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Australia as a clean energy superpower? Yeah…nah!

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The third largest exporter of fossil fuels behind only Russia and Saudi Arabia, Australia could already be regarded as a fossil fuel superpower, but can Australia become a "clean energy superpower" as suggested by many including recently by the Fully Charged Show.

What is a clean energy superpower? There are several different possible interpretations ranging from greenwashing to world changing. Inspired by the Fully Charged video that looks at one modest by realistic interpretation, this is a deeper look at the possibilities.

Despite the rhetoric and enormous potential, Australia shows little commitment to any more than an attempt to move from "clean coal" to "clean gas" and miss potentially huge opportunities, not only for Australia, but perhaps even for the planet.

Australia as a clean energy superpower? Yeah…nah!

The third largest exporter of fossil fuels behind only Russia and Saudi Arabia, Australia could already be regarded as a fossil fuel superpower, but can Australia become a "clean energy superpower" as suggested by many including recently by the Fully Charged Show.

What is a clean energy superpower? There are several different possible interpretations ranging from greenwashing to world changing. Inspired by the Fully Charged video that looks at one modest by realistic interpretation, this is a deeper look at the possibilities.

Despite the rhetoric and enormous potential, Australia shows little commitment to any more than an attempt to move from "clean coal" to "clean gas" and miss potentially huge opportunities, not only for Australia, but perhaps even for the planet.

Synopsis: Huge opportunity, but questionable commitment.

Of all the developed countries, Australia has the poorest standing on climate.

Bas Eickhout: Dutch Parliament Delegation leader (via CNN) .

As the largest exporter of liquid natural gas and the second largest exporter of coal, and the third largest exporter of fossil fuels behind only Russia and Saudi Arabia, perhaps it is not surprising that Australia has been a laggard on the commercial move to clean energy, despite the enormous potential from huge areas of land suitable for solar and wind.

So how can Australia become a clean energy superpower?

Despite all the hype, there is no clear agreement on what it means to be “a clean energy superpower”, with the term being sufficiently vague that people with very different visions feel able to claim they provide the path to this holy grail.

The first problem with Australia becoming anything significant in the world of clean energy beyond being branded a “climate laggard” is catch other nations on transforming its own power grid to clean energy. When “Fully Charged” asked genuine expert on the topic and host of “Engineering with Rosie” to make a video on how Australia could become an Engineering Superpower, the responsible approach from “Rosie” of a video of the length desired resulted in about just the first step: how Australia is able to manage its own clean energy transition.

Before becoming a superpower of clean energy, Australia has to commit and have agree Australia should manage its own transition, but it is hard to support this first interpretation of “clean energy superpower” as really qualifying as a superpower.

Those promoting that Australia could be a clean energy superpower would most likely include the fossil fuel/natural gas lobbyists pushing natural gas or blue hydrogen as clean energy. Again, it is hard to support this second interpretation of “Australia as clean energy superpower” as meaning much beyond some international gas companies with only minority Australian shareholding getting richer from Australia.

The third interpretation of “Australia as a clean energy superpower” is based on what looks to be a gross overestimate of the potential market for “green hydrogen”. There does look like there will be a real financial opportunity, but only a scale that could make some rich investors richer, particularly with the aid of some hype, but nothing that would transform Australia into a clean energy superpower. However, it could also help enable fossil fuel companies to avoid writing down the value of their natural gas assets just yet.

The fourth interpretation would to actually be real about clean energy and export electricity. While this option is the first with any hope of making Australia a genuine “clean energy superpower”, there is no evidence of government support for following this path. To make Australia, rather than some mostly foreign owned companies exploiting Australia, a clean energy superpower the logical step would be for the government to invest in the monopoly infrastructure required to connect Australia to the ASEAN grid and to promote international grids.

Then there is the fifth interpretation, which is to actually use the potential for low-cost clean energy to power a much bigger Australian economy and production capability. Achieving this most accurate interpretation of becoming a clean energy superpower would require outcome governments embracing the vision and actively perusing strategies to achieve it. Despite the potential and the public statements, there is no budget allocation, no publicised working group, or ministerial goals and no evidence of any of Australia’s think tanks being engaged to make such a vision a reality.

For Australia become any form of “superpower”, the government of Australia needs to transition from seeing their role as managing the colony of Australia is to ensure the primary resources are made available to foreign powers Australian governments must serve in order to continue to govern, to seeing themselves as being the government of an Australia with the potential to be a superpower in its own right.

Options 1, as imagined the “fully charged” video, only requires Australia finally matching other developed nations in reducing emissions and should be achievable. Options 2 and trying to put too much focus option 3, would both be more about delaying the globe’s transition away from fossil fuels, and none of these options make any interpretation of becoming a “clean energy superpower” into a reality.

The commitment to realising either interpretation 4 or 5 by Australia would not only result in Australia having some real claim to becoming a “clean energy superpower” but would also play a significant positive role in the global transition away from fossil fuels.

That the Australian government chose investing in nuclear submarines to ensure fossil fuel security over investing in ending dependence on fossil fuels, makes the attitude to really being a clean energy superpower very clear: Yeah, nah!

What is a clean energy superpower?

The meaning “clean energy superpower” is not self-explanatory.

I had been contemplating exploring this topic for some time when the release of the video below by “The fully-charged show” spurred me on to at least start the webpaper on the process.

It turns out, that video does not describe what I see as becoming a global energy superpower. So, what is a global energy superpower? Here are some alternative interpretations, and what is needed to get there.

Meaning 1: Catching other countries in the green revolution and meeting climate targets.

Despite the YouTube title “Why Australia Will Be The World’s New Energy Superpower“, inside the video is another title “Australia Abundance” and then the question “can Australia become a leader in the green revolution” and in reality, the video discusses how Australia can manage the transition to clean energy. It is a very solid video, but more explains how Australia could be dragged kicking and screaming into the transition to clean energy, than a process that would result in being a superpower.

The video describes the real current situation for Australia: Unless something changes, Australia will manage the transition to clean energy and produce sufficient energy for domestic requirements far later than many other developed economies, but potentially in time to stop being a climate pariah.

If this goal of “managing a clean energy transition”, which is what really the video describes, qualifies as being superpower, then it looks one Australia would be one of many superpowers, but not necessarily one of the leading ones.

It seems extremely likely to me that the hype of Australia becoming a “Clean Energy Superpower” inspired the crew at fully charged to have a video made, and while hats off for using a knowledgeable resource and creating a factual video, the truth is, analysis the current path provides no evidence Australia is yet safe on transitioning to renewables.

The party in Government has little opposition. Since 1944, Australian Governments have been led by either the Labor Party or the Liberal Party, but currently the Liberal Party is in some disarray, leaving the Labor Party in government with a significantly weakened opposition, and very little pressure to ensure Australia meets climate transition targets, doubt about going so far beyond as to achieve superpower status.

All projections are that if all proposed projects proceed on schedule, and targets for future projects are met then Australia could reach 83% renewables for electricity by 2030 and 98% by 2050. What is less clear, is if that is allows for an electrify everything approach as promoted by Rewiring Australia, or allows for any capacity to for Australia to leverage renewable energy in ways such to increase local processing of aluminium and steel instead of exporting the ores for processing offshore.

While it would take further investigation to understand why the 15% from 83% to 98% would take so long, if these figures are accurate, then Australia is on track to be ready to begin building the extra capacity of clean energy to support an export industry by around 2030.

Meaning 2: Continuing or even growing “clean” & now “green” fossil fuel exports.

While the analysis by Fully Charged failed to revealing anything that sounds like a path to a superpower, maybe they were looking in the wrong places?

The claim is most often worded as a “clean” energy superpower, and natural gas is often defined as “clean energy” and the EU even allows investment in natural gas to be a “green energy investment”.

For context, the term “green energy superpower” for Australia first emerged at around the time of the “gas fired recovery” plan. This suggests a possibly that the oil and gas industry have played a role in promoting Australia as a potential clean energy superpower, and with that the possibility that Australia is promoted as a potential clean energy superpower in order to further the interests of the oil and gas industry.

There are two ways that the promoting the “clean energy superpower” future could potentially assist the oil and gas industry:

  • Promoting of gas, a clean energy source provided an argument for opening up more gas production as the industry desperately and repeatedly requests.
  • Promoting of “carbon capture and storage” being able to produce clean energy from fossil fuels both helps justify further exploration in the short term and provides a basis for long term valuation of gas reserves as valuable assets long term rather than potential stranded assets.

As long as natural gas and/or “blue hydrogen” can be promoted as clean or green energy sources, then at least expansion of Australian energy exports is a real possibility. Exactly how this would make Australia a clean energy superpower is unclear, at least without an increase in royalties:

In 2017-18, LNG companies in Australia had revenue totalling $29.7 billion, yet paid just $1.07 billion in royalties levied under the petroleum resource rent tax (PRRT).

In 2016-17, from revenue of $22.7 billion, they paid only $970 million in PRRT.

By comparison, Qatar, a close second behind Australia in production, received a staggering $26 billion in royalties.

The LNG industry is booming. So why are we not getting the royalties?

The above article was published even before the “gas led recovery” plan was hatched, and just before Australia overtook Qatar as the world’s largest exporter of liquified natural gas.

Even with royalties it is hard to see how Australia would become a superpower from these exports, but with the low level of royalties, it is possible that some gas exporting companies could become superpowers.

Meaning 3: Becoming a leading exporter of clean energy as hydrogen.

After all, given Australia is the 3rd largest exporter of fossil fuels, perhaps the path to being a “clean energy superpower” is by exporting actual clean energy?

Being the 3rd largest exporter of fossil fuels has not been enough to earn the label of “fossil fuel superpower”, but perhaps Australia can export even more clean energy?

Or, just maybe, Australia could already be a fossil fuel “superpower” if not for the fact that most fossil fuel exports from Australia were by predominantly foreign owned companies, so it is not really Australia that profits?

There are several questions for the hydrogen export propositions:

  • Is this in many cases just a plan to sell natural gas and blue hydrogen “in the interim”?
  • Just how big is the hydrogen market?
  • The questions raised by the Forrest Muppet show.
  • Is Australia even placed to be a competitively price hydrogen supplier if there is a large market?
  • Will e-Fuels be a better option than hydrogen as a fuel?

In the end it all comes down to hydrogen can work for clean energy provided there is no other workable clean energy solution available.

Is this in many cases just a plan to sell natural gas and blue hydrogen “in the interim”?

The question remains as to “where will the clean energy for export come from when Australia is still highly reliant on fossil fuel for its own domestic energy?”

To become a such a significant exporter of clean energy to achieve a level of superpower status not enjoyed by being 3rd largest exporter of fossil fuels, Australia would have to make a lot of hydrogen. In fact, simply managing to achieve the same level of renewable energy exports as current fossil fuel exports is quite a challenge.

The other claim is that the plan is for these clean energy exports to be hydrogen. This makes sense given the hype around hydrogen and hydrogen hubs, but it is also possible that could be a long-term plan, with an interim step of “clean” fossil fuels, which for completeness, is also investigated below.

Just how big is the hydrogen market?

Here is the introduction from a rather critical look at the projections for clean energy exports:

Back in 2021, Australia launched a study about getting its economy to net zero by 2050, which is a laudable goal. Along the way, it appears to have been hijacked by people huffing hydrogen hopium. The April 19th, 2023 release projected a rather absurd growth in primary energy demand by 2050, with doubling of energy exports and 40 times the renewable capacity as today.

Australia’s New Net Zero Report Is A Study In Bad Assumptions & Wishful Thinking

The position of the author is negative, so the criticisms need to be fact checked, but the points conceded that do not favour the negative position are the easiest to check, and the claim that the goal is for Australia to double energy exports from those that are already third highest globally, does match the data.

To be successful exporting hydrogen, the world market for hydrogen as fuel needs to grow significantly, and that seems the type of gamble that is not generally acknowledge to have failed for private cars and is otherwise unproven. Even if hydrogen is required for many countries energy needs, there is a large question as to the size of the total global potential market, as pointed by Michael Barnard in the CleanTechnica article.

Japan and Korea have special reasons to consider hydrogen, reasons that do not apply to any other country with the possible exception of Taiwan.

What Japan and Korea share is the combination of a high population density that limits the land available for wind and solar, together with being neighboured only by significant countries where relations are strained. A look at the globe reveals they share geographic isolation from any country other than China or Russia for the supply from an international grid. Lack of land and tensions with neighbours could give Japan and Korea unique reasons to consider importing hydrogen as an energy source.

Japan and Korea have both not only committed to being a market for hydrogen for energy but have also been committed to hydrogen cars. Given the logic for hydrogen cars fails following the 10x price reductions and charging speed increases of batteries since the first hydrogen cars were released, still hoping for hydrogen FCEVs suggests illogical commercial interests may also play a role in planned national power choices in Japan and Korea.

Then Australia has another problem beyond those in the CleanTechnica article: Australia’s abundance of solar and wind alone does not alone in the ability to produce the most low-cost hydrogen.

In summary, the market for hydrogen is not projected to ever reach the scale of the 2020 natural gas marketplace, and even if Australia became world leader of hydrogen exports, the world market is not projected to ever exceed Australia’s 2023 level of natural gas exports. Plus, while there is a real need for hydrogen in fertilizer production and potentially for cement and replacing metallurgical coal, much the projected world demand for hydrogen is not for use for energy. So, Australia would never be as much as “clean energy superpower” as it currently is a “fossil fuel energy superpower”.

The questions raised by the Twiggy Forrest Muppet show and hydrogen vehicles.

A major factor in the profile of hydrogen projects in Australia is down to one person, raising questions as to the fallibility of that one person.

Andrew Forrest, currently the 2nd wealthiest Australian, is not only the most prominent backer of green hydrogen projects in Australia, he has also labelled those, including Elon Musk, who do not believe in hydrogen as the future for cars as “muppets”:

Until proven otherwise, my position is to accept the Andrew Forrest really believes in doing what is best for the environment, but his position has all the hallmarks of someone with a hydrogen hammer seeing the transition away from fossil fuels a nail that can be solved with hydrogen, and not being ready to accept those with better, faster, lower cost solutions as anything but Muppets. This said, there are also questions over other differences between statements by Forrest and actions of his companies:

Perhaps the problem comes down to confirmation bias, but still believing in, or promoting belief in, hydrogen playing a significant role even for passenger vehicles in 2023, when even the companies own trucks use batteries is quite worrying.

There are reasons why questions as to whether Andrew Forrest or business partners are pushing projects that are really a distraction keep being raised:

Is Australia even placed to be a competitively price hydrogen supplier if there is a large market?

Then there is the question as to whether would even be competitive are as supplier of hydrogen. Yes, Australia has the potential for a lot of solar and wind energy which could be used to produce hydrogen, but two factors act against Australia being price competitive:

  • The lowest energy cost hydrogen is produced using excess capacity “bonus electricity” which most abundant in countries with a larger domestic electricity market than is present in Australia.
  • Hydrogen is at least 5x more expensive to ship than fossil fuels, and the remote location of Australia will inflate shipping costs of hydrogen from Australia.

Significantly, without having one of the world’s largest domestic energy markets to create a large supply “bonus hydrogen“, is would be extremely difficult for Australia to be competitive as a hydrogen supplier in the long term, and in the short term, not only does Australia not yet produce enough clean energy to make its own grid clean, but there would be a natural-gas lobby to deal with if hydrogen could compete with natural gas exports. There will be hydrogen exports, but not on a large scale or necessarily sustainable in the long term. While this may be a great opportunity to attract investment but with little substance, with both “green” and “blue” hydrogen promoters gaining from stock market interest.

Will e-Fuels be a better option than hydrogen as a fuel?

What if there was a fuel that had the same overall lifecycle emissions as hydrogen, but could be shipped internationally at the same cost as fossil fuels, distributed through existing distribution channels rather than requiring a whole new hydrogen specific distribution infrastructure, and could even be used by existing vehicles instead of requiring a new feet of hydrogen vehicles?

Well…that is the promise of e-fuels.

E-Fuels highlight the problems hydrogen would face if it ever did get a distribution network, and potentially offer a better solution for the limited cases where a new “clean” fuel is still a viable alternative to a battery.

Meaning 4: An efficient electrical clean energy supplier superpower.

Overview: Australia could export clean electrical energy to an international grid.

The real progress in clean energy all centres around “electrify everything” rather than finding ways to create less emissions from burning alternative fuels.

The advantage of electrical energy over hydrogen or e-fuels is that for the same renewable energy generation the custoemr receives the 3x to 10x as much energy. There is no way any physical fuel can compete if energy can be supplied electrically.

Electricity requires a grid, and international connections that create international grids are an increasing reality.

For Australia to sell electrical energy the first requirement is for a connection to the emerging ASEAN gird. To go even further would require the ASEAN grid to be connected to other international grids.

It is quite a challenge, and on one hand its success would be the final end to any hope of huge revenues from exporting hydrogen for use a fuel, but on the other hand it opens a much greater prospect for the exporting of clean energy on a much larger scale than could ever be possible using hydrogen.

The export fuel proponents have reason to fear and loathe this option, but in the end it offers the biggest revenues, and every other option is reliant on hopes no one else ever provides grid connections or renewable energy to customer counties customers.

There is a launch project: Sun cable.

There is already a project with the goal of exporting renewable electrical energy from Australia to Singapore and the ASEAN regional grid via an HVDC. The world is progressing towards a “world wide grid”, and although the current progress is only towards large regions that may remain separate for a long time, joining Australia with an ASEAN grid unlocks potential electricity exports from Australia to a much wider audience than is realistic via hydrogen, and only a far more cost competitive basis, given the 2/3rd of power lost in converting power to hydrogen and back.

The 10GW/30GWh Australia-ASEAN Power Link scheme, to be completed in 2027, could well consist of world’s largest PV array, biggest battery and longest electricity cable

Australia to fast-track world’s largest solar-battery project with grid link to Singapore.

That said, with the power of the fossil fuel lobby in Australia, it was hydrogen projects that benefitted from 2 billion dollars of Australian taxpayer funds in the 2023 Australin government budget.

Connecting to the ASEAN grid and beyond would logically be the best path for Australia to become a major player in the export of clean energy, but the Australian government does not seem at all committed to such a future.

A first reaction to the idea that Australia may export clean energy prior to the nation itself completing the transition of the national grid to clean energy can include scepticism that it could be achieved and even outrage that exports could be given a higher priority than controlling Australia’s emissions.

However, reality is domestic and exports projects are funded independently, and the funding for export projects could assist with Australia’s own clean energy transition by creating economies of scale and making initiatives like local production of solar cells viable.

To become any interpretation of a “clean energy superpower” it requires a huge ramp up in clean energy generation projects, which makes little sense without also having a plan to do something with that power. The Sun Cable link can connect an Australian export grid to the ASEAN grid. Singapore is only the smallest electricity market of the 16 ASEAN grid participants accessible through the Singapore connection. This is a point missed or ignored by those feeding the press with negative information:

Singapore shapes up as the next big proving ground for Atlassian co-founder Mike Cannon-Brookes and his partners in Sun Cable amid questions over their ability to roll out and fund one of the world’s longest and deepest subsea power connections.

Cannon-Brookes’ next battle is selling Singapore on Sun Cable

The sun-cable project: One connection is not a really a grid, but an essential first step.

Realistically, while the first link is necessary to begin, it is also the biggest risk. The more connections between Australia and the ASEN grid the lower the risk. Another link future link via Indonesia, Papua New Guinea, Timor Leste or even the Philippines would be required at some future time to secure connection between Austral and the ASEN grid though an earthquake prone area.

The most difficult step in creating a grid is the first link and sun-cable enables the vision.

Entrepreneur says plan to send renewable energy to Singapore from Northern Territory a ‘nation-building project for Australia’.

Mike Cannon-Brookes has prevailed over Andrew Forrest in a billionaires’ battle for control of Sun Cable, an ambitious development promising to transmit solar-generated electricity from the Northern Territory outback to Singapore.

Mike Cannon-Brookes wins control of Sun Cable solar project from Andrew Forrest

The consortium also includes infrastructure investor Quinbrook. Under their control, the project will pursue its original goal of exporting solar power from the outback of Australia to the island nation of Singapore. 

Mr Forrest said his company was “unconvinced of the commercial viability” of sending the power to Asia. But, in a statement, Mr Cannon-Brookes said the outcome was “a big step in the right direction”: “We’ve always believed in the possibilities Sun Cable presents in exporting our boundless sunshine, and what it could mean for Australia. It’s time to stretch our country’s ambition. We need to take big swings if we are going to be a renewable energy superpower. So swing we will.”

Sun Cable: Mike Cannon-Brookes wins control of mega solar project after fall-out with Andrew Forrest

Meaning 5: Becoming a clean energy & resources powered economic superpower.

All of the previous meanings assume “a clean energy superpower” is not really a superpower, but more a leader in clean energy in some way.

But could Australia leverage clean energy to become more or like a genuine superpower?

This step requires not only harnessing the renewable energy potential of Australia and exporting some of that energy, but also realising the greatest gains in efficiency by converting raw materials sourced in Australia into finished products within Australia, instead the current global waste of energy and resources due to raw ingredients being shipped unnecessarily.

This would be leveraging the clean energy potential of Australia with the greatest efficiency and allow the fastest global transition away from fossil fuels. Even if Australia itself does not capitalise on those opportunity, the investment should ideally still be found to enable this opportunity to be realised.

Australia has historically exported primary products: first Agriculture and then from becoming a “hole in the ground” and exporting mostly fossil fuels and unprocessed ores. While fossil fuel exports may have an expiry date, Australia is the largest exporter of bauxite, and is even more dominant as the largest exporter of iron ore with over 50% of world exports, and the dominant exporter of coking coal to enable others to convert the iron ore to steel.

The first step in using clean energy in Australia would be to process the ores before export. In contrast to Australia being the largest miner of bauxite (Aluminium ore) but only the 6th largest Aluminum producer, consider Iceland with no significant bauxite, was as of 2019 data the world’s 11th largest smelter of bauxite, with even British/Australian company Rio Tinto smelting in Iceland due to the availability of clean energy.

Even having as much available cost competitive clean energy as Iceland would lift Australia in the rankings for Aluminium production, and why export so much of the worlds iron together with the coking coal to convert to steel in other countries when steel produced using low-cost renewable energy could be exported at lower cost than the raw ingredients.

The next step would be exporting batteries instead of just being the worlds largest exporter of lithium.

But if you have the steel, and the batteries, and all the other raw ingredients, in a world using AI and robot labour, manufacturing would be most efficient no longer in countries with low-cost labour, but in countries with the raw ingredients and the low-cost energy.

The path from being simply mines a or “hole in the ground” for the world and instead becoming an economic superpower is to follow a path value added beyond just converting bauxite to aluminium, iron ore and coking coal to steel and lithium to batteries, and progress in every opportunity possible to using the low-cost clean energy at the source and producing finished products.

This emerging as potential future superpower would be the most efficient application and realisation of Australia’s clean energy potential and would provide the greatest contribution to the world transitioning from fossil fuels as well as the greatest contribution to the Australian economy.

What is a superpower?

The conventional meaning of “a superpower”.

Superpower describes a state or supranational union that holds a dominant position characterized by the ability to exert influence or project power on a global scale.[1][2][3] This is done through the combined means of economic, military, technological, political, and cultural strength as well as diplomatic and soft power influence.

Wikipedia: Superpower

The text from Wikipedia is somewhat generic, but the examples do narrow it down further:

In 1944, during World War II, the term was first applied to the United States, the United Kingdom, and the Soviet Union.[5] During the Cold War, the British Empire dissolved, leaving the United States and the Soviet Union to dominate world affairs. …. Since the late 2010s and into the 2020sChina has been described as an emerging superpower or even an established one.[9][10][11][12][13]

Wikipedia: Superpower

So far, only the USA and UK, Soviet Union and China have achieved superpower status.

Searching for who might become superpowers yields results of India, Brazil and even Japan, but the sources are not that credible. An interesting point is that the countries most consider as contenders are those with the largest populations.

The clean energy superpower ambiguity.

A “clean energy superpower” could mean a genuine superpower that derives its superpower though being so strong in clean energy, or it may mean simply the dominant supplier clean energy.

Both meanings are somewhat problematic.

Just being the leading supplier of something does not make that country a “superpower” without a combination dominating a significant percentage of the global market of a highly valued an important product. For example, Maylasia is the world’s dominant supplier of pewter, but the title “pewter superpower” is not widely applied. Even back in in 1990 when over 1 in 4 of the world’s cars were made in Japan, I do not believe Japan was then considered then an “automobile superpower”, yet no one country is about to produce anywhere near 25% of the world’s renewable energy.

Becoming an actual superpower by leveraging the world’s lowest cost clean energy to become the best place for producing things that require energy may be more achievable than any form of superpower status from simply producing clean energy, but it is still a big step.

Could energy & resources enable a future production powerhouse and superpower?

The USA became a superpower largely dure to its industrial production capability and the USSR due to its military capability, which again was built on having significant production capability.

China emerged, or is emerging, as a superpower in a world with global trade, which meant the production capability to become a superpower could be scaled using world markets.

Ourworldindata: Trade and globalization

While the huge labour force has been key to at least the initial advantage leading to China’s rise to become the world manufacturing hub, becoming a global manufacturing center may not have been possible without the rise of a global market for exports.

Just as one country as the global centre of manufacturing would not have been possible prior to 1950, the idea of a major manufacturing hub without access to low-cost labour can still seem impossible in 2020.

But as the growth shipping and exports changed the world in the later 20th century, AI and robotics is set to change the world in the 21st century and rewrite the rules on the need for labour.

Tough Australian budget choice: nuclear submarines or clean energy superpower?

As a prosperous middle power, Australia has a small and professional defence force. It’s equipped with advanced combat aircraft, ageing but effective submarines, capable warships and, ultimately, nuclear submarines.

Other than the nukes – still more than a decade away – all assets require fossil fuels. As the world transitions to renewables, these will be in increasingly short supply.

Fuel security concerns endanger Australia’s defensive capabilities

Australia’s security concerns have always revolved around the danger of isolation. Located far from its most powerful allies, Australia could be easily cut off if an adversary came to dominate the seas around it. As a senior Australian intelligence official once summed up, “Isolation in a hostile environment would cost Australia foreign policy independence and control of its trade, reinforced by threat of occupation.”

Strategic Choice: Australia’s Nuclear-Powered Submarines – Foreign Policy Research Institute

Australia’s biggest defence threat is that of isolation, and the biggest danger from isolation is that Australia is dependant of the import of fossil fuels for its defence. Two possible solutions would be:

  • To break the dependence on foreign fossil fuels as a clean energy superpower able to manufacture its own e-fuels for defence purposes.
  • To acquire 8 nuclear submarines on the basis that these could prevent even a nation with a fleet of over 500 ships from isolating Australia from supplies.

The clean energy superpower choice would result in a more powerful and prosperous nation no longer dependant on foreign supplies and at-risk from isolation. The downside is it could take billions of dollars of investments and easily take ten years to achieve the required results.

The nuclear-powered submarines choice would result in a country with a commitment to significant military spending but little in other direct benefits. Again, it will cost $386 billion and it will take until the 2050 to have 5 submarines.

From a political perspective, the submarines are a winner as there are big commercial contracts with actual foreign superpowers and when you are spending that much money there is a lot of sucking up. The photo-ops and high-level meetings to attend when you spend $386 billion on defence contract provide great publicity and scrap book photos for any politician, and given that the government leader who signed the current agreements will be 87 years old in 2050 when the would be 5 submarines from the $386 billion contract, it is possible the impact of the decision during the time as leader may seem more important than what happens in almost 30 years’ time as a result of a defence contract signed today that will most likely be revised before any outcome is realised.

Gas as a source of power in Australian politics.

Background: History of natural gas in Australia.

The ‘dilemma’ is unclear, but the data and history make it worth watching.

Coal mining began in Australia the 1800s and Australia is currently the world’s second largest coal exporter, Natural gas in Australia began as an industry in the 1960s. Until 1975, Australian gas was not exported and reserved purely for domestic consumption. When the first LNG carrier ships were developed, Australia placed an embargo on natural gas exports, but exports of natural gas from Australia were uncompetitive due to transport costs anyway. Initially, 50% of all gas was still for only Australian consumption, but local prices remained low, and the restrictions were lifted. Lifting those restrictions transformed the gas industry in Australia:

The end of cheap domestic gas came when gas companies decided to aggressively exploit the export market. Energy finance analyst Bruce Roberstson from the pro-renewables think tank IEEFA says that age of cheap gas is behind us. It wasn’t just in the 70s and 80s it was right up until about 2012, we used to pay $3 to $4 a gigajoule for gas. That’s over, ever since the export part started up.

The future of power: What’s behind Australia’s push for gas-fired energy | Four Corners, 15m58s

Since around 2012, Australians pay world gas prices, and at times more than those outside Australia pay for Australian gas. Basically, Australians have only one source, while foreign customers for Australian gas can shop around:

The Australian Workers’ Union says proposed changes to offshore petroleum and gas storage legislation highlight the fact that the nation’s vast gas supplies are now largely foreign-owned.

The AWU says the Australian Competition and Consumer Commission has also effectively approved cartel conduct by some of the world’s largest gas companies, resulting in our gas going overseas while Australian consumers miss out and prices rise.

“Australians find themselves paying more for our own gas than we charge our customers overseas. It’s crazy!” AWU National Secretary Dan Walton says.

“We are the world’s richest energy exporting nation but have utterly failed at providing affordable energy prices at home.

Australia pays more for its own gas than it charges customers overseas

Australia’s “gas-fired recovery”: The recent history of gas and politics.

When Australia, led at the time by the government of the same Scott Morrison who had previously brought a lump of coal into parliament claiming people should not be scared of it, planned a path to avoid a post-Covid-19 recession, that solution was an economic “gas-fired-recovery”. The Covid-commission who created the plan was from the outset headed by the deputy chair of an oil and gas company, with a task force staffed by oil and gas industry executives.

The government would invest taxpayer money to support infrastructure to acceleration expansion of the gas industry, with the promise of “cheaper gas” for Australians and Australian industry.

The key flaw in this plan became apparent when the war in Ukraine resulted in a surge in gas prices in Europe, which were mirrored in Australia. There is no special deal for Australia to buy gas from the international gas companies operating in Australia, and Australians pay the same prices for gas as do international customers. This means that while the Australian government subsidised the gas industry, prices of gas in Australia would only fall if world gas prices fell globally. It was never that Australia was going to obtain gas at lower prices than customers internationally or have a competitive advantage for manufacturing. Gas production tripled from 2015 to 2022, and resulted in low gas prices in export markets, but did not decrease prise in Australia. Previous increases in Australian production made Australian industry using gas less competitive.

The benefit to the Australia from more gas could be taxation revenues from international gas companies selling more gas internationally, but the boost to Australian industry was never real.

Now in 2023, there is a new government, led by Anthony Albanese, quoted in the same video as saying, “We don’t say that there shouldn’t be any new gas, that is not our position”. At the time in opposition, but not opposing the government helping international gas companies, or highlighting any problems with the idea. In fact, the war in Ukraine and resulting boom in revenues for the gas companies combined with small increase in the gas resource royalties.

Australia: land of the low “resource rent tax” for gas exporters.

Australia has transitioned from a nation of agricultural exports to a nation of resource exports, but unlike many other countries, has allowed those mining the resources to pay very little to the host nation in return for rights to exploit national resources. The policy has been very much “if you mine in Australia, it will result in economic activity and mining jobs for Australians” with a belief that the resources mined would stimulate the economy in line with the vision that planned the “gas-fired recovery“.

The result is that while Norway has accrued a Sovereign wealth fund already valued at over 1 trillion dollars from resources rent taxes, and Qatar and earns 26 billion per year from as similar amount of gas exports to those that earn Australia only around 1 billion.

World champions in LNG: Great news for the economy, you might think, with those rivers of resource royalties flowing in to government coffers.
The reality, though, is vastly different.
In 2017-18, LNG companies in Australia had revenue totalling $29.7 billion, yet paid just $1.07 billion in royalties levied under the petroleum resource rent tax (PRRT).
In 2016-17, from revenue of $22.7 billion, they paid only $970 million in PRRT.
By comparison, Qatar, a close second behind Australia in production, received a staggering $26 billion in royalties.

The LNG industry is booming. So why are we not getting the royalties?

In the most recent Australian government budget as of May 2023, the Australian Government did raise the resource rent tax, which is projected to raise an additional $2.4 billion over the next 4 years or 0.6 billion per year, while:

The LNG industry is forecast to hit $91 billion in export earnings this financial year – three times more than in 2020-21 – on the back of a ban on Russian energy exports following its invasion of Ukraine.

Budget will grab $2.4 billion from LNG super profits

Losing less than 1 billion with revenues rising by 60 billion since 2017-2018, with the cost of product remaining static, does not seem too harsh for the gas companies. In fact, as domestic gas prices in Australia have risen to match international prices resulting in huge rises in domestic profits, domestic customers are funding super profits by more than the 0.6 billion paid to the government, which means the increased gas prices are funnelling extra “tax” from Australians to the government.

Politics: How do gas companies have so much power?

Gas companies have the means and the motive to influence government policy.

With the huge growth in incomes for the gas companies, listed as $63.5 billion for 2022, and projected to be $91 billion in exports for 2023, the companies have lot of money to spend.

Gas companies do not own the land or sea areas where they mine, and instead rely on being given access for mining by governments. With over 100 gas resource projects currently under consideration in Australia, permission to explore and mine is the first motive.

Given the gas mined is logically initially the property of the nation where the operate, gaining favourable rates to access the gas through a “resource rent tax” is critical to maximum profits. Minimum “resource rent tax” is the second motive.

Why do governments of Australia do so much to help gas companies?

  1. Gas company influence through political donations.
  2. Budgets: “It’s the economy, stupid“.
  3. Media and lobbying: The threat of media campaigns and impact of lobbying.

As outlined in the three sections below.

Gas company influence through political donations.

Fossil fuel companies backing large gas projects across Australia gave nearly $1m in political donations to the three major parties last financial year.

The analysis comes from campaign group which examined donations records from the Australian Electoral Commission to identify how much oil and gas companies were giving to Labor, the Liberals and the Nationals.

Australia has more than 100 fossil fuel developments in the pipeline that could result in nearly 1.7bn tonnes of greenhouse gases a year – equivalent to about 5% of global industrial emissions – if all were to go ahead.

‘More money than ever’: gas companies made almost $1m in donations to Labor and Liberals

Four of the nation’s biggest fossil fuels companies paid over 13,000 times more in “donations” to the major political parties last financial year than they collectively paid in taxes in 2020-21.

Australian Electoral Commission (AEC) data released this morning shows Chevron, Santos, Whitehaven Coal and Woodside together made $390,930 in political “donations” to the ALP and the Liberal and National parties last financial year.

Fossil fuel giants paid 13,000 times more political “donations” than taxes

A list of all major political donations in Australia in 2017-2018 is available here, for 2021-2022 is available here, but it is important to recognise that not all donations are disclosed. The percentage of donations disclosed is artificially inflated by the fact that is a reasonable percentage of public funding of political parties by the electoral commission, and the amount of this funding is on public record anyway. A significant percentage of what is not on public record can be hidden though loopholes, including:

Donations worth less than $14,300 do not need to be declared, meaning smaller fundraising drives by political parties will often not be included in the disclosures.

It is also possible for large donations to be made with multiple cheques just under that threshold.

Donations can also be funnelled through bodies affiliated with political parties that, for example, accept payments for seats at fundraising events.

These funds are then registered by the political parties as receipts from the affiliated body and the original source remains hidden.

Sources of millions in funding to Labor and Liberals kept secret in political donations disclosures

The overall result is that while the gas companies are among some of the largest political donors, the figures of around $1 million in the quotes above would not totally dominate donations to political parties. There is the whole question as to why companies with serve the interests of shareholders donate to political parties instead of returning those funds to shareholders and allow them to choose whether to make their own donations, but that aside, donations of $1 million to even each major party would not be enough to “buy democracy”.

But those $1 million numbers are far from the full story, and the real story is more complex:

Political donations from fossil fuel, gambling and alcohol companies all increased in the lead-up to the federal election, adding to ongoing concerns about the influence of these industries in politics.

Donations usually increase in the months before an election but last financial year, more than 75% of money came from just 10 individuals, companies or political movements, according to analysis by the Centre for Public Integrity released on Wednesday of the Australian Electoral Commission’s 2021-22 financial disclosure returns.

The Centre for Public Integrity chair, Anthony Whealy KC, said the $137 million spend from some of the nation’s richest people demonstrated the urgent need for reform, with donations not revealed until eight months after the election.

“Record high spending fuelled by a handful of donors is putting our democracy at risk,” Whealy said.

“10 individuals have given 77% of the donations to parties and individuals. Given the reliance that the major parties have on these top donors, there is a real risk that they receive special access and yield undue influence on our decision makers.”

Ten donors gave 77% of total political donations in lead-up to last Australian election

Mineralogy is a vehicle for the individual Clive Palmer, and Pratt holdings for Richard Pratt. Note that political donations over $1,500 are not tax deductable.

Some individuals are motivated to support one a political because they believe in the ideology, but to donate equally to both major political parties, as is the practice gas companies and major banks, is harder to justify on any basis other than raises gaining at least opportunity to influence government policy.

Budgets: “It’s the economy, stupid“.

A significant factor in political parties winning government, is the perception of the impact their economic management and their economic policies will have on the national economy.

All around the world, governments gain voter approval from efforts in meeting the needs of the community while being as close as possible to balancing the budget, or even better, achieving a government surplus.

Assisting major export industries not only helps the national economy and balance of payments, it can also provide taxation revenue to boost the budget bottom line. When the industry is a resource industry, it normally also provides additional government revenue from “resource rent taxes”, which see the companies extracting national resources paying the nation a percentage of profits on those resources.

Strangely, in Australia the gas companies have been paying less to Australia as their profits have risen, which has led to many questioning how the gas companies manage to enjoy such a good deal:

The extraordinary dodging of both company tax and the Petroleum Resource Rent Tax (PRRT) by Australia’s, and the world’s, biggest gas companies — and thus the theft from Australians of income from our own natural assets — should be front and centre in the election campaign, given the colossal deficits and debt Australia currently faces.

As Crikey reported last year, the PRRT is a colossal rort — taxpayers are actually receiving less now than they were 20 years ago despite the massive expansion in gas exports from Western Australian projects and the tens of billions in extra revenue offshore gas companies are enjoying. Only Russia’s invasion of Ukraine — and the massive spike in energy prices it caused — finally bumped PRRT revenue up in the forecasts in the April budget. But those forecasts remain below the levels of 20 years ago.

How the world’s biggest gas companies are making huge profits in Australia, without paying any tax

While it makes sense for a government to try and ensure resource industries can thrive in order for the government to benefit from the resulting revenues, it makes no economic sense from a government budget perspective to help these companies thrive while failing to collect proportionate revenues.

But winning government is about perception, and perception is very often largely framed by the media.

The threat of media campaigns and impact of lobbying.

When gas exports are predicted to be valued at $91 billion for 2023, and costs remains flat, there is a huge budget to spend on campaigns to gain access to more resources and protect those huge profits from an additional resource rent taxes as apply in other parts of the world which could easily amount to $20 billion per year. Even a fraction of $20 billion buys a huge volume of media and highly influential lobbying in Australia.

The idea of more significant increases to resource rent tax have been proposed in the past and failed. In 2010, the Australian Prime Minister Kevin Rudd, proposed such a tax, and the campaign by the mining industry played a key role in Kevid Rudd losing the role of Prime Minster and eventually the government losing power. Despite this Kevin Rudd is still calling for the government to act.

It’s probably no surprise that Rudd has raised the issue, given that the aborted Resources Super Profits Tax and the ferocious campaign against it by the mining industry played a significant role in his displacement as prime minister by Julia Gillard in 2010.

Ghost from the past: Kevin Rudd is making a big mistake reviving an old tax debate

Even before the current government was elected, they were reminded of the ability of mining companies to mount a campaign against any efforts to raise resource rent costs:

The mining lobby has urged the Albanese government to rule out taxes on the sector or face an ad campaign akin to one that derailed the Rudd government’s super profits tax.

Mining industry threatens to unleash ad campaign against Labor unless it rules out windfall profits tax

Unlike in Qatar which is a monarchy, the Australian government is vulnerable any groups with such wealth in an era where social media and the influence industry can even convince people the Earth is flat. Some see even the effect of lobbying alone as a threat to democracy in Australia:

The mining industry is 86% foreign owned and has spent over $541 million in the last ten years on lobbying Australian governments through its peak lobby groups, which are dominated by foreign interests.

Undermining our democracy: Foreign corporate influence through the Australian mining lobby

So, who has the power in Australia?

Australia is a democracy and thus in theory, it is rule by the people, for the people. But then, Russia, China and North Korea are also at least in theory democracies, but in each of these countries the government controls the media and the relations between lobbyists and the government are different than in countries with a free media. When the government controls the media it rarely still feels like “government by the people” and typically shows indications of becoming totalitarian even when still technically a democracy.

However even in the theoretically freest democracies, lobby groups such as the gun lobby in the USA and the fossil fuel lobby in Australia manage have governments act against what is measured to be the will of the people, and while the government does not control the media, entities like Fox News in the USA and Newscorp in Australia, both controlled by Rupert Murdoch as of 2023, wield enormous political power.

new study in the American Economic Review (the discipline’s flagship journal), with an intriguing and persuasive methodology, finds exactly that. Emory University political scientist Gregory Martin and Stanford economist Ali Yurukoglu estimate that watching Fox News directly causes a substantial rightward shift in viewers’ attitudes, which translates into a significantly greater willingness to vote for Republican candidates.

They estimate that if Fox News hadn’t existed, the Republican presidential candidate’s share of the two-party vote would have been 3.59 points lower in 2004 and 6.34 points lower in 2008.

For context, that would’ve made John Kerry the 2004 popular vote winner, and turned Barack Obama’s 2008 victory into a landslide where he got 60 percent of the two-party vote.

A stunning new study shows that Fox News is more powerful than we ever imagined (even before Trump)

Former prime minister Malcolm Turnbull says Rupert Murdoch’s News Corp poses a real threat to Australian democracy, claiming it has surpassed the Coalition or Labor [the two main political parties] as the most powerful political force in the country.

‘Utterly unaccountable’: Turnbull labels News Corp the most powerful political actor in Australia

The media and those with the wealth and ability to fund both media campaigns lobby groups have a disproportionate amount of power.

A key difference between Australia and other countries such as the USA, is that key businesses earning the greatest wealth and the having the greatest control over the media are mostly foreign owned, resulting in a government that does not always act in the best interests of Australia.

While the US broke free of answering to foreign powers back in 1776, Australia is still a constitutional Monarchy with the King/Queen of England as the head of state, ministers of government only serving provided approved by the representative of the crown.

Executive power is formally vested in the monarch and exercised by the governor-general on advice from government ministers, who are nominated by the prime minister and form the Federal Executive Council

Prime Minister of Australia.

The constitution of Australia makes no reference to either the prime minister who by convention is the head of government, nor does it contemplate political parties, although by convention each election results in a wining political party being declared “the government”.

In practice Australia is ruled by convention, which is one steeped in those appointed to govern answering to those outside Australia and ruling for the benefit of those outside of Australia. Convention now means government ministers have to worry little about appeasing the British Crown but does not prevent the need to appease media and lobby groups which are in turn subject to international control. Perhaps hardly surprising when the people of Australia themselves have such strong international links.

The challenges of exporting clean energy & a World Wide Grid.

Sources of energy.

  1. Solar: as sunlight powers solar cells and plants and evaporates water for hydro, and also the power behind wind and ocean currents
  2. Gravitational: tidal
  3. Nuclear: on Earth as opposed to the solar from nuclear on the sun
  4. Thermal: Using the Earths stored energy
  5. Fossil fuels: chemically stored solar energy captured by plants and animals over millennia.

Australia has an abundance of 1 (solar) and 2 (tidal) as well as 5 (fossil).

Of all the energy sources, only 5 (fossil fuels) are found in form ready for transport, with all the rest requiring the energy to be transformed into fuel for transport.

Transport of fuel is not the only alternative, as energy itself can be transmitted, either as electrical energy or as waves of light. transmission is more efficient than transport but requires new infrastructure.

Transporting and/or transmitting energy.

We currently have two ways of moving energy:

  1. Transporting energy as fuel, with the energy stored as chemical potential energy in the fuel.
  2. Transmitting electrical energy, which can send the energy as it is needed, reducing any need for storage.

Method 1, transporting energy as a fuel, requires conversion to a fuel that can be physically carried or piped. Intercontinental transport is normally by ship and incurs handling costs loading and unloading as well. When the fuel is hydrogen, there are additional costs converting energy to hydrogen and later back to energy. There are also additional costs transporting hydrogen, with the choice of keeping hydrogen liquid, which requires extreme cold temperatures approaching absolute zero, or highly pressurising hydrogen as a gas, with not only the energy cost of pressurisation, but the increased bulk of carrying energy as even pressurised hydrogen gas.

Method 2, transmitting electrical energy, is significantly more efficient, but for intercontinental transport the solution is High Voltage Direct Current cables or HVDC cables, which are being deployed worldwide, but from Australia, face some challenges. Plus, there is still the need for some storage, but this can be far more efficient storage than hydrogen, provided the storage does not need to be transported.

Exporting energy as hydrogen.

Currently hydrogen is almost extracted from natural gas using a process that results in more CO2 emissions per unit energy than result from burning natural gas, which is why most hydrogen exported internationally so far, is not exported for energy use as energy.

The green production of hydrogen results from converting electrical energy into hydrogen. Since the most efficient way to use hydrogen for energy involves converting the hydrogen back into electrical energy. Hydrogen can used directly for heating, and this is viable for high temperature heating for some industrial processes, but for heating homes and offices, is more than 2x less efficient than the conversion to electrical energy and use in a heat pump. The end result is that for over 95% of applications, the steps are:

  • Electrical energy -> hydrogen for storage and/or transport -> electrical energy.

There are heat losses as both conversion steps. To store or transport the hydrogen, it also must be pressurised, and compressing a gas, as anyone who has used a bicycle pump can attest, generates heat, which means more losses. Overall, the electrical energy in the end is around 1/3 of the initial energy is available in the end.

Low cost “Bonus” electricity for producing hydrogen: disadvantage Australia.

A more complete exploration of hydrogen from bonus electricity can be for here, but in summary, the conversion from electricity to hydrogen and back would mean hydrogen for energy must cost at least 3x the cost of directly using the electricity, but using “bonus electricity” is a case where that cost could be dramatically reduced.

Since wind and solar, are quite variable as generators, reliable power needs an excess electricity generation capacity and/or an electrical storage, so then even when the sun is dim and the wind is calm, there is still sufficient power. The equation so far favours a significant component of excess capacity, which means when the sun is bright and/or the wind is strong, there can be “free” electricity for making hydrogen.

The amount of “free” electrical power will be proportionate to the amount of stable power that must be produced from wind and solar.

This means countries such as China and the USA with their large electricity grids, have the potentially to have the greatest amount of “free” excess energy, and thus the ability to produce the most hydrogen using excess energy.

A World Wide Grid? Could international grids expand?

Europe has an interational grid that is part of the incomplete but growing world wide grid.

Imagine if the world had a grid connecting the power grid network connecting all countries, just as the world has data network connecting all countries.

The adage, “the sun does not always shine, and the wind does not always blow” would not apply to a worldwide grid.

Contrary to the outcome of the Edison vs Westinghouse war of the currents in the 1880s, in the 21st century, HVDC (High Voltage Direct Current) is the preferred way to transmit electrical energy over long distances, and between countries and even continents.

These HVDC links connect national grids, that are typically AC grids, with the end result being a network of national grids connected by international and intercontinental links that are typically HVDC links.

The synchronous grid of Continental Europe (also known as Continental Synchronous Area; formerly known as the UCTE grid) is the largest synchronous electrical grid (by connected power) in the world. It is interconnected as a single phase-locked 50 Hz mains frequency electricity grid that supplies over 400 million customers in 24 countries, including most of the European Union.

Wikipedia: Synchronous grid of Continental Europe

The diagram from this Wikipedia page highlights many of the European interconnects, both within and beyond the European grid, but that is just a small sample of the global list of projects on the page. For those want visual data, this “Just have a think video” an visual representations of many developments worldwide.

Yes, there is no global world-wide grid yet, but things are heading in that direction.

ASEAN regional grid.

Joining the Australian to Asia (ASEAN) would be huge step, and while the proposed link between Darwin and Singapore is in total double the length of the longest in operation today, it is only marginally longer than the proposed Morrocco to UK link. A project of around 2/3rds of the length was underway in the Soviet Union in the 1990s, and connections of 2,373km in Brazil in in 2013 and 2,210 km Hami – Zhengzhou link in China in 2014 are examples of well proven long length links.

This cable would link Australia to the emerging ASEAN grid, with 16 countries planned to be connected at in 2020 when the project was granted “major project status” by the Australian government.

ASEAN Centre for Energy Executive Director Nuki Agya Utama says “the next challenges will be adding a submersible line from Singapore to Sumatra, Kalimantan, Malaysia, Sabah, Sarawak, and Brunei to the Philippines.”

Building the ASEAN Power Grid: Opportunities and Challenges

The Association of Southeast Asian Nations (ASEAN) has been working towards regional electricity interconnectivity through an ASEAN Power Grid (APG) since 1997

Is ASEAN ready to move to multilateral cross-border electricity trade?