Solar Technology Here to Stay
Updated 28 Jan 2020, 10:00am
It was a story that raised a few hackles, particularly in Canberra, but one largely overlooked as the unfolding disaster gripped the nation.
Early last month, as fire swept across large parts of the east coast and South Australia but before the Christmas conflagration, secret internal documents detailing ANZ’s rapid retreat from coal hit the news.
Contrary to its public statements before Parliament just a few weeks before, the bank had formulated a plan to shed more than $700 million in thermal coal loans within the next four years: a 75 per cent reduction.
This was a major shift for ANZ, the country’s biggest lender to the coal industry, and one that would bring it into line with the Commonwealth Bank and the National Australia Bank.
A few weeks later, investment bank Goldman Sachs, in one of the strongest positions from any American financier, ruled out future thermal coal financing, either for new mines or power stations globally.
These were considered, long-term, strategic decisions made individually by disparate groups united by a single cause — the unbridled pursuit of profit.
The message each is broadcasting is clear. When it comes to investment, coal, particularly thermal coal for electricity generation, has little, if any, future.
It’s a message our politicians should heed if they want to limit the damage to communities that rely upon the coal industry.
Given Australia is one of the world’s biggest coal exporters, shipping about $30 billion of thermal coal a year and around the same in metallurgical coal, the stakes are high.
Global banks are aware of the dangers. For decades, sceptics have disputed the science of climate change. Now they want to ignore the economics.
The reason global financiers are rapidly turning their backs on coal is because there’s no longer a buck to be made from it.
Last week, that message was rammed home rather forcefully by the Bank of International Settlements, the governing body of the world’s central banks, including our own Reserve Bank.
In a paper entitled Green Swan, the BIS warned central banks that bad loans on power stations and mines could spark the next financial crisis.
Should that occur, central banks could be forced to pick up the tab, just as they had to wade into mortgage markets during the global financial crisis.
Most global banks already are acutely aware of the dangers. That’s why no-one will commit to financing the Adani mine in Queensland’s Galilee Basin.
Coal mines and coal fired power stations are projects with very long life spans that require huge amounts of capital.
Many now deem the risk of committing vast billions over decades to be too high. Not surprisingly, it was ANZ’s Credit and Market Risk Committee that advocated the retreat from coal.
Renewable energy is no longer just a cleaner alternative.
There’s a personal aspect too. Committing vast sums to coal-fired generation — when the financial and environmental risks have been evident — leaves executives and directors open to legal action.
Renewable energy is now no longer just a cleaner alternative to coal.
It’s also cheaper and costs continue to fall. According to the Federal Government’s energy market operator and the CSIRO, “wind and solar are clearly the cheapest new form of electricity generation”.
In a joint report last year, the pair found that while existing coal plants remained the lowest cost, when it came to building new plants, coal could not keep pace. And that’s even without the introduction of a carbon price.
“Our data confirms that while existing fossil fuel power plants are competitive due to their sunk capital costs, solar and wind generation technologies are currently the lowest cost ways to generate electricity for Australia, compared to any other new build technology,” CSIRO chief energy economist Paul Graham said.
The rapid improvements in renewable energy generation technology now are being matched by advances in energy storage, particularly batteries, tilting the economics further towards the future and away from the past.
Ideology versus economics
How is it that often intelligent, high achievers, some of whom hold office, can argue so forcefully against the overwhelming weight of evidence?
Since 2000, Australia has suffered a series of once-in-a-century droughts, a challenging prospect for anyone with even a fleeting acquaintance with mathematics. From one in a hundred to one in six.
Rather than an evidence-based quest for answers, climate has become an ideological battle framed around politics instead of science.
In most facets of their lives, climate sceptics rejoice in scientific advancement and technological breakthrough.
There’s never any debate about Einstein’s theory of special relativity. They never question the revolution wrought by electronics. They revel in high-speed travel. And when it comes to health, they demand the latest and the very best.
But with climate — or more specifically electricity generation — they blanch at the idea of moving much beyond 1776, the year James Watt improved Thomas Newcomen’s steam engine.
Setting fire to coal and boiling up a big pot of water so the steam can turn a machine is apparently the pinnacle of modern electricity generation and a point beyond which we shouldn’t venture, regardless of cost.
Climate change costs
It isn’t easy to measure the cost of the current fires although much of the “analysis” you are likely to see in the next few months will be inaccurate.
The loss of innocent lives, the devastation of our wildlife and the heartbreak of losing your home can’t be measured on a balance sheet.
Even then, it’s likely to underestimate the true costs. That’s because many economists focus only on the immediate.
They’ll include the benefits of rebuilding while ignoring the long-term costs.
When combined with the ongoing drought, two of our biggest export industries — agriculture and tourism — could suffer deep and lasting damage. Those costs will only increase if our dry spells continue at this rate or worsen.
If managed correctly, both these industries are sustainable, while mineral extraction lasts only as long as the minerals. Even the Minerals Council of Australia admits that, at current production, Australia will be exhausted of black coal within 125 years.
Our rural exports are worth $45 billion a year, according to the Department of Foreign Affairs and Trade. Foreign tourists spent around the same amount here in the year to the end of June.
The numbers are even more stark when it comes to employment. DFAT estimates that 646,000 Australians directly work in tourism alone, 14 times more than the 47,000 employed in coal mining.
The choices have already been made in boardrooms The Reserve Bank of Australia, meanwhile, is under no illusion about the future.
“Beyond the next few years, the outlook for coal prices and demand is increasingly uncertain, particularly for thermal coal,” it said.
“Many of Australia’s key thermal coal export destinations including China, Japan and South Korea, are transitioning away from coal-powered electricity generation.”
Many believe Australia faces some tough choices when it comes to coal and energy policy.
That’s not the case.
The choices already have been made in boardrooms around the globe.
Modern Homes Demand Smart Technology
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This Trend is Set to Continue
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The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.
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