Path clear to a zero carbon economy
Ten years ago Lord Adair Turner made what he considers the most embarrassing prediction in a 40 year career which included decent lengths of time in consulting, banking, prudential regulation and academia.
The embarrassment occurred when he was the inaugural chairman of the body formed by the British government to provide independent advice on tackling and preparing for climate change.
“I was the first chair of the UK’s Climate Change Committee in 2008 and we did estimates of what might happen to the cost of wind and solar over the decade after that,” he says.
“Bluntly, I think that people have destroyed the contents of our papers, because it’s so embarrassing. I mean, we knew the price of wind and solar was coming down but we thought it might come down at, you know, 20 per cent a decade or something like that.
“Solar has come down by 90 per cent or so, wind has come down by 70 per cent. The matter of fact is that if you now run the numbers it’s quite possible that within 10 to 15 years you will be able to build systems or set out to build systems which are 85 per cent or so dependent on renewable technology, on wind and solar, electricity systems and that they will cost you, once you’ve built them no more than a coal fired power system.”
Fast forward a decade and Turner has a great deal of empathy for the Paris-based International Energy Agency and its annual forecasts of what will happen to the composition of the world’s sources of energy.
“If you look at the last 15 years of IEA reports, their flagship product, the world energy outlook and you simply draw in 2005 what they thought would happen to solar energy, then in 2006, then in 2007, right up to today, and what has actually happened, it’s one of those extraordinary things of continually getting it wrong and continually having to increase their forecasts,” he said.
“The levels of solar are way above what they were saying 15 years ago. Now, you know, I did that myself, I failed to see what was occurring.”
Nevertheless, Turner is back in the forecasting game in his role as a senior research fellow at the George Soros’ funded think tank, Institute for New Economic Thinking and in his role as the chairman of the Energy Transitions Commission (ETC).
The ETC. which aims to “accelerate change towards low-carbon energy systems that enable robust economic development and limit the rise in global temperature to well below 2°C”, is composed of a diverse group of industry leaders from government, business, think tanks and specialist lobby energy lobby groups.
Energy giants Shell and BP are members of the ETC and Turner says Anglo-Australian miner, Rio Tinto joined the group this month.
“At the global level what the Energy Transitions Commission has illustrated is that it is absolutely possible for the global economy to get to a zero-carbon economy by about 2060,” he says.
“The developed economies should arguably get there a bit earlier and developing ones a bit later, say 2050 for the developed economies and 2060 for developing. It’s absolutely possible to do that and at a cost to the global economy which will be less than 1 per cent of global GDP.”
Turner believes that as the world transitions toward a zero-carbon future there will be a unique opportunity for Australia to become an exporter of zero carbon energy.
“The key point to make is that in the long-term Australia’s in a fantastic position because it is super endowed with the greatest resource of all which is solar energy and it’s just sort of obvious,” he says.
“It has a very sunny geography and it has a huge land mass with a lot of land which is of relatively low value and that makes it very competitive in solar fleet production.
“Australia should realise that in the long term that soalr resource is a far bigger resource and a far better resource than coal because it’s a completely clean resource.
“So, the vision for the long-term future of the Australian economy should be a very positive one in a zero-carbon economy. I think it can by be an exporter of energy because it can be an exporter of hydrogen made from solar energy then exported across the world.
“To be blunt, I think if Australia is frightened by the transition to a zero-carbon economy then that’s just a complete failure of imagination to see it could be one of the biggest beneficiaries of a future zero-carbon economy.”
When Chanticleer raises the obvious question of how Australia can replace $56 billion in annual coal exports, Turner says the forecasts published by the ETC indicate coal consumption will fall dramatically as the steel industry decarbonises.
He says it is likely hydrogen will be used instead of coal in the steel production process and this will happen in China and India. Turner believes coal producing companies will come under increasing pressure to cap coal production as Glencore did earlier this year and oil and gas companies will be pressured to stop exploration activities.
“We said in our first report of the Energy Transition Commission, which was called Better Energy, Greater Prosperity, which we produced in April 2017, we said, here’s the vision of a low carbon and eventually zero carbon electricity systems, which over the next several years and several decades you can build to eventually be absolutely zero carbon, not low carbon,” he said.
“And what’s interesting is on the basis of that, we have been working for the last two years in India led by my co-Chair of the ETC, who is Dr Ajay Mathur of the Energy & Resources Institute in India and we’ve been working on how fast India can grow in that direction.
“We’ve just produced a report in the middle of February which shows that by 2030 India could progress to produce 30 per cent of its electricity from various renewables, so wind and solar, another 15 per cent from large hydro and nuclear and bioenergy, so 45 per cent zero carbon.
“They can do that at no extra cost to the economy, while also growing electricity generation at almost two and a half times, from 1100 terawatt hours to 2400 terawatt hours, and I think they will do that. The implication of that is that they don’t need to build any more coal capacity beyond the stuff which is already under construction and we think over the next 12 years they will retire more coal capacity than they construct.
“If somebody is thinking that the future prosperity of Australia is based off selling evermore coal to India, I think they’re wrong.”
Turner’s vision of a low carbon global economy includes a combination of carrots and sticks. He says it is inevitable there will be a tax on carbon. Also, he believes like minded countries will co-ordinate and co-operate on carbon reduction with no-cooperating countries penalised through higher tariffs.
Turner, who will join 40 other global innovators and leaders presenting at Creative Innovation 2019 Asia Pacific conference in Melbourne next month, says the use of thermal coal will fall by 18 per cent by 2040 and the use of oil will decline by 30 to 35 per cent by then.
“We think those sorts of figures are completely manageable and that they are required in order to balance the system in a way which meets the Paris Climate Agreements,” he says. “But we think they’re completely compatible with a growing economy.”