A Senate report has recommended that Australia should move completely away from coal-generated electricity, citing economic factors as the primary drivers.
It comes about a month after the unplanned closure of Hazelwood, Australia’s dirtiest coal station, and before the expected unplanned closure of several others around the country.
With the backing of both the Labor and Green members of the committee, the report called for a comprehensive energy transition plan and the development of a mechanism that would ensure coal-fired power stations close in an orderly fashion and with plenty of warning.
It also backs a call from the Australian Council of Trade Unions, which argued in a report this month for an independent “energy transition authority” to manage the transition, ensuring that particular workers and communities are are not unfairly affected by the changes.
The committee’s chairwoman, Larissa Waters, said: “This report should be a wake-up call for the government. The electricity market is going through a dramatic transformation but it must be managed.
“Evidence to the committee showed that Australia’s biggest power companies, unions, climate NGOs and affected communities like the Latrobe Valley are all pleading with the government for a national plan.”
The interim report also called for a change to the national electricity objective, which governs the national electricity market but currently demands regulators focus only on price, quality, safety, reliability and security but not environmental factors. The report said it should include an objective that was “consistent with Australia’s obligations under the Paris agreement”.
The report was backed by both the Labor and Greens members. The Liberal members wrote a dissenting report.
It came after two public hearings in which energy companies, environmental groups, unions and academics urged the government to devise an orderly transition away from coal-generated electricity, rather than relying on market forces to lead to the closure of Australia’s ageing fleet of coal-fired power generators.
“The question is not if coal-fired power stations will close but how quickly and orderly these closures will occur and what supporting policies, if any, will be in place to help manage the process,” the report said.
The requirement to plan the transition was driven mostly by economic and energy security factors, the report said, since a disorderly closure could wreak havoc with energy supply and communities that rely on jobs in coal-related industries.
The closure of most power plants in the coming decades was inevitable, with most of Australia’s fleet already more than 30 years old. Several large coal power stations have already been slated for closure.
But closure within a decade was also demanded by Australia’s commitment to keep global warming at well below 2C, the report said.
During the first of the two public hearings, Olivia Kember of the Climate Institute told the committee: “For emissions reductions consistent with the 2C goal, Australia’s existing coal stations essentially needed to have closed by the early 2030s and what that works out to is roughly the rate of the equivalent of a Hazelwood a year.”
A submission from AGL said it welcomed the discussion of the closure of coal as a “critical element of the transition to a decarbonised energy sector”. AGL argued that governments needed to plan the closure of power stations – including ones they own – so that investors had enough lead-time to plan replacement clean energy.
The Minerals Council of Australia, however, argued the discussion was “remarkably one-dimensional” and pushed for the construction of “super-efficient coal generation”, saying eliminating coal generation would push the costs of the transition higher.
During the public hearings, Erwin Jackson from the Climate Institute said that since existing coal power stations were going to close no matter what, energy prices were inevitably going to rise.
And Frank Jotzo from the Australian National University said the cost of building renewables and coal power stations was about the same, so there was no commercial reason to preference coal.
“I would judge it highly unlikely you would see commercial investment in coal-fired power in Australia,” he said.
Jotzo also said while new coal power stations were more efficient than existing ones, they would lock Australia into a high-emissions future.
“In the short term, as a thought experiment, if you replaced the La Trobe generators with ultra supercritical [efficient coal power stations] you’d make something like a saving of 50 per cent in emissions in rough terms,” he said. “But of course you’re locking in that investment for a long time and that’s fundamentally incompatible even with the existing Australian national 2030 emissions target.”
In a dissenting report, the Coalition senators said they did not support any of the recommendations of the majority report.
“Inappropriate policy, regulation and interference in an attempt to pick winners or mandate inefficient investment means consumers, industry and communities will ultimately suffer through increased energy prices and loss of energy security,” they wrote.
The Coalition senators argued the government already had, or was developing, a comprehensive set of energy transition policies, and rejected the majority report’s recommendations mostly for being redundant.
The Greens’ climate change and energy spokesman, Adam Bandt, said: ‘This is a red-letter day for clean energy. For the first time ever, a parliamentary body has called for a managed replacement of coal-fired power with renewables.
“When everyone from the Greens to Australia’s biggest coal-fired power company are calling for a national plan to phase out coal-fired power stations so workers, communities and clean energy investors can plan for the future, it is time for the government to get on board.”