The irrationality of the Coalition's obsession with coal and gas

The Coalition tells us more than anyone how important cheap power will be for Australia’s economic recovery. They are right.

Most economic activity depends on electricity. All other things being equal, a business that has access to cheaper power will have an advantage over a business that does not.

Today, renewables are the cheapest sources of power. Despite this, the Government have announced plans to build a gas-fired power plant, invested money in carbon capture and storage, are expanding the Snowy Hydro Electric Scheme, and are investing money to produce hydrogen from coal. All of these actions will increase power prices, and harm Australia’s economy.

Using expensive power sources to lower power prices

The Government is planning to build a gas-fired power plant to replace the Liddell Power Station which is due to close in 2023. Angus Taylor says this will “protect families and businesses against the risk of price rises” such as that which occurred when the Hazelwood Power Station closed in 2017.

Nothing is further from the truth. It was well documented at the time that power prices in Victoria increased following the closure of Hazelwood Power Station because the proportion of gas-derived power in the energy mix increased.

Institutional corruption is keeping the coal fires burning

Corruption at a Government level is preventing the switch to clean energy and the demise of the coal industry.

When the Hazelwood Power Station, which burns coal, closed, gas-fired plants increased their energy production to compensate for the energy production that was lost. Power derived from gas is more expensive than that derived from coal, wind or the sun. The increase of gas-derived power in the mix caused power prices in Victoria to rise rapidly.

Angus Taylor is trying to solve a problem caused by too much gas by using more gas.

Destroying energy to create energy

Federal Liberal Member of Parliament, Craig Kelly, described Snowy 2.0 as an "energy destroyer". Pumped hydro, the type of energy that will be generated by Snowy 2.0, works by pumping water uphill at times of low power demand. That water is allowed to flow downhill through turbines to generate power when power demand is higher. More power is required to pump the water uphill than is generated when the water flows downhill. Therefore, there is an overall loss of energy.

This is why Craig Kelly calls Snowy 2.0 an "energy destroyer". The price of power generated by Snowy 2.0 must be inflated to cover the cost of the power that is lost. Modelling that was posted on Snowy Hydro's own website confirms that Snowy 2.0 will increase power prices.

Coalition's gas-fired recovery a benefit to its donors

Motives behind the Coalition's intention to build a gas-fired power plant appear to be driven by ties to fossil fuel power companies.

Adding costs to reduce costs

Attempts at capture and storage involve retrieving carbon dioxide before it escapes to the atmosphere. This will be useful in some industrial applications, however, the Government is spending money on combining carbon capture and storage with power stations that use fossil fuels.

As already mentioned, renewable sources of power are cheaper than power derived from fossil fuels. Even if carbon capture and storage can be done for free or cheaply, power that is produced by burning fossil fuels combined with carbon capture and storage will never be cheaper than power generated from renewable sources.

In reality, carbon capture and storage do cost money. Using carbon capture and storage with the burning of fossil fuels will make a relatively expensive source of power even more expensive.

The Government has invested money in producing hydrogen from brown coal. As with carbon capture and storage, even if someone discovers how to convert the energy stored in coal to hydrogen for free, this strategy will never be commercially viable. In a perfect system that combines coal with steam to form hydrogen, the amount of energy that is lost is about 80 per cent.

The 'gas-led recovery' isn't economically or environmentally prudent

If Scott Morrison ever went back to his old job of promoting tourism and needed to ramp up the travel industry, he would put his money on blimps.

As this applies to an ideal system, this is the minimum amount of energy that can be lost when using coal to produce hydrogen. This is not a technical problem that can be overcome. Coal-fired power plants are usually about 40 per cent efficient.

For hydrogen produced from coal to be economically viable, a hydrogen gas turbine, or hydrogen fuel cell, it would need generate more power than it receives. This is a physical impossibility. Therefore, no amount of improvement in the way hydrogen fuel cells, or hydrogen gas turbines, work can compensate for the energy that is lost from the hydrogen production process.

Many countries racing to integrate as much renewable energy into their grids as possible, as fast as possible, to exploit the economic advantages of having access to cheap power. In Australia, we have a Government that is not just standing still but, by intervening to make power prices more expensive, is running in the opposite direction.

This will cost jobs, lower wages and harm our standards of living.