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Lack of climate leadership forces Australian states to set their own path

A recent announcement to support offshore wind projects off the state of Victoria shows how the local government has grown tired of waiting for federal leadership on the energy transition

Central government has set a net-zero target but remains economically tethered to coal and gas sectors


LACK OF LEADERSHIP
Australia’s federal government is coming under increasing pressure from all sides to address its decarbonisation plans

STATE REACTION
Many Australian state governments are taking their own steps to tackle climate change but in an incoherent way

KEY QUOTE
Not only are the states taking the lead, but also Australian consumers


As the federal government in Australia faces growing criticism for failing to enact a renewables and energy transition policy, individual states are trying to fill the gap. Prime Minister Scott Morrison’s administration in Canberra continues to shirk its climate responsibilities—either the result of indecision, apathy or simply to appease the country’s power fossil fuel lobby. Many in the country do appear ready to rein in the overreliance on coal needed for thermal power production, but breaking its coal addiction, particularly for its export market, is made more difficult given its contribution to the nation’s Gross Domestic Product (GDP). Mining represented 10.4% of Australia’s GDP in 2019-2020 while coal exports represented 3.5%. [Australian coal] will not be staying in the ground while it continues to provide thousands of jobs and bring significant economic benefits both here and across the world. The reality is that global demand for Australian coal is increasing and forecast to continue rising into the next decade at least,” said Morrison’s Minister for Resources and Water, Keith Pitt, in September 2021. Due to its large resources export economy, including coal, liquefied natural gas (LNG) and iron ore, and the CO2 emitted from their production, Australian carbon levels will remain a point of contention for the foreseeable future. When emissions from Australia’s current coal, oil and gas exports (3.6% of global total) are added to domestic emissions (1.4% of global total), Australia’s contribution to the global climate pollution footprint is already about 5%, according to Climate Analytics, a research group. This total is equivalent to the total greenhouse gas emissions of Russia, the world’s fifth-biggest carbon dioxide emitter. On a per capita basis, Australia’s carbon footprint, including exports, is nine times higher than China’s, four times that of the US, and 37 times that of India, the report added. In 2021, Australia and the US vied for the fourth top global coal production slot at some 541 million tonnes, behind China, India and Indonesia, according to analysis firm Global Data. Australia’s iron ore production also held the top global spot last year at 900 million tonnes, followed by Brazil, China and India. Australia is also a top LNG exporter.

GLOBAL BACKLASH The Morrison-led federal government is being brought to task by international agencies and governments, critical of the premier’s policy to not phase out more fossil fuel projects. The Australian government has ramped up its gas-fired recovery over a green economic recovery, refused to increase its 2030 domestic emissions target, and is not on track to meet its current target,” a report by Climate Action Tracker, a research group, concludes. At the COP26 conference in Scotland in November 2021, Australia enhanced its Nationally Determined Contribution (NDC) under the Paris Agreement to include net-zero emissions by a 2050 target, with its latest emissions projections that will see it aim for a 35% reduction by 2030. However, that pledge is also not without its critics, given that the federal government failed to join other developed economies in a pledge to totally phase out coal-fueled power generation and stop building new plants. Morrison said that coal would be used for decades to come” despite British Prime Minister Boris Johnson stating that COP26 had sounded the death knell for coal.” The [Australian] government appears intent on replacing fossil fuels with fossil fuels,” Climate Action Tracker added. The Australian Petroleum Production and Exploration Association (APPEA), an industry body, not unsurprisingly, disagrees. It still sees gas playing an integral role in the country’s climate mitigation solution, pointing to the more than A$5 billion that’s being invested in technology such as carbon capture and storage (CCS). However, there are still varying opinions on just how effective CCS is, creating yet another layer of complexity in Australia’s national climate change dialogue. APPEAs Andrew McConville claimed that gas can replace coal, while stabilising renewables, as a feedstock for hydrogen production and as a key input to a myriad of manufacturing processes.

PLAN OF ACTION Johanna Bowyer from The Institute for Energy Economics and Financial Analysis (IEEFA) says Australia really needs a comprehensive and enforceable plan to phase out fossil fuel generators and replace them with renewables and storage while supporting the communities and workers affected by the change. The apathetic federal government is moving but at a snail’s pace. In November 2021, the central government introduced legislation to establish a framework for the construction, operation, maintenance and decommissioning of electricity projects in its offshore area. The regulations are expected to speed up projects that will support electrification and the transmission of clean electricity that are already under development. These projects include the Marinus Link transmission line between the mainland and the Battery of the Nation project on Tasmania, Victoria’s 2 gigawatt (GW) Star of the South offshore wind project, and Sun Cable, an ambitious project intended to export renewable energy from Australia to Singapore. However, still more needs to be done by the Morrison administration, argued Daniel Andrews, premier of Victoria. We are a first-world country with second-rate renewable energy ambitions—around 60% of our national energy mix is still fossil fuels,” he said at an event in early March 2022, adding that national emissions targets were embarrassingly eclipsed” by those set by states and territories. What’s clear is that the transition to cheap renewable energy will only get done if it’s led by states and territories,” he added.

STATE LEADERSHIP Bowyer says Australian state governments are already driving the country’s energy transition. Not only are the states taking the lead, but also Australian consumers. Australia has the highest per capita uptake of rooftop PV anywhere in the world.” Figures from the Australian Clean Energy Regulator (CER) show that more than 3 GW of small-scale solar capacity was added to electricity grids around the country in 2021. The previous high was 2.96 GW in 2020. But while the states are taking the initiative, the actions taken and the context in each state in Australia are quite different, Bowyer notes. As a result, the disjointed approach means the country is unlikely to maximise its full decarbonised potential. Bowyer does highlight the actions taken by the New South Wales (NSW) government as the most developed. The state is already implementing a renewables electricity infrastructure roadmap, bringing in new renewables and storage capacity, installing transmission infrastructure to access new renewable energy generation, and providing certainty for investors through Long Term Energy Service Agreements, which will offer an option to access price guarantees for developers of eligible generation, long-duration storage and firming projects. South Australia is also progressing well, Bowyer adds, with wind and solar providing 62% of the state’s demand in 2021. Tasmania was already at 100% renewables in 2021 due to large amounts of hydropower. Queensland is an outlier with a large amount of coal still in the system. Just 19% of Queensland’s demand was served by renewables in 2021. The state is seeing high electricity prices at the moment—largely driven by high coal and gas prices and a failure of a coal generation unit which exploded in May 2021 and is expected to be offline until the end of 2022,” Bowyer says.

GREEN VICTORIA Victoria, meanwhile, had 34% of demand served by renewables in 2021 and is preparing to go further. On March 4th, 2022, the state announced it would accelerate its offshore wind power ambitions to 4 GW by 2035 and as much as 9 GW by 2040. Following a competitive process the 2.2 GW Star of the South, is already scheduled to be built off the southern Victoria coast in the Gippsland Basin in 2028. But details to develop further capacity have yet to be released, raising several questions, including whether Victoria will prioritise near-shore projects in its coastal waters and give equal treatment to any federally-regulated projects in territorial waters. Victoria has been laying the groundwork for its recent offshore wind announcement for some time. In November, it pledged A$40 million under a new Energy Innovation Fund to finance feasibility studies and pre-construction development for three major offshore wind proposals by Star of the South, Macquarie Group and Flotation Energy. The state ultimately envisages up to 33 GW or more of offshore wind capacity, depending on the rate of technological advancement in floating turbine technology. A report by Sydney-based law firm Gilbert & Tolbin said the Bass Strait alone in the Gippsland Basin has approximately 60 GW of floating offshore wind project potential. The Bass Strait Triangle includes the waters that separate the states of Victoria and Tasmania in southeastern Australia. The Gippsland Basin, meanwhile, also contains some 2.7 trillion cubic feet of natural gas and ethane, as well as 220 million barrels of oil and condensate, according to Victoria government data. Moreover, it will remain a major area for hydrocarbon production, despite Victoria’s wind power ambitions. Esso Australia, an ExxonMobil subsidiary, said on March 17th, 2022, it would invest A$400 million more in the basin to extract an additional 200 petajoules (PJ) of gas over the coming five years to meet domestic gas demand. Numerous other oil majors already operate in the area.

OFFSHORE LESSONS As individual states take the lead in renewables development, they, including Victoria, could learn from the growing offshore wind sector of the United States. Contrary to Australia, however, US states do enjoy support from the federal government, a climate-friendly Biden Administration and central organisation from the Bureau of Ocean Energy Management. Nonetheless, the US could showcase to Australia the best practice—or mistakes to avoid—in developing an offshore wind sector rapidly over only a few years. Several US states have taken their own offshore wind power initiatives, separate from federal government actions. A report by Pew Research Centre, a Washington-based think tank, indicated that at least eight US east coast states have been laying the groundwork for major offshore wind power development, including requiring state utilities to purchase set amounts of offshore power by certain dates, investing in ports and transmission infrastructure and setting up workforce training programmes. As a result, in less than a decade, the US offshore wind capacity pipeline erupted to some 30 GW of possible capacity. By 2025, the US looks set to have 4.7 GW of operating offshore wind capacity if all projects are built on time, data from S&P Global Market Intelligence suggests. By 2030, total installed capacity could reach 20.1 GW. Currently, the US has 42 megawatts (MW) of operating offshore wind capacity with 932 MW under construction. Australia has the potential to replicate this growth but only with climate-conscious federal government leadership. •


TEXT Tim Daiss