Superpower by Ross Garnaut

Author:Ross Garnaut [Garnaut, Ross]
Language: eng
Format: epub
Publisher: La Trobe University Press
Published: 0101-01-01T00:00:00+00:00

Australia’s competitiveness in a zero-carbon world

Australia is more richly endowed than any other developed country relative to population and local demand for both fossil and renewable energy. However, Australia’s international competitiveness in electricity supply will strengthen as all countries move away from fossil energy in electricity supply. This is because fossil energy can be imported at relatively low cost by countries with poor resources, but renewable energy cannot.

Thermal coal does not cost much more in China or Japan than in Australia. However, renewable energy can be traded internationally only at high cost – through high-voltage direct-current submarine cables, or through liquefaction of hydrogen or use of ammonia as a hydrogen carrier. International transmission of electricity from Australia would cost much more than the electricity itself. More than half of the value of hydrogen would be lost in preparation for and during transportation. Unlike Australian coal resources, Australian renewable electricity will be available at much lower cost to Australian than overseas industry.

Australian power generation and industry once had access to Australian fossil energy resources at prices far below those in importing countries. Until early this century, high-quality Australian coal resources were reserved for use by the electricity commissions of each of the eastern states, and coal made available at cost to them. However, coal in Queensland and New South Wales is now exportable, and power generators are required to pay export parity prices for them – not much below prices in countries importing Australian coal. Until a few years ago, eastern Australia had domestic gas prices at a modest fraction – at times around a third – of those in North America, Europe and Japan. The development of the liquid natural gas (LNG) export facilities in Gladstone lifted Australian gas prices to export parity levels – not much below and at times equal to or above those in Japan and Europe. In the meantime, the United States – having much higher domestic gas prices than Australia until a few years ago, and experiencing a proportionately smaller expansion of domestic gas reserves and production to that which in Australia fuelled the LNG export boom – restricted gas exports and domestic prices fell to about a third of the new, higher Australian levels.

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