Treasurer Scott Morrison put a few Coalition noses out of joint at the weekend by admitting to the Australian Financial Review newspaper that “new cheap coal is a bit of a myth”.
Mr Morrison should be commended for that frank assessment, but he needs to go much further and explain how the “myth” of cheap coal is holding up an investment boom based around renewable energy.
That’s easier said than done, of course, given the number of anti-climate action MPs in the Coalition party room. However, even they can’t argue with Mr Morrison’s weekend comments.
The government’s own Finkel Review spells out clearly that the cheapest form of new-build energy is wind power, even taking into account the ‘firming costs’ of storage or gas-fired generation to back it up.
New realities require new thinking
Cheap coal power was a central part of Australia’s economic success over the past century, but that competitive advantage is rapidly slipping away as the world moves to cut carbon emissions.
Losing that competitive advantage could be an existential threat to an economy like Australia’s, but only if nothing is done to adapt to the new reality.
Unfortunately, large parts of the Liberal and National parties still think doing nothing is an option – a position based on two dangerous delusions.
The first is that the risks described by the overwhelming majority of climate scientists around the world are some kind of wicked conspiracy – or “complete crap” as Tony Abbott famously summed it up.
The second, is that because President Donald Trump pulled the US out of the Paris agreement in June, the nations that account for the other 86 per cent of global emissions will do likewise.
In fact, of the 197 nations that signed the 2016 agreement, 157 have already ratified it in their own parliaments.
The danger of inaction on climate change
Living in denial about the science or the global politics of climate change is harmful to the economy.
It delays what should be a steady transition to cleaner energy sources and jeopardises Australia’s potential status as a ‘clean-energy super-power’.
Mr Morrison seems to be aware of this, telling the AFR: “To solve the problem we need to have certainty around investment rules … [The] capital is there but it will not come without that certainty and we’re working to achieve that.”
What he’s alluding to is the single recommendation, of the 50 made by the Finkel report, that the Coalition joint party room has not yet voted to accept – the creation of a Clean Energy Target (CET).
The CET would set a benchmark for carbon emissions and create a price signal to encourage energy generators to pursue low-emissions technologies.
Companies that generated power above the threshold would be required to buy certificates issued by those that generated below the threshold – and the threshold itself could be gradually lowered over time.
The new ‘green’ economy
The CET would speed up a process that is already underway – helping to match clean energy with existing industries to make them more competitive.
Have a look, for instance, at the plans of the consortium GFG Alliance, which recently bought out the Arrium steelworks in Whyalla.
It is establishing a market position as a supplier of ‘green steel’ by buying steel works located close to large-scale renewable energy assets.
Or consider the wind-power-plus-storage system being used by agribusiness Nectar Farms to heat hectares of horticultural greenhouses in Victoria.
Or again, the solar-tower technology being used by Sundrop Farms to power a tomato growing operation in the desert, or the South Australian government’s decision to source all its own power consumption from a state-of-the-art solar thermal power plant in Port Augusta.
Clean energy is gaining momentum in Australia, but with stronger political leadership Australia could be leading, not following, this global revolution.
That is exactly what the clean energy target would help achieve.
But that won’t happen unless Mr Morrison can shake a few more of his party room colleagues out of their unfounded, counterfactual state of denial.