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No progressive ideas please, we’re from Team Australia

lemmingsBy Giles Parkinson, Renew Economy

Any time someone comes up with a progressive idea in Australia – especially if it is about climate change or clean energy – it doesn’t take long for them to get shouted down by the extraordinarily conservative mainstream media.

Pity those whose arguments or actions somehow go against the coal industry. Take the recent declaration by South Australia that it intends to go to 50 per cent renewable energy by 2025, or even the decision by the ANU investment fund to dump some resource stocks from its portfolio.

The South Australia decision was completely uncontroversial, and mostly symbolic. It had, after all, already reached its previous target of 33 per cent renewables by 2020 six years early, and its 50 per cent target by 2025 will likely depend on a national RET staying in place. It is just as likely that it would get there by rooftop solar additions alone.

But that didn’t stop the conservatives railing against it – over the assumed costs (South Australia has enjoyed the greatest fall in wholesale prices over the last few years, much to the chagrin of the local fossil fuel generators). The local paper complained, the local shock jock quoted some economist who said there would be so many wind turbines they would need to be spaced further apart. That was about the height of their argument.

Even the News Corp-owned Climate Spectator was disdainful, complaining it wasn’t actual practical policy, just politics. (Yes, we know, and neither was the 33 per cent target, but the ambition it projected helped the state attract nearly half of all large scale renewable energy investment in Australia, even when other states had better wind resources).

The reaction to the divestment story has been even more profound – and for that reason, more scary. The Australian Financial Review reacted to the ANU’s decision to sell stocks in seven resource companies as though someone had committed treason against Team Australia. Or at the very least against Team Coal.

The paper ran three items in today’s edition alone – one quoting the aggrieved companies whose stock would be sold, and two opinion pieces, including the page two columnist, Jennifer Hewett, whose piece was titled ‘Morality play with dodgy ethics.’

The nub of Hewett’s argument came from the following paragraph, provided by – guess who – the Minerals Council of Australia (it’s CEO Brendan Pearson is a former journalist at the AFR, and so is this writer for that matter).

‘The Minerals Council says it’s a bizarre concept of ethics given the importance of coal in delivering access to affordable electricity to hundreds of millions of people in the developing world. Even assuming technology improvements, renewable energy is unlikely to replicate that access or affordability for decades. Fossil fuels will be a major part of the energy mix indefinitely.’

This, as one observer noted, puts it right up there with the Terry McCranns of the world. How dare the Greens be right about anything! The idea that coal is the only answer to energy poverty is the centerpiece of the coal lobby’s advertising campaign. Even Australia’s environment minister says anyone who disagrees is ‘against electricity’.  It is about the only argument the fossil fuel industry has going for it, but it is a deeply flawed argument, challenged by reality.

Parity for new-build renewables is not decades away, it is now – and especially so at the ‘socket’, which is what consumers really care about. It is simply a matter of providing the finance (something coal has obviously been singularly unable to do for the past century or these people would not be without power).

Even the conservative International Energy Agency admits renewables will be the better, cheaper and quicker way to deliver electricity to those 300 million without it, given they can do it at low cost and without the massive infrastructure.

Furthermore, the IEA says coal will play an ever decreasing role – and in some of its scenarios, coal will simply not be used. The cost of this? An extra $44 trillion in upfront costs – offset by $115 trillion of fuel savings.

The only people that don’t accept this are the fossil fuel companies themselves – and their lobbyists and media cheerleaders. That’s because if they can’t convince investors of the future of their commodity, they will start to move their funds elsewhere. Hence the determination of Shell, Exxon, and the MCA to insist that the primacy of their commodities is untouchable.

Most major investment banks now realise that is bollocks, and soon so will most investors. As Alliance Bernstein pointed out, even the liquid fuels markets – LNG, diesel, oil – are under threat from the declining cost of renewables. It noted that the prospect of energy price deflation would cause investors to channel their funds – well before it actually happened.

It pointed out that in a global context, solar is ‘just cheap, clean, convenient, reliable energy.’ This will lead to dramatic changes in the energy industry – distributed generation, battery storage, electrification of transport – and to the psyche of investors.

Importantly, and this is the key, Alliance Bernstein said that those who control the flow of capital may not wait until energy prices do actually deflate, they will likely change their behaviour well before that in anticipation that it will happen.

‘If the downward sloping forward curve is ever accepted as permanent, rational behavior from energy producers will guarantee it is so. Sitting on oil and gas reserves for the benefit of generations yet to come ceases to be a rational strategy if that reserve represents a depreciating rather than an appreciating asset.’

Alliance Bernstein and Kepler Chevreux point out that these crossover points – when renewable energy is becoming cheaper than liquid fuels, and stationary energy – is not far away. Even the IEA talks about peak oil demand by 2020.

Kepler Chevreux puts the risk of stranded assets at $30 trillion. That doesn’t include the cost of associated infrastructure which is the focus of discussion in Australia – the ports and rail lines to support projects like the Galilee Basin.

That’s the point of the divestment program. It’s about awakening the trustees and advisory boards to this very threat, and to suggest they move their funds out of exposed assets before it is too late.

As one recent study suggested, if you want to convince conservatives types about the merits of acting on climate change, don’t mention the environment, just talk about the dollars. That is what is underpinning the movement now, which, it should be pointed out, is led not so much by green NGOs, as by investment bankers and economists who know a bubble when they see one. And this one is a great big carbon bubble.

It’s about protecting your savings, and your economic future. And it’s worth noting who was on the ANU advisory board that made this decision:
Graeme Samuel, the former head of the ACCC (appointed by that well known green radical, Peter Costello), and Doug McTaggart, who was on the commission of audit for Queensland Premier Campbell Newman.

This is what terrifies the incumbent fossil fuel industry – and it is why the MCA relies on the likes of Hewett and McCrann and the state governments who are so dependent on royalties.

Hewett even attacked the Anglican Diocese of Perth for wanting to do the same as the ANU and sell fossil fuel assets. Don’t they know they are in WA, a state hugely dependent on resources, she bellowed.

‘Green Imperialism at its worst,’ she found someone in a coal company to say, without a hint of irony that this should come from a fossil fuel industry that has dominated geopolitics for more than half a century. So this must be what is meant by playing for Team Australia. Or for Team Coal. Just follow the crowd. Off a cliff.

 


6 responses to “No progressive ideas please, we’re from Team Australia”

  1. Stuart21 says:

    “‘The Minerals Council says it’s a bizarre concept of ethics given the importance of coal in delivering access to affordable electricity to hundreds of millions of people in the developing world. Even assuming technology improvements, renewable energy is unlikely to replicate that access or affordability for decades. Fossil fuels will be a major part of the energy mix indefinitely.”

    Missing; “We hope”

  2. jj says:

    In Greece there are gigantic solar farms all around Athens, in Italy and many other European countries they fill the rooves of villages and cities and China is leading the way in moving away from coal-fuelled power and India is as well. It is only in the U.S and Australia that the fossil fuel industry runs government policy on this issue and makes the people look like a pack of gullible rednecks who believe everything the Murdoch press tell them. Why continue to subsidise (we’re talking billions of dollars) an industry that has taken far more out of this country that it has ever contributed and is destined to go, kicking and screaming, down the gurgler within the next decade…

  3. Russell Mills says:

    As some wag incisively tweeted a month or so ago, Australia is the drunk idiot driving the wrong way down the climate science freeway. Nuff said.

  4. Peter Houston says:

    Does anyone know what’s happened to the Renew Economy web site? I can’t access it any more from three different computers.

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