Japan’s nuclear crisis is a dramatic complication to Australia’s — and the world’s — already complicated and fraught climate change policy debate.
China announced on Wednesday that it was suspending approval of 25 reactors under construction; Germany has imposed a moratorium on 17 reactor renovations; many other countries are now reviewing their nuclear policies. An analyst from Dresdner Bank in Germany, Daneil Brebner, was quoted this morning as saying: “Nuclear power has suddenly gone from being part of the solution for future green energy to a dangerous relic of the cold-war era.”
This may all simply be cautious, and temporary, public positioning by politicians, and the managing director of Australian uranium explorer Deep Yellow, Greg Cochran, may be right when he says in his KGB interview that it will all blow over, but at this stage it looks like the planned global phase-out of fossil fuel power generation will go out the window, or at least be massively extended.
China is making huge investments in renewable energy, but base-load nuclear power has been an important part of its strategy as well. If that is reduced at as a result of the Japanese accident there will be much more demand for coal and gas, in particular coal-seam gas from Queensland.
The CSG hopefuls will all now be preparing to fast track their feasibility studies and planning approvals. The share prices of existing gas and coal firms have been rising in anticipation of greater demand, just as the share prices of uranium producers and explorers have collapsed.
But as statistics on the Climate Change Department’s website have made clear, Australia’s biggest problem with carbon emissions is now “fugitive emissions” from coal mining and gas production.
Already the 5% emissions reduction target has blown out to 23% cut from current levels because of the forecast growth in emissions from CSG, NW Shelf natural gas and coal production.
If China and India turn their backs on nuclear power not only will the demand for gas and coal soar, along with fugitive emissions in Australia, but also the positives and negatives associated with our terms of trade boom will be extended and exacerbated.
It is an exquisite dilemma for Australia. We make far more money from coal and gas than uranium exports, so if worldwide uranium demand collapses and is replaced by demand for coal and gas it is fabulous news for the national economy.
But it is terrible news for the nation’s politicians, who are locked in a fight to death over the solution to growing carbon emissions. It is also terrible news for trade exposed manufacturers like steel and cement producers, who will theoretically have to bear more of the burden of carbon emission reduction.
Australia’s refusal to build nuclear reactors looked irrational at the time, and might now end up looking prescient. But the fact other countries have been building reactors has limited the demand for fossil fuels and given the world the remote chance of preventing disastrous global warming through greenhouse gas reduction policies, principally by putting a price on carbon and letting the market sort it out.
Without nuclear base-load generation, if that’s what happens, the task of meeting the required 450 parts per million CO2 concentration in the atmosphere becomes much more expensive. Countries that lag in pricing carbon will have an enormous trade advantage.
Unless the crisis in Japan blows over quickly, the Japanese tsunami and nuclear accident could well be a turning point for the global economy.
*This first appeared on Business Spectator.