The Clean Coal Con Job

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Let’s hope for the sake of the planet that Carbon dioxide Capture and Storage (CCS) eventually works. Certainly, it warrants research and development funding, though not necessarily at the expense of the taxpayer.

The Howard Government’s con trick is to claim to support CCS (with R&D funding and plenty of hype), while being very careful to not support the application of global carbon pricing even though it knows that no sane electricity generator would choose a technology as costly as CCS in the absence of carbon pricing.

The Government’s lack of genuine support for CCS is implicit in its failure to ratify the Kyoto Protocol. Its intention, rather, is to sabotage international carbon pricing so as to retain markets for conventional coal-fired electricity generation. As the ALP’s Shadow Environment Minister Peter Garrett says, Howard is running a scare campaign about the costs of carbon abatement. But we need to be clear on what this is about because there are two distinct scare campaigns, operating in parallel.

The first scare campaign hypes the impact of international c arbon constraints and anticipates reduced coal export revenues (relative to some hypothetical boom in a business-as-usual scenario). But Australia’s existing coal export revenues are not going to be jeopardised any time soon because these export markets cannot disappear overnight: there’s just too much inertia in the system.

What is really at stake is the possible loss of future super-profits from coal export due to the cutting of global greenhouse gas emissions. That is, it’s about share prices. (Hardly discussed is the fact that the ‘business-as-usual’ boom would sharply raise the Australian real exchange rate and put grave further pressure on other Australian export and import-competing industries. Kevin Rudd has rightly given some priority to these industries, and no doubt is aware of the problem.)

Global emissions constraints are not something that a minor player like Australia would ordinarily have much control over. But Howard’s climate strategy for the last decade has been politically motivated it’s been about supporting the Bush Administration’s shameful hold-out on Kyoto. Put another way, an acceptable climate change policy for Australia must also assist the US to restore its severely damaged international legitimacy by providing some genuine leadership on this issue.

The second scare campaign is about the impact of capping Australia’s domestic greenhouse gas emissions. Labor is right to commit itself to major emission abatement targets by 2050. By the same token, it is right to be more cautious about shorter-term commitments, until the economic analysis is complete. This is not to deny that urgent action is needed.

Kevin Rudd has now released a statement of Labor’s support for CCS. It commences with the assumption that ‘Australia directly exported [coal worth]$24.5 billion last year, making Australia the world’s largest coal exporter.’

This is quite misleading. In the relevant category of steaming coal for electricity generation, Australia exported a little over $6 billion worth of coal last year. The rest was higher quality coking coal for steel-making. To put these exports into perspective, Australia produces only 3 per cent of the world’s steaming coal used for electricity generation. Although it’s important for the Australian economy, coal is not a commodity that is strongly traded internationally tending to be mined in the country where it is combusted into electricity.

Thanks to Scratch

According to the US Energy Information Agency’s ‘business-as-usual’ scenario (that is, if there are no carbon emission constraints), China and India together will account for 70 per cent of the projected increase in world coal consumption over the period to 2030. China’s coal-fired electricity capacity is projected to increase by 20 gigawatts (GW) per year over this period.

This business-as-usual forecast cannot be allowed to happen if global climate change is to be stabilised at a reasonable level. Fortunately, there needn’t be total reliance on a technologically uncertain option such as CCS. China and India have other options, including the combination of renewables, natural gas imported from West Asia, and an increase in end-use efficiency. But none of these options will be seriously considered by investors or governments unless emissions targets are adopted and carbon is priced.

That is why it so crucial for Australia and the US to ratify Kyoto. China and India cannot be expected to ratify when these two countries do not, and when their CO2 emissions are five times as great in per capita terms. Labor promises to fund CCS research and development on a 1:2 basis (Government and industry) to the tune of $500 million, coupled with a ‘rock solid’ undertaking to immediately ratify the Kyoto Protocol.

Again differentiating itself from the Howard Government, Labor has commendably signed on to a long-term program of reducing greenhouse gas emissions by 60 per cent by 2050. To achieve this action must begin now. The ALP talks about a combination of renewables and CCS to solve the greenhouse gas emissions problem. But it has no obvious fall-back if CCS does not come off and given that, even under the best assumptions, it will be long-time coming.

Cynically, Labor still supports building new coal-fired power stations in Australia on the pretext that they are getting ‘cleaner’ although they must be aware this is a furphy. In the final paragraph of Rudd’s own Press Statement, he conflates CCS with ‘clean coal technology.’ These are two completely different entities. The ALP should be uncovering the distortions and half-truths of the coal lobby not perpetuating them.

Bob Brown was as usual well-informed when he commented that for a Victorian brown coal power station to improve its CO2-intensity by 30 per cent would only get it to the same abysmal level as black coal stations. Labor’s double standards are evident in NSW too. The Institute of Environmental Studies’s Mark Diesendorf has noted that t he NSW program to upgrade the State’s 12 coal-fired generators from 660 to 750 megawatts (MW) each will produce equivalent emissions to a new coal-fired station.

In the absence of CCS, it is quite reprehensible for Labor to be approving new coal-fired power stations . There are untested claims that baseload electricity can be met from renewables. But what is clear is that Australia does have a cost-effective ‘bridging technology’ for baseload. Combined Cycle Gas Turbines (CCGTs) are ideally suited to this role. CCGTs can be fuelled either with natural gas or coal-bed methane, of which Australia has large reserves. CCGTs require only half the capital cost of new coal-fired capacity. They not only use a much less carbon-intensive primary fuel, but they are at least 25 per cent more fuel efficient than coal-fired stations. As Tim Flannery has pointed out, they have only one half of the CO2 emissions per kWh.

And CCGTs are far more suited to operation in conjunction with renewables such as wind, solar thermal and photovoltaics. They have much shorter construction lead times and, being more modular, they are better tailored to growth in demand. This is important at a time when the greatest emphasis should be on encouraging energy efficiency and reducing requirement for new generating capacity.

Labor deserves criticism for ignoring the gas option for baseload electricity.

Its other blind spot is the role of policies to encourage energy efficiency in end-use. But once again, this situation cannot be turned around overnight. The turnaround time for vehicle fleets is 15 years but often considerably longer for stationary electrical assets. Retrofitting existing buildings cost-effectively also takes time and money and will not happen in the absence of external incentives. Hence, once again, the importance of beginning to act now and of the role for ‘bridging technologies’ in conjunction with the other options.

Unfortunately, what we have instead is the usual bias in favour of strong producer lobbies.

New Matilda

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