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The race to carbon-neutral is on – we need ambition, wisdom and collaboration to get there safely

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High stakes
We are now playing decarbonisation for keeps. Closing all coal power by 2030 would be a mighty challenge, but winding back coal-fired power production to near zero by the mid-2030s is more consistent with our official target of net zero by 2050.
Partnership
The task of reaching net zero is so large and complex that it requires a strong and long partnership of governments, businesses and communities – to establish new industries and infrastructure, close obsolete ones, change out most appliances and vehicles, and more.
Ambition is vital
The size and speed of the transition requires all realistic options to be mobilised. To meet our domestic needs with a fully renewable future, we’ll need perhaps six times the power that we made in old coal days, which is more than 20 times our current renewable output.

By Richard Bolt

The closure of Australia’s coal-fired power fleet is accelerating past the point of no return. Closures have been brought forward in New South Wales and Victoria, and the Brookfield-Cannon-Brookes bid for AGL proposed to close its stations by 2030 – 15 years early in the case of Victoria’s Loy Yang A. This has crystallised an expectation that may already have been built into AGL’s share price.

These developments have left Australians feeling buoyed or insecure or both. Emissions will reduce, but unprecedented investments will be needed to keep supplies reliable and affordable. Jobs will be lost early, causing extra uncertainty.

We are now playing decarbonisation for keeps. Closing all coal power by 2030 would be a mighty challenge, but winding back coal-fired power production to near zero by the mid-2030s is more consistent with our official target of net zero by 2050 than are AGL’s closure dates. This is because decarbonising electricity only gets us to first base. A home run requires us to progressively stop using oil products, gas and coal in our homes, businesses and vehicles. We consume far more energy in these forms than electricity. And we also have to neutralise emissions from livestock and cement.

The complex task requires partnerships

Wind and solar are becoming new energy pillars, but their weather-dependent output will need extra support from electricity storage and transmission. Our energy use must become more efficient and flexible, to limit demand growth as we electrify much travel and heating, and help balance the power grid – but there will be limits on efficiency and flexibility, so firm and plentiful supplies will still be needed.

In theory, we could keep producing some fossil fuel emissions by buying offsets, for example to pay for revegetation. But at net zero, there won’t be enough genuine offsets to give fossil fuel emissions a large or lasting leave pass. Not only should we decarbonise our own energy use, we will need to become a clean energy exporter to population-rich, energy-poor countries like Japan. They’ll need our energy, and our regions will need the jobs.

The task of reaching net zero is so large and complex that it requires a strong and long partnership of governments, businesses and communities – to establish new industries and infrastructure, close obsolete ones, change out most appliances and vehicles, adopt new behaviours, reinvent businesses, train for new jobs, and accept the sight of large rural areas under new infrastructure. Better planning and use of markets will be needed, as will improved governance.

Ambition is vital because 2050 is little more than half an investment cycle away. The size and speed of the transition requires all realistic options to be mobilised. To meet our domestic needs with a fully renewable future, we’ll need perhaps six times the power that we made in old coal days, which is more than 20 times our current renewable output. To build clean energy exports will likely need far more renewables again, seeing that Australia currently exports several times more energy than we use, as coal, LNG and uranium.

To achieve net zero and build carbon-neutral exports requires the rate at which we are building onshore wind, solar, transmission, pumped hydro and batteries to accelerate greatly. This is not only a huge engineering and financing task, it is also a social challenge. Emerging landowner and community concerns about new infrastructure such as electricity transmission requires a modern approach to engaging on and sharing the benefits of new powerlines, particularly where they cross land that has cultural, agricultural and environmental value.

Wind and hydrogen are part of the solution

We will get better at gaining social and environmental licence, but onshore renewables are unlikely to fully meet our 2050 needs in our more populous states. One strategic response should be to establish offshore wind as a complement to the onshore industry, to provide a large source of energy that can feed bulk power to cities and industrial hubs over fewer and shorter transmission lines, to greatly reduce land use conflicts and accelerate the transition.

And for green power to dominate, it will need to be complemented by targeted, low-emission fossil fuel uses. This includes gas-fired peaking generators that can provide back-up power during sustained low wind or sun, and coal or gas with carbon capture and storage (CCS) that can make ‘blue’ hydrogen to back-up the green product and made into vital commodities such as urea. The actual use of fossil fuels by 2050 should be low compared to renewables, though its economic and social value will be high. And it is possible that we will reach net zero before we achieve maximum renewables.

Although wind and solar farms in remote areas such as the Pilbara could supply competitively-priced green hydrogen to Asia earlier than the mid-2030s, this requires ambitious reductions in the cost of renewables and electrolysis remain to be realised against rapidly rising global demand, which may cause supply chain constraints that partly offset economies of scale. Also, serious amounts of storage will be needed to balance green hydrogen supply and demand over time, but storage is hard to find here. Because coal is a large, ready-made energy store, its use with CCS can back up an increasingly green hydrogen supply. It can also create jobs in the regions that will lose jobs as coal power shuts. And it may make carbon storage more viable for uses that renewables can’t meet, like cement-making.

We have started down the path to net zero without knowing exactly what route to follow, yet we have to increase our speed. The journey to a carbon-neutral future is well and truly on, and we will need ambition, collaboration and sound, unbiased judgement to get there safely.

 

Get in touch to discuss how we can help you on the path to net zero.

Connect with Richard Bolt on LinkedIn.

Prepared with input from Phillip Vrettakis.

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