Picture a future where the air is cleaner, the planet isn’t warming so fast and energy is affordable for all. It is possible.
The renewable future
Right now, the rate that technology is developing and the increasing affordability of renewables is at a really exciting stage. There’s wind, solar, hydro, geothermal and other renewables combining with energy storage using batteries, hydro and even the very sci-fi sounding molten salt for solar energy.
The variety of renewables and storage now available is great news. There’s ample evidence to support the idea that through a combination of sources, it is possible to produce reliable, cost-effective energy which doesn’t wreck the planet.
Currently, a lot of renewable energy (about a fifth) in Australia is actually coming from our own homes – that is, rooftop solar. While this can feed back into the grid, larger-scale projects are crucial to increase the amount and diversification of renewable energy production.
There are some large-scale renewable projects already happening in Australia or planned soon. For example, South Australia now hosts the world’s biggest lithium ion battery. Built by Tesla (who we invest in) and headed up by the big personality of Elon Musk, the battery not only increases the security of energy supply, in its first quarter of operation it reduced the state’s cost of energy supply by $33 million.
In early 2018, there are more than a dozen wind farm projects actively underway in Australia, and 21 big solar projects currently under construction. The Clean Energy Regulator has announced that there are now enough projects committed to meet the 2020 Renewable Energy Target.
Renewables will make energy more affordable
The cost of renewable energy has fallen much faster than expected, helping the transition. A 2018 report from the International Renewable Energy Agency says that globally, onshore wind schemes cost on average $0.06 per kilowatt hour (kWh) and the cost of solar PV is $0.10 per kWh. In comparison, the cost of electricity from fossil fuels generally ranges from $0.05 to $0.17 per kWh. Onshore wind and solar PV could reliably deliver energy for as low as $0.03 per kWh by 2020. So it’s not just an environmental decision to turn to renewable energy, but it’s also becoming an economic decision.
Although the cost of generating power in Australia from existing coal stations is currently cheaper than renewable energy (a marginal cost of around $0.04 cents per kWh), these power plants will need to be replaced in the coming years. The cost of building new coal-fired power plants will exceed the cost of renewable energy, so in the long run renewables are the more affordable option.
It’s important to remember that these cost comparisons don’t factor in the additional cost of global warming and pollution caused by fossil fuels. A carbon price of some sort is inevitable as those countries which are implementing the Paris Agreement take action to drive the transition while at the same time penalising those countries which are not. This will weigh the financial scales even further in favour of renewables.
Once set up, Australia has the capacity to produce virtually unlimited energy from solar and wind alone. This will feed both our inter-connected electricity grids as well as decentralised micro-grids. On top of that renewable energy can be used to create alternative sources of emissions free energy such as hydrogen, which can then be used to produce ammonia (for agriculture) and steel, in addition to powering vehicles for use in remote areas.
Renewables are creating more jobs
There are more jobs in renewables now than ever. At least 46 large-scale energy projects were completed last year, which employed about 10,000 people full-time for a year. Rooftop solar installations alone supported a further 3,769 full-time jobs across Australia in 2016-17.
While Australia is acting to meet the 2˚C warming limit set by the Paris Agreement, we need what’s being called a ‘Just Transition’ to deal with the major social and economic changes caused by the shift from fossil fuels to renewables. Companies, investors and governments need to plan ahead to help regions to develop new industries and to help people acquire new skills. The Australian Council of Trade Unions (ACTU) President Ged Kearney explains, “we need to ensure there is Just Transition for workers whose jobs and communities are impacted by the move to a low-emission economy so they can move into good, secure jobs”.
“The union movement has campaigned strongly to ensure that as part of the energy transition, alternative job opportunities are maximised and workers in industries which are changing will not be left worse off and will have work for as long as they want it.”
Australia has quite a strong and skilled manufacturing sector and industry, and many experts say that’s the essential ingredient needed to move to a renewable future. We spoke to Vanessa Petrie, the CEO of Beyond Zero Emissions (BZE) who explained that, “Australia has highly skilled people and we need their skills and experience to transition to new technologies”.
Cleaner and safer technologies and industries offer both new jobs and a more sustainable and healthy environment for the benefit of workers, local communities and broader national, economic and global benefits.
Getting Australia to 100% renewables
It’s interesting to see some local councils leading the way on climate action and the transition to renewables. Vanessa from BZE says that, “it’s really important that the leadership of local governments is properly recognised because they are the closest government to the community”. BZE’s Australian Local Government Climate Review outlines numerous examples of how local governments are driving the uptake of renewables.
The Sunshine Coast Council are Australia’s first local government to generate all their electricity across all their facilities and operations – including admin buildings, aquatic centres, community and performance venues, as well as holiday parks, libraries, art galleries and sporting facilities – from renewable energy at their own dedicated solar farm.
BZE audited every single local government website in Australia and found that over 50% of Australian councils provided the public with information on the issue of climate change. Further, 88% of responding councils were unsatisfied with the federal government’s approach to reducing emissions – with 81% having or intending to set their own corporate targets instead.
In order to get to 100% renewables, some myths need to be busted. Contrary to what the doubters will tell you, Australia doesn’t need new coal for base load. This is a fact confirmed by current coal power generators AGL, Origin and Energy Australia. “What’s important to know is that our understanding of baseload is very different now,” says Vanessa. “We know now that baseload power can be provided by a range of technologies – and South Australia is proof of that.” Read more about common myths about renewables that Australian Ethical’s Ethics Research team have busted here.
Policy is holding renewables back
The political environment in Australia is the main obstacle holding progress back on renewable energy generation. This change needs to come from the federal level of government if Australia is serious about its commitment to the Paris Agreement. The proposed National Energy Guarantee has the potential to fill the current policy vacuum but it needs to include credible Paris-aligned emission reduction targets.
The Australian Council of Social Service (ACOSS) CEO Dr Cassandra Goldie has publicly said that elected leaders need to end the blame-shifting and politicking: “It’s clear we need to transition to modern clean energy in line with our Paris commitment. We must also urgently relieve pressure on people who cannot cope with rising energy prices.”
“Governments must listen to people’s very deep concerns about energy prices and make the transition to clean energy equitable and affordable for everyone… [we need to] incentivise the transition to clean energy, and the allocation of costs for this must be equitable,” says Cassandra.
ACOSS released a report in 2017 that outlines among other suggestions the need to incentivise the transition to clean energy, such as a clean energy target and an emissions intensity scheme.
Vanessa from BZE agrees that, “many people involved in climate and energy at the moment are saying we need a clear policy framework at the federal level”.
Ged from the ACTU also admits lack of action on climate change is a serious concern, and goes further to say that, “any lessening of Australia’s commitment [to the Paris Agreement] would be a disaster for both the environment and the economy.”
As well as general policy uncertainty, another way that renewables are being held back is through subsidies for the fossil fuel industry (which we don’t invest in) that far exceed any support provided to renewables (which we do invest in). The Overseas Development Institute found that “investment in fossil fuel exploration, extraction and electricity production in Australia are supported by an average of $5 billion in national subsidies annually”.
Regardless of policy shortfalls, renewables are booming. Although governments do affect the economics of renewable energy, we see examples of solar, geothermal, hydro and wind energy operating profitably around the world. We expect this profitability to improve over time as governments act to implement their Paris commitments.
In the US, there has been more renewable energy generation under Trump than under Obama – so it just goes to show that the market will ignore political rhetoric and drive progress when it makes business sense. The cost of renewables is falling so fast that they are already beating fossil fuels on price alone, despite subsidies and politics.
A renewable energy superpower
Transitioning to 100% renewable power is a mammoth infrastructure project. Huge amounts of investment are required to ensure the transition happens with the speed needed to avoid dangerous climate change. While these power upgrades won’t be easy in the short-term, it will be so much better and more reliable in the long-run. Once installed, solar and wind provide many years of reliable, free, zero-emission electricity.
“Australia can lead the world and become a renewable energy superpower – our economically demonstrated solar and wind energy potential is 75% more than all of Australia’s combined coal, gas, oil and uranium resources,” says Vanessa from BZE. “In fact, Australia’s economic renewable resources are estimated to be 5,054 exajoules – enough to power the entire world for ten years.”
How is Australian Ethical helping with the transition?
We believe in the power of capital to create change and we’re helping Australia transition to renewables through our funds. We manage $2.8 billion of ethically-invested super and investments, and we don’t just exclude fossil fuels, we invest in many renewable companies including wind, solar, hydro and geothermal. And as the current political climate isn’t supportive of renewables, we use our influence to advocate for a better world. You can read more here about how we engaged the federal government on why Australia doesn’t need an Adani Charmichael mine, how we rallied G20 nations to stop fossil fuel subsidies, and our submission to the government’s review of climate change policies here.
We’re also helping through our Community Grants. We have one of the highest rates of corporate giving, offering 10% of our pre-tax profits to selected charitable organisations. We gave a grant to Lock The Gate Alliance for their work informing people of the harms of Coal Seam Gas mining and the benefits of sustainable solutions to food and energy production. We also supported the Australian Conservation Foundation’s ‘Stop Adani’ campaign to save the Great Barrier Reef by transitioning Australia away from coal towards renewable energy.
|82% of Australia’s biggest super funds don’t consider climate risks. Does yours? If not, you might like to consider switching your super to Australian Ethical. We exclude all investments in fossil fuel companies, instead investing in renewable energy (solar, wind, tidal, geothermal and sustainable hydro), as well as energy efficiency and battery storage. Get competitive returns and help build a clean energy future by joining now. *|
* This information is general information only and does not take into account your individual investment objectives, financial situation or needs. Before acting on it, consider seeking independent financial advice.
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We exclude all fossil fuel company investments. This means we exclude all companies whose main business is fossil fuels, as well as diversified companies that earn some fossil fuel revenue and aren’t creating positive impact with their other activities. We may invest in a diversified company which is having a positive impact in other ways such as producing renewable energy, provided its fossil fuel revenue is below our thresholds.