I do not have much time to write today. But this evening I am heading to a very exciting event in Newcastle run by – Sun Crowd. It is the first energy storage bulk-buy campaign in Australia and Newcastle is the first city to launch this initiative which will see hundreds of households go off the energy grid and rely on our copious supply of free solar energy. The bulk-buy campaign is a cooperative (not for profit) venture which allows many households to team up to achieve low cost purchases of storage batteries, panels (if you haven’t already got them) and receive technical advice to cut through the complexity of the technology. Our household, which already is ‘off the grid’ during daylight hours (thanks to our solar panels) will soon be able to store our excess electricity we generate during daylight hours and use it up at nights instead of exporting it into the national grid at ridiculously low prices (thanks to the power (excuse the pun) that the power companies have over state government policy. So we are off tonight to get a big mutha of a battery at discounted prices (due to the bulk buy) and free ourselves of the high charges the power companies. Our next step might be to set up a local community power company and generate free power co-operatively for all from the sun. So, pretty exciting. Today also marks the publication of Bloomberg’s – New Energy Outlook 2016 – which provides the latest data on the relative costs of solar/wind against coal fired power generation. The numbers are moving firmly in favour of renewables which should see many more households moving off coal-fired power in the next decade or so.
The conservative Australian government has an appalling record in dealing with climate change and is consistently
Our previous conservative Prime Minister, Tony Abbott who was deposed by his own party last year in a nasty coup as they became more desperate with the federal election pending and the government’s popularity at rock bottom, was a champion of coal-fired energy production.
As he was opening a contention new coal mine in Queensland in October 2014, Tony Abbott announced that (Source):
Coal is good for humanity, coal is good for prosperity, coal is an essential part of our economic future, here in Australia, and right around the world …
This is a sign of hope and confidence in the future of the coal industry – it’s a great industry, we’ve had a great partnership with Japan in the coal industry.
Coal is essential for the prosperity of the world.
Energy is what sustains our prosperity, and coal is the world’s principal energy source and it will be for many decades to come.
The government continues to sanction highly dubious mining projects, which will, clearly have long-term costs to our natural environment and economy.
Readers from abroad might not be up to date on the – Coral Bleaching – due to climate change and human agency along the coast that is ravaging the world famous Great Barrier Reef, one our tourist dollar magnets.
This report from the ABC (June 21, 2016) – Great Barrier Reef coral bleaching could cost $1b in lost tourism, research suggests – indicates the economic damage that is being caused
It is now understood that – Only 7% of the Great Barrier Reef has avoided coral bleaching
The conservative Australian government doesn’t seem to get it. The large coal mining projects along the coast adjacent to the reef involve the creation of port infrastructure, dredging near the reef which further damages the reef.
The proposed Carmichael mine and the related infrastructure developments at Abbot Point has not only lied about how many jobs will be created and the government subsidies that will be provided but will have extremely damaging environment impacts in the region of the Reef and on groundwater in the region (Central Queensland hinterland).
Many of the big investment banks have refused to fund the company’s development of this mine because of its environmental consequences and the shifting sentiment among the population with respect to coal.
There is also a Federal Court case at the moment challenging the decision by the Federal Environment Minister to approve the mine on the basis the approval was unlawful and didn’t properly consider the environmental impacts.
The Australian government is required to protect the World Heritage listed Great Barrier Reef and the approval of the Carmichael mine is in direct violation of that responsibility. That is what the case is about. We will see.
The Bloomberg New Energy Outlook 2016 certainly is relevant here.
What we have learned from this report and previous reports since 2013 is that fossil fuels are now becoming less economically attractive relative to renewable energy.
These results refute the standard line from the mainstream (particularly the coal lobby) that renewable energy is still too costly to think about and will not be viable in the foreseeable future.
Well, technology seems to have arrived that have lowered the costs of renewable energy to the point that it is now competitive with carbon-based sources.
In their 2013 summary of their Energy Outlook (published February 7, 2013) – Renewable energy now cheaper than new fossil fuels in Australia – Bloomberg New Energy Finance reports that when we compare coal-projects with renewables on a consistent basis, the latter win out on purely cost terms.
We learn that (as in 2013):
… that electricity can be supplied from a new wind farm at a cost of AUD 80/MWh (USD 83), compared to AUD 143/MWh from a new coal plant or AUD 116/MWh from a new baseload gas plant, including the cost of emissions under the Gillard government’s carbon pricing scheme. However even without a carbon price (the most efficient way to reduce economy-wide emissions) wind energy is 14% cheaper than new coal and 18% cheaper than new gas.
We should also add that the conservative government that followed the demise of the Gillard-Rudd Labour government scrapped the Carbon Tax as part of the debt it owed the coal lobby in taking office apart from their inherent and on-going climate change denial DNA.
Other reports from the US, for example, demonstrate the same tendency for solar/wind to be cheaper than coal (Source)
And I do not need to remind anyone that the cost-benefit ratios are biased towards fossil-fuels because governments do not correct the market failure that sees the environmental costs (the so-called ‘externalities’) properly priced into the production of coal-based electricity.
In 2015, the IMF published a Working Paper (WP/15/05) – How Large Are Global Energy Subsidies? – which sought to calculate the extent to which carbon-based energy production is escaping the full costs of production because either:
1. “Pre-tax consumer subsidies arise when the price paid by consumers (that is, firms and households) is below the cost of supplying energy”.
2. “Post-tax consumer subsidies arise when the price paid by consumers is below the supply cost of energy plus an appropriate “Pigouvian” (or “corrective”) tax that reflects the environmental damage associated with energy consumption and an additional consumption tax that should be applied to all consumption goods for raising revenues”.
The IMF found that:
Post-tax energy subsidies are dramatically higher than previously estimated—$4.9 trillion (6.5 percent of global GDP) in 2013, and projected to reach $5.3 trillion (6.5 percent of global GDP) in 2015 …
Among different energy products, coal accounts for the biggest subsidies, given its high environmental damage and because (unlike for road fuels) no country imposes meaningful excises on its consumption …
Most energy subsidies arise from the failure to adequately charge for the cost of domestic environmental damage—only about one-quarter of the total is from climate change—so unilateral reform of energy subsidies is mostly in countries’ own interests, although global coordination could strengthen such efforts.
The latest Bloomberg New Energy Outlook 2016 was produced in the environment of cheaper coal and cheaper gas but they conclude that these trends:
… will not derail the transformation and decarbonisation of the world’s power systems … by 2040, 60% of the global power capacity will come from zero-emission energy sources.
They predict that:
1. “Onshore wind will fall 41% by 2040 … … and solar by 60%”.
2. “This means these two technologies will be the cheapest ways of producing electricity in many countries during the 2020s and in most of the world in the 2030s.”
3. Most of the new investment will be in the Asia-Pacific region “which will add as much capacity in the next 25 years as the rest of the world combined.”
4. “…and half of that will be built in China, which despite its current slow-down will attract $2.8 trillion of new investment. Around 73% of capacity additions in China will be renewables. Coal capacity peaks in 2020 and coal generation in 2025.”
However, unfortunately (due to India and other developing countries), “fossil fuels will maintain a 44% share of generation in 2040 – down from two-thirds in 2015”. This is because “climate change policies” are “weak or yet to be implemented”.
For those who like discussions about mathematics (and there relevance to climate change), this Bloomberg article (June 20, 2016) – With Climate Change, Doing the Math Matters – is interesting.
In part, it draws on a recent article that appeared in Chaos, an Interdisciplinary Journal of Nonlinear Science – Evaluating gambles using dynamics – that reports on the research by two physics researchers on whether gambles (bets) work in additive or multiplicative ways and what the implications are of each.
The research findings basically scuttle the traditional approach still used by mainstream economists to evaluate topics such as environmental damage and climate change.
The results show that standard ‘utility theory’ which uses “Utility functions” which “aim to capture individual psychological characteristics” have no application in real world settings where ergodicity (probabilistic stability) is absent.
Essentially, they say that decision-making based on the mainstream economics framework leads to wrong decisions because multiplicity rules so that small impacts expand over time to become huge (losses or gains).
The results suggest that mainstream claims that new coal-fired power stations will be economically viable are likely to be invalid.
Bloomberg believes that the creation of “new coal-fired power stations … in Australia … are just too expensive now, compared to renewables”.
The problem remaining that renewables still cannot compete (on economic grounds) with “old assets that have already been paid off”, which means that regulative regimes have to put those old assets out of business rather than relying on the inevitable market forces which will lead to the same result but in decades to come.
That environmental damage is multiplicative tells us that we cannot wait for decades.
I am acting tonight!
MMT Interview – Valencia, May 11, 2016
The following video was recorded by Attac-TV at the Centre Cultural La Nau – Universitat de València, which was built in 1497.
The interview took place on May 11, 2016 prior to my evening presentation at the University.
The interviewer was Jorge Amar, who is the President of the Asociación Para el Pleno Empleo y la Estabilidad de Precios (APEEP), or Association for Full Employment and Price Stability in Spain.
The video was produced by Attac-TV although I altered the music (reggae instead of hard rock) and added English sub-titles to complement the Spanish introductions to each segment.
Thanks to Jorge and the Attac team for their work.