Climate change and environment policy


PDC members have been working on a new energy and environment policy. This replaces existing energy and environment material. The existing energy policy is extremely transparent and received good feedback at the last election. However, transparency can sometimes be a problem - the policy identifies technology and costs and much of the specifics of it are in danger of going out of date.

Accordingly, a new (and hopefully future-proof) energy policy is needed. This version covers energy and also draws in the old environment policy - the line separating the two policy areas has become largely non-existent and separating them no longer makes sense.

The main elements are:

  • Providing a national feed-in tariff scheme to sponsor renewable power. The intent is to transfer from a monopoly-based, dirty energy grid to community oriented, clean energy grid.
  • Improving land use through constructive engagement with farmers.
  • Expanding national parks and protecting biodiversity.

As ever, feedback is good.


The energy policy seems a little behind the times to me. The way the market is developing, incumbents are shooting themselves in the feet, trying to stop change or at least slow it down to reduce their losses. Unfortunately, they’re about to hit a wall.

Prices of photovoltaics and storage are coming down so fast that, soon enough, going off-grid will become cost-effective, even in cities. Well within a decade, that will start happening. The more the incumbents alienate their customers by price-gouging, the sooner it will come about.

In that environment, the role of the energy network is to balance inputs from multiple small generators and make best use of distributed storage. For government, the role is to encourage investment in generation and storage, by what are currently passive consumers.

Giles Parkinson at RenewEconomy will probably be able to explain it more coherently.

I live in a coal mining area. The thought that most of the remaining coal will have to be left in the ground is incomprehensible to most of my neighbours. When the realisation hits, it will be met with fear and hostility. We need policy to allay those fears and emphasise the jobs in creating and maintaining the distributed power
generation and storage infrastructure of the future.

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Agree on everything. Renewables are actually far more high-employing than other forms of power, including coal.

PV has already crossed the threshold to cheapest power source in some countries. However, baseload power can’t be wholly met from rooftop PV. A short sharp period of stimulated investment will get renewables at 40-50% of baseload at which point the tech will get cheaper through mass-production, and coal will start to lose its economies of scale and fall behind. Parity is getting closer - it just needs a kickalong.

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What’s cost-effective depends on which costs are incorporated in the equation. Yes, there are problems with PV on its own, but PV plus storage could conceivably provide baseload power. PV plus wind plus hydro, etc. are already price-competitive, particularly if environmental and health costs are factored in. Our problem is that we’ve swallowed the Conservative hook and tend to think only in fundamental market terms.

On a policy for residential customers, we need to be a bit less specific. Among others we should address:

  • incentives to invest in both generation (panels, windmills, bicycles, whatever) and storage;
  • proscription of disincentives by incumbents (and/or incentives not to go off-grid);
  • development of the grid to most effectively exploit distributed generation and storage (“smart grid”);
  • though it might be a red rag to a bull: mandating public ownership of the grid.

I was pondering the ‘no new coal mines’ thing and I think you’re right that its a bit heavy. What might be better is to have a coal exports levy which we set at a rising rate. It will still curb coal exports over time, but less prescriptively and with money raised to fund the rest of the policy.

I’ll extend the PV part to cover storage too.

What ‘disincentives by incumbents’ are you thinking of?

I don’t know whether we can realistically sugar-coat the necessity to leave most of the remaining coal in the ground. In a coal-mining community, the thought is alarming, but honesty will probably work best:
this is what’s happening;
this is why;
we can’t stop it;
if not mining, what would your region be good at?
this is what we’ll do to help.

Worldwide, incumbents have been trying any disincentives they can think of. Locally, it’s typified by increasing network connection charges, so reducing consumption isn’t as attractive. In other parts, power-bill surcharges for premises with solar panels. I’ve heard it referred to as “air-con good, solar bad” (air-conditioning increases consumption, and thus power industry profits, whereas solar panels decrease consumption from the grid, reducing those profits). Some governments even want to tax panels:

I agree that our policy should call for retaining distribution and transmission assets in public ownership. In fact, we should renationalise the Victorian network. Assuming that storage will never be super-cheap, the network will probably be the most cost effective way to cope with intermittency from renewable generation, and instead of being a cash cow/de facto tax access needs to be kept cheap (at least, cheaper than storage). Ideally, the revenue from carbon pricing would be used to make the network free to domestic customers who are reasonably frugal, with surcharges for heavy users.

Should we spell out what we want in the way of carbon pricing? The ‘existing’ model might not be around for much longer. What about the following approach.
The Climate Change Commission would have the job of drawing up a 30 year carbon budget setting out a path to a zero emissions economy. Each year, the carbon budget gets updated and the CCC publishes a recommended cap for that year’s emissions, based on Australia doing its ‘fair share’ of the global effort against climate change. To enforce the cap, the ATO runs a monthly auction of CO2 equivalent emission permits. The permits are non-transferable, but if the local carbon price gets too high compared to a trade weighted international price, then the Govt. can buy permits offshore and onsell them until the local price drops back into line. Or the Govt. could just reject the CCC recommendation and allow a higher cap, leading to a ‘carbon deficit’ for that year.

Cost/benefit calculation of storage is complex. For example, storage distributed throughout the network can be charged during times of low demand and discharged when demand is high. The result is a truncating of load peaks. The justification for “gold-plating”, so the network can handle high peaks, evaporates. Distributed storage makes the network more resilient; a short-lived line failure need not lead to a blackout, for example. It can also negate any need for spinning reserves and fast-startup generation, like gas-fired turbines. The efficiencies are obvious, as are the environmental benefits.

This only works if the storage is connected to the network and can be controlled by the network operators. In other words, policy needs to not only encourage consumers to invest in generation and storage, but to remain connected to the grid. Short-sighted incumbents are currently working for the opposite.

For motivated prosumers, costs are already low enough in some markets to make defecting from the grid attractive. That trend is only going to get worse for incumbents.

Feedback has been received from a renewable energy business owner about this policy. He says we should try not to be too different or radical. The biggest obstacle for him and others like him is the constant unpredictable changes in renewable policy (witness the on-again off-again status of the renewable energy target and clean energy finance corp, the rapid change from carbon tax to European ETS to direct action to nothing, the “solar-coaster” situation with state tariffs). So rather than us saying: we will change everything, its better if we say: we will use the existing mechanisms (however imperfect they are) and accelerate them. Also, he thinks some of the tech we identify in our tariff plan is not yet commercially viable.

The upshot is, we should limit the tariff to solar (which is commercially available) and use those tariffs as a support for the renewable energy target rather than a replacement. I’ve made this change.

There’s also some text included now to cover the storage question. Tariffs should, in general, encourage people to stay grid-connected, since you get zilch from them unless you’re actually feeding the grid.

What is the case for re-nationalizing the grid? it sounds a bit like the kind of abrupt change that keeps tripping the renewable industry over. it would be expensive too, for a measure that doesn’t directly reduce emissions.

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“What is the case for re-nationalizing the grid?” Now there’s a question.

To my mind the grid is not only a natural monopoly, but a strategic asset. I couldn’t begin to put a number on its value in defence, economic and social terms. Our society needs the grid to be under public control. The grid is also a source of ongoing revenue. Privatisation impoverishes the future for a short-term money hit.

First things first; prevent any more harm. Oppose privatisation.

Edit: Just read a cogent phrase at “reclaiming the Commons”. Sounds like a rallying cry to me.

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My view is that the old 1950s debates about whether governments or corporations should control centralised energy infrastructure is going to be resolved by progress. And the answer will be neither of them. Energy will be generated, stored and owned in the community and the grid will decentralise. This is where technology and progress is taking us. We should accelerate that and not fight it.

I urge interested folks to come to the pdc meeting tonight as this is the last chance to iron out this policy before congress.

Depends on what you mean by “infrastructure”. For mine, the “infrastructure” at issue is the interconnects. Connecting distributed generation and storage, and controlling the flows between, looks like being the only remaining natural monopoly. How do you see progress resolving ownership of the grid (generation and storage excluded)?

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It’s a very interesting question. Generation and storage is hard to exclude because its the heart of the issue. A big break-through is just being made now which will greatly cut the price of solar storage and ‘tip’ the economic balance in favour of disconnecting from the grid altogether. The shift to a ‘prosumers’ model will be accelerated by the foolish ‘gold plating’ of centralised infrastructure, which will lead to price increases leading to grid defections leading to further price increases and more defections and so on. If the government abolishes the carbon tax that will also push grid defections among people who object to the way the coal-backers have behaved.

There will be more demand for forms of technology that help communities to control power flows in small areas, but that will be something of a local/municipal issue and the need for large pylons and movement of power over great distances will disappear. Throw in more energy efficiency and the influx of wind and other power sources which require their own infrastructure and the result is obsolescence for traditional power distribution networks and stranded assets all over the place. Some pieces will remain necessary, but it’s hard to know which ones and it’s certainly not a great time to be purchasing those types of assets.

The private owners of such assets will soon start to rent-seek if they’re not already doing so. That should be resisted, obviously. Once the death spiral is underway it might become worthwhile for state and local governments to snatch back some assets on the cheap. By then, we might have more notion about which parts of the old centralised grid infrastructure are really essential to preserve.

[quote=“MarkG, post:13, topic:148”]
Generation and storage is hard to exclude
[/quote]On the other hand, lumping them in with reticulation is probably a mistake.

What part of the reticulation network could a prosumer own? What good would it do them?

For example, I live on the land. I nominally own the poles and wires from my house to the edge of my property. Until a decade or so ago, the public utility maintained the infrastructure on my land (checking the condition of poles, trimming vegetation, etc). Then we all got notices that the responsibility was now ours. None of us had the slightest idea what to do. It took a couple of years for the (by then) semi-privatised utilities to make necessary information available. They never quite managed to get that right (the information was outdated or just wrong). After a few deaths and the occasional bush fire from fallen lines, they’ve quietly resumed maintaining lines on private land (as a “free service”). I own part of the reticulation network, but what good does it do me?

A policy which does not differentiate between generation and reticulation will fail. I’d argue that we should consider further differentiation between generation and storage, transmission and monitoring/control.

For an individual, grid defection may be attractive. For society and the economy, I’d say it’s a negative. Unfortunately, incumbents in their death throes are driving defection. We need a policy that motivates participation in the common good that is the grid.

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There’s just so much ill-will directed at power utilities and the government that the next few years will be a kind of perfect storm for grid defections no matter what.

I think committing up front to buying all the poles and wires back would be to overspend on declining assets. The gold plating fiasco is a salutary lesson in over-committing without looking forward. We could possibly include an adaptive instrument in the policy - like say a ‘grid management fund’ which would be used to address emerging challenges around reticulation. Experts would run the fund and oversee critical asset buy-backs and interconnection of new mass-scale renewables as well as more prosaic things like information distribution.

I’m not convinced about the virtue of resisting the shift off-grid. To be stuck with poles and wires is to be at the mercy of people who’ve demonstrated again and again that they can’t be depended on. Horror stories like your own are not unusual and not limited to states with privatized assets.

Note the new Indian PM is skipping over more reticulation in favour of a solar panel on every house. If he succeeds the mass production will see costs for solar & storage fall staggeringly, and not just in India.

Is it a case of resisting a trend or is it looking for the best outcome? Standalone systems are fine for rugged individualists who are prepared to accept the downsides, but most of us want more reliability and flexibility.

For example, if your isolated off-grid system goes down, you’re without power. If you’re connected to a network of systems, you can draw on their resources. The price of being connected is that others will draw on your resources as necessary. In the final analysis, you lose a little freedom and gain a lot of reliability.

In the case of India, they’re going from no power to isolated systems. Would they be better with interconnections?

Of course, if the grid goes down, you’re also screwed (unless you have storage and a suitably tolerant inverter).

Have a think about the target market for these Indian solar panels. My guess is that Indian households without a grid connection, are probably in a slum or a rural village.

Further, Indian energy usage is only set to rise - as far as I can tell they’re limited by generation capacity as it is.

So whichever way you slice it, adding distributed generation wins there…

[quote=“alexjago, post:17, topic:148”]
Of course, if the grid goes down, you’re also screwed (unless you have storage and a suitably tolerant inverter).[/quote]
All things are possible. For water and sewerage, I live “off the grid”. That gives me a perspective that’s perhaps a little less romantic than some. From my perspective, isolated systems are less reliable than interconnected systems.

A network of interconnected distributed generation and storage should be more robust and reliable than isolated systems or the traditional centralised generation model.

[quote=“alexjago, post:17, topic:148”]Further, Indian energy usage is only set to rise - as far as I can tell they’re limited by generation capacity as it is.[/quote]As I understand it, India has a lot of coal. They could conceivably generate all the energy they need. India doesn’t have poles and wires. The solar panels are intended to get around the lack of reticulation infrastructure.

[quote=“alexjago, post:17, topic:148”]So whichever way you slice it, adding distributed generation wins there…
[/quote]Agreed. I think Mark’s question is about the value of the interconnects.

I wasn’t saying Australia should copy India, only that India’s policy will cheapen the tech and bring closer the crossover point where solar becomes more economical than traditional grid connections. That moment is already near in Australia thanks to the gold plating of the last few years. For my part I will be planning my defection the moment carbon pricing is gone.

For what it’s worth the policy does encourage people to stay connected - that’s one of the effects of feed-in tariffs. We could provide explicit support to reticulation in the policy though- possibly something like:

  • Provide $3 billion to support grid upgrade priorities including infrastructure improvements, critical asset purchases and interconnection/storage for new mass-scale renewables.

I’d support an amendment of that kind if someone wanted to bring it up in Congress. The key is nimbleness - providing support for reticulation in a way that contains the cost by spending only where needed and letting the priorities reflect pressures on the ground.

Putting blanket renationalisation into an environment policy plays into the hands of people who say environmentalism is just a vehicle for socialism. Also many traditional assets will soon be stranded and buying them now will just socialise the losses. So I would probably vote against that. But I’m only one vote and I hope everyone will be there at Congress with their ideas.

[quote=“MarkG, post:19, topic:148”]… many traditional assets will soon be stranded …[/quote]Things like fossil-fuelled generators and coal mines, probably. Which interconnection assets do you see being stranded?

An interesting clip from the Rocky Mountains Institute gives some insight into the value of linking power generators together.

All generators fail. Interconnection moderates the consequences.