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Further implications
(The following 'Further implications' is an excerpt from a comment published in The Brisbane Times on July 24, 2015 and written by James Rydge and Fergus Green. It details the changing international economic and environmental circumstances which the authors argue make it imperative for Australian governments to facilitate this country's shift to clean, renewable energy production.
The full text of this comment can be found at http://www.brisbanetimes.com.au/comment/australia-needs-to-accept-the-move-to-clean-energy-20150723-giipe2.html)
Australia is at a historic economic turning point. The mining boom is over. The price of Australia's two largest exports, iron ore and coal, has collapsed for structural reasons. The extraordinary transformation of China's economy, which has taken root over the past 18 months, is central among these. China, our largest trading partner, is shifting rapidly away from the old model of breakneck growth based on investment in resource-intensive heavy industries such as steel and cement production, and towards household consumption and investment in services and higher-value manufacturing.
China is also transforming its energy system. The government has imposed restrictions on coal use in key economic regions and is supporting a rapid shift to cleaner energy sources. In 2014, $US83 billion was invested in renewable energy generation capacity (excluding hydroelectricity) in China - about a third of the global total. This shift is motivated partly by acute public concern about air pollution, which kills more than a million Chinese people every year and burdens tens of millions more with ill health and toxic living conditions.
The remarkable outcome is that in 2014 China's coal use fell (after growing at more than 8 per cent a year between 2000 and 2013), and has fallen even more strongly in the first six months of 2015. Coal imports fell by about 38 per cent year-on-year in the first half of 2015.
This is China's "new normal". China's next five-year plan, scheduled to start in 2016, will accelerate these economic shifts: China's central bank estimates the country will spend at least $US320 billion in each of the next five years to meet the new plan's targets for cleaning up China's environment and expanding non-fossil-fuel energy.
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The result of all this for Australia? Constantly rising Chinese demand for our resources has become a thing of the past, just as mining companies have invested heavily in expanding Australia's supply. And demand for low-carbon, energy-efficient, and environmentally friendly goods and services will grow, just as Australia's current government is systematically dismantling the policies and institutions designed to foster Australian growth industries in these areas.
Dramatic changes in energy systems are evident in many other countries too, and they are affecting technological possibilities and relative prices everywhere.
Denmark already gets more than 40 per cent of its electricity from renewable sources, and is aiming for 100 per cent by 2035. On one windy July day this year, Denmark produced well over 100 per cent of its electricity needs from renewables, selling the surplus to other countries. Germany, the world's fourth-largest economy, gets a quarter of its electricity from renewable sources already and is aiming for up to 60 per cent by 2035. The United States just announced the retirement of its 200th coal-fired power station in five years, and California alone is proposing a 50 per cent renewable energy target by 2030.
These countries are acting to capture the economic benefits and are positioning themselves for a future of cheap and clean energy. As the costs of key zero-carbon technologies plummet, the transition is now accelerating at a rate few thought possible even three years ago.
Australia, with its world-class renewable resources, is among the best-placed countries to capitalise. Wind energy is competitive with new-build coal and gas. And the cost of solar photovoltaic modules has fallen 80 per cent over the past decade - a key reason, no doubt, why one in six Australian households now uses them to generate their own electricity (up from one in 100 households in 2009), and why Australians overwhelmingly support efforts to expand renewables.
It is now beyond reasonable doubt that a more decentralised, renewables-based system will provide much cheaper power over the medium and long term, especially with ongoing innovation, and with the increasing uptake of smart electricity grid infrastructure and energy storage technologies, the costs of which are also falling rapidly. Energy planning, operation, and pricing arrangements designed to optimise such a system will make energy prices in the new system even more competitive compared with the alternative of propping up our creaking, centralised, fossil fuel-based system. Further improvements in energy efficiency - eminently possible with the right policies - will bring the cost of energy services down further still and can offset any short-term electricity price increases.
Amid this surging tide of technological innovation, ever-more attractive economics, and growing popular support for a renewables-based energy system, what should the Australian government do?
A comprehensive package of complementary government policies is essential to steer private investment in energy efficiency, clean energy innovation and climate-smart infrastructure - these are fundamental drivers of both economic growth and the transition to a zero-carbon energy system...'