RENEWABLE: Solar and wind are now generally the cheapest forms of new-build electricity generation available, in most locations around the world.
RENEWABLE: Solar and wind are now generally the cheapest forms of new-build electricity generation available, in most locations around the world.

Australia thrust back into energy policy wilderness

LAST week's tumultuous events in Canberra unfortunately spell the end to hopes of there being, any time soon at least, a coherent national policy that addresses both climate and energy objectives in Australia.

Australians, from within communities to the big end of town, overwhelmingly want our parliament to deliver on this.

Indeed, the most recent Lowy Institute poll found nine out of 10 Australians want our government to take steps to tackle climate change, two-thirds of those saying we should do so even if it involves significant costs. But once again, the issue has somehow undone a government.

It is now completely unclear what sort of energy policy, if any, the current Australian Government might bring to parliament.

The energy sector must therefore continue to sit and wait for much-needed investment certainty.

Let's recap on why a coherent energy policy in Australia is needed.

Australia is a signatory, for now at least, to the Paris Climate Agreement, designed to limit global temperature rise below 2°C.

Under the agreement, Australia has committed to reduce our emissions from all sources (not just the electricity sector) to 26-28 per cent below 2005 levels by 2030.

Forecasting emissions is difficult, not least of all because the uptake of low emissions technologies is heavily influenced both by changing technology costs and by changing government policy.

However, according to the Government's own figures and most recent projections, we're on target for 2030 emissions that will be only about 7 per cent below 2005 levels.

Put simply, under a business-as-usual scenario we're likely to be a fair way short of our commitment.

The good news is that a number of key measures, mandating energy efficiency and increasing the amount of renewable energy generation via the Renewable Energy Target for example, have been quite successful at improving our emissions trajectory.

But, we need to do much more. We need appropriate, forward-looking policy settings that will enable the investments required to facilitate a well-planned transition to an appropriate mix of technologies.

The electricity sector meanwhile, responsible for the largest proportion of economy-wide emissions, is the best equipped to deliver significant emissions reductions.

In fact, the electricity sector could and should be shouldering more of the emissions reductions in the short to medium term. It will be cheaper, easier and faster to transition our electricity system to low emissions than it will be to transition, for example, the transport or agriculture sectors.

Solar and wind are now generally the cheapest forms of new-build electricity generation available, in most locations around the world.

Increasing the level of renewable generation has been shown (by experience in Germany for example, and via the NEG modelling in Australia) to actually drive energy prices down rather than up.

Reliability issues that may arise in a high renewables future can be addressed through new generation and balancing technologies, such as pumped hydro energy storage or battery storage.

It will take some planning and some work, but it can be done.

A well thought through and coherent policy could address all three of these energy and climate objectives - emissions, prices and reliability.

In the period leading up to last week, I noticed a concerning shift in the political commentary on energy policy, towards one where "lower household energy bills" has almost become the only game in town. It is of course hard to argue against such a motive on its own, yet to focus on this at expense of all else is problematic.

It takes focus away from the broader energy system issues and it effectively locks out solutions that might actually address all issues simultaneously. Interestingly too, no-one yet seems to be asking the alternative question: "What will be the impact on future household energy bills if we don't act to reduce emissions?"

Higher electricity demand and prices are usually associated with hotter days, while extreme weather events often translate to electricity price spikes.

Evan Franklin is an associate professor in the Centre for Renewable Energy and Power Systems and co-director of the Future Energy group at the University of Tasmania.