Menzies Foundation Symposium, Melbourne, 2382006 Clean Energy Scenarios for Australia

1
Menzies Foundation Symposium, Melbourne,
23/8/2006Clean Energy Scenarios for Australia

• Dr Mark Diesendorf
• Institute of Environmental Studies
• UNSW

2
A CLEAN ENERGY FUTURE FOR AUSTRALIA National
Scenarios for 2040Authors

• Dr Hugh Saddler, Energy Strategies Pty Ltd
• Dr Mark Diesendorf, Sustainability Centre Pty Ltd
  (now Institute of Environmental Studies), UNSW)
• Richard Denniss, The Australia Institute (now
  economic adviser to The Australian Greens)

3
AIM BIG REDUCTIONS IN CO2 EMISSIONS FROM
STATIONARY ENERGY
i.e. Big reduction without major technical
breakthroughs!
4
DRIVERS OF ENERGY CONSUMPTION GHG EMISSIONS
I P x A x T Environmental Impact
Population x Affluence x Technology where
Affluence A GDP / person and Technology T
Impact / GDP
Population growth 2001 to 2040 29 to 25
million (ABS) Annual GDP growth from
Intergenerational Report Technology
improvements included in study
5
CO2 EMISSIONS FROM STATIONARY ENERGY, AUSTRALIA
Baseline
Baseline with medium efficiency
50 reduction in CO2 emissions
Clean Energy Future
The time path is a notional one, based on the
assumption that policy recommendations are
adopted.
6
ELECTRICITY FUEL MIX IN 2001, 2040 BASELINE,
2040 SCENARIO 2
7
CHANGE IN CO2 EMISSIONS IN 2040 RELATIVE TO
2001, SCENARIOS 1 - 3
8
MEDIUM ENERGY EFFICIENCYTechnological Options
Residential Solar efficient design, solar hot
water, insulation, space heating cooling,
lighting, taps showers Commercial Design,
heating cooling, sleep modes, refrigeration,
lighting Industrial Cogeneration, electric
motors, boilers, kilns, heat pumps, design of
systems, industrial processes
9
FUEL SUBSTITUTION EFFICIENT GENERATION

• Electricity supply shifted from mainly coal to
  natural gas plus renewables
• Widespread cogeneration (combined heat power)
• Solar thermal preheating in industrial
  commercial sectors
• Substitution of natural gas for coal in most
  non-metallurgical applications

10
BIOMASS RESIDUESSupply 28 electricity in 2040

• Residues wastes cheapest fastest, but
  resource limited.
• Fuels include stubble from grain crops, bagasse,
  plantation forest residues
• Some oil mallee in wheatbelt included

• Burning sugar cane sawmill residues at
  Rocky Point, Qld

11
ECONOMICS OF BIOENERGY

• Depends on fuel, location, technology choice,
  size of power station, and technology
  experience/scale
• Cheapest is co-firing at coal-fired power
  station dearer than dirty coal gas cheaper
  than other renewables
• More expensive is combustion of biomass residues,
  e.g. from sugar, cereal straw, plantation
  forestry. Price may overlap with coal CCS and
  with nuclear
• Still more expensive dedicated energy crops.
  Price can be offset by multiple economic
  environmental benefits.

12
BIOENERGY TREE CROPS WITH MULTIPLE USES e.g.
OIL MALLEE

• 3 products electricity activated charcoal
  eucalyptus oil
• Reduces waterlogging dryland salinity
• Creates rural jobs
• Reduces erosion
• Improves landscape

13
WIND POWER
20 of electricity in 2040 (20 GW, 51 TWh/yr)

• 20 of elec achieved in Denmark by end 2003
• 42 achieved at Denham Hopetoun W.A. Mawson
• Wind gas turbines can substitute for coal in
  grid
• Changes to network

• Albany wind farm, W.A.

14
INTERMITTENT VARIABLE ELECTRICITY SOURCES

• There is no totally reliable source of
  electricity.
• Coal nuclear plants break down and require
  partial backup.
• Coal nuclear plants break down less frequently
  than there are lulls in the wind, but they are
  often down for weeks, while lulls are for hours
  or days.
• So coal nuclear power are intermittent (on or
  off) sources.
• Electricity demand varies by season, time of day
  and by random fluctuations during the day.
• Since there is no means of storing electricity
  cheaply on a large scale, grids are a continuous
  balance between variable demand and variable
  supply.

15
ADDING WIND POWER TO THE GRID

• For geographically dispersed wind farms, power
  output varies slowly and is rarely zero.
• Large-scale, dispersed wind power is not
  intermittent but variable.
• Variations in small amounts of wind power are
  lost in fluctuations in demand.
• Variations in large amounts of wind power (e.g.
  20 of elec) are balanced mainly with peak-load
  (hydro and/or gas turbines) or by external
  purchases.
• E.g. 2600 MW of wind power peak-load can
  replace a 1000 MW coal power station (both
  capital and operating costs).
• Land occupied 7-20 sq. km, less than most
  open-cut coal mines.
• Additional costs of balancing supply demand and
  of reserve plant are quite small.

16
REPLACING NSW COAL POWER STN BY 2012 Annual
Energy Generation CO2 Emissions(Diesendorf,
2005)
Gas
Wind
Bio- energy
Cleaner mix achieves 78 reduction in CO2
emissions
17
NSW COAL POWER REPLACEMENT Costs of Energy
Delivered in Year 6
savings from energy efficiency pay for
additional costs of gas renewable energy and
more -- provided institutional changes are made.
Network changes not priced.
18
NSW POWER REPLACEMENT Equivalent Firm Capacity
1228
Technology installed capacity
869
19
COMPARISON OF DIRECT LOCAL JOBS PER UNIT OF
ELECTRICITY GENERATED
20
STUDY BY ALLEN CONSULTING for Australian
Business Roundtable on Climate Change

• Goal reduce Australian emissions by 60 by 2050
• Conservative assumptions
• Low efficient energy use and moderate renewable
  energy
• Action begins either in 2013 (early) or 2022
  (late)
• Business-as-usual (BAU) doesnt include economic
  damage from climate change
• Assumes significant contribution from coalCCS by
  2050
• Method apply carbon tax, redistributed by
  reducing corporate and personal income taxes.
• Results
• Annual GDP growth 2.2 in BAU 2.1 in early
  scenario and 1.9 in late scenario.

21
RECOMMENDED POLICIES DEMAND SIDE

• Energy performance standards for several
  categories of existing buildings, commencing with
  tenanted
• Incentives/penalties to encourage expansion of
  solar hot water
• Smart meters and peak-load pricing
• Low-cost packages for householders

22
RECOMMENDED POLICIES SUPPLY SIDE

• Limit on greenhouse intensity of all new power
  stations.
• Federal or State Mandatory Renewable Energy
  Target (MRET)
• Either tradeable emission permits (cap trade
  type) or carbon levy
• Remove subsidies to production and use of fossil
  fuels

23
NUCLEAR ECONOMICSClaims that nuclear energy is
cheap are based on hidden assumptions, e.g.

• Huge subsidies ignored R D, enrichment,
  insurance liability, wastes, decommissioning
• Since nukes have high capital cost and low
  operating cost, nuclear proponents choose
  unrealistically low interest/discount rate or
  accounting method to shrink interest capital
  repayments
• Over-optimistic assumptions about performance
  (capacity factor) -- choosing best year instead
  of average

24
MORE REALISTIC NUCLEAR ECONOMICS FROM ELECTRICITY
PRIVATISATIONUK

• Fossil fuel levy of 1.2 billion per year to
  subsidise nuclear in privatised electricity
  industry in 1990s.
• Equivalent to subsidy of 3 p/kWh (A 6 c/kWh) of
  nuclear electricity generated.
• Total nuclear electricity price 6 p/kWh (12
  c/kWh) decommissioning 90 billion.
• Compare average price of on-shore wind power in
  UK currently 4.2 p/kWh

25
MORE REALISTIC NUCLEAR ECONOMICS FROM ELECTRICITY
PRIVATISATIONUSA

• No new nuclear power stations since 1978, despite
  huge subsidies US90 billion accumulated
• Pro-nuclear MIT (2003) study estimates new nuke
  electricity at US 6.7 c/kwh.
• Wind power in USA is currently US 4.5-5.5 c/kWh
  at excellent sites

26
FURTHER READING
National and State Clean Energy Future studies
available at www.wwf.org.au Go to Climate
Change then Publications Allen Consulting
2006, Deep Cuts in Greenhouse Gas Emissions.
www.businessroundtable.com.au