It’s not surprising that climate denialists have reacted to Friday’s Finkel energy review by complaining about the maths behind it.
“Creative assumptions”, Senator Eric Abetz insisted. Another usual suspect, Craig Kelly, wants the numbers done again because he didn’t like the results in the review. Those results show a Clean Energy Target produces lower prices for both residential consumers and industry than an Emissions Intensity Scheme or if the current “business as usual” scenario continues.
There are numerically challenged complaints from other quarters, too. One of the country’s top rent-seekers, the Minerals Council, complained about the lack of consideration of nuclear power in the review. Presumably, Minerals Council CEO Brendan Pearson et al want Australia to copy Finland, where the first western European nuclear power plant in 15 years will open at the end of next year — nearly a decade late and at 2.6 times its budgeted cost. In the intervening decade, investors have abandoned the project in droves an the French builder asked for a bailout from the French government. The new reactor being built by that company in France has tripled in cost — though it’s only six years behind schedule.
Japanese giant Toshiba is also facing massive writedowns because of the construction of two new nuclear power plants in the US, which are — you guessed it — massively delayed and over budget. The various parties can’t even agree on who is responsible for the blowouts.
But the Minerals Council’s nuclear fantasies aside, the real fight with denialists will be how to allow coal-fired power to be deemed “clean energy”. The Finkel Review helpfully lists technology in order of emissions intensity.
It shows why coal fetishists want the threshold for the Clean Energy Target to be set as high as 850 kgs, in order to allow high-efficiency coal-fired plants to fit under the threshold.
The problem, however, lies with investors, not the threshold: they don’t want to invest in coal-fired power in Australia, no matter how many glamorous prefixes you put in front of it. As with nuclear power, any serious consideration of building new coal-fired power stations in Australia starts with the need for government subsidies — probably very large ones — because the market won’t provide the funding for them.
Tony Abbott and his denialist friends are no strangers to ignoring the market and preferring big-government, big-spending solutions on climate action — he repealed a successful market-based carbon pricing mechanism and substituted an expensive handout program. But for coal-fired power, the handouts would have to be an order of magnitude larger than the funding for Greg Hunt’s Soil Magic fund, likely tens of billions of dollars — the 600 MW John W. Turk Jr ultra-supercritical plant in Arkansas alone cost US$1.8 billion five years ago.
So here’s the challenge for the coal fetishists, nuclear power fans and climate denialists: identify the budget savings you’ll use to fund power plants given the need for government-funded construction. Because it doesn’t matter where the CET threshold is set, investors prefer renewable energy and gas-fired power.