Rally – Dr Alan Moran

Next at the National Wind Power Fraud Rally on June 18, 2013 at Parliament House, Canberra,  was Dr Alan Moran from the Institute of Public Affairs.

Alan is an energy economy expert and argues that we are destroying our natural economic advantage by throwing 20-30 billion dollars a year, the equivalent of the Australian Defence budget, towards policies designed to reduce carbon emissions. He argues that these policies won’t work in reducing global emissions as our productive industries move overseas and we continue to increase our export of coal and gas. And what we are getting for this obscene investment? Very unreliable forms of energy that need to be backed up by conventional power plants, increasing our emissions, blowing out our power bills and making us increasingly vulnerable to blackouts.

This is a transcript of the video

AJ: Alan Moran is one of Australia’s leading energy market economists, and he has a deep understanding of the economics of wind power. He most probably, it’s been said, will play a key role in shaping Coalition policy, should the Coalition come to government. From the Institute of Public Affairs, would you please welcome, Mr Alan Moran.

AM: Thanks very much.

Listen, one of the great … I want to speak a little bit more about the money that is being spent on this as a community, as a government on our behalf. One of the great growth industries in Australia over recent years has been from the reallocation of funds from consumers and taxpayers to reducing emissions of carbon dioxide and other greenhouse gases. It has been a growth in investments with negative net worth.

Both sides of politics have, both sides of politics have indulged this negative value–adding activity, though it was brought to its present levels by the Rudd/Gillard governments.

Now, current government CO2 emission suppression policies employ four kinds of measures. First we’ve got the carbon tax, which costs consumers $9 billion a year, and will continue to do so forever more at an expanding rate.

Secondly, the government is spending about $5 billion a year on subsidies to green schemes, half through that wastefully channelled, wastefully channelled to that “Clean Energy Finance Corporation” which we have been hearing about. That’s 5 billion dollars a year, direct from taxpayers.

Thirdly, it’s got a whole series of measures, with efficiency standards on housing, and other goods, and all this costs a lot of money. It raise, it costs new home owners about $750 million a year – that’s just for new home owners alone.

And fourthly, we have the issue, which most of us here are particularly concerned with, that is the Renewable Energy Target, which subsidises windmills and rooftop solar through customers’ electricity bill. The target increases year by year, this is the renewable energy target, and its annual costs will be $5 billion every year by 2020.

Now just putting this all together, the government’s policies, aimed at reducing carbon emissions will in total, cost between $20 and $30 billion every year, 20-30 billion dollars every year. Now to put that into perspective, that is how much we spend on the Defence of Australia. We spend that on the Defence of Australia, we are spending this on wind farms, carbon taxes and various other regulations. And these measures can have no effect, no effect whatsoever, in terms of their target, that is the global emissions. Firstly because Australian is a mere 1.4% of the total, and secondly, whenever we put these taxes on, what happens is that the major payers of these taxes, the firms and industries, will just move overseas, and they will produce the same goods overseas, probably producing more carbon dioxide.

The insanity of the present spending on these measures has thankfully, started to strike home with the Coalition. The Coalition has said that it would replace the $9 billion a year carbon tax with a less wasteful half a billion dollars a year, in an attempt to buy out carbon emissions. And the Coalition has also said it discontinue the disgracefully wasteful subsidies handed out to eager corporate rorters through the $2 billion a year Clean Energy Fund.

Now that is a good start, that’s a good start.

However, as far as subsidized renewable energy is concerned, this actually largely comprises wind mills and these cost 3-4 times as much as conventional unsubsidised coal, gas and hydroelectricity. And then there are solar panels which are even more costly. The costs of these exotic renewables is amplified by a need for them to have a back up in terms of fast-start conventional businesses, that is because, they are low quality, they only operate when the sun shines and the wind blows. And they are imposing a huge burden on consumers and businesses.

At present the cost boost to household electricity consumers is about 7% from the green schemes, dominated by renewable requirements, and 8% from the carbon tax. For businesses, the share of that cost is even greater. And the costs for businesses and others are automatically passed on. So, in other words, not only is it a 15% cost in our electricity bills, we’re paying costs in terms of the other goods and services that have to be passed on by businesses.

And the cost of the green schemes are only really just starting. They’re not even half way to that target of 45,000 Giga Watt hours target. And in arriving at that target they are in fact squeezing out conventional energy, conventional, predictable and reliable energy, because they are “must run”, and conventional energy is automatically backed off.

This is leading to the retirement of coal fired stations, as subsidised wind makes them not profitable. So, the entire electricity system is made unstable and subject to blackouts, and an event like this happened, almost happened a week, the week before last, in South Australia. It was avoided by sheer luck. In South Australia, where 20%* of the energy is powered by wind, the wind stopped blowing. The system remained in operation only because a retired coal generator happened to be running experimentally. Without this large areas of the State would have been forced to shut down. And that is a pattern we’ll see progressively across Australia, if this is allowed to continue.

We have seen with the rooftop systems, the PV systems, the governments have backed off, because the costs got to be so colossal.

We also see that existing measures may well be locked-in for a long time. But there is experience elsewhere in the world, in terms of Spain. Spain has been the beacon for the Australian Treasury, the Greens, Senator Campbell and other climate alarmists. But those lavish subsidies in Spain have left the electricity industry $34 billion in deficit. And the Spanish Government has started to cut back – it has already cut back on photo-voltaic subsidies and this week it will announce its approach to cutting the subsidies in wind.

The Coalition does proclaim it’s faith in renewable energy and the renewable program, and that’s a pity. The program’s effects are bad enough when consumers were hit by regulators forcing them to use this intrinsically high cost for 20 per cent of their supply. And I notice over there is a “20/20 must go”. But my friends, it is not 20%, because the higher cost imposed by wind farms and by the carbon tax itself, has resulted in less electricity being used. So it’s 27 per cent, not 20%.

Now there is some encouragement to be taken in the Opposition’s movement to make the approval of new wind more expensive by requiring continuous sound monitoring. The Opposition’s does of course also recognise the senseless waste of money Australia is incurring with the de-carbonisation policy. Greg Hunt has, commendably, opposed wasted expenditure by the Government’s Clean Energy Finance Corporation and points out that subsidies, these (wind) subsidies have no effect on the quantum of renewable energy supplied. But unfortunately he adopts this position because such subsidies disadvantage programs on what he calls, based on what he calls ”a commercial basis”. Now there are, of course, no commercial projects developed under the RET scheme, none whatsoever, where the cheapest form of electricity under the RET scheme $100 per MWh, 2-3 times the cost of coal.

Now, though the Greens, quite predictably I suppose, are happy to see a deindustrialisation and indeed an impoverishment of Australia the ALP, unfortunately, also by its actions is adopting the same agenda.

Greg Combet has gloatingly said well, the carbon tax has reduced domestic coal usage by 7 per cent. Well the renewable energy program would have even a greater effect than this by the time it has run its course. But guess what? Guess what? Last year the export tonnage of Australian coal increased by 13 per cent. Coal burned overseas has exactly the same effect as coal burned domestically, and yet our government spokespeople don’t seem to understand that. The Chinese and Indians and Japanese who are buying our coal, aren’t silly enough to destroy their own economies by substituting this high cost power for fossil fuel generated electricity. And coal explorers, actually are putting their own money on the line, and recognise this to be the fact, because the increased expenditure on coal exploration over the past 4 years has been, the expenditure has trebled. So they’re putting their money on the line and expect this to continue.

It did use to be said that in promoting wind, we’d be getting on the ground floor of a booming new global industry. Gullible politicians like Victoria’s John Brumby and Steve Bracks, with all the gusto of people spending somebody else’s money, gave subsidies to blade manufacturing plants, hailing the dawning of a sunrise industry. Within months the subsidies had disappeared down the slit hole, hiding all such government spending the world over. We hear less now about the creation of such infant industries.

We also here less about the future of low cost solar, wind and other renewable sources yet to be invented. Wind costs are obstinately stuck at $100 per MWh, three times the conventional price and they have been for years. The technology is actually quite mature now and remains, and will remain three times the costs of coal in Australia. All the projected new developments that were forecasted by Treasury, by Garnaut, by Stern and other economic frauds have forecast, have remained in the labs or in people’s imagination. There’s no breakthrough on the horizon, and there is certainly no breakthrough on the horizon for wind, which is now a mature technology and will not see any further reductions in costs.

The effect of all these carbon cost impositions on businesses, is particularly potent in undermining living standards. Business energy consumption is falling, not because businesses are looking to be good, it is because our most productive industries –smelting and steel – are relocating overseas. Other firms, even cafes, are finding the energy costs forces them to reduce their activities.

My friends, Australia has got the cheapest energy in the world. Others use our coal and gas, with the added costs of transport, while we can locate our power stations on the coal fields themselves, saving all that cost. We deny ourselves this birth right, by plumping for wind and other solar sources, which cost us at least three times as much.

Those imposing these policies upon us are either naïve believers in technological utopia, or are scoundrels, pursuing an illusory mirage of a carbon-lite economy, which means a sacrifice of national productivity for no purpose.

I think we are winning the battle for ideas and opinions within Australia. The Nationals certainly have been pretty solid, and the Liberals are coming around, but we must build upon the minor victories we have had in wind and other excesses to combat carbon emissions, by eliminating the rorts, and restoring the national prosperity which we can easily achieve, given our fantastic resources here in Australia. Thank you.

AJ: Absolutely brilliant that is, just an outstanding intellectual and academic presentation. Outstanding stuff.

All the Rally videos will be available in this playlist.