The week of energy policy announcements: pumped hydro, hydrogen, energy efficiency, EVs

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A week filled with the Coalition government’s climate policy announcements has been wrapped up with the official opening of public consultation on a national hydrogen strategy. The strategy has been mooted as the roadmap to potential $1.7 billion export industry.

After engaging Chief Scientist, Alan Finkel, to develop the draft strategy, the Morrison government says it stands ready to kickstart the establishment of a new clean hydrogen industry in Australia once the roadmap is finalized and released  in September 2019.

The agreement to develop a hydrogen strategy was one of the rare substantive outcomes of the December meeting of the COAG Energy Council, which grabbed headlines as NSW attempted to push for a zero-emissions policy only to be blocked by Federal Energy Minister Angus Taylor.

Australia’s potential to become the world’s largest producer and exporter of hydrogen produced by solar and wind powered electrolysers have been widely reported by CSIRO, ARENA, Alan Finkel and even the International Energy Agency (IEA), against the backdrop of a rising international market for hydrogen led by Asian countries such as South Korea and Japan. However, to unlock this potential, much more needs to be done.

“The government’s interest and support for this industry of the future is obviously welcome, but it needs to be accompanied by serious policy and strategy development to realize a massive new opportunity,” Clean Energy Council (CEC) Chief Executive Kane Thornton.

In addition to tangible policy initiatives, the CEC argues that an extension to the funding for the Australian Renewable Energy Agency (ARENA) is needed to unlock a huge potential export earner.

“ARENA has played an incredibly important role in helping to develop early-stage clean energy technology. While the agency is expected to spend almost all of its available funding in the next 12 months and wind up in 2022, its job is only half done,” Thorton said.

“If the Federal Government is serious about developing Australia’s hydrogen potential, it also needs to extend the funding of ARENA to allow it to leverage expertise that will help to reduce the cost of producing hydrogen in Australia and develop a promising new export earner for the future.”

However, the Morrison government seems set on pursuing the wrong hydrogen agenda – one based on hydrogen production from fossil fuels. According to Energy Minister Angus Taylor, the government has already invested more than $100 million into hydrogen projects, however half of the amount was allocated for a coal-to-hydrogen pilot in the La Trobe Valley, Victoria.

Instead of using CSIRO’s technology to transport renewable hydrogen in the form of ammonia, the Hydrogen Energy Supply Chain led by Kawasaki Heavy Industries will use 160 tonnes of brown coal from Loy Yang’s mine to create three tonnes of hydrogen which will be shipped to Japan via a specially-designed boat. So far, not good.

Previously on ScoMo climate policy pivot

In a bid to reposition itself on climate and energy policy, the Coalition has issued a flurry of announcements as part of its $3.5 billion environment policy, including a $2 billion over ten years to a Climate Solutions Fund – an extension to the Abbott government’s emissions reduction fund.

Over the past week, the federal government pledged $1.38 billion in funding for the Snowy 2.0 pumped hydro expansion, along with $56 million for the Marinus Link project, part of Tasmania’s Battery of the Nation program, which would provide a second interconnector across Bass Strait to increase the availability of the state’s hydro resources on the mainland.

While analysis shows that additional energy storage capacity makes financial sense in the light of coal retirements, and for the Marinus Link well ahead of schedule, the potential of these pumped hydro projects can be fully exploited only when they operate in concert with renewables.

“Don’t talk about Snowy 2.0 being renewable, when every time it pumps, it will be using off peak power from the dirty power stations we have in NSW today. They need to close, they fall over when the going gets tough in extreme weather, it’s time to move on into the 21st century with  renewables, so Snowy 2.0 can truly be a renewable project,” said the Climate Council’s Professor Andrew Stock.

The same is needed for the Marinus interconnector to stack up. In an initial study, TasNetworks estimated the capital cost of the Marinus Link would range from $1.3 – $1.7 billion for the 600 MW link or $1.9 – 3.1 billion for the 1200 MW capacity. Noting that the project is looking promising, ARENA underlined the initial findings and indicated a second interconnector could become economically feasible in the early 2030s or as early as the mid 2020s – depending on when existing coal fired power stations retire.

“The second interconnector with Tasmania only works if the coal closure rates increase and we have an over 50% reduction in emissions from the electricity sector – not the 26% that the Government has been charting,” says Ben Oquist, Executive Director of The Australia Institute.

The Marinus Link is part of Tasmania’s Battery of the Nation pumped hydro project, which has this week emerged as an early winner of the Underwriting New Generation Investment Program, with Morrison flagging willingness to funnel taxpayers money into the project and Tasmania’s Hodgman Government promising to allocate $30 million for Hydro Tasmania to narrow the number of potential sites from 14 down to three.

In another announcement, the Morrison government promised $50 million in more than 2,500 grants for businesses and community organizations to invest in new energy efficiency measures, and an additional $17 million to help building owners benchmark their energy use.

Finally, the government released a national strategy for electric vehicles on Monday – a single page document which is supposed to ensure the transition to EV technology and infrastructure. While the document states that addressing these issues now is necessary, it does not put forward any target or a clear policy.

The document comes off the back of a flagship report from the Senate, which includes recommendations and targets, calling for a government’s strategy that would give much greater support to Australians who are keen to make the switch from ICE [internal combustion engine] vehicles to EVs.

The peak body for the electric vehicle industry has expressed its disappointment at the federal government’s underwhelming approach to the electric vehicle revolution, outlined in the new Climate Solutions Fund.

“Now, on the eve of a federal election, we hear the government committing to nothing more than the creation of a plan about a plan. It’s underwhelming to say the least,” said Electric Vehicle Council chief executive Behyad Jafari, noting that a lack of clarity in the government’s plan was inadequate for a nation like Australia in 2019.