Additional comments – Senator the Hon Matthew Canavan

1.1The Chair’s report begins from an incorrect premise, which begins by stating that:

Global efforts to reduce greenhouse gas emissions and commitments to achieving net-zero emissions are transforming world trade. As a result, demand for Australia’s traditionally emissions-intensive export industries is changing as many countries, including Australia’s major trading partners, seek to replace their imports with ‘green’ alternatives to assist them to reach their decarbonisation goals.[1]

1.2The International Energy Agency recently reported that global coal demand had hit record levels:

As projected in the Coal 2022 report last December, global coal demand reached a new all-time high in 2022, rising above 8.3 billion tonnes (bt).[2]

1.3Coal demand is up 8 per cent in India, 4.6 per cent in China and a whopping 36 per cent in Indonesia. Even Europe recorded increases in coal demand of 1 per cent as it adjusts to the fallout from Russia’s invasion of Ukraine. The “net-zero transformation” of world trade is an invisible one.

1.4China's total coal imports have soared since the lifting of its unofficial ban on Australian imports. Customs data released on 8 August 2023 showed July imports at 39.26 million metric tons, level with June's 39.87 million but up almost 67% from the same month last year.For the first seven months of this year, the world's biggest coal importer saw arrivals of 261.18 million metric tons, up 88.6% from the same period in 2022.[3]

1.5According to the World Bank, without China successfully transitioning to a low-carbon economy, achieving global climate goals will be impossible. China emits 27 percent of global carbon dioxide and a third of the world’s greenhouse gases.[4]

1.6China has the greatest number of coal-fired power stations of any country or territory in the world. As of July 2022, there were 1,118 operational coal power plants on the Chinese Mainland. This was nearly four times the number of such power stations in India, which ranked second. China accounts for over 50 percent of total global coal electricity generation.[5]In the first half of 2023, China saw 52 gigawatts (GW) of new coal power permitted, maintaining the previous rhythm of permitting two coal power plants per week.Coal power plant commissioning also doubled year-on-year, with 17.1 GW added to the grid in the first half of 2023.[6]

1.7In India, three new coal plant expansions (3.9 gigawatts, or GW) received permits in the first five months of 2023 alone, up from zero the year before, as well as seven other coal plant proposals (7.6 GW) also moving forward into the permission process, and two additional coal plants (2.9 GW) appeared under consideration for the first time this year.[7]

1.8The report focusses on and significantly overstates, the capacity of new technologies not yet proven or tested at scale. Take for example, hydrogen.

1.9Green Hydrogen is produced by renewables with an electric current breaking down water into hydrogen and oxygen (electrolysis). Hydrogen advocates focus on the source and cost of electricity for the electrolysis – without stating the real fact – electrolysis needs water. Nine tonnes of water are needed to produce one tonne of hydrogen with electrolysis. The water also needs to be purified first. The energy-hungry desalination plant is coming back in vogue.Water purification typically requires two tonnes of impure water to produce one ton of purified water. So, one tonne of hydrogen actually needs 18 tonnes of water. Accounting for losses, the ratio is closer to 20 tonnes of water for every one ton of hydrogen.[8]

1.10It takes 20 tonnes of water to make one ton of hydrogen fuel.A dam or river can't supply that quantity of water. The source of water doesn't get a mention. Where do you suppose that will be?

1.11Hydrogen production requires secure, long-term access to water, which may prove challenging in a country known for variable rainfall and frequent droughts, particularly as the impacts of climate change intensify. While the Australian hydrogen industry looks set to take off, a level of uncertainty remains as to whether Australia's domestic water resources can support long-term, commercial-scale hydrogen production.

1.12Water access regimes and trading schemes in Australia are complex, with different rules applying in each of the states and territories. Water pricing, availability and use restrictions also differ between states, and between water sources within states. These factors should be considered when project planning and budgeting.

1.13Desalination, recycled wastewater and stormwater are being explored as alternatives to relying on fresh water and the traditional water entitlements model for hydrogen production and other industrial applications. Project developers should consider exploring alternative water sources for hydrogen production, and factor potential changes in water supply into project planning and costs.[9]

1.14Submitters highlighted Australia’s considerable natural strengths that underpin the opportunity to become a green energy superpower. These include abundant renewable energy resources (solar and wind) a large land mass with low population density, extensive marine jurisdiction, significant critical minerals reserves and geographical proximity to key export markets.[10]

1.15Australia might have the highest solar radiation per square metre of any continent in the world – but you can’t generate solar energy when the sun doesn’t shine – so it is at most available and generating energy for 12 hours a day – when the power needs of households and business require reliable power 24 hours a day.The vast tracts of land required to capture this energy is destroying natural landscapes, agricultural lands and regional communities. Not to mention the thousands of kilometres of transmission lines required to bring this energy into the grid.If we can’t generate enough renewable energy for domestic use, how and when will we be realistically in a position to export this energy?

1.16Australia’s landscape also provides an abundance of wind[11] – but you can’t predict the wind and you can’t generate wind energy when the wind doesn’t blow at a sufficient rate. Tops of mountain ranges are being flattened, vast tracts of land (including pristine vegetation) is being destroyed in an effort to secure the optimal position to catch the wind.And there is further need for thousands more kilometres of transmission lines required to bring this energy into the grid.

1.17Furthermore, the degradation and clearing of these landscapes increases the risk of polluted run off into our precious water ways, rivers and oceans.

1.18Australia’s marine jurisdiction is approximately double the size of Australia’s land mass, and accounts for four per cent of the world’s oceans.[12] But we want to spoil, disturb and destroy this marine environment with offshore wind developments – and yet more kilometres of transmission lines back into the onshore grid.

1.19There are increasing concerns about the impact of large-scale wind and solar energy on our pristine landscape.

1.20Wind energy also has severe environmental effects. Most significantly its land footprint. On average wind requires 421x more land than nuclear, with estimates comparing it to the Rolls Royce SMR stipulating 10,000x more land is needed for wind to produce the same output of electricity (Bryce, 2022). In most cases this land is unsuitable for further use with exclusion zones needed to avoid negative health impacts derived from wind turbines (Metzger, 2011). Moreover, wind has a detrimental impact on wildlife particularly birds.[13]

1.21In its submission to the recent Inquiry into removing nuclear energy prohibitions, Voice for Walcha’s stated that:

1.22The proposed wind farm consists of up to 119 wind turbine generators (WTGs) with a maximum tip height of 230m and ancillary infrastructure, including substations, a battery energy storage system (BESS), new and upgraded roads, overhead cabling and underground cabling. Temporary construction facilities, including batching and crushing facilities will also operate during the construction period.This Wind Farm and others planned in the vicinity will cause considerable environmental damage, cause significant visual impact, may impact property values, will cause health issues associated with audible noise and inaudible low frequency noise, will cause considerable traffic disruption during construction and most importantly has already caused community discord.[14]

1.23Similarly, Responsible Energy Development for New England raised concerns about the impact on their community of renewable energy projects in its submission: “Our Community is experiencing the “rollout” of some 14 GW of Renewable Energy Projects which will result in some 2000 Wind Towers and many millions of Solar panels along with new Transmission Lines, new Substations Battery Storage and Pumped Hydro.If constructed it will result in massive overdevelopment and Cumulative Impact on Prime Agricultural Land, a delicate Ecosystem and a relatively closely settled rural environment. This has resulted in mental stress on neighbours and division amongst small Rural Communities. This area simply has not got the resources to host such massive overdevelopment.[15]

1.24And in testimony to that Inquiry, Mr Irwin made the following comments about the impact of transmission lines: “The big advantage of repowering existing coal-fired power stations is that the transmission system is already there. The problem with solar is that you need such a vast area of land. Darlington Point is 1,000 hectares. You have to put it out remotely. That means that you've got to put in a lot of extra transmission to connect it to where you want it. The other problem is that, with the win not blowing all the time and the sun not shining all the time, the way you try to get around that is moving it around the country, so we're going to need a lot more big transmission links. This is a really big expense. We're seeing this in the AEMO estimates. They're going to need a huge amount of extra interstate transmission as well. It's hardly used; it's not used up to its capacity a lot of the time, so it's not the best investment.”[16]

1.25Australia is also endowed with vast geological reserves and mineral resources, including critical minerals. Australia is one of the world's leading producers of bauxite (aluminium ore), iron ore, lithium, gold, lead, diamond, rare earth elements, uranium, and zinc. Australia also has large mineral sand deposits of ilmenite, zircon and rutile. In addition, Australia produces large quantities of black coal, manganese, antimony, nickel, silver, cobalt, copper and tin.[17]

1.26Another aspect of this report is the significant overstatement of the current production of the many raw materials that are essential inputs to the production of low emissions technologies that are vital for the world to achieve its decarbonisation goals.Some of these raw minerals are defined as ‘critical minerals’ on the basis that they are both essential for modern technologies, economies or national security and that there is a risk of supply chain disruption or limited availability.[18]

1.27As pointed out by the Minerals Council of Australia in its submission to the critical mineral’s strategy:

The world must undergo an extraordinary deployment of clean energy technologies to achieve global net zero emissions by 2050, along with a massive increase in global production of the material inputs required to manufacture the necessary technologies and infrastructure.

1.28With faster and more streamlined approvals and cheaper energy, the economic opportunity critical minerals present for Australia is significant. Global mining investment is expected to increase by US$100 billion annually from current levels to produce the mineral commodities required for the world to achieve net-zero emissions by 2050. This equates to about A$4 trillion of investment required between now and 2050.

1.29Australia is fortunate to have the mineral resources, stable political system, world leading exploration geoscience and environmental management systems needed to meet the growing global demand for critical minerals, including mineral fertilisers and minerals at risk of longer-term supply disruptions. However, unless the Australian Government puts business growth and investment at the centre of its policy making these attributes are not enough to seize the opportunity before us.

1.30Mining investment cannot be taken for granted in the face of strong and growing competition from other countries. And yet, without investment in mining and early stage processing there will be no opportunity for mid-stage and end stage manufacturing in Australia.

1.31The Australian Government has a clear role in providing policy settings that improve investment conditions for mining in general – and critical minerals in particular – if Australia is to successfully attract the capital and technology needed to capture this opportunity and support long-term industry growth and job creation.

1.32That will require a sophisticated and integrated approach to national and international economic policy. It will require the development of more strategic and economic partnerships that go well beyond free trade agreements and establish mutually supportive domestic policy settings between Australia and its key partners – policy settings that integrate the supply chains for the minerals and manufactures needed by our separate economies.

1.33However, to successfully establish our mining and manufacturing future we must also look at our domestic policy and regulatory settings. We also need to be competitive as a destination for capital. Our ability to attract the necessary capital and become the lead global supplier of processed critical minerals and metals and their manufacture means we need to find ways to remove our economic and policy friction points and infrastructure inefficiencies that drag on our economic objectives. We need to drive a domestic economic policy realignment that delivers reliable and affordable energy, skills, technology and infrastructure.

1.34Australia is an expensive place to do business. We have a high-cost business environment relative to our competitors in the minerals sector: with a high cost energy and transport infrastructure, chemicals and other inputs, skilled labour, land, transport, tax rates and high costs associated with regulatory processes and approval delays.

1.35Domestic policy settings and policy stability are also of critical importance to Australia’s capacity to attract multi-billion dollar capital investments into mining, processing and manufacturing projects. Currently there are significant policy and regulatory disconnects and differences between federal, state and territory governments that create frictions and inconsistencies, driving up costs, adding delays or worse, driving onshore processing offshore.[19]

1.36One of the most limiting features of this 200-page report is the absence of any consideration of the world’s most reliable, low emission energy source – that is nuclear energy.

1.37Of the 20 richest nations in the world only three do not have nuclear power: Australia, Saudi Arabia and Italy. Saudi Arabia is building a nuclear power station and Italy gets much of its imported electricity from France, where over 60 per cent of the electricity is produced by nuclear.

1.38Australia’s status as a nuclear outcast is more remarkable given that our country has the largest reserves of uranium in the world. Australia is the world’s fourth largest producer of uranium and is home to one of the world’s leading nuclear medical facilities just 30 kilometres from the centre of Sydney.[20]

1.39Given that Australia’s coal fired power fleet is now old, and governments have not supported constructing new ones because of concerns over climate change, there has never been a greater justification for overturing the ban on nuclear energy.

1.40Nuclear energy delivers electricity by harnessing the heat produced in the fission, or splitting, of radioactive isotopes of uranium or plutonium in a reactor. Nuclear energy is also widely used in submarines for power and propulsion, but also other shipping, including aircraft carriers and icebreakers. Australia has just approved the use of nuclear-powered submarines in our waters.

1.41Nuclear plants are generally characterised by large capacity and output, high capital cost, and long construction times, but relatively low operating costs and almost zero carbon dioxide emissions from their operation.[21]

1.42Nuclear energy is used to produce electricity in 31 countries from some 450 nuclear reactors, providing around 10 per cent of global electricity. Many nations are building new nuclear power plants because they provide reliable, emission free power. There are 54 nuclear power stations under construction.[22]

1.43There is a strong case that nuclear energy can provide a competitive energy option especially against the alternative of relying on a firmed renewable energy solution.

1.44The key question for Australia’s future is whether nuclear is comparable to other options under consideration in this inquiry and presented in this report.

1.45In a major report in 2020 comparing the costs of different energy technologies, the International Energy Agency (IEA) concluded that: “The cost of electricity from new nuclear power plants remains stable, yet electricity from the long-term operation of nuclear power plants constitutes the least cost option for low-carbon generation.”[23]

1.46Given the IEA’s findings on the competitiveness of existing nuclear technologies it is strange that this Inquiry has not bothered to even consider this as an option, or even attempt to incorporate any information in this its report.

1.47Given the cost blowouts that are occurring on major projects like Snowy Hydro 2.0 and the Battery of the Nation, it is not clear that these projects will, or have to, proceed. If Australia instead chose to build nuclear plants, there would be reduced need for large storage or transmission projects like these. Therefore, excluding their costs to compare the relative costs of nuclear and renewables produces a misleading comparison.

1.48Putting aside the estimated costs of different energy options, the actual costs of electricity in countries that have adopted a high penetration of wind and solar energy have been much higher than those that have predominantly relied on nuclear energy. For example, those high-income OECD countries with a higher share of nuclear energy have an average electricity price 25 per cent lower, than those countries with an above average share of solar and wind electricity.[24]

1.49A comparison between two countries like Australia highlights the higher cost of solar and wind electricity in the real world. Germany has adopted aggressive investments in solar and wind electricity.Germany has also been phasing out its nuclear power plants. Solar and wind electricity now generate a third of Germany’s electricity and its electricity price for households is 54 cents per kWh. In comparison, France has a long history of investing in nuclear electricity and 63 per cent of France’s electricity is generated by nuclear. (Only 12 per cent of France’s electricity is generated by solar and wind energy.) France’s household electricity price is 33 cents per kWh, almost 40 per cent lower than Germany’s electricity prices.[25]

1.50Nuclear power, like wind and solar, generates only a small amount of carbon dioxide emissions. In addition, longer lifetime requires less replacement. The design lifetime for nuclear power plants is around 60 years, solar lasts for about 25 years and wind for about 20 years.

1.51Carbon emissions are generated through the construction of new nuclear, solar and wind facilities. However, given that a nuclear plant must be replaced much less frequently these emissions will be lower as well.

1.52The broader environmental impacts of nuclear power are less than those of wind and solar because nuclear energy uses less land for the same amount of power generation.Nuclear energy’s high energy density requires fewer materials and less land area per unit of electricity generated.

1.53Nuclear energy also has a much lower environmental cost than large scale wind and solar energy. Given that nuclear energy has a smaller environmental footprint than other energy types, it is ironic that nuclear remains prohibited in Australia’s primary laws to protect the environment. This is just another reason for why Australia’s ban on nuclear is illogical.

Conclusion

1.54If we are serious about the reduction of emissions to meet targets, and the Government’s target is for 82 per cent of Australia’s electricity to come from renewable sources by 2030, then we should explore all low-carbon options—and it is a bonus that nuclear is also a fantastic source of reliable baseload power.

1.55Why are we limiting ourselves to renewables and hedging our bets unless there is a political or financial agenda with the renewable industry?

1.56Nuclear is fit-for-purpose from the moment it is brought online. We are spending billions to Rewire the Nation and pave our agricultural land with transmission lines, because it doesn't work with existing infrastructure. Nuclear does, and not only is it fit-for-purpose, but when we move to the next generation of energy technology it will be a direct exchange, rather than the billions likely to be required to again change the energy infrastructure to future technologies.

1.57Yet the focus of this report rests squarely on the role Australia would play in global decarbonisation well beyond the size of its emissions and economy.A push to make Australia a green energy superpower will only harm our economy, our environment, and our future.

Recommendations

1.58Recommendation 1: That the Australian Government add uranium to its list of critical (or green) minerals.

1.59Recommendation 2: That the Australian Government remove the ban on nuclear power.

1.60Recommendation 3: That the Australian Government impose a moratorium on large scale renewable energy projects until a better regulatory approval process is put in place to assess the cumulative impacts of these projects on Australia’s land and water resources.

1.61Recommendation 4: That the Australian Government ban the use of freshwater for the creation of hydrogen for export.As the driest continent on Earth, Australia should not export its scarce water resources to other countries.

Hon Matthew Canavan

LNP Senator for Queensland

Committee Member

Footnotes

[1]Committee Report, page 1.

[2]https://www.iea.org/reports/coal-market-update-july-2023/demand (accessed 26 September 2023).

[3]https://www.afr.com/ 3 July 2023 (accessed 26 September 2023).

[4]https://www.worldbank.org/en/news/press-release/2022/10/12/china-s-transition-to-a-low-carbon-economy-and-climate-resilience-needs-shifts-in-resources-and-technologies (accessed 26 September 2023).

[5]Global operational coal-fired power stations by country 2022, published by Statista Research Department, 25 August 2023 (accessed 26 September 2023).

[6]https://globalenergymonitor.org/press-release/chinas-coal-power-spree-could-see-over-300-coal-plants-added-before-emissions-peak/ 28 August 2023 (accessed 26 September 2023).

[7]Ibid.

[8]https://rmi.org/hydrogen-reality-check-distilling-green-hydrogens-water-consumption (accessed 26 September 2023).

[9]Ibid.

[10]Committee Report, Pages 15-16.

[11]Committee Report, page 17.

[12]Committee Report, page 18.

[13]Coalition Dissenting Report, Inquiry into Environment and Other Legislation Amendment (Removing Nuclear Energy Prohibitions) Bill 2022.

[14]Ibid, page 85.

[15]Ibid, page 86.

[16]Ibid.

[17]https://www.ga.gov.au/education/classroom-resources/minerals-energy/australian-mineral-facts (accessed 26 September 2023).

[18]https://www.ga.gov.au/scientific-topics/minerals/critical-minerals (accessed 26 September 2023).

[19]https://minerals.org.au/resources/submission-to-australias-critical-minerals-strategy-discussion-paper/ (accessed 26 September 2023).

[20]Coalition Dissenting Report, Inquiry into Environment and Other Legislation Amendment (Removing Nuclear Energy Prohibitions) Bill 2022.

[21]Ibid.

[22]Ibid.

[23]Ibid.

[24]Ibid.

[25]Ibid.