Josh Frydenberg: Australias use of coal is falling and that is not a bad thing

28 July 2016 | Mitigation

Australia’s new environment and energy minister, Josh Frydenberg, says coal will be a declining part of Australia’s energy mix because of inexorable market forces – but he insists the Coalition’s much criticised Direct Action policy is up to the mark, and will allow Australia to meet its international emissions reduction targets.

Frydenberg told Guardian Australia he accepts the science of climate change and his goal in the new portfolio is “to achieve affordable, reliable, and accessible energy supply as we transition to a lower emissions future” – including optimising new technologies and renewable energy sources, with gas as a significant back-up.

Frydenberg in his previous portfolio of resources was a strong advocate for the coal industry – a fact which triggered concerns from environmentalists when he was transferred to the new combined portfolio of energy and the environment by the prime minister, Malcolm Turnbull, in his recent ministerial reshuffle.

Asked whether transitioning successfully to a lower emissions future would inevitably mean less reliance on coal-generated power, Frydenberg said: “I accept that a transition is occurring away from coal and that is not a bad thing.”

“Coal-generated power is still a part of our energy mix, with today about 60%, but that has come down from 70% a decade ago,” he said. “It’s coming down, and the market is bringing on this change.

“Eight out of 12 of Australia’s most emissions-intensive power stations have closed in the last five years. So it’s occurring.”

But while acknowledging that shift, Frydenberg moved to play down expectations that a scheduled review of the Direct Action policy in 2017 would yield any substantial overhaul.

Many experts argue the Coalition’s climate policy is expensive and not up to the task of delivering Australia’s Paris commitments. Frydenberg rebuffed those criticisms, and minimised the review as a “sit-rep” (situation report) rather than a substantial process that would yield any significant policy change.

He said the policy as it stood was “very successful”.

Asked whether there was any need to strengthen the baselines to force emissions reductions sufficient to meet the Paris targets, Frydenberg said: “The baselines are what they are. We are confident that we will meet our Paris commitments.”

Many analysts believe the Direct Action scheme could be converted into a baseline and credit scheme, but that would reopen the Coalition’s fierce internal debate about carbon pricing that saw Malcolm Turnbull lose the opposition leadership to Tony Abbott.

Conservatives have been facing off in a series of proxy battles with the prime minister since the Coalition was returned to government with a wafer-thin majority.

Frydenberg effectively closed the door on a significant overhaul of Direct Action post-review. “Our settings, our policy settings are established, and I’m confident we’ll meet our 2030 targets.”

Asked why then continue with the scheduled review of the policy in 2017 if there was no prospect of adjustments, the minister said: “The review is simply a sit-rep. We believe the ERF is working to get the lowest cost abatement that will meet our 2030 targets.”

He also ruled any changes to the existing renewable energy target, which is legislated out to 2020.

“We’ve now got the architecture in place, the ERF, the RET, the Clean Energy Finance Corporation, the programs we have funded under Arena. That’s what I’m rolling out. The 2020 RET figure is set in stone. That’s very important because it invites stability in investment in the sector,” Frydenberg said.

He said his first priority in the portfolio was an upcoming meeting of state and territory energy ministers on 19 August, which would consider developments in the national electricity market, specifically “how to ensure we get a greater integration of renewables into the electricity market, and a greater focus on new technologies.”

Frydenberg noted that all the states had different renewable energy targets and they were at different points of diversification in their respective energy mixes. Tasmania, for example, has more than 90% renewables. South Australia is around 41%, Victoria is around 12% and New South Wales about 8% – and then there’s the federal RET. “The question is how do I integrate the state and the federal policies,” Frydenberg said.

Power outages in South Australia in 2015 were blamed on that state’s high proportion of wind energy by some conservative commentators, but Frydenberg said there were several factors involved in the blackouts, only one of which was the intermittency of wind .

While minimising some of the negative commentary, Frydenberg said gas remained fundamentally important as a source of back-up power to ensure a stable transition to low-carbon sources. “The lessons going forward are we need diversity of supply,” he said.

“What I’m trying to say to people is it’s a transition and my job … no matter what I say I won’t please Bob Brown – but what I can do is help ensure a stable transition to a low emissions future and that’s why you need the gas. At the same time we’ve got to better integrate the new technologies into the system.”

He also noted the costs of renewable energy had come down markedly in recent years, which was a significant factor in a successful move away from carbon-intensive power sources. “My department tells me in the last seven years the cost of wind has come down 50% and the cost of solar PVs have come down 80%.”

“I’m told by the CSIRO the cost of battery storage will come down 60% over the next 10 years. We are going to see big changes in domestic markets, and the intermittency of renewables is better handled with new technologies that will allow us to store renewable energy.”

Frydenberg dismissed a question about whether the government might need more than market forces to trigger a rationalisation of coal-fired power – perhaps a structured plan to phase out coal. “I think the market is driving these changes. You’ve got the RET, you’ve also got a changing face of the domestic economy.”

Asked about the future of the Adani mine in Queensland which was approved by his predecessor Greg Hunt, the minister said it was up to the company about whether to proceed with the development, but he said the Commonwealth would invest no money in the project.

He also welcomed moves in South Australia to reopen an “informed” debate about the nuclear fuel cycle, but he said Australia would never move down the path of activating nuclear power unless there was bipartisan support. “We are not opening up nuclear power as an issue.”

Source: The Guardian