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Carbon tax dumped: how do we get to 100% renewable energy?

The Federal Government has sparked significant debate with the confirmation it intends to move from a fixed carbon price to an emissions trading scheme next year. But where is the description of the long…

It’s hard to imagine a future without fossil fuel, but sound modelling can help. Dave Clarke

The Federal Government has sparked significant debate with the confirmation it intends to move from a fixed carbon price to an emissions trading scheme next year. But where is the description of the long term, low carbon future for Australia? Aside from the 90% renewable energy target proposed by the Greens, the major parties are slim on long-term vision.

International experience suggests that when we start talking about long term futures, it can dramatically shift debate towards a long term vision. It’s particularly important to outline those futures that are most different from the present, so that they can be clearly understood.

The Australian Energy Market Operator (AEMO) recently released a landmark report showing that shifting to 100% renewable electricity is a feasible and affordable option for the Australian National Electricity Market. Coming from the highly conservative body responsible for “keeping the lights on”, this carries a hefty credibility.

The operator’s modelling shows that a 100% renewable power system could be installed for around a 20‑30% increase from present retail electricity prices. In the context of rising fuel prices and mounting pressure to reduce greenhouse emissions, the cost of a 100% renewable power system could be similar to what we would be paying for electricity anyway by around the year 2030.

But a 100% renewable system is very different from the one we currently operate. We currently source only around 10% of Australia’s electricity from renewables.

The energy market operator’s modelling of a 100% renewable future has already significantly shifted the debate within industry. Seen as “crazy talk” only a few years ago, 100% renewable scenarios are now being discussed as genuine and valid options by an increasing number of industry organisations.

But this dramatic mind-shift is at risk of stagnating. The rapid development of renewable energy technologies means results from this modelling will date rapidly. For the 100% renewables option to stay on the table we need to update the modelling regularly. This makes sure our leaders are well informed of all the options, and the market understands all possible futures in which they might be operating.

Familiarity bias and institutional barriers often make it hard to consider alternatives based upon radical changes in technology, and this is particularly prevalent in the electricity industry. Often, the very methods we use limit possible outcomes, potentially ruling out entire technology classes.

This certainly applies in the recent modelling conducted by the electricity operator. The existing models for routine long term planning could not deal with large quantities of wind and photovoltaics. The operator had to develop a whole new model.

When the electricity market operator is making long term projections it has to look beyond the three year political cycle and be guided by hard science. It should consider a range of scenarios in line with Australia’s international commitments to do our “fair share” of limiting global warming to 2°C.

We have to consider and plan for rapid trajectories for emissions reduction as one of a range of futures that may eventuate. This informs our leaders and helps market participants make effective decisions about large investments.

The energy market operator has invested substantial time and effort in developing the modelling tools and methodologies to make this study possible. We should keep using them: the ongoing expense is likely to be very modest in the context of the investment we need to address all the challenges the electricity industry faces.

The modelling is vital to properly understanding the limitations, costs, risks and opportunities of the full range of options on the table. We are, after all, talking about Australia’s energy future. Decisions made now will affect our nation for generations to come.

Beyond modelling, how would we get to this 100% renewable future in reality? Many policy mechanisms are available – we could expand and extend the Renewable Energy Target as suggested by the Greens, or we could ensure stable carbon prices at a sufficiently high level.

Other nations have also applied utility scale feed-in tariffs to great effect, similar to that now being put in place to drive solar development in the ACT.

In the short term debate on the carbon price, let’s not forget about the long term vision. Policy makers have a great opportunity to inexpensively shift debate by asking the electricity market operator to continue modelling 100% renewables scenarios in the years to come.

This is an essential first step to get us there.