The Australian Prime Minister, the Hon. Jon Howard, has released a AU$500 million energy policy, “Securing Australia’s Energy Future“. The spiel was that it had a sustainability agenda with funding for renewable energy initiatives. I was “cautiously optimistic” but my hopes have been gutted. Gutted, I tells ya.
See this. There’s “lots” of money for new renewable enegy technology but we already have plenty of it, and world-class energy efficiency measures to boot. What we need is some Government-prodding for people to take up these technologies already in existence…like a higher Mandatory Renewable Energy Target. 2% by 2010 is just a tad pathetic. At the pre-MRET growth rate for renewables, this target represents a real increase of about 0.5%.
Oh yeah, and this environmentally-responsible energy policy also includes a reduction in fuel taxes (yay! cheaper petrol!), diesel subsidies for farmers, fisheries and mining, a plan to pump carbon dioxide underground and did I mention that the chief scientist of this policy, Dr Robin Batterham, also sits on the Rio Tinto board? Rio Tinto is a coal mining company. As Marcellus said in Hamlet, “Something is rotten in the state of Denmark.”
Oooh, political rant. My first one! Don’t worry, we shall return to normal programming very shortly 🙂
“What we need is some Government-prodding for people to take up these technologies already in existence…like a higher Mandatory Renewable Energy Target”
Seeing that you’re an environmental engineer, is this technology more cost efficient for industry? I’m thinking that the reason they don’t take up even higher MRET’s is because of output capacity worries of this source and the cost as compared to other sources – are the risks greater and how secure would the supply be if businesses were to move completely over to it?
“Dr Robin Batterham, also sits on the Rio Tinto board?”
You have a lot of people on the Left who say, “we see these problems with big business, let’s run to big government to fix it”, when it is actually the alliance between big government and big business that creates the very problems they complain about in the first place.
I’m a Christian Libertarian by the way, and I find it very disappointing that there are no Limited Government parties on the ballot that I can vote for.
On fuel taxes, I don’t think there should be any at all, but then I find the government having a role in education to be a conflict of interest…
Jamie
Jamie has brought up a good point. Industry could reduce greenhouse gases more if the money they spent on renewables was put into energy efficient measures and processes. I suppose I’d like to see a MEET – “Mandatory Energy Efficiency Target”, rather than an MRET. But renewables are far more glamourous than energy efficient fridges! :p
The cost of renewable energy is definitely greater than for coal-based fuel but that’s largely an economy of scale thing. To make renewables more competitive, we need to either make the coal-based electricity include the cost of environmental impact (very tricky to work out), subsidise the hell out of renewables or go larger scale. Reliability and output aren’t problems but the Government will need to dangle big carrots or wield big sticks to create the demand for renewables.
Mr. Batterham on the board is definitely a conflict of interest. I can’t take anything he says seriously until Rio Tinto gets out of the fossil fuel business.
I also think that fuel should be far more expensive. Whether that means the Government should tax it more or if the environmental cost is included at the pump… *shrug* But I’m a hypocrite. I drive to uni when I could easily take a bus.
BAD JOANIUM, BAD.
“To make renewables more competitive, we need to either make the coal-based electricity include the cost of environmental impact (very tricky to work out), subsidise the hell out of renewables or go larger scale.”
This is where I have doubts about the good intentions of environmentalists, if the impact is speculative at best – I know there are easily identifiable abuses that can be punished, say for instance an oil spill, or what BHP did to the river system with Ok Tedi in Papua New Guinea – then why devote taxpayer’s money as a sort of forced investment into an industry where it hasn’t proven it can operate below cost? I understand why it won’t go larger scale yet, if they can’t make it efficient on a lower scale, taking out a larger loan on a bigger version of that investment is pointless.
I’m a trader, and I find it tough to justify investing in a stock that has a poor track record in getting on top of costs – for instance, Southcorp over the past few years, but not now. I just won’t risk that investment until I receive evidence and assurances of its potential to perform. Government subsidising anything just hides costs. And government doesn’t create its own revenue, subsidies come from other profitable industries, so by helping out one that can’t perform, you’re hurting another that can.
Healthcare in this country would be much more expensive if subsidies were removed, which would be a Very Bad Thing, but maybe there would be no need for subsidies if the health care sector wasn’t so inefficient. Costs must be dealt with, they can’t be hidden forever. The only mechanism that has proven time and time again that it can successfully reduce costs is the free market. This is the process which has led the Western world to such high living standards.
Jamie
“Mr. Batterham on the board is definitely a conflict of interest. I can’t take anything he says seriously until Rio Tinto gets out of the fossil fuel business.”
As I said before, by no means am I a fan of government and big business helping each other out for mutually agreeable ends (reminds me of the old German Industrialists and their buddy-buddy relationship with Hitler – it’s fascism), but I can also see that if renewable energy was a technology that was exploitable for profit and growth, Rio Tinto would be there straight away.
From what I can gather, the costs of the technology need to be overcome before it can be seen as a legitimate force in the energy sector. Every business will choose the cheapest sources, so the challenge is to make it cheaper, which I guess is on the shoulders of the next generation of environmental engineers like yourself now…
Jamie
Ah, economics. The reason why fossil fuels are affordable and the industry is this profitable is because of a distortion of pure market forces. For example, coal mining degrades the natural services that the environment provides (eg. water purification, erosion control, clean air) and directly results in say, respiratory illness or an increased incidence of cancer due to pollutants. So while the company reaps the profits, the community at large (taxpayers) must pay for the costs of clean up, public health and opportunity cost for natural resources. One of the tenets of sustainability is that products should be priced at their true cost, including environmental and social externalities. You could say that the Government is subsidising the fossil fue industry with our taxes.
I think the challenge is not to make renewables cheaper but to make fossil fuels more expensive. Anyway, if all energy was more expensive, people might take up energy efficiency with more gusto. Right now, there’s no motivation. “Why bother? It’ll save me a couple of dollars, max.”
There is still a lot of progress being made towards making solar cells more cost effective and efficient. If I could do something as useful as that in my lifetime, I’d be a happy chicky. But there are lots of other renewables that are already financially viable, like well-placed wind turbines, geothermal energy and biogas. But I also accept that we would never be able to rely on renewables completely. Fossil fuels will still be useful.
If only someone would go ahead with that cold-fusion reactor they had planned a few years ago! Then we could really whoop those aliens when they come for us next time!
“For example, coal mining degrades the natural services that the environment provides (eg. water purification, erosion control, clean air) and directly results in say, respiratory illness or an increased incidence of cancer due to pollutants.”
If any of these things can be proven in a court of law, you can make them pay, sometimes it is very speculative. The environmental lobby is quite powerful, I don’t buy the victimisation of them completely, Rio Tinto and BHP may have clout, but so do many international organisations. I mean, if Ok Tedi was in Australia, BHP would have got done big time – PNG didn’t care as much, cause they don’t have much money, we wouldn’t allow something like that to happen to our river system and town communities. I do think environmental effects should be covered by the miners, but not social externialities, it is tough to prove what exactly caused this or that in humans, and most are looking to blame it on something so they can get paid.
Bad publicity is not encouraging news for further investment in a mining company, so they do have to watch their back. The best punishment is a stock market sell off and a loss of confidence in them. They don’t recover from that.
Jamie
Undoubtedly some companies will go bankrupt or become less profitable if they must meet environmental and social obligations. But I also have no doubts that new industries and companies will sprout to fill the void. I think this kind of pressure will result in innovation. The economy may slow down in the short term, but we’ll find our momentum again.
There are plenty of things we can do better and more sustainably without causing economic collapse. In my uni course, we develop a passion and certainty that society must change but we also learn how society works, economics, business and practicalities. I think what I’ve gotten out of it all is that there are plenty of quick gains to be made, if we’d just commit to them. I am hopeful whenever I hear the Government is making steps towards sustainable development (development, not conservation!) but this Energy Policy frustrates me because there are so many steps backwards.
It really is very tricky dealing with environmental issues in the developing world! I agree that it would be terribly unfair for the developed world (who have already logged their forests and started off global warming) to force developing countries to accept onerous environmental laws that stop them raising their living standards. That’s why these countries are exempt from the Kyoto Protocol (for now). I think the process will be a slow one, with developed countries transferring new technology to India, South America, China etc. So maybe when their coal powered plants are replaced, they can use a windfarm or use their waste to make fuel gas.
I am practical, not too much of a hippy 🙂 I want development to continue but in a more carefully considered way.