This is not an insignificant figure, as Australian coal currently generates 80 percent of Australia’s electrical energy output.
The grim statistic was contained in the recent report, “Keeping the Home Fires Burning,” issued by the Australian Strategic Policy Institute.
So, who is the Australian Strategic Policy Institute? Tree-hugging, wallaby and kangaroo friendly ecological leftists or energy company flacks?
According to the Australian Strategic Policy Institute website, “ASPI is an independent, non-partisan policy institute. It has been set up by the government to provide fresh ideas on Australia’s defense and strategic policy choices… It aims to help Australians understand the critical strategic choices which our country will face over the coming years, and will help government make better-informed decisions.”
Accordingly ASPI’s conclusions cannot be seen as either energy industry shills nor environmental advocates, which makes them accordingly worth careful consideration.
The report starts ominously, “Australia, like all modern economies, needs an assured supply of energy to function effectively. As a net exporter of energy, Australia is well placed in most respects. But we are still reliant on external sources of oil.”
Authors Andrew Davies and Edward Mortimer pull no punches, first noting that Australia’s massive indigenous energy reserves of coal and natural gas would shield it from political disruptions in the Middle East before adding, ”The energy security policy challenges of the next 20 years are likely to pale into insignificance compared to those that will arise when the availability of fossil fuels declines significantly. Unfortunately, it doesn’t look like renewable sources of energy will be able to provide adequate substitutes, at least based on current technology. Developing countries are even less likely to be able to adopt alternative energy sources on a large scale. As a result, any large reduction in fossil fuel usage will most likely be due to scarcity and price rather than choice. The timescale is decades rather than years, and the decline of existing fuel stocks will be gradual rather than precipitous, so there’s scope for technological advances to come to the rescue – but there are no obvious solutions at the moment.”
So, solar power to the rescue? According to the authors, ”The requirement (to generate solar power per capita) can also be expressed as 200 square meters of panel per person, or about four times the average amount of roof area per person in Australia today.” As for the country weaning itself off fossil fuel power and diverting to solar power generation, the authors conclude, “As a rough estimate, if the cost per panel could be halved (due to economies of scale), the total cost would be around $100 billion.”
What to do?
Davies and Mortimer suggest that in conjunction with neighbors New Zealand, Papua New Guinea and the Pacific Island countries Australia develop a strategic oil reserve to maintain transport and industry if and when Middle East disruptions imperil supplies.
For a government sponsored institute providing “fresh ideas,” ASPI seems stuck in a “business as usual” rut, looking at the immediate bottom line versus the long-term picture.
As for establishing an oil strategic reserve, the rising tensions in the Middle East over Iran’s nuclear programs could change the dynamics of Persian Gulf oil exports to East Asia long before strategic reserves could be established.
Australia does indeed have significant reserves of coal as well as access to natural gas, including the offshore Sunrise natural gas field, shared with Timor Leste and estimated to contain 5.1 trillion cubic feet of liquefied natural gas and 226 million barrels of condensate, the largest petroleum resource in the Timor Sea. Development of the field with Timor Leste has been blocked by disputes with the Timorese government for the last nine years.
Charming as the idea of boring holes in the ground and pumping Middle Eastern oil down them for a rainy day, would it not be in Australia’s interest to negotiate fairly with Timor Leste over the Sunrise field? Even if solar power gives Canberra sticker shock, it seems preferable to make local arrangements for more environmentally friendly fuels such as natural gas rather than continuing to import hydrocarbons from the Middle East or burning local coal. Best then, at the end of the day, it’s an economic issue, with quality of life considerations coming second.
But if Canberra has to give its energy import policies hostage to fortune, Timor Leste is a lot closer than the Persian Gulf.
By. John C.K. Daly of Oilprice.com