Green Dreams, Grid Realities: Renewables -v- The Rest
Address to the Western Heritage Round Table Forum: held at NSW Parliament House August 5th, 2025
This issue involves several different dimensions.
The wellspring of the issue itself is global warming. Is this happening, is it a threat and what to do about it if it is.
The second aspect is what are the costs of taking some action.
And the third aspect is what are the outcomes of the action itself that we might take.
Global Warming
Concerning global warming, a general consensus is emerging that carbon dioxide in the atmosphere may increase temperatures over and above levels which are in place and which vary naturally from century to century. Human induced emissions may increase global temperatures by 1°C and perhaps as much as 3°C. Alarmists’ suggestions that warming might be up to 6°C are now more or less totally discounted.
If this is an issue it can only be tackled globally. To combat it requires pretty well universal measures across all countries. But this is far from being implemented. Indeed, commitment to the sort of measures in place under the so-called Paris Agreement is going backwards.
Those countries which are opposed to action or in fact do very little include China, India, USA, Russia, and Indonesia. That’s over 70% of the world’s emissions. Those that are doing something – the EU, South Korea, South Africa, UK - account for about 13% of global emissions. It is telling that the three most successful economies: China, India and the US are heading in a different direction from the EU/UK and Australia.
Whether or not global warming as an issue is controversial
The latest report by five extremely well credentialed people - John Christy, Judith Curry, Steven Koonin, Ross McKitrick, and Roy Spencer - published by the Department of Energy in the US titled “A Critical Review of Impacts of Greenhouse Gas Emissions on the U.S. Climate”, concludes, “Extreme convective storms, hurricanes, tornadoes, floods and droughts exhibit considerable natural variability, but long-term increases are not detected.
They also find that dangers of global warming are probably more than totally offset by increased photosynthesis and plant growth. The new DoE report suggests there is about a 30% increase in photosynthesis as a result of the increase in CO2 from the previous 270 parts per million to about 400+ parts per million that we’re now experiencing. UN Climate Chief Simon Stiell was perhaps unaware that global fruit production is up fourfold when he said fruit would become a rare treat with increased emissions.
So what is the cost?
Well, we have these studies, Lazards is quite famous globally and we have our very own CSIRO that tell us that renewables are the cheapest energy source so it’s painless to be virtuous.
But you can do a chart with the renewable share (by that I mean wind and solar) on the horizontal axis and the price of energy on the vertical and plot each country. This gives a 45% trajectory with the lowest renewable-share countries – India, Russia, China – also having the lowest electricity prices up to the highest renewable-share countries – UK, Germany, Denmark, Spain - with the highest prices.
That should be a dead giveaway that essentially if we are forcing this so-called “transition” to a “clean Energy” future as if this is something that’s just happening, this is not a cheap thing.
We can actually just look at Australia as well - almost everybody knows what’s happened to Energy prices in Australia over the last 20-25 years during which we actually started putting in place: subsidies to renewables and penalties on coal and gas. In that 20 year period we’ve introduced cascading measures that have increased the aggregate costs from just a few hundred million dollars a year during the Howard government back in 2005 to something like $16 billion every year. The most important of these has been the requirement under the RET and SRES to incorporate increasing levels of wind and solar in energy supplies. Superimposed on top of this is the Capacity Investment Scheme, the funding of which has been expanded 25 per cent to provide guaranteed prices for renewable Energy proposals that the Commonwealth minister thinks are kosher.
And then we have maybe $100 billion in transmission spending. State governments also do that bit.
These schemes have brought the average energy price ex-generator from less than $40 per MWh to about $120. That’s a three or four fold increase, far exceeding general inflation and increases in prices that have been seen in those countries like China, India and the USA. In addition to the trebling of prices ex-generator we are seeing the effects of having a widely dispersed generating sector compared to the highly concentrated supply which is automatically in place using coal, hydro or nuclear.
This means massive increases in in transmission lines which are proving to be so unpopular in the rural communities that they traverse. And these costs are massively increasing. For example, the Victoria-New South Wales links called VNI West was, just a couple years ago, said to be costing $2 billion but is now coming in at $12 billion.
Many argue that these price increases are inevitable because we need to replace the legacy plants. This is not true. For example, we can look at the cost of plants being developed elsewhere in the world (China and India) and even if we add in the CFMEU factor of higher unionisation costs, we observe only a modest increase in construction costs, while the actual availability of the natural resources of coal and gas remains abundant.
In the case of coal, for example, we have 500 years supply at existing levels of production in Victoria and we have high reserves New South Wales and Queensland. The coal is actually situated close to major loads and can be developed very quickly. Transmission lines can be then run from the coal mine to the cities and we can be producing in today’s money electricity for something like $55 or $60 per MWh, about the same, inflation-adjusted, as it was 25 years ago and far less than the wind and solar alternatives even without those supply sources’ additional disadvantages.
In the case of gas, Australia geologically is not that dissimilar from the United States but the United States has not prevented the development of gas resources, although the Biden administration certainly put some barriers in the way, and they have prices that are a quarter of those we see in Australia. We don’t have those prices in Australia because the state governments have prevented the exploration and many environmental pressures are in place to stop development so we don’t have the gas. Nobody can actually persuade shareholders that it's worthwhile looking for gas when the likelihood is that development will not be permitted or it will be costly and time-consuming to navigate the approval process.
In addition to these cost factors, renewable based systems are highly susceptible to breakdown because of the lack of grid inertia. Weather dependent plants are not readily controllable and, unlike hydro, nuclear, gas and coal plants, don’t simply stop when the sun goes in or the wind stops. Their inertia gives time for the controller to do something. The absence of grid inertia brought about blackouts here in South Australia and Broken Hill, and in Spain, Chile and Texas over the last couple of years. Australian Energy Market Operator chief Daniel Westerman this week revealed the number of interventions to stave off blackouts had exploded from six in 2016 to 1800 last year.
At present we get about 35% of our energy from renewables and AEMO is working on plans to double this. The respected consultancy, GlobalRoam, which works largely for Green energy firms, has estimated that to run a grid that is basically wind and solar would would need $6 trillion - 3 times GDP - in back up storage to meet present day reliability.
Beyond wind and solar, for those untethered from reality, there is The Next Big Thing, “green hydrogen”; this has seen 99 per cent of $100 billion worth of “green hydrogen” projects failing to progress in Australia, according to Rystad Energy, practically all of which have received some form government support, which in the case of Fortescue the government wants its money back
So what are the outcomes?
Well, we can see in Australia a massive loss of manufacturing capacity especially in the Energy intensive areas which have been the backbone of world-competitive Australian industry. We’ve lost the smelters. Nickel is already closed down and copper is under review. Aluminium smelters are in hospital care in Victoria, Queensland and New South Wales. They must all close very soon because the energy price is so high now and aluminium is all about Energy. Manufacturing is now down to about 5% of the economy.
The ramifications of this are lower living standards. By any measure, over the past two or three years under the ALP government, real productivity, which is the harbinger of real living standards, has fallen five or six per cent. This is almost without precedent in Australian history and is the worst performance among all OECD countries.
The situation is caused by lack of capital investment compounded by regulatory measures on labour and the environment reducing the productive capacity of the investment we are actually seeing.
A particular reason for the low levels of productivity is that the so-called investment in the energy sector is actually cannibalising aggregate productivity.
Spending on renewable energy is about $36 billion per year or about 10 or 11% of private investment. All of this is on the back of subsidies and unlike other private investment is not only failing to drive productivity but is actually undermining it. We are scrapping highly productive coal and gas plant and replacing it by unproductive renewables. So, we’re spending money on what are counted as investments to actually impoverish ourselves.
One manifestation of this is in the composition of the job growth. This is not in the economy’s productive sectors. We saw that 82% of new jobs were in the public sector; some of this is productive but mainly it is far less productive than in the private sector and some of it is actually reducing real production.
We can see that this is being exacerbated by the proposals before the Productivity Summit. Those coming out of the Productivity Commission, which is nowadays riddled with left-wing types - in a Grattanification (named after the pro-regulation Grattan Institute) that owes its funding to Labor and firms paying back favours to the ALP.
Its recommendations involve considerable costs to firms and individuals. For example, they:
require more firms than the current 219 biggest emitting facilities to reduce their emissions by five per cent a year, the cost of which is already crippling the energy intensive industries like smelters;
seek to penalise heavy emitting motor vehicles and take similar action in other sectors, including requiring new houses to be more energy efficient and climate resilient;
envisage a flying squad (a “strike team”) of environmental department public servants to integrate environment and clean energy policy; and
ensure all approvals for new developments are supportive of what ideologues call the “energy transition”, which is the forced replacement of lower cost fossil fuel energy sources by higher cost and unreliable wind and solar.
All of these are going in the opposite direction of where we should be going.