2015-07-07
Peter Lane
Under the Abbott government, with acquiescence from the opposition, not only has the Renewable Energy Target (RET) been reduced, but the burning of native forest timber for power generation has been allowed as part of the makeup to meet that target. With the world's governments (including previously recalcitrant ones such as China) accepting the need for dramatic cuts in emissions, and with evidence almost every day, how could this come about?
One seemingly small but significant factor is that we should never have had a RET; we should have had a CFET — a Carbon-Free Emissions Target. The RET was instigated in those heady days of the concept of “Peak Oil”, always a scientifically and technically invalid notion, and renewable energy was considered the answer to both lowering emissions and reducing our dependence on fossil fuels. We now have a fossil fuel glut. Our politicians have simply not kept with the times.
But the issue goes a lot further. It points to an ideological obsession our government has in favour of coal and, as seen by the crusade against wind-farms, against carbon-free energy. And while this is of concern to environmentalists it should also be of very considerable concern to economists.
For the past decade and more Australia has ridden on the back of the resources boom. That has come to an end, specifically with our big export items. The price of iron ore has plummeted; neither India nor China want our coal; our biggest potential coal mine, a 60 million tonnes/year project in the Galilee basin, is considered to be non-financeable; and international demand for liquefied natural gas, the great hope of the unconventional gas industry, has dwindled. With little or no evidence of a foreseeable recovery for these resources, what is Australia's future?
Australia had a terrific natural advantage in having some really world-class mineral resources. While it can no longer turn these to the profit it once relied on, it still has a huge natural and human advantage, but of a different nature.
We are the sunniest and windiest of the (inhabited) continents and the nation with the world's longest coastline; we have a huge amount of money in super funds and elsewhere with nowhere to go; we have money going into non-productive real estate; and we have a scientific, technical and corporate/financial framework the envy of most nations.
We have the opportunity of becoming real world leaders in alternate, carbon-free energy — solar, wind, wave and tidal. We can become world leaders, not only in the technology of carbon-free power generation, but if done right, in its manufacture as well.
And it doesn't matter if investors or the government accept climate change or not — the rest of the world does; so this is a commercial opportunity and a potentially new and exciting direction our presently rudderless economy could take. To do so it needs the right policy framework, but the government's extraordinary reduction of the RET and even greater reduction of the CFET engenders little confidence that this will happen. Other less blessed countries will take the lead and this extraordinary opportunity will soon be lost.