in early July, part of its long and intense campaign against renewable energy. Apart from being wrong - and sourced from the Coalition - it completely missed the point. Yet it has written nothing of the market manipulation and “economic” withdrawal of nearly 1,000MW of fossil fuel generation. The price gouging of retailers has barely got a mention.

Meanwhile, the fossil fuel industry does as it pleases: demonising renewables, withholding capacity, exploiting market holes to push prices higher, pleading for subsidies to help fossil fuel generation leave the market, pleading for other subsidies to “guarantee” the retention of other fossil fuel generators, fighting rule changes that could open the market to new competition, and taking the regulator to court in an effort to further gold plate the grid.

That is what they are able to do. They have a majority share of the market operator, extraordinary influence over the policy maker and federal and state regulators, and a stranglehold over conservative politicians. And as long as the Coalition refuses to translate its Paris commitment to practical policy, they will continue to run amok. 

The Warming Arctic Is Creating a Greenhouse Gas Danger Zone

by Tim Radford/Climate News Network, on TruthDig: http://www.truthdig.com/report/item/the_warming_arctic_is_creating_a_greenhouse_gas_danger_zone_20160630 

Permafrost pockets (Christopher Arp, University of Alaska Fairbanks)

This piece first appeared at Climate News Network.

Climate scientists have coolly established the mechanism by which a warming Arctic will accelerate the warming of the whole world. It’s simple: as the permafrost warms and dries, it will release ever greater quantities of carbon dioxide from the Arctic soils.

And those bits of tundra that warm, thaw and become increasingly soggy will release ever greater quantities of methane, a greenhouse gas (GHG) more short-lived but also a far more potent heat trap than CO₂.

The impact of the carbon dioxide, they say, could be dominant in accelerating global climate change. Since the Arctic region is already the fastest-warming place on the planet, and since the soils of the permafrost are calculated to hold twice as much carbon as is already in the atmosphere, the stakes are high - and so is the pressure on climate scientists to get the details right.

Christina Schädel, an ecosystem scientist at Northern Arizona University in the US, and 23 colleagues from New Zealand, Finland, the Czech Republic, the UK, Australia, Canada, Germany, Singapore and other US institutions report in Nature Climate Change that they made a meta-analysis of 25 separate incubation experiments with soils from the permafrost zone to establish the fine detail of what happens when long-frozen soil is warmed by 10°C. 

Carbon feedback

They found that temperature and moisture both mattered - and the biggest delivery of potential greenhouse warming came with the mix of microbes, soil carbon, and oxygen.

“Our results show that increasing temperatures have a large effect on carbon release from permafrost, but that changes in soil moisture conditions have an even greater effect,” Dr Schädel says. “We conclude that the permafrost carbon feedback will be stronger when a larger percentage of the permafrost zone undergoes thaw in a dry and oxygen-rich environment.”

That a thawing Arctic could, just by the act of thawing, still further accelerate climate change is not news. Researchers have not just repeatedly confirmed the hazard but have even tried to estimate the future toll on global economies.

A report in the latest edition of Geophysical Research Letters journal says that even under the shallow lakes that dot the Arctic lowlands, permafrost is beginning to thaw.

Lakebed temperatures at a depth of a metre or less have warmed by 2.4°C during the last three decades, and for five of the last seven years, the mean annual lakebed temperature has stayed above freezing. So warming is inexorable - and, with it, the potential release of huge quantities of long-buried carbon preserved in the peat and frozen plant material in the soils. 

Question of topography

The Nature Climate Change study picks apart the fine detail of the process, and the next step is to establish whether thawing polar soils will become wetter or drier overall. This could boil down to a question of topography.

“A few centimetres can make the difference in whether the ground slumps and becomes wetter or ends up high and dry, by separating more from the water table,” says Colleen Iversen, an ecosystem scientists at the Oak Ridge National Laboratory in the US and a co-author of the report.

“There are also big ponds that might dry out over large areas, as well as soils underlain by a network of ice wedges where warming could lead to a thermokarst, or a slumping, of the land surface as permafrost thaws and the ice wedges melt. So the wetting and drying of the Arctic is important to observe and model at scales ranging from a metre to multiple kilometers.” 

Tim Radford, a founding editor of Climate News Network, worked for The Guardian for 32 years, for most of that time as science editor. He has been covering climate change since 1988.