Renewable energy is doomed
Originally published in Spectator Australia, June 2025
No sooner had the Prime Minister announced a roundtable on productivity when advice was being proffered on how further to reduce it. Electrical Trades Union national secretary, Michael Wright, urged the productivity roundtable to address delays in approving transmission, solar, and wind projects. This was in line with the Prime Miniister’s own predilection to harness this into creating the new forms of industry that are to accompany Australia’s transition to a renewable energy superpower.
Yet it is the subsidies and regulatory favours governments have provided to these intrinsically high-cost energy sources that are at the root of the nation’s productivity slowdown. Energy is the life-blood that drives modern economies and Australia, the nation most abundantly endowed with it, has shown how best to misuse it.
Detrimental political measures started with forcing energy suppliers to favour those claiming hardship. Such measures were amplified by the pursuit of Net Zero CO2 emissions that was to drive out coal generation with subsidies to solar and wind. Those measures are now reaching a crescendo with government purchasing deals, additional subsidies to transmission lines and batteries. They have undermined productivity of an electricity supply system that 25 years ago was the world’s most productive and lowest cost.
Using Australian Bureau of Statistics data, University of Queensland Professor Stephen Wilson shows aggregate productivity of gas, water and electricity (which electricity dominates) as having fallen by 20 per cent. This is an inevitable outcome of the forced replacement of high-productivity fossil fuels by very low-productivity and unreliable wind and solar. Progressing further along the ‘renewable energy superpower’ path can only exacerbate this.
This is confirmation that the renewable energy path is a cul-de-sac. Governments well-disposed towards pursuing the Net Zero illusion have been recently elected in the UK, Canada, and Korea as well as Australia. But in spite of this, mugged by reality, the fantasia is doomed. No amount of fabricated ‘global boiling’ notions of increased wildfires, floods, drought, heat waves, and cold snaps being caused by global emissions will turn that tide.
Globally, the only means by which Net Zero could even remotely make sense, was terminated even before Donald Trump put a nail in its coffin by eliminating US subsidies and fostering hydrocarbons (and nuclear). The two new global superpowers, China and India, emerging from their centuries of sloth never bought it. Any nation staying with it in the face of those countries’ marrying of low labour and land costs, high national savings rates and cheap energy would be out-competed in tradeable manufactures and services, thereby voluntarily accepting de-industrialisation and lower living standards. India, China and the US account for over half of world manufacturing.
Most mainstream Western politicians shut their eyes to the clear empirical evidence supplied by the cross-country association of high electricity prices and a high share of renewables in the total supply. Fabricated evidence of grasping lobbyists and anti-capitalist ideologues, persuaded them and many of their gullible constituents that renewables are the cheapest forms of energy. Disappearing industries – especially energy-intensive ones – was dismissed as inevitable, at times even attributed to the “legacy” hydrocarbon fuel generators that energy policies were killing off.
And hydrogen was grasped as the fuel of the future, only to be revealed as a mirage dependent upon an unachievable breakthrough involving reducing its costs to 10 per cent of those prevailing. Australia’s Labor government allocated $8 billion in taxpayers’ money to unlock what it planned to be $50 billion in private sector money ready to pursue this agenda. The cascading number of cancelled hydrogen projects are a testament to this unattainable optimism.
Australia already had a precursor of the outcome of transforming its economy to the ethereal renewables’ doctrine. In the last three years under the ALP government, living standards have collapsed with an 8 per cent reduction in real living standards, a reduction unprecedented at previous times since the 1930s. And, with private investment flagging, this cannot be turned around with current policies.
The damage to our living standards from the policy madness is incalculable but how do we recover?
Energy policy is only one, albeit a very important one, of the factors that are crippling Australian living standards. It is a part of the massive regulatory detritus of environmental, heritage and workplace regulations which have been cumulatively imposed upon the economy for over 40 years. A bonfire of these is essential.
For energy, it may however not be sufficient to simply abolish the regulations prejudicing coal and gas and advantaging wind and solar. Removing the subsidies is essential but may not be sufficient. Private investments have been proven to be vulnerable to political measures that overnight devalue coal generation facilities with an expected life of 50 years and more. Erasing the spectre of expropriation will take time. Hence, unfortunately, government investment in new generating facilities may be necessary.
Australian coal (and perhaps gas) offers the means of providing the world’s cheapest energy. as an attraction for global energy-intensive industries (including AI which some say will comprise 20-30 per cent of future energy use). A government coal power station building program could double existing capacity for something like $70 billion and offer electricity at a world-beating price of $60-70 per MWh, half are present prices. Compare that to the $16 billion a year we are currently spending in subsidies that undermine our naturally advantageous situation.