The Australian Financial Review (AFR) secured a strong gathering of speakers as it continues to push its summits as an alternative to Canberra. Yet it was a Canberra crowd on show: ministers, industry, regulators, investors – everyone except the group with equal influence over the speed of transition – communities and their engagement through the approvals process. More on that later.
Headlines or insights?
As well, there was a much better effort from AFR moderators to extract understanding and detail from speakers, rather than headlines as in previous summits. But still they needed to go deeper. This was a summit with a specialist audience, but much was said at a generic, base level of understanding.
Indeed some speakers, guided from previous outings, came prepared to generate headlines. Boral claimed that it has to turn off its plant “almost every day” due to spikes in energy prices. As the moderator suggested, it seems odd for such an energy-dependent producer to be on a spot price, and private conversations later confirmed that plant stoppages might happen “once or twice a year”.
The new chair of the National Reconstruction Fund (NRF), on the other hand, pushed the more constructive headline ‘Go hard, be brave’. In a transition as complex as this, Martijn Wilder said we need to take a portfolio approach and accept that some ideas to be funded by the NRF will not work. He pleaded with commentators not to punish every learning opportunity, but to celebrate rational risk-taking as a necessary mindset and the route to testing good ideas.
A clear split on nuclear
Overall, there was extremely strong consensus within industry of the need for the transition, with a supporting role for gas, and support for AEMO’s Integrated Systems Plan. The only bone of real contention was the potential of nuclear energy. In the blue corner on the cost question alone, Minister Bowen and the CSIRO/AEMO GenCost report; in the red corner, Shadow Minister O’Brien and Westinghouse, who produces the small modular reactors.
But even Westinghouse conceded ‘small modular reactors’ (SMRs) would have only a limited baseload role in support of renewables, and are at best 15 years away for Australia, assuming everyone supports them. That remains too late to replace departing coal, before considering the emissions spent in construction and the water used in operation. Offshore wind is gaining support as alternative baseload, with oceans wind being stronger and more consistent than onshore.
Social licence for a project, or a plan?
There are headwinds to the transition plan, in particular on social licence, in two areas. Both fall where private rights intersect with community need. This is a place for political parties especially to help find solutions, to be bipartisan on shared energy and community goals.
The first area is major energy infrastructure projects. There is certainly a need for speed over the next 15 years. At the moment, the consultation processes that are holding up investment seem to be rules-based rather than outcomes-based, and compensation-based rather than seeking to build sustainable local economies.
Perhaps there is a need to move on from each project being its own negotiation battlefield. Perhaps it would be worthwhile to invest some time in clarifying a more transparent, evidence- and respect-based framework for community agreement on a sustainable future that all parties can trust. That investment may clear the road for much faster and certain processes, and more diverse and innovative local solutions.
Whatever the case, a different approach is needed. As one former regulator confessed, it was a revelation to hear that landowners preferred to talk with their neighbours, rather than as individuals – which is consultation 101 in any other world.
The second area is in ‘consumer energy resources’ or CER, the new acronym to describe all the rooftop solar and batteries that households and businesses are laying out and which can already meet up to 48% of our national energy demand – in the middle of a sunny day. That is fine for those lucky enough to have invested in CER, but the grid needs massive investment to cater for the energy flows, which all energy users have to pay for. Again, compromise will be needed to manage both the grid and the competing interests.
To be fair, better approaches are being pursued, in particular through the proposed welcome changes to the Australian Energy Rules on community engagement for infrastructure projects, and through State-based enquiries. However, these rules still treat each project as its own end, presume ‘community benefits’ means compensation or funding, do not call for an integrated approach to land use planning, nor insist on local community participation in that planning.
There is still much work to be done to ensure the energy transition fulfils its potential to renew for the better both the Australian economy and many of its communities. But that potential is very strong, and very much remains in sight.
Josh Dowse is Head of ESG for the communication consultancy SenateSHJ.