Sections

Services

Information

UK United Kingdom

Like chalk and queso: Australia and Spain’s energy profiles aren’t the same

Prime Minister Julia Gillard last week used the example of Spain to indicate how Australia’s energy mix could be transformed. The potential for this transformation is nothing more than wishful thinking…

Winds of change: Julia Gillard’s comparison is politically convenient, but doesn’t make sense. AAP

Prime Minister Julia Gillard last week used the example of Spain to indicate how Australia’s energy mix could be transformed.

The potential for this transformation is nothing more than wishful thinking. Her prediction overlooks the differences between Australia’s and Spain’s energy systems and the viability of future options.

Some commentators have criticised Gillard for comparing Australia with an economically-devastated country.

But that Spain is in recession is not the point. Gillard’s commitment to the expansion of Australia’s renewable energy sector is commendable. But it ignores the realities of Australia’s existing energy system.

Australia is one of the world’s largest producers and exporters of energy. It’s the world’s largest coal exporter, and is a significant exporter of natural gas.

Australia’s economy also relies on revenues generated by exploitation of other commodities, such as iron ore and uranium. Australia is also the largest exporter of lead and zinc and a significant exporter of copper, nickel, gold and many other mineral commodities. The production of these commodities is energy-intensive.

Meanwhile, Spain is an energy-poor country, which, like Japan or Germany, is heavily reliant on imports of fossil fuels. According to European Commission data, Spain has a 77.4% energy import dependency. Such is the extent of dependence on fossil fuel imports that domestic production is mainly related to nuclear energy and renewables.

According to BP, in 2010, 14.7% of Spain’s energy was generated from renewable sources. In terms of total generating capacity, Spain’s renewable sector is behind only the US and Germany.

Meanwhile, in Australia the sector is in its infancy, with only 1.3% of energy generated from renewable sources. The figure increases to 4.1% if hydroelectricity is included.

Certainly, Australia has much potential to expand its renewable sector. Without doubt, the share of renewables will increase in Australia’s energy mix over the next few decades, possibly coinciding with the Federal Government’s Mandatory Renewable Energy Target.

But following the example of Spain would amount to political and economic suicide for the “lucky country”.

In the energy market, more than in any other market, relative prices matter. Energy transitions are very slow affairs and fossil fuels have no cost-competitive alternatives on a global scale.

It will take at least two decades before this may be a possibility. Australia has ample supplies of cheap fossil fuels. Spain has none.

Energy security also matters. Australia is one of the world’s largest energy exporters, supplying mainly Asian markets with its fossil fuels.

Spain is in global top ten of oil and natural gas importers. It largely relies on imports from the Middle East, Africa and the Former Soviet Union. These regions have been unstable in recent years.

Comparing two countries with entirely different energy system characteristics makes no sense.

For Spain, an energy-poor country where security of fossil fuel supplies is a matter of national security, renewable energy is a viable and perfectly rational option.

For Australia, for the time being, renewable energy makes no economic or political sense. A major commitment to renewables would increase the cost of living and alienate some of the country’s largest and most lucrative businesses.

The reality of this situation implies that Australia cannot be a leader in renewable energy.

Regardless of the political commitment it will always remain a laggard. It will never be able to compete with energy-poor countries such as Germany, Spain or Japan.

Nor should it. There is no international expectation or some broader moral imperative for Australia to wholeheartedly commit to renewable energy.

Australia is a reliable supplier of fossil fuels to the global energy markets. Unlike many other countries, it rarely uses its energy riches to gain leverage in other arenas. This has been recognised time and again by many Asian leaders.

In terms of future comparisons, the Prime Minister and other policy-makers should draw comparisons between Australia and Canada or Russia.

These latter two countries share similar energy characteristics with Australia. They are both geographically vast countries and rich in fossil fuels. They are large carbon-intensive economies and energy exporters.

Julia Gillard should avoid drawing comparisons that don’t stand up to scrutiny.

Join the conversation

15 Comments sorted by

  1. Paul Richards
    Paul Richards is a Friend of The Conversation.

    You make valid points Vlado.
    I might add politicians are always going be populist and our responsibility is awareness of the areas that fall outside their frame of reference.
    As caretakers of these resource, our responsibility lies clearly with what happens to the energy resources after they leave our shores.

    There is always a risk in using simplistic examples will offend the aware, however taken in context of Julia Gillard's audience the example worked.It's those who critic it with bias that can damage the message so your warning is appropriate

    report
  2. Drew Ringsmuth

    PhD Candidate in Biophysics at University of Queensland

    As I understand it, you are arguing here for continued complacency in Australia, about our energy system, in the following way:
    1) Australia has lots of fossil fuels and lots of money
    2) Australia needs lots of fossil fuels but not at rates approaching our production rates
    3) Australia got lots of its money from selling the production/consumption surplus to other countries, which makes them happy too.
    --------------------------------------
    Therefore, 4) Australia should not attempt to transition…

    Read more
  3. Byron Smith
    Byron Smith is a Friend of The Conversation.

    PhD candidate in Christian Ethics at University of Edinburgh

    "There is no international expectation or some broader moral imperative for Australia to wholeheartedly commit to renewable energy."

    According to the recent report published by the independent Climate Commission titled "The Critical Decade", human emissions must be kept "not more than 1 trillion tonnes of CO2 between 2000 and 2050 to have a probability of about 75% of limiting temperature rise to 2ºC or less". (p. 53) And according to the study that they cite for this figure (Meinshausen et al…

    Read more
  4. Paula Chavez

    activist

    I hope that this distinguished audience has had a chance to read Zero Carbon Australia Stationary Energy Plan by Beyond Zero Emissions (BZE). BZE has formed a strategic research partnership with the University of Melbourne Energy Research Institute and published the major research work, the Zero Carbon Australia Plan. Please go to http://beyondzeroemissions.org/ to download a copy. The Zero Carbon Australia (ZCA) project is a detailed roadmap for the transformation to a decarbonised Australian economy in ten years. With regard to the approved coal seam plants that are in the news, that is the wrong direction. There is no point in having targets and goals that only solve half the problem. Coal seam energy still emits carbon. Investment in another dirty energy generation plant does not solve the problem. Please take the time to visit http://beyondzeroemissions.org. Hopefully, you will decide to become involved in the right solution - zero carbon emissions in ten years.

    report
  5. Ken Fabian

    Mr

    I think the author is neglecting the costs that will arise from global failure to haul back emissions, as if it's optional. Aligning Australia in opposition to serious efforts to do so will only help to delay global action.

    The issue is especially problematical in that the effects from previous emissions have decades yet to accumulate and are effectively irreversible - a commitment that can't be defaulted on. Combined with atmospheric aerosols that currently mask much of the impacts to date that…

    Read more
  6. Nicholas Aberle

    Shouldn't we be taking this opportunity - while we can easily dig stuff out of the ground and sell it at handsome prices - to be investing in a future that won't rely on digging stuff out of the ground?

    Some of it will run out in the not too distant future, and then what will we be left with? Any suggestions in response to that, Dr Vivoda?

    report
  7. Vlado Vivoda

    Research Fellow, Griffith Asia Institute at Griffith University

    Nicholas, I wholeheartedly agree that we should be investing the proceeds earned from mineral exploitation into diversification of our economy. In fact, we take too little of the proceeds and do not reinvest them wisely. This warning goes back to Bob Gregory's 1976 warning about the dangers of over-reliance on the resources sector (the so called 'Gregory thesis', or more commonly referred to as the Dutch Disease).

    Let's be realistic. The world is not going to shift away from fossil fuels any time…

    Read more
    1. Byron Smith
      Byron Smith is a Friend of The Conversation.

      PhD candidate in Christian Ethics at University of Edinburgh

      In reply to Vlado Vivoda

      "Let's be realistic. The world is not going to shift away from fossil fuels any time soon, at least not in the next two decades."
      When faced with the political impossibility of shifting away from fossil fuels and the ecological impossibility of sustaining present levels of consumption (including fossil fuel use) for much longer, I know which impossibility I am going to focus on changing.

      "a debate in this country on costs and benefits of mitigation vs adaptation policy"
      Are there any serious commentators who now say that we need something other than serious mitigation *and* serious adaptation? The costs of adaptation alone are astronomical. Have you followed any of the recent research on what a 4ºC+ world might look like?

      report
    2. Byron Smith
      Byron Smith is a Friend of The Conversation.

      PhD candidate in Christian Ethics at University of Edinburgh

      In reply to Vlado Vivoda

      "This makes us a responsible stakeholder in international affairs."
      We may be more reasonable than Russia or Venezuela, but our record on contributing to international action on climate change is considerably more patchy and I don't think (yet?) merits us being called a responsibility stakeholder in international affairs.

      "we are in no position to be leaders in renewable energy, nor we should be. Let's stick to what we are good at and what the world needs us for. [...] once technology is improved…

      Read more
  8. Nicholas Aberle

    I'm with Byron.

    Vlado, you have a very narrow (and, I think, old-fashioned) view of what constitutes a "responsible stakeholder in international affairs".

    I fear, though, that too many political leaders share your lack of vision and ambition for a better future, instead, rather glumly hoping that the status quo should be maintained indefinitely, despite all indicators pointing to business-as-usual scenarios ramming us up against a host of accepted planetary boundaries.

    We will just put you in the box of "its too hard to try, so lets just wait and see where we end up". Disappointing.

    report
  9. Vlado Vivoda

    Research Fellow, Griffith Asia Institute at Griffith University

    "Our cost of living is being kept artificially low by the fossil fuel industry". What planet do you live on? We are, in fact, probably the most expensive country to live in at the moment. I attest to that from personal travel experience this year. We have four cities in the top 20 of the world's most expensive cities to live in. My thinking may be old-fashioned, but it is realistic. I am certainly in favour of changes, but any follower of politics would know that massive policy shifts take time and…

    Read more
    1. Mark Duffett

      logged in via Facebook

      In reply to Vlado Vivoda

      Maybe Byron means that our (meaning the first world generally) _standard_ of living is being kept artificially _high_ by fossil fuels' avoidance of externalities?

      report
    2. Byron Smith
      Byron Smith is a Friend of The Conversation.

      PhD candidate in Christian Ethics at University of Edinburgh

      In reply to Mark Duffett

      That too, but I do mean that the cost of living in Australia (high though it is compared to most other places) is suppressed by not having to include all externalities from the combustion of fossil fuels. A study in the New York Academy of Sciences earlier this year found that the immediate externalities (ignoring all climate effects) of coal combustion in the US amounted to between a third and half a trillion dollars annually. Those costs (as well the potentially even larger climate costs) are excluded…

      Read more
  10. Sue Morrison

    Environmental management student, UNE

    It is ridiculous to suggest "There is no international expectation or some broader moral imperative for Australia to wholeheartedly commit to renewable energy" when:
    1) Renewable energy is a vital component of any credible emissions reduction strategy and energy security policy;
    2) Australia is one of 149 signatories to the 2009 Statute of the International Renewable Energy Agency (IRENA), which aims to promote ‘widespread and increased adoption and the sustainable use of all forms of renewable energy’ while recognising the serious negative health implications of fossil fuel use.

    report