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Renewables are the Wrong Target

In responding to climate change, national policy often targets the proportion of the electricity generation that will be from renewable sources in 2020 or beyond. These targets are important and, in the absence of any other metric, they are fundamental.

The metric of a renewable generation ratio is however indirect. Coal with carbon capture and storage, when and if the technology is available, is not a renewable generation source. Coal gasification, nuclear power and on-site natural gas co-generation are also non-renewable, yet each is considered an effective response to climate change.

Each country will have its own options in respect of these alternatives. Each country will assess the benefits and costs of these options in conjunction with renewables differently. In order to ensure that energy supply progresses along the lowest Carbon emissions pathway, the metric should incorporate the following types of responses. This metric is the carbon intensity of the supply, measured as CO2e/kWh.

A renewable energy generation ratio provides no guidance on the cleanliness of the electricity supply.

Focusing only on the marginal emissions for each kWh produced at generation, the current non-renewable electricity generation facilities have a wide range of carbon intensity - from the 1.4kg CO2/kWh for 'brown coal' to the 0.2kg CO2/kWh for next generation nuclear.

Australia's reliance on coal provides an 860g CO2/kWh carbon intensity - the highest for any OECD country. If Australia were to shift to a 50% renewable electricity generation by 2020, the carbon intensity overall would not be lower than presently exists in The Netherlands, United Kingdom, or Japan - all of whom have negligible renewable generation today.

Significantly, with the possible exception of Poland, the 50% renewable path would result in Australia still having the highest carbon intensity for electricity supply. The weakness of the renewable ratio is that it is a relative one, while the goal is absolute. The sustainability path requires the right targets.

Life-cycle Carbon Cost

The Carbon cost of the power generation is only part of the emissions from energy use. To ensure the investment does contribute to the response to climate change, the evaluation of power generation alternatives should incorporate two additional considerations:

  1. Renewable or not, the alternatives have asset life-cycles with very different Carbon cost profiles. That is, the Carbon emissions in the design, build, maintenance, decommissioning and disposal of the power generating asset vary greatly between one alternative and another, with each alternative progressing through these stages over different time scales; and

  2. The minimum commercial scale, responsiveness to changes in demand and reliability of each alternative greatly impacts the Carbon costs in the supply at the point of use of the power. Coal fired and nuclear generation operate at a scale resulting in the requirement for long transmission distances, solar power in only available when the sun shines and so on. The infrastructure to ensure reliable transmission and supply can cost more in Carbon emissions than the generation itself.

The inclusion of these two considerations challenges any response to climate change as no alternative is the right one in every situation. The carbon intensity at point of use of an on-site natural gas generator is lower than for a utility scale photo-voltaic solar generator 500kms away. The key is to consider energy not in terms of how it is generated, but where and when it is used.

The response to climate change is a journey that we have only just started. Today, policy is focusing on renewables. Certainly, renewables are needed as part of the energy supply mix but only where and when they lower the carbon intensity of the energy use (not supply) over the life-cycle of the generation and energy transport (transmission and control) assets.

The next step is to shift the focus to incorporate factors such as the advantages of localisation of energy supply, the disadvantages of power conversion, the gains and the penalties in low emission non-renewable sources. This step is the targeting of a new metric, the carbon intensity at point of use – a metric that applies to all energy use.

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