Australia’s energy mix: still room for coal?

Australia’s energy mix: still room for coal?

Often at the frontline of extreme weather, Australia has long been a proponent of renewable energies and continues to play a strong international role on issues of climate change. Where does coal fit into future plans?

In 2015, Canberra signed the Paris COP21 Agreement pledging to reduce its carbon emissions. The government concurrently set its own voluntary target aiming to secure 23% of its energy from renewable sources. But a string of recent blackouts might have prompted Canberra to change tack.

Following a massive storm last autumn, South Australia was plunged into darkness after high voltage power lines were severed by a series of tornadoes. A subsequent December blackout wreaked havoc on a major industrial plant, which suffered damages that required a multi-million dollar government bailout. Investigating the catastrophic failure of backup systems to kick in, the Australian Energy Market Operator (AEMO) concluded that South Australia’s reliance on renewables played a significant part in producing the outage, as wind farms shut down for security reasons.

As a result, Australia’s Deputy Prime Minister has claimed that the country’s renewables target could be reduced as coal plants with high efficiency, low emissions (HELE) technology could provide a solution to Australia’s energy security. His comments faced significant backlash from opposition MPs and from an independent government-commissioned study stating that Australia would be unable to meet its emission targets if the current policy remains unchanged.

Australia, therefore, faces a conundrum: while heavily investing in renewable energy could eventually lead it to meet its emission targets, the blackouts in South Australia are emblematic of the debate over the state government’s over-reliance on renewable energy grids. In Australia where targets for renewable energy technology are set at the state level, this has led to political bickering where parties have attempted to “show off” that their targets work better than the opposition’s policies. Essentially, it’s not so much about protecting the environment as it is about beating your opponent with a windmill-shaped stick.

In South Australia, the target for renewable energy is set at 50% by 2025 – double the federal target. Following the blackouts, Frydenburg, Australia’s Minister for Environment and Energy, criticised South Australia’s state policies for creating “the highest electricity prices in the National Electricity Market, while at the same time being the only jurisdiction that has had a state-wide blackout”. Essentially, South Australia’s unrealistic renewable energy goals were responsible for driving up consumer prices while failing to maintain energy security.

Although renewable energies have made giant strides over the past two decades, they have been unable to meet the world’s growing energy needs. However, the current debate between renewable technology and energy security in Australia misses the point. The availability and affordability of coal mean that the fossil fuel will remain integral to the global energy mix for some time to come – up to at least 2040 according to experts. Therefore, the question is more about how to reconcile coal with COP21 commitments while keeping energy affordable for the consumer. By many accounts, clean coal and carbon capture and sequestration (CCS) technology could help close the gap between maintaining energy security and reducing carbon emissions.

Traditionally, CCS has been an inherently technical process that has proved too expensive to deploy. Its main idea revolves around capturing carbon emissions from burning coal and storing them under the earth. The technology has existed for decades, but it is only recently that it has become commercially affordable and has garnered increased interest around the world.

According to the International Energy Agency, following the Paris Agreement, the ability of CCS to reduce emissions from fossil fuel use in power generation and industrial processes – including from existing facilities – will be crucial to limiting future temperature increases to “well below 2°C”.

Countries around the world are again closely examining the question of clean coal. India is spearheading the push, with a new plant in Chennai that captures more than 90% of its CO2 without needing government subsidies to stay competitive. The technology converts emissions to soda ash, which is then used in a variety of industries ranging from glass manufacture, sweeteners, detergents and paper products. China, one of the largest producers of carbon emissions from coal plants, has increasingly implemented both clean coal, CCS and CCU (Carbon Capture Utilisation – where captured carbon is used to produce a variety of materials) as a viable balance between energy and environmental security.

However, the greatest concern with respect to clean coal and CCS is the creation of an appropriate policy and regulatory framework that recognises the technology’s utility in helping curb carbon emissions. As stated by an expert of Australia’s Global Carbon Capture and Storage Institute, “the biggest technical issue is reducing cost, and that’s being actively pursued through global R&D. The policy side is what really needs attention.” Part of this includes tax incentives and other legislation limiting carbon emissions. However, a large part will come down to creating a stringent approach to issues of governance and enforcement.

For clean coal and CCS to become recognised as a middle way between energy and environmental security in Australia will require political leadership. HELE technologies should form the backbone of the country’s future coal plants – not only would they reduce CO2 emissions but also nitrogen oxide, sulphur dioxide and particulate matter emissions. This explains why the Turnbull government is even contemplating offering HELE clean-energy subsidies.

Bipartisan support for these efforts can be gathered by looking at facts and the growing evidence of work supporting CCS and HELE technology, as coal remains a vital resource in the country’s energy mix. The cost of ignoring technology could be even greater for the climate in the long run.


About Author

Nicolas Jenny

Nicolas Jenny specialises in European and Asian political risk analysis. He has lived extensively throughout the region and speaks English, French and Mandarin. He holds a double master's from Sciences Po Paris and Fudan University and a BSc in politics from the University of Bristol.