Australia’s Energy Crisis
Few if any countries in the world can match the size and breadth of Australia’s energy resources. Yet the country is in the middle of an energy crisis, writes long-standing Primafila correspondent and energy expert Garry Barker.
With boundless sunshine across an area almost as large as the United States, with the world’s largest known deposits of natural gas, reliable and powerful winds, nearly half the world’s known deposits of uranium, massive waves from the Southern Ocean crashing on our shores and huge stores of coal – why does Australia have an energy crisis?
Put simply: There isn’t enough energy to meet current demands, let alone a future in which the need for energy must, inexorably, increase if we are to remain a highly developed and competitive advanced country. All of this has meant that the price of energy has suddenly and steeply increased. On July 1st of this year, domestic electricity prices rose 20 percent in one jump, but that was nothing compared with the 250 percent increase imposed on industrial users. That, for many Australian exporters, could render them instantly uncompetitive and, unless a remedy is quickly found, many will go to the wall.
Bordering on the Stupid
The causes of this extraordinary situation are several and complex. Part of it, many say, is the result of price-gouging by generating and distribution companies, but it’s much deeper than that and borders on the stupid. Because the gas extracting companies are more interested in selling vast quantities of gas to export, there is a shortage of gas in Australia. Consequently, the export price of Australian gas charged on long-term contracts to countries such as China and Japan, compared with that levied upon all domestic users is huge and illogical. It is so different that an Australian generator could buy Australian gas that had been shipped to Japan and ship it back to Australia for less than they now pay locally.
The Australian Federal Government recently required exporters to increase domestic supplies, even if it meant curtailing shipments to export customers, but so far that has not affected local pricing, despite evidence that many lower-income families are having extreme difficulty in affording the new rates.
There are other factors, such as the closure of old coal-fired base load generators. because they are no longer profitable, a worldwide problem. For instance, the world’s largest coal-fired station, owned by the Indian energy company Adani, loses millions of dollars a year and has done so for the best part of a decade. The Hazelwood station in Victoria, Australia, is in the same situation and was closed earlier this year, wiping 1600 megawatts from the Australian grid, with much argument, but no clear plan to fill the gap it has left.
A Crisis Ignored
So, inevitably, there is a debate in our Parliament, but it is not a debate about energy supply and the plight of families and industry, something that should have been foreseen by the government and that energy companies probably knew was coming, but kept quiet. In the debate the crisis is all but ignored. The Government, led by Prime Minister Malcolm Turnbull has a one-seat majority and is forced to make terms with small, cross-bench parties to get legislation through. Consequently, the fight is nasty, personal, and politically venal. It is principally about political ambition, and damn the consequences. That is true of both sides of the Parliament, and also within the ranks of the ruling Liberal Party where there are at least ten factions at odds with one another, meaning a clear Government energy policy is currently impossible.
The public is now deeply disappointed of just about every aspect of its Parliament and largely distrustful and even contemptuous of their elected representatives.
Further bile in Parliament is added by former prime minister, Tony Abbott, still seething with rage about his summary ousting by his party in favor of Turnbull. Clearly, he seeks to unseat and replace Turnbull, though every opinion poll says a snowflake would have more chance surviving a blast furnace. But, within the Liberal party’s right wing Abbott continues to have support; enough to foment dissension, argument, and back-stabbing and give advantage to the Labour opposition led by Bill Shorten, who hopes it will give him the Prime Ministership at the next election in 2018.
As a result, a detailed report into Australia’s energy crisis by our distinguished Chief Scientist, neuro scientist and electrical engineer, Dr Alan Finkel, has become a political football and so far nothing has come of it.
Clinging to Coal
Coal is part of the argument. It is one of Australia’s biggest exports. Though Australia is a signatory to the Paris Agreement on climate change and one of the world’s biggest polluters, Abbott and his coterie continue to support the construction of more coal-fired power stations, though there is no chance they could ever make money, in the unlikely event any company would make such a stupidly risky investment.
Along the way, because of a serious blackout that occurred in South Australia, the state with the largest investment in solar and wind power, many of our less than informed politicians talk down renewable energy sources, despite the fact that wind and solar generation is now cheaper than coal and getting cheaper.
As a sidebar to that, Adani, which has a debt burden of $US15 billion, has proposed developing one of the world’s biggest coal deposits in the Galilee basin in Queensland, promising the creation of 10,000 jobs. Outside politics, few knowledgeable people here believe it will create more than about 1000 permanent jobs. More importantly, Adani has sought funding from both the Queensland and Australian Federal Governments and additionally asked that government funds be used to build a rail line from the mine to the export port; more billions and only one user. If the mine fails the Government would own a line going from nowhere to nowhere.
