Famously, in 1793 the Emperor Qianlong penned a letter for the benefit of the entourage led by English Ambassador, Lord George McCartney, informing him and his King, George III that “we possess all things. I set no value on objects strange or ingenious, and have no use for your country’s manufactures.”
Things have moved on a little since then, and rather than a hermit kingdom, China has become the one to watch in matters of international import. On energy matters, the Chinese have hoodwinked plenty in the West into believing that it’s ad idem with UN backed AGW ideologues, when it comes to wind powering it into a ‘super-clean energy’ future.
Inscrutable, as always, the Chinese aren’t about to follow the example set by the likes of Germany: a country that has spent more than €200 billion on its Energiewende and, thereby, sent its power prices through the roof and its heavy industry packing.
In February 2014, its government said that 6.9m households German households live in energy poverty, defined as spending more than 10 per cent of their income on energy. This is largely a result of the surcharge for renewable energy. Between 2000 and 2013, electricity prices for households increased 80 per cent in real terms, according to data from the OECD and the International Energy Agency. Over 350,000 homes were disconnected from the grid last year and more than 800,000 households suffer without any power at all.
The likes of BASF “chose the US for its largest single investment ever, a $1 billion propylene factory in Freeport, Texas, to take advantage of low energy costs” and “BMW and SGL Carbon, which produces carbon fibers for BMW’s lightweight E-series electric cars, built their latest $300 million carbon fiber plant in Moses Lake, Washington, because of competitive energy costs”.
China has already determined that wind power is nonsense. And is building the capacity for its surging power needs around meaningful power sources: its Three Gorges Dam has added a massive 22,500MW to its hydro capacity; and it has dozens of new nuclear plants and hundreds of coal and gas-fired plants under construction. China’s economic growth has been driven by having secure, reliable and affordable power: all of the essential electricity elements that are absent with wind power.
While this piece from Graham Lloyd is riddled with self-serving, hysterical bunkum from Greenpeace, the WWF and the UN’s eco-fascist in chief, Ban Ki-Moon (why should energy policy “not be subject to political debate”?) – the facts come through clearly enough.
Instead of messing with breezes itself, China is ready to exploit the self-inflicted damage caused by those that have: China is positioning itself as the key provider of affordable power to Germany, aiming to export it over ultra-high voltage transmission lines, fed by coal-fired plant, hydro and nuclear – in that order.
Coal is far from burnt out as a global power
16 April 2016
For a good example of a masterplanned community in which renewable energy and storage innovation point to a brighter future it is difficult to overlook Alkimos Beach on the outer northern reaches of Perth.
With his bags packed for New York to sign Australia up to the Paris climate change agreement, federal Environment Minister Greg Hunt chose Alkimos Beach this week to highlight the Turnbull government’s renewed renewable energy bona fides.
Australia will be one of the first countries to sign the Paris climate agreement to limit global temperature rises to less than 2C when Hunt attends a high-profile ceremony in New York on Friday. Behind the scenes, though, a lot more is going on than political photo opportunities in front of giant banks of lithium ion batteries.
During the past few weeks, big questions have been raised about the future of coal, the economics of renewables, the ability of US President Barack Obama to deliver on his climate promises and niggling doubts about whether China is taking everyone for a ride.
At home, the Turnbull government has “jumped the shark” to change its narrative on renewables away from the positively downbeat message of Tony Abbott.
Sweeping his hand for the cameras at Alkimos Beach, Hunt declared: “Behind us we have 1.1 million hours’ worth of (battery) storage. This is the real world; this is the future that is behind us in terms of storage, solar energy on the roofs in front of us, the storage behind us.
“At the end of the day, we can help household budgets, we can help the cost of electricity and we can do the right thing by the environment.”
So, the Coalition’s climate message has been flipped from rising power bills to helping household budgets.
But if you read the fine print on the Alkimos project, the bottom line is that 100 households in the new Lendlease development will be subsidised to the tune of $45,000 each to potentially save 20 per cent on their electricity bill.
Alkimos Beach is one of nine projects funded in the last round of grants by the Australian Renewable Energy Agency, an agency the federal government wanted to scrap but has decided to rebadge and keep. It is all about innovation.
In a research and development sense, ARENA chief executive Ivor Frischknecht says Alkimos Beach will be the nation’s first large-scale community battery project and prices are certain to fall in the future.
“It’s not like the cost is going to halve every other year,” Frischknecht says, “But what we do see is Chinese manufacturers ramping up quickly so there is going to be a lot of capacity over the next two or three years to fill. That will force the price down.”
Australia is already the leader in terms of the deployment of solar, but Hunt says he wants it to become No 1 in the deployment of battery storage.
It’s all part of efforts to meet Australia’s goal to reduce emissions by 26 per cent to 28 per cent below 2005 levels by 2030 as part of undertakings made in Paris.
The federal government soon will hold its third reverse auction to buy carbon abatement from land managers and industry under its Direct Action policies.
Carbon market experts expect the price paid by the government for each tonne of carbon abatement to be lower than what was paid in the first two rounds. One study by energy and emissions market analyst RepuTex says this is because there will be greater competition from industry and energy efficiency projects, which were excluded from the first two rounds.
This is good news for abatement but not good enough for environment groups, the Greens and federal opposition, who want the Turnbull government to lift its game. Australia’s carbon dioxide emissions from electricity are rising, driven mostly by increased black coal consumption in Queensland, where the coal-seam gas export industry boosted electricity consumption in that state by 10 per cent last year.
Queensland is also under pressure over increased land clearing approved by the former Newman government, which the present Labor administration has promised to wind back against the backdrop of a spirited campaign by farmers.
Green groups are demanding a tougher response from the federal government and the ALP has proposed a royal commission-type inquiry into coal-fired power and the national grid.
But given the Coalition’s history of refusing to ratify the Kyoto Protocol mark one once, Hunt signing the Paris agreement in New York this week indicates the Coalition can rightly consider the transformation of climate politics under Turnbull to be complete.
However, as a sparsely populated country responsible for less than 2 per cent of global carbon dioxide emissions, Australia’s ability to influence the global climate change picture has always been more symbolic than real.
The bigger question in climate change politics remains whether the world’s most important participants, the US and China, will be able to deliver.
A key part of the US climate change response is Obama’s clean power plan, which seeks to cut carbon dioxide emissions from coal-fired power plants by 32 per cent below 2005 levels by 2030.
The US Environmental Protection Agency argues carbon emissions from coal-fired power plants are a “monumental threat to Americans’ health and welfare” by causing climate change, which leads to rising seas, coastal flooding, threatened water supplies, the spread of infectious disease and more frequent extreme weather.
But nearly half of all the US states want to stop the Clean Power Plan because they believe it to be an illegal attempt to “reorganise the nation’s energy grid” and an attack on the coal industry that will lead to higher electricity costs.
The Supreme Court has put Obama’s EPA plan on hold while it prepares to hear the case.
In an interview with The Wall Street Journal this week, UN secretary-general Ban Ki-moon said he believed climate change should “not be subject to political debate”.
He said Obama would “do whatever he can under his executive power”.
So, faced with a hostile Senate, his key response bogged down in legal action and disbelieving Republican presidential contenders, Obama is seeking to have the Paris agreement locked up before he leaves office. Doing so would make it more difficult for any future president to withdraw.
Signing and ratification by the US, China and 130 other countries in New York is a first step.
For their part, green groups have accused the states challenging Obama’s EPA climate response of doing the coal industry’s bidding.
They point to the decision of the world’s biggest coal producer, Peabody Energy, to file for Chapter 11 bankruptcy protection this week as further evidence the coal industry is in terminal decline.
Blair Palese, chief executive of climate group 350.org Australia, says Peabody “shows in no uncertain terms that the end of coal is here to stay”.
Peabody’s market value has fallen from $20 billion to $38 million and it has joined other coal majors — Arch Coal Inc, Alpha Natural Resources Inc, Patriot Coal Corp and Walter Energy — in bankruptcy protection.
Despite this, the US still gets roughly one-third of its electricity from coal. Rather than climate change and renewables, the fall of Peabody is largely a story of heavy debt burden and increased competition from shale gas.
And on this front, coal is not alone. New-generation wind and solar energy company and former Silicon Valley darling SunEdison is itself on the verge of bankruptcy after its value plunged from $10bn in July to $650m. The company was once the great hope of renewable energy but has surrendered under the weight of heavy borrowings used to make overly expensive acquisitions as part of a poorly thought through strategy.
While coal has its problems, the collapse of SunEdison, a withdrawal of subsidies across Europe and a move away from onshore wind power in Germany are key developments in the renewable energy markets.
After years of solid growth, the latest research from the International Renewable Energy Agency shows developing countries that already have a high share of renewable energy are unlikely to build this share further.
Developing countries are turning towards fossil fuels to meet the energy demands of their citizens, the IREA says.
This has left a confusing picture on the future demand for coal. A report by Greenpeace says that, since 2010, 473 gigawatts of new coal capacity has gone on line in 33 countries. Eighty-five per cent of these plants were built in China and India, with the rest mostly in Indonesia and Vietnam.
Another report, by renewable energy consultancy Ecofys, says the trend is continuing. There are 2300 new coal plants with 1400GW of capacity planned worldwide, which it says will “take the world off-course from the internationally agreed target of keeping temperature rise below two degrees Celsius above pre-industrial levels’’.
Ecofys concludes that new technology for burning coal will not be enough. “This report discredits claims from the coal industry and governments such as those of Japan, Germany, South Korea, Australia and Poland that efficient coal plants are compatible with climate action,” WWF economist Sebastien Godinot said.
But the World Coal Association maintains new high-efficiency coal technology will deliver power at half the cost of gas and one-fifth the price of wind in Asian countries in the future.
Greenpeace likes to think that China’s future coal plant projections are the result of “dysfunctional planning systems and cheap credit”.
But there is another possibility highlighted by Britain’s Financial Times: that is, that China’s proposed investment in long-distance, ultra-high voltage power transmission lines will pave the way for power exports from China to as far away as Germany.
Liu Zhenya, chairman of State Grid, told reporters that wind and thermal power produced in Xinjiang could reach Germany at half the present cost of electricity there.
According to the Financial Times, exporting power to central Asia and beyond falls into China’s “one belt, one road” ambitions to export industrial overcapacity and engineering expertise as it faces slowing growth at home.
Australia sees its future importing millions of solar panels and batteries from China to deliver the Turnbull government’s solar and storage revolution. Meanwhile, the Middle Kingdom is planning to keep burning coal and to ship electricity to Germany, where the renewable revolution has made power so expensive it may soon be cheaper to get it from half a world away, from coal.
We’ve got to hand it to Greg Hunt: the idea that subsidising households to the tune of $45,000 to knock a piddling 20% off the recipient’s power bill makes economic sense is risible. But economics never was Greg’s strength. Like everything else Greg has to say about electricity, his household solar/battery ‘plan’ is driven by the worldly logic of a child that spent its formative years in a cupboard under the stairs.
The commercial value of the electricity produced and stored under the scheme he was touting in Perth will never repay the capital cost (the punter still pays 80% of their escalating power bill) and, as with every subsidy, the full cost is borne by someone else (ie you and me).
The reason Greg is spruiking battery power is because the wind industry plants in his office (which includes Patrick Gibbons one of the clowns responsible for South Australia’s wind power disaster) have told him to.
The bulk storage of electricity is an engineering and economic pipe dream, pedaled by energy lightweights in an effort to maintain monstrous rorts like Australia’s LRET – a $45 billion tax on all power consumers, designed to go to Patrick Gibbon’s mates in the wind industry, as the biggest single industry subsidy scheme in the history of the Commonwealth: ‘corporate welfare on steroids‘, as switched-on Liberal, Angus Taylor calls it.
If Australia wants to end up where Germany is (and South Australia is already there), it need only follow the moonbeam and fairy dust ‘policies’ being pitched by Hunt and Turnbull. If not, then watch and learn from the inscrutable Chinese: cheap, reliable energy means real power, and to China, real power is everything.