The folly of tilting at windmills 

As the carbon reduction debate progresses, it is clear that the real argument is not primarily about climate science, but economics.

It mirrors Australia’s great reform debates of the 1980s and 90s when public life was divided between economic rationalists and irrationalists. Indeed, many who argued that the Hawke and Keating reforms would shut down the country are now advocating the most drastic response to climate change. They are showing the same aversion to rational economics and the same perverse resistance to weighing costs against benefits that dominated debate 20 years ago. And again, they are advocating policies that would, quite literally, shut down the country if anybody were foolish enough to follow them. If greenhouse cuts are to be made, which The Weekend Australian believes is necessary insurance against climate change, the challenge is to achieve the biggest cuts for the least cost, a process that needs an efficient market mechanism.

Given present technology, policymakers must look beyond renewable energy to cleaner coal, greater use of natural gas and possibly, as former Maritime Union of Australia boss John Coombs concedes, nuclear power. While the numbers do not stack up for nuclear power at the moment, Ziggy Switkowski, chairman of the Australian Nuclear Science and Technology Organisation, believes it will become viable as coal power becomes more expensive with a carbon price of $15 to $40 a tonne. After decades of blocking nuclear waste at ports, Mr Coombs has been prepared to change his mind, showing an open-mindedness that shames the dogmatic Greens and many in the ALP.

At the 2007 election, both sides of politics were committed to a rational, market-based approach. The wooly thinking that has fragmented that consensus is highlighted by the Rudd government’s mandatory target of 20 per cent of renewables in Australia’s electricity mix by 2020. It has badly skewed the market, creating an inefficient allocation of scarce resources. Taxpayers subsidise solar and wind power at enormous cost and in the case of wind, at some cost to the environment. As Graham Lloyd reports, new-generation wind turbines dotting Australia’s landscape cost more than $2 million each, are as tall as 45-storey steel-and-concrete buildings and their blades take up more than 1ha of sky, creating turbulence that tears apart birds that stray too close. Other drawbacks include the cost of connecting to the grid, dependence on correct wind conditions, the need for fossil fuel back-up and the impact on residents in noise, vibrations and the blight on the landscape. When all costs are taken into account, the price of avoiding each tonne of carbon emissions using wind with gas-turbine back-up generation is more than $1100. Neither has subsidising solar power proved economical, with the power produced from rooftop solar panels costing about 25 times as much to cut greenhouse gases as would a nationwide emissions trading scheme.

Given Australia’s coal reserves, resources might be better invested in making coal-fired power cleaner. In this newspaper last month, Peter Beattie wrote that the Massachusetts Institute of Technology report The Future of Coal in a Carbon-Constrained World concluded that coal would remain the “mainstay of both the developed and developing world”, making carbon capture and storage the critical technology of the future. The arguments of such energy experts as Amory Lovins, that the cheapest way to cut carbon emissions is to design buildings and transport systems that waste less energy, should also be heeded. If the whole of the US, for example, used electricity as efficiently as its top 10 states, Lovins points out, 62 per cent of electricity generated from coal in the nation would be superfluous. Promoting efficient energy usage is a good reason for pricing carbon. Greens and other activists tend to condemn those who question the investment in renewable energy at the expense of other initiatives as climate science deniers. In cutting carbon, the best solutions are those that do the job cost-efficiently. High-cost token measures will destroy public support for real solutions.