Australia: The bigger picture.
Australia has solar and wind resources that could enable it to become a renewable energy superpower, but any attempt to make that transition must get past a fossil fuel industry lobby that has proved all powerful in the past.
The result been that Australia is often seen as a climate action ‘pariah’, with both major political parties significantly funded by fossil fuel interests.
I will update this section with more on how Australia has become an outlier on action on climate and has squandered opportunities in renewables over the next few months, as this webpaper is an early version.
The Australian Natural Gas Dilemma of 2022.
Russia’s invasion of Ukraine has, either intentionally or accidentally, fed into a global inflation crisis, and at the centre, is gas prices, with Russia being the world’s largest gas supplier.
One consequence is a dilemma for Australia: what to do about gas prices.
The price of natural gas in Australia has increased ten-fold (10x) in the past 18 months, while the cost has remained the same.
A significant contribution to rising inflation in Australia, is not increased costs, but soaring profits of a cartel of 5 fossil fuel companies.
The good news for Australia, is that because these profits are based on international prices for natural gas driven up due to the crisis in Ukraine, the result is record export earnings, lifting the Australian export earnings to result in a record trade surplus.
If only all shareholders of the 5 companies in the cartel were Australians, it would better help the overall economy as much as it helps tax revenues.
Still the bottom line is not just consumers, but also the rest of industry that relies on power prices, are all suffering to support the 5 companies of the cartel, who are already rich from export earnings.
To interfere in the market is against the principles of a free market, but does the market really have to be so much freer than Norway, where all citizens enjoy an improved standard of living because the nation earns are share of the revenues from that which was dug up from under national territory.
In the end, it comes down to the power of influence of the fossil fuel companies, which was demonstrated on a recent new program broadcast on the national news network, the ABC, Sunday October 30th.
The only suggested action on the program, was to support calls by the CEO Australian Petroleum Production & Exploration Association (fossil fuel lobby) for more access to the country’s resources, by overturning regulations by the states limiting exploration.
The logic seems to be:
- Future investments in fossil fuel projects are dependent on the increased prices that resulted from the conflict in Ukraine.
- Prices in Australia, which currently are set by international prices most set in Europe, will fall if Australia expands its natural gas exploration.
The suggestion seems to be that expansion of exploration in Australia will bring gas prices down in Europe, to the level that was made possible by gas pipelines from Russia. So, there is no need to decouple prices in Australia from those paid in Europe, as the global problem will be solved by a little more exploration in Australia.
Or is it that this will enable even more revenues for that cartel of natural gas suppliers, so there is a lot of money available influences whoever necessary and unlock even bigger profits?
Yet, this was not questioned on the report. Largely because news networks need content fed to them as there is insufficient funding to generate their own content, particularly on weekends, which means they end up being spokespeople for those with the budget to provide content.
Australia as a renewable energy superpower.
Primary Australia: The mentality of fossil fuels and raw materials Australia.
In April 2022, Australia achieved a record trade surplus, according to the report by Alan Kohler, courtesy of the high global prices of coal and gas.
This would only be possible, if coal and gas make up a significant part of Australia’s exports. A search reveals that, overall, resources, which basically means mining, accounts for over 60% of Australia’s exports, according to the Reserve Bank of Australia.
Prior to 1960, Australian exports were over 60% agriculture, and 10% resources, and in 2021 they were over 60% resources, and 10% agriculture. However, the entire time around 70% of all exports were primary products.
Most products are now exported without further processing. An example of this is steel, which peaked as an export in 1998, and fallen to 1/3 of the level since then despite Australia’s iron ore exports having risen significantly in that period. In contrast, steel imports have risen. Australia exports both iron ore and coal, which are used to produce steel in other countries, and Australia then imports that steel.
However, most steel imported to Australia that began as iron ore and coal exported from Australia, is import as manufactured goods such as cars and white goods.
Hydrogen: Renewables for primary Australia.
A popular concept is that Australia can move from exporting energy as coal and natural gas, to exporting energy as hydrogen. Then Australia’s customer for iron ore and other minerals will still have the energy to process these other resources.
The idea is that the fossil fuel revenues, can be replace by hydrogen revenues and nothing else changes. The problem is, as explained here by Michael Barnard, exporting hydrogen as an energy source simply does not add up.
One attribute of fossil fuels that does not transfer to the age of renewables, is the concept of loading energy on a boat and shipping that energy.
With fossil fuels, the energy was already in stored by photosynthesis hundreds of million years ago. With renewables, energy must be converted into a storable form first, and that always loses a significant amount of the original energy.
Unlike with fossil fuels, which energy rich countries simply mine and export, renewable energy is far better used in the original location.
A renewable energy powerhouse.
Renewable energy is best used closer to the point where it is generated.
This concept really changes, what is an already fast changing world. As a key example, is Australia looks to supply Japan with energy, and iron ore and other resources, in part because Japan is the second largest exporter of cars in the world.
The reality is, Japan is highly unlikely to continue this huge level of car exports, as in the renewable economy, manufacture is best located near the source of renewable energy. While at one time as living standards in Japan rose, it may have become advantageous to relocate manufacturing to a country with lower labour costs, robotics and renewable energy now means the advantage may come from moving manufacturing to a country that is a source of renewable energy.
- 2022 November 1: First published.