NSW renewables plan marks a major new moment for climate action in Australia

Posted by on November 10, 2020 in News

NSW renewables plan marks a major new moment for climate action in Australia

Renew Economy
Ketan Joshi
10 November 2020 –

That the states of Australia are stepping well ahead of the federal government on climate action is no mystery. As the Prime Minister Scott Morrison and the federal energy and “emissions reductions” minister Angus Taylor stall, distract and obfuscate, the problems get deeper. Yesterday, federal MP Craig Kelly issued an anxious pre-emptive strike to the federal leadership, presumably after seeing China, South Korea, Japan and (probably) the US get on track to net zero by 2050. “Net zero would cause a lot of pain to a lot of people in a lot of electorates,” Kelly told Guardian Australia, definitely referring to very specific people in very specific electorates.

As this unending, self-repeating and utterly exhausting federal pantomime continues, every single state in the country has established a 2050 net zero emissions reduction target, and to varying degrees, each have begun the actual policy and practical steps to create this change on a scale that gets the country where it needs to be in the next few decades. The most fascinating element of this state-level climate action that has spread across the country is the political diversity. The conservative Liberal party leads New South Wales, South Australia and Tasmania. The centre-left Labor party holds the Australian Capital Territory, the Northern Territory, Queensland, Victoria and Western Australia. And, fascinatingly, we do not see a political divide among these states when it comes to hard decisions on climate action.

The weird quad-partisan world of state climate politics

Yesterday, New South Wales’ state government released a detailed and relatively beefy ‘roadmap‘ for new energy infrastructure over the coming decades. There is plenty to dig into, but it’s important first to note how weird this moment was. This was essentially a climate policy for guiding investment in clean energy that was supported by:

– The NSW Liberal party (centre-right)

– The NSW Nationals party (hard right) (“The stimulus the Renewable Energy Zones will provide to regional communities will unlock over 9,000 new jobs and will be a huge boost to farmers and land owners”)

– The NSW Greens (“This is BIG! 🙌🏽”)

Support and interest came from a very wide range of the big climate groups and people in Australia, like the Australian Conservation Foundation, the Climate Council, WWF Australia, The Australia Institute, the Smart Energy Council, Atlassian CEO and renewable investor Mike Cannon-Brookes, Environment Victoria, GetUp!, the Clean Energy Council, Beyond Zero Emissions and quite a few others. It’s a big, endless list. The sole exception to this was One Nation NSW, whose NSW MLC Mark Latham, who said the policy was a “massive scandal of rent seekers, perverted markets and Liberal factional politics”, though One Nation’s recent collapse in QLD polls suggests they can be reasonably dismissed.

By my own reckoning, I don’t think there has ever been a major climate policy of this scale that’s been supported by four separate groups: the hard right, the centre-right, the centre-left and the hard left. To some degree, the answer lies not in a sudden well of quad-partisan good feeling, but rather in the simple fact that the transition from fossil fuels to renewable energy is already set in motion, and what is most urgently needed now is planning, leadership and strong investment signals (as opposed to the subsidies, regulations and tax incentives that put this change in motion in the 2010s). “The electricity market is not designed for transformational change”, the NSW government writes, burying criticism of the lack of federal leadership in some heavy euphemisms.

It is clear they are doing what must be done, but that is not the first question that comes to mind when considering how to clap. The question is how far beyond ‘business as usual’ this goes. Is this is the bare minimum to maintain a stable and affordable grid, or is there ambition driving the need to rapidly reduce emissions in Australia? Back in December 2019, I calculated that the state’s 30% emissions reductions by 2030 target would be met purely by the natural rate of replacement in the grid: that’s ‘business as usual’ presented as active climate action.

Is this plan the same?

Exactly how ambitious is this plan?

The ‘roadmap’ comprises a collection of investment intentions, targeting regional NSW, and focusing on energy storage, ‘renewable energy zones’ (REZ) (in which wind and solar growth are concentrated and optimised), grid reliability and cheaper provision of electricity. An ‘Electricity Infrastructure Investment Safeguard’ provides investor certainty in the provision of REZs, deep storage and other integration technologies.

The report shies away from language around climate, and talk mostly about jobs, regional benefits, economic benefits and industry, but explicitly highlights the fact that the best, cheapest pathway for new energy technologies is, inarguably, renewable energy. Green steel, green aluminium, hydrogen and environmental horticulture are all major selling points in these document. It is an aspirational vision, but these infrastructure plans are also tied to the planned shutdowns of NSW’s massive, dominating coal-fired power stations over the coming two decades:

That NSW is engaging in a whole of system plan is an extremely good thing. The most significant danger of federal inaction on climate change is a vacuum of confusion, mixed-messages and non-policy, in which the investments in the replacements for rapidly-shutting-down coal and gas assets do not occur, leaving the grid in chaos (and plenty of opportunity to blame renewables). The subtext of this report is, of course, the famous intervention of the federal government in NSW as the Liddell coal-fired power stations reaches its old age. First, Taylor tried to extend it life, and after accepting defeat, threatened to build a gas-fired power station. If that moment was perfectly indicative of anything, it’s the direct and outright dangers of federal mismanagement of grid investment.

Buried in the back end of the ‘detailed report’ are a range of scenarios. Their own ‘Infrastructure safeguard’ (careful wording, again) scenario is compared to the ‘imperfect foresight’ scenario, in which investment decisions are frazzled, delayed and inefficient (“This is similar to the responses observed after the closures of Northern in South Australia and Hazelwood in Victoria”). Between this frazzled scenario and the NSW plan, from 2030 onwards a whopping 10 to 16 gigawatts of new zero carbon capacity will be added:

It’s clear, however, from this scenario chart that no coal or gas-fired power stations will be shutting down early due to this plan. The Australian Energy Market Operator’s ‘Integrated System Plan’ models a range of scenarios, and in the most ambitious ‘step change’ scenario, coal actually shuts down earlier than the scheduled closure dates to make room for cheap, effective renewables. The state reaches zero coal capacity by the year 2036, instead of sitting at 1.3 gigawatts of coal output in the year 2042:

What’s clear from this is that NSW’s “Imperfect” scenario roughly matches AEMO’s “Slow change”, and their “Perfect foresight” scenario matches AEMO’s “Central”. Most of the reports comparison occur between the worst case ‘imperfect’ scenario and the government’s plan, and there we can generate a rough proxy by doing the same comparison for AEMO’s plan. Comparing all the scenarios to the worst case, we see less coal and more zero carbon options. But each scenario also has varying quantities of this trend:

It isn’t immediately clear exactly what happens to NSW coal-fired power stations in the state government’s new plan. It is clear their modelling shows a large amount of new renewables with clear investment incentives, central planning, and big new dispatchable things. It is clear that the amount of new renewables they’re targeting are in the upper end of AEMO’s scenarios, but not at the ‘top’ end.

The NSW plan certainly avoids a substantial quantity of greenhouse gas emissions. Figure 18 in their report suggests their plan results in a total reduction of 210 MTCO2-e between 2020 and 2040. But I suspect there is room for more. We can say for sure that there is plenty of unrealised potential in figuring out how the early shutdown of coal-fired power stations could win the same type of broad spectrum support that this ‘renewable growth management’ style plan has quickly garnered. Then, of course, there is the issue of the quantity of coal that NSW mines and sells overseas, which remains very large, alongside the rapidly expanding extraction of fossil gas. These aren’t distant challenges. They are among those we’ll face in the next decade.

This plan is a good step towards managing the challenge of Australia’s federal government, and their nasty habit of getting involved in fantasy football replacements for dying coal-fired power stations. This is a good thing, and all other states have plenty to learn from this approach. The options for even deeper decarbonisation will be even more relevant, as we figure out how to ramp up this change to the pace required,