Energy transition economics outpace Australian politics
The reaction of the Australian government to the recent IPCC report was to reject a phase out of coal. But with research showing new wind and solar are competitive with new coal, economics, not politics, looks set to define the country’s energy mix
In response to the latest Intergovernmental Panel on Climate Change report on how to limit the global average temperature increase to 1.5°C, the Australian government rejected the call to phase out coal by 2050. But as the country grapples with an ageing power generating infrastructure, it is increasingly clear the economics of new coal are unable to compete with the cleaner technologies being rapidly developed
Key to the transition from brown to green energy, as set out by the Intergovernmental Panel on Climate Change (IPCC), is a decline in coal to as little as 1% of the global energy mix by 2050 and a scale up of renewables to around two-thirds of supply. The goals are ambitious. In 2017, coal accounted for nearly 40% of the world’s electricity supply, while renewables (including hydropower) accounted for 24%, says BP’s Statistical Review of World Energy 2018. In Australia, coal remains king, generating 63% of electricity compared with 16% for renewables, while the government has been dismissive of the IPCC report and refused to rule out the continued use of coal.
A long-standing partisan issue, Australia’s ever-changing climate policies have bedevilled investors. When the current ruling Liberal-National coalition came to power in 2013, the then-prime minister Tony Abbott set about undoing or watering down the previous Labor government’s climate initiatives, from the carbon pricing mechanism to the renewable energy target. In 2015, he was replaced by Malcolm Turnbull, who in turn was ousted in August 2018, following the collapse of his flagship national energy guarantee (NEG) policy. ...
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