Energy Policy for Australia – Paul Howes

Paul Howes is the National Secretary of The Australian Workers’ Union. He became a Union official at the age of 17, and since then as worked in reforming the union’s internal structure, implementing new strategies to organise non-union workplaces and consolidate membership in a number of industrial and manufacturing sectors. In Paul Howes’ address to The Sydney Institute, on Tuesday 18 August 2009, he argued that nuclear power must be a necessary part of Australia’s response to the dual challenge and energy and climate security.

ENERGY CHOICES FOR THE FUTURE

PAUL HOWES

Our nation’s future prosperity is threatened by two clear and plain challenges: energy security; and our response to climate change. The government’s discussion paper on the value of technology in the energy sector has stated: “Policies and issues influence the rate and direction of technological advance in the energy sector … and the challenge of ensuring the development, deployment and diffusion of new technologies to facilitate necessary structural change.”

Tonight I want to outline how these two factors – energy security and climate change – are driving a renaissance of nuclear power around the world, and hence the imminent fortunes of the uranium industry here in Australia, and the use of natural gas as a way to a lower carbon futurete

These two global considerations – energy security and our response to climate change – have combined to make more attractive to any thinking person the future development of the uranium industry, and Australia’s abundant natural gas reserves.

New gas fields are being discovered, and a new generation of nuclear reactors, 462 of them currently being built, or planned, or considered around the world, will help to give us what we need, I think, and help preserve our species from an otherwise unthinkable journey’s end. Australia is very well placed to assist in this quest, and to profit from its realisation.

We are the biggest supplier of the world’s coal. We have huge resources, inland and offshore, of natural gas. No longer is it just the north west shelf, but we also have an abundance of coal-seam gas in Queensland and NSW that could supply the domestic market well into the next century. And we have an international reputation as an efficient, reliable and low-risk trading partner.

And if we add to this our share of the world’s uranium, which is greater than Saudi Arabia’s share in the planet’s oil, it seems pretty likely that we could become, ‘an energy superpower’.

Tonight’s talk is about how we can do this, and go earlier and more quickly to a lower carbon future, and simultaneously increase national wealth, and jobs.

The prospect of carbon reduction as a planetary necessity is turning the thoughts of most of the developed economies towards nuclear power. Australia can also do this, and ought to do this. We ought to think this way, and take at least the first steps, for if Carbon Capture and Storage fails in its several experiments – and it might – to deliver its hoped-for slowing down of climate change, we will have already explored a mix of thoughtful alternatives.

Natural gas, I believe, in CCGTs – the new Combined Cycle Gas Turbine power plants – can supplement our immense coal resource and our IGCC, our Integrated Gasification Combined Cycle, to generate our electricity at lower environmental cost, with lower emissions, and peaking and intermediate supply.

Natural gas is also baseload – in fact there are only two baseload technologies available in Australia right now – coal and gas. Even if we start the nuclear debate in Australia today, it will be at least a decade, if not two, before the first sod would be turned on any construction site. And either of these two timeframes is too late to meet the expected requirements for new baseload power generation in eastern Australia.

So the question really becomes – will we build gas or coal baseload? Given gas’s significantly lower carbon profile and cost competitiveness, it is the logical immediate option for Australia – delivering 40 per cent to 70 per cent less carbon emissions than existing coal, and right now, today, delivering 80 per cent of the possible carbon emission reductions by retro-fitting existing coal with CCS and 70 per cent of the emissions reductions that nuclear might achieve at some future date.

The world is moving, however slowly, towards a collaborative method, a co-operative way, of reducing emissions of greenhouse gases, and in Copenhagen this December the nations of Earth will argue cuts of 25 to 40 per cent. If such cuts go ahead, it will mean big changes in the electricity generation sector, which currently depends on coal plants with a high carbon footprint. This problem is made worse by our need, if forward projections are correct, to double our electricity supply by 2030, to serve growing needs in every sector, in every industry and every suburb.

This is discussed in the government Green Paper, out this month. To make this work, we will need a portfolio of technologies. And it will come as no surprise when I say, as leader of the AWU, that one of these is coal, vital to a range of our industries including steel and aluminium.

Which means that our CCS technologies, currently in development, must be tested soon and proceeded with. I applaud the Rudd Government’s steps in this regard, and President Obama’s energetic approval of our Global CCS Institute at the G8 meeting recently.

Natural gas and renewable energy, working in partnership, are a sensible way forward. Natural gas plus a lesser amount of coal-fired energy will buy time for the invention, testing, approval and building of CCS technologies and nuclear power facilities which will form the portfolio – if I may put it this way – the portfolio of our salvation.

In the meantime, we can export gas and uranium to help other countries in their quest for reduced emissions.

Scenario modelling by Insight Economics shows nuclear energy needs will increase as carbon reduction is demanded, and required world wide, and Australia will profit from this, but only profit fully if uranium bans are lifted in Queensland adding $20 billion worth of deposits to those in Western Australia, South Australia and the Northern Territory.

From this we may derive, if we think carefully and plan with precision, a sustainable energy plan. This will include:

• Gas-fired electricity as well as coal-fired electricity in staged combination with renewables in the immediate future;
• Carbon capture and storage technologies that will secure coal use after 2015; and
• Nuclear power after 2020, probably no earlier;
• Before the full integration of thermal-solar, geothermal and wind into the national energy system by 2050; and
• By this time, if we are lucky, nuclear fusion as a sustainable energy source.

And we have been lucky thus far, because of our abundance of coal. The maintenance of our current level of prosperous good fortune, however, depends on other abundant resources, and a cunning use of them.

Uranium is carbon free and able to provide us reliably with base load power at a cost not significantly higher than current coal power generation. The Executive Secretary of the IPCC stated at Bali that he had never seen a credible scenario for reducing emissions that did not include nuclear energy. The recent British White Paper on nuclear power concluded that: nuclear power is the most cost effective low-carbon generation technology.

The White Paper clearly stated that it has much lower abatement costs, or pollution reduction costs compared to onshore wind power, the next nearest currently available low-carbon electricity generation technology.

As a result of these various factors, an increasing number of new nuclear generators are being built and planned. According to the World Nuclear Association as of 1 August 2009, there are currently 436 nuclear power reactors in operation around the world, with 49 under construction, and 413 new reactors planned or proposed globally.

The global nuclear industry today needs an estimated 181 million pounds of uranium a year for reactor feed requirements, and this figure may double by around 2030. There is estimated to be enough uranium for 100 years with current technology and generation rates. ABARE has noted that 64 nuclear power plants are to be commissioned around the world in the next six years. China is planning to build at least 20 in the next decade.

Five months ago, Sweden, which already finds 40 per cent of its electricity in nuclear generation, scrapped a long-standing ban on building nuclear infrastructure. Finland is building its fifth nuclear plant and considering a sixth, and Poland is moving to build two nuclear power stations to cut its dependence on coal.

This country is possessed of 38 per cent of global uranium resources and Australia’s reputation as a politically stable, reliable and punctual energy supplier offers a great opportunity to take advantage of this very favourable market situation. This means we may look forward to at least doubling current production of around 10,000 tonnes per annum which is around 15 per cent of world trade, valued at $881 million.

The lifting, in September 2008, of the ban on uranium mining in Western Australia – which was done without new legislation – is good news for the industry and jobs. The change has already cleared the way for explorers with resource projects to ramp up their activities and work harder.

In WA, uranium mining leases are currently held by only two companies – BHP Billiton, for the Yeelirrie project, and Toro Energy, for the Lake Way and Centipede deposits at Wiluna – and neither have wasted any time since the ban was overturned. In November 2008, BHP Billiton announced it was reactivating Yeelirrie with a drilling program to confirm the resource and exploit it.

The recent approval by the Federal government of the new Four Mile Uranium Mine in South Australia as Australia’s fifth uranium mine will increase production, and I applaud this, no matter what the Left of the Labor Party might say.

Australia has a good deal of uranium, and we must cast off 60 years of banner-waving hypochondria about its use. It is a clean source of mineral energy. We would be fools, or more accurately dills, not to use it, or to pretend it isn’t there. Honeymoon Mine will be at work in mid 2010 and Ranger and Olympic Dam expanded very soon after that.

All this is admittedly happening in the middle of a world financial crisis, and funding for some explorers will be hard to find. But after decades in the doldrums uranium export now has a fair wind at its back.

Production and exploration are increasing. In the Northern Territory alone, where there were only four exploration permits earlier this century, there are over one hundred now. And while it is true that current spot prices have fallen in response to the current crisis, the medium-term outlook is for prices at around $60 US a pound and this will make new projects viable. In fact, long term contract prices are still relatively stable at around $70 US a pound. And it’s clear to some advisers that uranium offers the best long-term investment opportunity of all the energy stocks, because of its minimal pollution and its low strategic supply profile.

We are well-placed to sell it world-wide. Olympic Dam seems likely, in BHP Billiton’s view, to expand its annual output from the current 4,000 tonnes of U308 – uranium oxide commonly called yellowcake – to 19,000 tonnes. And Olympic Dam, though incompletely assessed, has been found to possess 230,000 tonnes thus far, which makes it the largest uranium resource in the world.

It’s obvious to me, and to a look at future scenarios by Access Economics, that Queensland should lift its ban on uranium mining – which looks more and more like a medieval peasant holding up a wooden cross to ward off the devil – and join WA, South Australia and the Northern Territory in the rich pickings of this idea whose time has come.

Under the Climate Action Scenario Australia would by 2030 supply, 19 percent of the world demand and increase its GDP by $28.6 billion. And if Queensland joined in, that sum would be $32.3 billion, and 35 percent of the global demand for uranium.

And, with Queensland in and uranium power in use in this country, our effort would potentially remove 2.5 billion tonnes of greenhouse gas from the sky, an equivalent of eight per cent of current global emissions.

There are things, of course, that prevent this happening now – bans on uranium mining in Queensland, decades old exploration bans in NSW and Victoria will slow down the rate of development. But it would be foolish of them to persist in these ancient, hypochondriac policies, these superstitions of another age. It would be foolish not to seize this prize, and its benefits to every Australian state, and the living standards of its people.

The present government prohibits on these shores a nuclear power industry. It says we do not need nuclear power as a part of the mix because we have fossil fuel and renewables to spare. I think the time has come to rethink this view, and this policy, and the consequent set of laws after the Lenzen Review of all the up-to-date academic and scientific literature, especially work done in this past year, on electricity generation policy.

The Lenzen review’s key findings were that:

• Fossil fuel and nuclear and hydro are our most available sources of base-load power;
• Nuclear and renewables best fulfil the current, pressing need for greenhouse mitigation;
• What we know best are nuclear, hydro and wind;
• What we have not fully tested are coal with carbon capture and storage, and solar;
• Fossil fuel technologies presently cost the least, followed by nuclear, then wind, then hydro, then solar;
• Hydro is the least subsidised, followed by nuclear and geothermal, wind, coal, biomass and solar;
• All the technologies have disadvantages, and this reinforces our need for a full portfolio of technologies, including uranium;
• and that nuclear power is the only low carbon technology available now, at a reasonable price, as an alternative to fossil fuels.

The Lenzen study debunks the prevailing myths that nuclear power is too slow, too expensive and not greenhouse-friendly. It supports the countervailing thesis that uranium exports can be part of our climate change narrative, a help not just to our economy but to the overall good health of the planet.

But my aim tonight is to also raise the potential – long recognised by many other countries – for nuclear energy to supply Australia’s future domestic energy needs and to have this debate with urgency, and with the most up-to-date information to hand.

A domestic nuclear industry could potentially be up and running within 10-15 years, but despite a rising level of community acceptance according to a number of recent surveys, with constraints to be addressed regarding safety, waste, proliferation and the risk of diversion, of this worthwhile idea, some governments, overtly at least, are against it.

The issue of proliferation is perhaps the most significant global issue to be addressed in our time, after advances in plant safety and waste treatment. In addition to international agreements, technology and the development of 4th Generation fusion reactors will lower, I believe, proliferation risks.

Repositories for low level and short-lived intermediate waste are in use worldwide and are straightforward technology – for example in the Champagne district in France, which has no present fear of contaminated wine. These wastes require compaction and, in some cases, storage in concrete. Transport safety has been excellent thus far, with tens of millions of movements of material with no accidents affecting people.

For long-lived wastes, there is wide international agreement on engineered geologic disposal as an effective, feasible and promising waste management end-point – seen as a radioactive waste management end-point that does not require monitoring and institutional controls, and is sustainable. Geologic repository programs are under way, most notably in Finland, Sweden, and the United States.

But from a domestic perspective, the major economic factors are capital costs, infrastructure requirements, the necessary regulatory regime and available fuel supply. The latter issue of supply is relevant because the nuclear fuel cycle includes the processing of oxide-enriched ore to gas and then to suitable fuel for use in reactors.

We currently have no domestic processing capacity and would therefore need to rely on the development of a domestic nuclear sector to process uranium ore that is suitable for use by reactors. Which means we should consider the establishment of nuclear processing facilities in Australia – to add value to our export ore and oxides.

Capital costs are the greatest factor in establishing a nuclear facility and the biggest barrier to entry followed by coordinated infrastructure to link generators to the electricity grid. This will require a long term development program of the order of ten to fifteen years. However, that time frame will ensure that nuclear energy has a role in achieving significant emissions reductions targets by Australia by 2050.

And given the uncertainty of the future coverage of CCS, and coal related technologies, it is prudent for Australia to review its current position opposing nuclear energy. It is a technology available today which can act as insurance against the uncertainties of the technologies of tomorrow, whatever they are, and a way of maintaining living standards and securing wages. Nuclear energy should be part of Australia’s prudent risk strategy policy mix aimed at addressing energy security and climate change.

Australia’s natural gas resources provide both immediate and long-term strategic advantage for Australia. Gas is no longer the bridesmaid to oil and coal. In fact, the energy and policy mix of more gas plus energy efficiency, CCS and nuclear power along with reafforestation and renewables is the only way we can do what we must reduce emissions by around 60 percent by 2050.

Gas, in particular, which is low in carbon emission and proven in power generation, is I believe the keystone of this environmental Hadrian’s Wall against global warming. Gas we have in copious abundance, and it is much of what we need, and what the islands of the South Pacific need if they are not to disappear.

Gas is immediate, and coal-power generation will buy time for the renewables and the sequestration of pollution, technologies that are still in the development stage. Gas will go straight into the grid, and into the grids of North and South-East Asia. Gas will generate thousands of new jobs, tens of billion of new investment, and billions more in export revenue, government taxes and royalties. Gas uses less water and less land, and creates less carbon. There are several hundreds of years of it, available and easily extractable, on Australian territory. It is reliable, proven, safe and affordable.

By 2050, industry asserts, gas can underwrite 20 percent reduction in carbon emissions and double the level of power available to Australian industries and Australian homes. In the short term, new CCGT power stations may be adopted. In the long term, new fossil fuel technologies, sequestered or not, filtered or not, with low or no emissions, may be adopted. These include the IGCC, the Intergrated Gassification Combined Cycle method, using coal as a fuel, and the more efficient natural gas-fired combined cycle plant as an additional fuel. This, as I say, will give us time, to find the silver bullet, if there is one, in sequestration or renewables.

The single largest driver of this energy hypothesis is the emergence of eastern Australia’s coal-seam gas (CSG) sector. This CSG resource has the potential to exceed that of the traditional home of Australia’s gas reserves, the North West Shelf.

The North West Shelf was thought for years to be probably all we needed. But with our eastern natural gas reserves in play, and our former plans to import gas from Papua New Guinea now abandoned, we can look to export of our gas reserves and profits therefrom, in amounts that are presently dizzying. A hundred years of our natural gas needs in Eastern Australia will be easily met – CSG already supplies 20 per cent of its needs – and there will be clearly more to spare a hundred years from now.

Gas-fired power generation is proven, reliable and clean. It has thus far provided energy to less than ten percent of our needs. It can lock in significant carbon savings and be sold, on present calculations, from between 20 dollars to 30 dollars per carbon dioxide equivalent, and, on those figures, slowly overtake coal.

It will certainly put initial upward pressure on domestic gas prices, but will easily sell competitively overseas I think the general assumption is that gas prices will rise incrementally over the coming decade, but the prospect of rapid increases to international parity are unlikely due to the significant supply side being offered by the development of coal seam gas. It has pipelines already in place. It is ready to go.

It can complement wind power, as is discussed in the Maximising the Value of Technology Discussion Paper, where Santos argues its importance in a portfolio of power generation methods. It will minimise the oscillations in supply, and bridge the way to more efficient and more miraculous technologies. The versatility of gas-fired power generation platforms and their ability to smooth these fluctuations means we would be then, if I may venture to coin a useful phrase, cooking with gas.

We cannot do this alone. India and China and other nations in the Asia Pacific have a strong appetite for Australian natural gas, and its lower carbon footprint, as the Indian-Australian Joint Working Group on Energy and Minerals lately asserted.

We can become the preferred supplier of LNG to the Asia Pacific. We can add to that region tens of thousands of new skilled jobs, tens of billions in new investment and more again in export revenues and royalty payments.

In Queensland, twenty billion in foreign investment has occurred in that sector in the past eighteen months. Multi-billion dollar projects involving LNG are coming to Gladstone, with some of the world’s most significant gas companies in play. Three thousand Australian workers will be employed in each project, and this can only be what some Hollywood writers would describe as “an excellent adventure”.

With coal, and gas, clean nuclear, wind and solar, and those emerging technologies that in the next decade may cleanse our skies and waterways, we have a clear way through to an untraumatic, economically sensible and environmentally sustainable future.

We would be dills not to seize it.