The University of Queensland

Professor Chris Greig Director, UQ Energy Initiative

Australian Energy & Climate Policy

Action overwhelmed by Advocacy, Activism and Apathy

FAST FACTS

• Four campuses

• Six faculties

• Eight research institutes

• More than 400 degree

programs

• AU $1.64 billion annual

operating revenue

• Leading Australian

university in research

and commercialisation

• 45,548 students

• 11,398 international

students from 130 countries

• 12,268 postgraduate

students

• 4,593 research higher

degree students

• More than 7000 staff

• 200,000+ Alumni in

160 countries

• 10,000 PhD graduates

- Top 100 Academic Rankings of World Universities (ARWU)

- Top 50 QS World University Rankings

- Top 75 Times Higher Education

- Top 15 Asia Pacific region – ARWU

Today’s Presentation

• Australian energy context

• Ambitions for Reliable,

Affordable, Sustainable Energy

• Are we there yet & if not why

not?

• A look ahead – For Australia

and the world

Energy in Australia

• 88% of electricity is generated from fossil fuels

• Rich in non-renewable energy resources

• Major Energy Exporter

• Investment in fossil energy production central

to Australia’s economic resilience

Australian Energy Policy – The Vision

“Climate Change is the greatest moral, economic

and social challenge of our time”…

• Proposed cuts to GHG emissions by 80% before 2050

• An expanded mandatory Renewable Energy Target

• An Emissions Trading Scheme proposed in 2008

• Established the Global Carbon Capture & Storage

Institute and called for 20 large scale CCS

demonstrations by 2020 including three in Australia

by 2015

• A new Energy White Paper commissioned

Kevin Rudd in 2007 Australian Prime Minister

Promised an era of certainty for investors to decarbonise the energy sector

The Energy White Paper

• Reliance on fuel switching from Coal to

Gas fired electricity

• Developing critical energy resources…

especially gas

• Reinvigorating energy market reform

• “Accelerating” clean energy deployment

– ARENA

– Clean Energy Finance Corporation

– CCS Flagships and Solar Flagships

Australian Energy Politics – The Reality

In 2009 Kevin Rudd dropped plans for an ETS as it was unpopular.

Labour dropped Rudd, and in 2010, new Prime Minister Julia Gillard:

“there will be no carbon tax under a government I lead”

But in mid 2011, a re-elected Julia Gillard states:

• Pricing carbon is this Government’s biggest reform yet.

• A vital economic reform which will build our clean energy future.

• Starting at $23 per tonne this price on carbon gives investors certainty

And a new political reality

New Prime Minister Tony Abbot

campaigned on Australia’s suffering under

the weight of “world’s biggest carbon tax”

and has promised to repeal it.

To be replaced by Direct Action Policy

A new Energy White Paper is coming

In an environment of austerity

So where are we now?

• Energy & climate policies are in disarray

• Retail electricity prices have increased dramatically

• Carbon emissions are little changed

• Manufacturing has moved off-shore

• Electricity Demand has declined

• No large scale renewable energy projects developed (except on-shore wind)

• No CCS demonstrations even close to investment decisions

Residential Electricity Price increase 2005-13

Source: China Light & Power Annual Report 2012

Residential Electricity Tariffs in 2013

Source: China Light & Power Annual Report 2012

And a gas boom is in progress but ….

Industry Minister Ian Macfarlane says gas supply problems are looming in NSW because there has been insufficient progress in developing its coal seam gas industry.

NSW to face a gas shortage crisis by 2016?

So what went wrong?

A tale of Environmental Activism

The Australian coal industry - adding value to the economy

Coal - Safe clean power for the world And Industry Advocacy

Cleaner Energy Creating Jobs Growing Communities

Extreme Environmental Activism

• Ideologically driven to destroy Australia's fossil fuel industry.

• No technically and commercially reliable and affordable solution to global climate change.

• Avoid the issue of providing energy to more than a 2.5 Billion people living in poverty.

A campaign to kill Australian coal exports

Environmental activists are

increasingly joined by media,

politicians, academics, etc.

“…. Our choice is clear, cease …

Australia’s coal exports or wilfully

threaten our children’s future. …”

But what would really happen?

Increased tonnages from less safe, lower quality Indonesian and Mongolian coal mines?

Legitimate concerns are lost in the noise

Rigorous scientific assessment and rational debate about long term impacts on water resources and farm lands late.

And, there is increasing noise about the science …

The Blame Game leads to Apathy

While politicians, activists, industry and scientists continue a blame game.

leading to

Apathy among the general public

Society is confused and Energy Literacy is lacking ….

Energy Poverty - as big a deal as climate change?

Courtesy: Fires, Fuel and Fate of 3 Billion, Guatam N Yadama

Energy Poverty - as big a deal as climate change?

Courtesy: Fires, Fuel and Fate of 3 Billion, Guatam N Yadama

Energy Poverty - as big a deal as climate change?

The fate of 2.7 billion impoverished people without access to

electricity and/or clean fuel for cooking and heating.

Even in advanced economies when it comes to energy, behaviour

indicates that

Security trumps Affordability which trumps Environmental

Performance

And so what do we do?

Address complexity & economics globally • Society will not pay large premiums to tackle emissions

• Carbon prices that are “acceptable” sacrifice industrial competitiveness but are insufficient to drive technological change

• There is little to gain in “demonising” the fossil fuel industry

• A one dimensional, alarmist strategy centred on combatting climate change isn’t working.

• Solutions MUST offer secure, reliable, affordable and sustainable energy for ALL

T

Science, Engineering & Socio-Economic RD&D

So what does the future look like?

• The Golden Age of Gas

• The Future of Coal

• And Renewables

• Then, what about Nuclear

IEA’s Golden Age of Gas (& Golden Rules)

• The “GAS Scenario”

– Widespread dev’t of u/c gas as per US “Shale Gale” (ref: CERA)

– Dramatic expansion of LNG

– Lower (global traded) gas prices

– China targets gas in 5 yr plan

– Air quality & Climate drivers

– NG vehicles grow

• By 2035

– Gas demand grows >50% with 40% from u/c

– Gas supplies 25% of world energy

– Some net carbon reduction from substitution

– Still not enough to assure 2oC

Conditional upon…

• Regulatory / operational “best practice”

– Zonal isolation

– Minimising water use

– Water treatment & disposal

– Limiting venting - GHG int +3.5% conv. Gas

• But

– You still have to find, test and commercialise the stuff outside the US

– … and at costs to keep int’l prices low

– … and develop fields (& LNG) in time to assure supply to underpin demand growth

The Debate in Australia on Gas Reservation

Popular wisdom

“Strong Asian demand and high prices

are inducing Australian producers to

export their gas. That means local

consumers will have to pay higher

prices”…. Grattan Institute June 2013

“…with no limitations on exports of

Australian gas, local manufacturers

cannot secure long-term contracts for

gas…” ManufacturingAustralia.com.au, 30/7/13

But a more realistic perspective

Strong Asian demand and high prices

have enabled Australian producers to

develop their gas for export. That

means local consumers …

“Origin signs big east Australia

domestic gas supply deal with

ExxonMobil”

Sydney (Platts)—20 Sep 2013/252

Comparison USA (LOWER 48) AUSTRALIA

Land Area 7.7 million sq km 7.7 million sq km

SG Basins/Plays >20 5-8

SG Resources 1,161 tcf technically recoverable (EIA, 2013)

437 tcf technically recoverable (DoE, 2013)

SG Production 6.87 tcf / year (after EIA, 2011, “dry gas” only)

Nil

SG Wells > 30,000 5 – 10 (mainly E&A)

Land rig count 1,692 16 – 20 (mainly CSG)

Frac equipment 756 units (JPT, 2010 – includes offshore & Mexico)

~ 5 units (JPT, 2010)

Golden Age for Australia Expansion/Repeat of US Shale Boom ?

US Coal Demand

-

US CO2 Emissions

US Gas Price

US LNG Exports

Other Local Policy & Supply Factors

Unconventional Geology

Technology & Innovation

Domestic market US Coal Exports

Global Coal Price

Global LNG Prices

% Gas Share of Energy Mix

Global CO2 Emissions

USA Situation

What does a limited Gas Boom mean for GHG?

The Future of Coal

Current policies may see a reduction in coal consumption in Australia,

But Australian Coal Production is

mainly about China … and increasingly India…

Demand growth will be enduring

Any softening in coal demand for power will be countered by CtX

China’s energy

consumption by

source (annual average 2002-12)

And Renewables?

A place but given the requirement and

high total cost for renewable energy

that is always available on demand, it’s

role will be limited.

Storage is key but aside from pumped

hydro (limited in Australia), other

solutions look expensive.

Of mandatory renewable energy targets?

Legislation without technically and commercially reliable and affordable solutions will not be sustained

And Nuclear in Australia?

And Nuclear in Australia?

• Australia hosts more than one-third of global uranium reserves

• Very large exporter of uranium for power generation to many countries

• 400+ nuclear reactors in 31 countries generate ~ 15% of the world’s electricity

• China currently has 29 new plants under construction and more planned

• Government policy in Australia currently precludes nuclear power

• But legislation, regulation, community engagement planning must

precede deployment by years if not decades.

• Along with skills and capability building.

>> Eliminating a low carbon base load technology?

Activism & Politics compromising Policy

Nuclear power reactors in Asia

PAKISTAN

3 2 0

INDIA

20 7 18

CHINA

17 28 57

VIETNAM

0 0 4

JAPAN

50 3 10

SOUTH

KOREA

23 5 5

Operational Under construction Planned

Taiwan

6 2 0

INDONESIA

0 0 2

2013

What’s important in 15 – 20 years

What’s important in 15 – 20 years

• Coherent long term energy & climate policy with bipartisan support

• Changing patterns of demand growth and supply disaggregation

• Carbon Capture & Storage

• Grid stability with renewables Power storage

• Smart grids + DSM residential DC transmission

• Low cost high efficiency PV

• ENABLERS Science + Innovation to drive costs down

AND

Emergence of China as a major energy industry OEM

Thank you