Sustainability expert Alan Pears sets out key recovery priorities for a post-Covid economy. Also: the need (or lack thereof) for seasonal storage, and the problem of our ageing data resources.
There is a widening gulf between the Australian government’s economic recovery plan and an ever increasing number of studies. Internationally, the International Energy Agency, United Nations, central banks, investment experts, industry groups, communities and governments have shown that “green” recovery strategies offer the best economic, employment, equity and environmental outcomes. Numerous Australian studies reinforce the local case for such action.
Yet Australia’s government has resisted such solutions. Instead, its strategy continues to be dominated by tax reductions for the wealthy, propping up the fossil fuel industry and ignoring potential to rebuild an equitable, sustainable society.
The government appears to believe that it needsa narrative that differs from Labor and the Greens. It panders to its internal climate deniers and major donors by focusing on incentives (from taxpayers) and promoting fossil gas, rather than pricing carbon emissions and using the revenue to incentivise zero-emission solutions. Instead of setting aggressive targets to focus action, the government claims to be driving technology development and practical action that will allow it to beat the weak 2030 target it has set. Unfortunately, much of this development and action is misdirected.
Thankfully, Australia has relatively independent state and local governments, and they are filling some of the gaps. Progressive businesses, organisations, financiers and communities are also ramping up action. In the meantime, our national leaders continue to undermine Australia’s capacity to build a successful, equitable low carbon economy and society. Ideology and vested interests are powerful forces.
Infrastructure and recovery
At a time when interest rates for government borrowing are close to zero, careful investment in infrastructure that will deliver a long-term return and benefit Australians makes sense. Funding the wrong infrastructure, however, builds public debt, future consumer costs and inequity, and locks in higher future emissions—and failure to recognise some forms of infrastructure means we may not invest in the most beneficial options.
Expanding fossil fuel “infrastructure” serves only to lock in both higher future carbon emissions and higher energy costs. Investment in a new road or poorly designed urban development that increases car dependence for access to services increases long-term community costs and inequity. Differential treatment of options can distort decision-making.
The same is true at non-governmental levels. There is plenty of evidence that businesses and households refuse to invest in energy efficiency, even in improvements that deliver impressive returns in relatively short periods.
An investment in energy efficiency improvement may have a payback period of as little as two or three years, which represents an annual return on investment of 30 per cent or more. This is far above the average long-term return of most investments and the cost of capital, and yet such investments are rejected by businesses and people who are happy to invest in large scale energy supply infrastructure that is far less cost-effective. Subsidies to fossil fuels further distort outcomes.
My recent work on a range of “virtual” solutions across all sectors of the economy has highlighted what seems to be a fundamental change in how we should look at infrastructure investment.
Virtual, connected solutions sidestep conventional business models. People used to drive a car to a video hire shop to hire a DVD, then use a specialised DVD player to watch it. Now they simply download a movie. Many businesspeople used to fly interstate regularly, using
taxis, hotels, buying food, and using meeting spaces – and wasting a lot of time. Now they meet virtually. 3D printers can use much less material and operate in a back room
to replace a factory. A micro-brewery can out-compete a large brewery and its supply chain, combining its activities with a tourism venue to capture a lot of value. Real time tracking of the location and condition of food can slash food waste and costs across the supply chain.
Over half of global steel demand is for buildings and infrastructure, and an eighth for vehicles. Online shopping and telecommuting reduce demand for these. In developed economies, a society-wide increase in automation and virtualisation clearly also presents its own challenges – and opportunities – that influence other aspects of the economy, such as the quantity and types of jobs available. Developing countries, meanwhile, are simply leapfrogging the approaches used by developed countries to deliver services: landline phones, complex energy supply infrastructure, roads and cars struggle to compete.
If we take a long-term system- and service- oriented approach, we see some key recovery priorities:
- Shelter for people that is healthy; affordable over time (not just up front), emits zero carbon, and is resilient to climate change, pandemics and other risks;
- Efficient, zero-emission production of inputs needed to deliver essential and valued services to both community and economy (not just to individual businesses or business sectors);
- Generation of export revenues that create a net climate benefit for Australians and also enhance global net value, including environmental and social value; and
- Smart management of dependence on other countries to maintain national resilience if we respond intelligently to feedback from global consumers and protect ourselves from risks created by other countries acting in their self interest or pursuing their own objectives (that is, the USA and China).
Seasonal energy storage in our revolutionary future?
Energy storage is a tricky issue. It is fundamental to management of the grid
as the proportion of “variable” renewable energy increases. Its economics are sensitive to the gap between high and low prices, its “round trip” efficiency, and its capacity to capture income from value adding services that stabilise the grid during transient events. But more investment in storage means less revenue for each storage operator.
Developers of large pumped hydro schemes and advocates for renewable hydrogen recognise that it will be difficult to compete with batteries, smaller pumped hydro and demand response to capture value from short-duration peaks and troughs in demand. Accordingly, they are focusing increasingly on supporting seasonal variation as their core role. Hydro operators and hydrogen producers want to capture excess low-priced seasonal renewable electricity, then generate during supply shortages when prices are higher.
In light of all this, the above graph from AEMO’s recently published Integrated System Plan is significant. It maps out how a seasonal storage plant might operate.
However, it also highlights – again – that Australian energy policy makers and investors lack focus on the demand side of the energy equation. It is mainly demand side factors that drive the need for autumn top-up, along with heavy drawdown in winter due to limited solar generation, and the need for storage to build up during the summer.
We must therefore ask what activities are contributing to high demand. What potential is there for energy efficiency to reduce the seasonal variation in demand, not just the short-term peaks?
AEMO’s graph highlights a number of possibilities. The major factors underlying seasonal variation are poorly performing buildings, and inefficient heating and cooling equipment. These include thermally disastrous buildings (both residential and commercial), widespread use of resistive electric heating and inefficient air conditioners, inefficient lighting, open shop doors, heat loss from poorly insulated hot water tanks and pipes, unnecessary use of pool filter pumps, inefficient industrial processes and so on.
Addressing these would reduce seasonal variation, along with the need for the seasonal storage and seasonal hydrogen-sourced generation shown in AEMO’s graph. This also means that there is a lot of risk for investors in such storage projects: indeed, governments may need to actively incentivise investment in seasonal storage to reduce investor risk.
But this raises another question: will such incentives end up creating uneconomic storage infrastructure, which will eventually be overtaken by demand-side transformation?
I often get requests for practical, numerical information on aspects of energy use
by appliances, buildings and vehicles (among lots of other things). It is becoming increasingly difficult to find quality data to underpin practical advice. The most recent detailed resource I found on school energy use at the activity level, for example, was dated 2013. The last real-world government tests of new car fuel consumption were carried out prior to 2010.
Some community groups (including Renew) try to provide useful information, and while some resources such as Your Home are helpful, they are also woefully inadequate. This is a serious problem, and governments need to invest in measurement, engagement and communication in user-friendly formats, so people and businesses can be empowered and make informed judgements.
My ten-year-old Australian Greenhouse Calculator, hosted by EPA Victoria, still seems to be the only comprehensive option for households to explore their emissions in any detail from the bottom up. It’s still available, but only until December. This is because it relies on Adobe Flash, which is being phased out across the web. It works with Internet Explorer, and will also work if you actively allow Flash to run on other browsers such as Chrome. It would be great if funding was made available to update it!
For now, the tool is available for use here.
Alan Pears, AM, is one of Australia’s best-regarded sustainability experts.
He is a senior industry fellow at RMIT University, advises a number of industry and community organisations and works as a consultant.
This article was first published in Renew Magazine and republished with permission.