A DESERTEC-Australia Roadmap To A Greenhouse Gas-Free Australia by 2050

Climate change offers a huge opportunity to Australia to develop the nation's Outback energy resources and export that energy to the world. Doing so will make Australia richer and will help reduce the global risks of uncontrollable global warming.

In the roadmap below, DESERTEC-Australia outlines how Australia can reduce carbon emissions cost-effectively by 80-90% by 2050. The plan involves satisfying ALL of Australia's energy needs from the huge solar and geothermal resources in the Outback.

Background

Three elements constitute the climate change challenge. They are:

1. Rising global energy consumption. It's been this way since Thomas Edison invented the lightbulb and it's going to be like this for a long while yet. Civilization is dependent on electricity and this isn't going to change anytime soon.

2. The looming replacement cycle of current energy generation capacity. Most of Australia's electricity-generating capacity is coal-fired. Much of it was built during the 1960s and 1970s and many plants are reaching, or are more than 40 years old and must be progressively replaced in coming years. This is a worldwide problem, and not isolated to Australia.

3. Atmospheric accumulation of greenhouse gases must be limited 450 parts per million to avoid out-of-control global warming.

Rising energy consumption is occurring at a time when large amounts of existing energy generation capacity must be retired.	Atmospheric carbon accumulation must be limited to 450 ppm to avoid the worst ravages of climate change.
Source: "Uranium Mining, Processing and Nuclear Energy – Opportunities for Australia?" Department of Prime Minister and Cabinet, 2007	Source: Khosla Ventures
Click on graphics to enlarge

The Assets: Australia's Renewable Energy Resources

Australia's renewable energy resources are shown below. Biomass is located primarily in the eastern states. Wind resources are located along the southern coasts. Geothermal resources are located in the Cooper and Eromanga Basins. Solar energy exists pretty much everywhere, but is strongest in the interior. DESERTEC-Australia's roadmap focuses primarily on the huge potential represented by solar and geothermal.

Biomass is located in inland areas.	Australia's wind resources (the dark colors) are located along her southern coasts.
Australia's strongest solar resources (the lighter colors) are located in the interior.	Geothermal resources (the reds) are located in the Cooper and Eromanga Basins.
Source: "Securing Australia's Energy Future," Department of Prime Minister and Cabinet, 2004

Solar Energy

There are two kinds of solar energy: solar photovoltaics and solar thermal energy.

Solar photovoltaics converts solar energy directly into electricity. Solar panels on placed on rooftops and generate on-site power for localised use. Solar thermal converts sunlight into heat by concentrating and magnifying the sunlight. The best known form of solar thermal energy is solar hot water. But there's another, larger-scale form of solar thermal energy. It's known as concentrating solar thermal power (or concentrating solar power, generally abbreviated as CSP).

Concentrating solar power is best harnessed by large, centralised CSP power plants located in desert regions with high direct normal radiation. Direct normal radiation simply means strong sun in arid areas with little cloud cover or atmospheric moisture.

The graphic below illustrates how concentrating solar power works in the case of parabolic troughs, the most developed form of the technology. With parabolic troughs, sunshine is reflected off curved mirrors and focused on a central receiver pipe through which flows a liquid that the reflected and concentrated sunlight will heat to 400-1,000C. This heat is then drawn off to create steam to drive a traditional steam turbine.

Other forms of concentrating solar power are solar towers (lower left), solar dishes (lower middle) and and linear fresnel reflectors (lower right). Solar towers and dishes reach the highest efficiencies (ie highest temperatures), but also have highest manufacturing and construction costs. Fresnel reflectors have the lowest efficiencies in creating heat, but this is offset by lower manufacturing and construction costs. Parabolic troughs sit in the middle. But parabolic troughs currently have the advantage of a 25-year proven commercial operating record which the other technologies have yet to compile.

Parabolic troughs: most tested., medium efficiency, medium cost
Solar Towers: high efficiency but expensive	Solar Dishes:high efficiency but expensive	Fresnel Reflectors: lower efficiency, less expensive
Source: US National Renewable Energy Laboratory

Concentrating Solar Power is Here, Now and Proven

Parabolic trough concentrating solar power plants have been generating electricity for the California grid since the 1980s. Unlike carbon capture and storage or 'next-generation' nuclear, concentrating solar power is proven. In the Mojave Desert, 350 megawatts of capacity (roughly enough to power one third of Canberra) has been operating for the past 25 years. Half of all solar electricity ever generated has come from concentrating solar power.

Concentrating solar plants in California have been operating for more than 20 years
Source: US Renewable Energy Laboratory
Click top graphic to enlarge

Molten Salt, the 'battery'

Concentrating solar power can be rendered even more commercially attractive by its ability to temporarily "store" energy. To do so, liquid salt (an ideal 'storage' medium) is heated through the solar thermal process to 400-1,000C. It is then held in insulated storage tanks from which it can be drawn upon later to generate electricity. This means excess solar thermal energy generated during hot, sunny afternoons can be saved and used to generate power into the early evening after the sun goes down but while peak consumption demands are still being made upon the grid.

This "molten" salt technology is advancing rapidly. One Australian company in California -- Ausra -- believes it can extend 'storage' of solar energy to 24-hours through molten salt technologies. if it succeeds, it will open the door to round-the-clock generation of 'solar' energy exclusively. Today, 24-hour baseload power can be generated by concentrating solar power plants by combining them with natural gas turbines. Under this configuration, the natural gas turbines can produce power at night, while solar supplies power during the day. Such 'hybrid' solutions create low-cost, low-greenhouse gas emission baseload power.

Concentrating solar power coupled with solar salt storage and natural gas turbines can create 24x7 power at competitive prices with low greenhouse gas emissions.	Solar salt storage facilities can 'hold' excess solar heat to allow electricity generation in the evening after the sun goes down

Concentrating solar power now generates electricity at about US12c/kwh and falling rapidly. Coupled with molten salt and natural gas backup, a hybrid solar-gas-molten salt power plant can today generate electricity for about 8c/kwh. This is an intriguing number because it's the same price that new coal-fired power plant equipped with carbon capture and storage might achieve in 2015. Concentrating solar power and natural gas achieves 8c/kwh power now. And CSP/natural gas does it with greenhouse gas signature lower than carbon capture and storage.

Furthermore, concentrating solar power/natural gas plants can provide supply flexibility for the grid that basic baseload coal-fired power cannot. During a very hot weather afternoon in summer, a solar plant with storage and natural gas backup can 'triple up' electricity generation by running the natural gas turbine and the solar field at the same time as drawing down on stored heat to deal with grid demand spikes. This makes the overall electricity more efficient since less 'spinning capacity' is needed. This, in turn, lower electricity costs to consumers.

Concentrating Solar Power is Falling Rapidly Price

During the first wave of investment in concentrating solar power (between 1983 and 1989), concentrating solar power prices fell by half in just seven years (from US30c/kwh to 12c/kwh). In the 1990s, low oil prices prevented new capacity from being built. Today, with oil prices well over $100, money and brains are flowing back into CSP and prices are rapidly falling again. Experts expect current concentrating solar prices of about 12c/kwh (without molten storage) will halve again by 2015, probably sooner. That will put CSP on a price par with existing natural gas and coal-fired power generation even before carbon penalties are added to gas and coal. To be more specific, if 3.2c worth of carbon costs (derived by taking $40 per tonne carbon prices and multiplying them by coal-fired power emissions of .8 kg/kwh) are added to coal's current 3c/kwh generation costs and then adding another 1.5c/kwh for the upstream carbon emissions generated through digging up and delivery coal to power stations, concentrating solar power is already price competitive with properly carbon-adjusted coal-fired power.

Concentrating solar power prices fell by half in the 1980s. Prices are set to fall again by half in coming years as more CSP projects come on line globally.

Source: US National Renewable Energy Laboratory

Click on Image to enlarge

CSP Worldwide

Due to falling concentrating solar power technology prices, CSP's synergies with natural gas and the benefits of using heat storage with CSP, investment is flowing into the CSP industry. Global capacity is expanding rapidly.

In 2007, after a 15-year hiatus, the first new concentrating solar power capacity in the world went online: the 64MW "Nevada Solar One" project outside Las Vegas, Nevada. In Spain, 50MW of parabolic trough capacity named "Andasol 1" is also online and its capacity will be tripled to 150MW in coming years. Natural gas rich Abu Dhabi is investing in concentrating solar power to provide electricity for its MASDAR 'green city.' In California, nearly 3,000MW of new CSP capacity is now before permitting authorities, and 7,000MW of new capacity is planned worldwide. Given that CSP plants take much less time to construct than nuclear or coal, much of this new CSP could be online by 2012, creating a highly virtuous circle of uptake, achievements of economies of scale and improvements in technology and processes gained through 'learning by doing.'

All up, planned capacity expansions worldwide are expected to swell the industry 15 times over in the next five years, providing a firm commercial platform for future growth. Net result: rapidly-falling costs.

Huge capacity expansions are planned for concentrating solar power in coming years

Click image to enlarge

Geothermal

Like concentrating solar power, geothermal is another huge source of clean, cost effective energy. In Iceland, nearly electricity is drawn from geothermal. Nearly one-third of California's renewable energy comes from geothermal. The Philippines gets a quarter of its overall electricity from geothermal. Indonesia is believed to have the world's largest recoverable geothermal reserves, according to Chevron Corp. Chevron is actively developing geothermal plants in Indonesia and plans to develop more.

In Australia, a host of companies are active in the Cooper and Eromanga basins (see graphic, below right). Industry leader Geodynamics believes Australia's Outback-based geothermal resources can generate power for around A4.5c/kwh. That's much cheaper than fossil fuels once proper carbon weights are applied. It's also equivalent to the lowest estimates for nuclear, but with none of the safety issues that nuclear power entails.

Geothermal companies can produce power for less than 'clean coal' or nuclear.	Geothermal licenses and exploration is booming in Australia.
Source: Geodynamics	Source: Pirsa
Click on images to enlarge

Concentrating Solar Power and Geothermal: Ideal Partners

Huge geothermal and solar resources lie in Australia's Outback. The Centre for International Economics estimates there's enough geothermal energy beneath Australia to satisfy the nation's entire electricity needs for 450 years. As for concentrating solar power, the CSIRO believes Australia's entire electricity consumption could be satisfied by a mirror field 40-50 kilometres on a side. Thus, Australia's entire future energy needs could be more than satisfied exclusively through solar and geothermal power.

Hypothetically speaking, the entire world's electricity demand could be satisfied by a concentrating solar power mirror field in Outback Australia 432 kilometres on a side. Global primary energy demand (ie all energy usage) could be satisfied through a solar field 1,230 kilometres on a side located in Outback Australia -- a region with few other uses.

In the graphic below, the sizes of various hypothetical mirror fields needed to satisfy electricity needs ranging from Australia to the world are overlaid on the Australian continent. Looking at the graphic below, Australia's electricity needs could be met by a mirror field 50 kilometres on a side represented by the tiny square in the northwest corner of New South Wales. Above that, a mirror field 164 kilometres square could power China. Above that, a mirror field 223 kilometres square could power the US and a mirror field 432 kilometres square could power the world's electricity needs. The size of a hypothetical mirror field sufficient to meet global primary energy demand is overlaid over the For perspective's sake, the Woomera Prohibited Area is included in a blue outline. Were it to be covered with mirrors, it could power either China or the United States.

	Kms on a side Country 50 Australia 164 China 223 US 432 World
Not only Australia's but the entire world's energy demand could be met by solar fields in Australia's interior.	Mirror fields of relatively small sizes could satisfy energy needs.
Source: TREC

Combined costs/volumes of CSP/Geothermal In the Australian context

Geodynamics has estimated that vast amounts of geothermal energy from Australia's Outback could be generated at costs around A4.5c/kwh. Meanwhile, concentrating solar power (without molten storage) can generate power at about 12c/kwh. A hypothetical 50-50% blend of geothermal and concentrating solar power at today's prices and without molten salt storage would offer hypothetical current prices of 8.5c/kwh. This compares very favorably to the costs of carbon capture and storage in 2015 -- which itself hinges upon unproven technology. It also compares favorably to 'next-generation' nuclear when the upstream costs of uranium mining and enrichment, the downstream costs of radioactive waste storage and the associated security costs are added in. Ziggy Switkowski, John Howard's one-time nuclear expert, acknowledged nuclear wouldn't even be ready for Australia until 2020.

It's impossible to overstate this: concentrating solar power and and geothermal today offer combined energy prices equivalent to what carbon capture and storage and/or nuclear may offer tomorrow. Stated conversely, huge government subsidies aimed at jumpstarting 'clean coal' and nuclear could create terrible White Elephants for Australian taxpayers.

The case becomes even more compelling when research from the Australian Bureau of Agricultural and Resource Economics (ABARE), the Intergovernmental Panel on Climate Change (IPCC) and the Australian Nuclear Science and Technology Organisation ANSTO) are taken into account.

These organisations have studied the prospects for renewable energy and carbon capture and storage. ABARE has estimated concentrating solar power prices are falling at roughly 7% per year and that geothermal prices in Australia are falling about 4% per year. The IPCC has estimated the costs of still theoretical and unproven carbon capture and storage will fall by only 2-3% per year over the next decade. ANSTO has estimated the costs of nuclear power plants in Australia will fall at about the same pace as carbon capture and storage in Australia over the next 10-15 years.

This means that every year that goes by, the price advantage of solar and geothermal gets better and better compared to coal and nuclear. A hypothetical 50-50% blend of concentrating solar power and geothermal is already competitive with carbon capture and storage and/or properly carbon-adjusted legacy coal-fired fired power prices. By 2015, a 50-50 blend of solar and geothermal energy will be cheaper than nuclear. And given that carbon capture won't be ready (if then) until 2015 and nuclear won't be ready (if then) until 2020, this means both energy technologies are uncompetitive for forward planning of new energy generation capacity in Australia (see graphic below).

A blend of concentrating solar power and geothermal is cheaper than carbon capture and storage or nuclear over the long run

Sources: ANSTO, ABARE, IPCC, others

Getting Power to Market

Australia has large, clean, safe, cheap and massively-scalable power supplies in the Outback in the form of solar and geothermal power. How might that power be brought to market?

Australia's eastern electricity grid is concentrated along the coast and only occasionally pokes inland. Australia's huge solar and geothermal supplies are located in the Outback. Thus, the way to get these huge solar and geothermal resources to market is string a High-Voltage, Direct Current (HVDC) power line between Olympic Dam or Leigh Creek, South Australia to Roma, Queensland. This would provide a 'renewable energy superhighway' for Outback-based solar and geothermal resources to reach Eastern urban markets. Building HVDC power lines into the Outback would open the sparsely inhabited region to huge economic development opportunities in a sunrise industry as new, clean energy projects are developed to provide power to the nation at cost competitive prices. Such infrastructure would be expensive: a 1,000-kilometre HVDC power line would cost about $1 billion.

How might it be paid for?

What's needed is an Outback power line connecting Roxby Downs or Leigh Creek to Roma, Queensland.	The current eastern electricity grid doesn't stretch inland, and was built for a coastal, coal-fired era.
Source: TREC/DESERTEC	Source: ESAA

"Price Separation"

The Energy Users Association of Australia (ESAA) has long complained about the inefficiencies and deadweight economic losses of eastern Australia's current electricity transmission system.

The reason is transmission bottlenecks. Under the current electricity grid, low cost Queensland power can't flow directly to Victoria or South Australia. This creates electricity price divergences in Eastern state markets which estimates costs the Australian economy about $1 billion per year or about $10 billion since 1995. Therefore, a 1,000-kilometre, $1-billion HVDC power line connecting Leigh Creek/Olympic Dam to Roma, Queensland would pay for itself one year merely through enhanced efficiencies it would bring the existing grid. The benefits it would bring in opening up the Australian hinterland to development of renewable energy resources would be, in effect, "free."

Electricity "price separation" in Australia's eastern markets costs the economy about $1 billion per year.

Source: Energy Users Association of Australia

Click on image to enlarge

Were Australia to build electricity power lines connecting South Australia to Queensland, it will have a knock on effect in developing renewable energy resources in the Outback akin to standardising rail gauges across the country in the early 1900s or building the Snowy Scheme after World War II.

Australia has huge, unexploited solar resources in its continental interior akin in size to the oil fields of the Middle East in the early 20th Century. When the 'Seven Sisters' oil companies exploited those Middle Eastern oil fields, the global energy system changed forever. Today, Australia has the makings of an emerging global 'green energy' superpower. It's impossible to overstate the significance of the 'comparative advantage' Australia enjoys in such a key 21st Century sunrise industry as renewable energy.

Australia also has intellectual capital 'comparative advantage' in solar/geothermal energy -- at least for now. At present, there is no other country or multi-nation grouping (ie the EU) with such a broad collection of companies involved is so many niches of the geothermal/concentrating solar power industry.

Australia has the world's most broad-based solar industry, it includes: Solar Dishes -- Australian National University Parabolic Troughs -- Acquasol Solar Towers -- CSIRO Solar Chimneys -- Enviromission Concentrating Solar Photovoltiacs -- Solar Systems Hot Dry Rock Geothermal -- Geodynamics, Petratherm, Green Rock and others

TREC (Trans-Mediterranean Renewable Energy Cooperation)

Founded in 2003 under the auspices of the Club of Rome (a European think thank), TREC stands for Trans Mediterranean Renewable Energy Cooperation. It campaigns for greater European energy security through development of the vast solar energy capacities in North Africa and transmission of that electricity to the urbanised consumption markets of northern Europe. TREC's driving patron has been Germany, which has smartly concluded it's imprudent to outsource its future energy security to Vladimir Putin's Russia.

TREC's overarching idea is that a network of concentrating solar power plants constructed in North Africa and the Middle East (along with wind farms along Morocco's Atlantic coast) could deliver power northward via High Voltage Direct Current (HVDC) power lines to the European continent. To make that model fit Australia, all one need do is flip the graph 90 degrees clockwise. Instead of taking energy from the south and pumping it north, in Australia it can be pumped from west to east. Apart from that, the concept is the same.

	Click Image To Enlarge
A chain of solar and wind farms in North Africa could provide electricity for northern Europe.	Costs over the long term would be attractive.
Source: TREC	Source: German Aerospace Center

If Australia were to do the same, it could lay its HVDC power lines along existing rights of way used by its natural gas transmission infrastructure. This would limit any greenfield construction damage such power lines might cause while ensuring a robust clean energy supply for the future. As it happens, the nation's natural gas distribution nexus is at Moomba, right in the heart of the nation's most prospective solar and geothermal regions.

An initial power line connector between South Australia and Queensland to bring solar and geothermal to eastern markets...	..could be supplemented by other network infrastructure to open up further development of Outback solar and geothermal...	..using, potentially and among other things, existing rights of way for Australia's natural gas pipeline system.
STAGE 1	STAGE 2	Source: Australia Pipeline Trust

Surplus Energy-Electric cars

Consider this: If Australia's geothermal resources are enough to power the nation for 450 years and Australia's solar resources in the Outback are more than enough to satisfy the nation's entire electricity demand -- developing both could result in Australia producing a surplus of clean, green solar and geothermal energy. What could Australia do with such a surplus? It could shift its national vehicle fleet to electric power -- using surplus power from the Outback to charge up an national electric vehicle fleet.

Since most vehicles would be charged at night, surplus daytime energy could be turned into hydrogen at downstream locations, and thus "saved" for nighttime charging of vehicles. This idea is not new or original. It is contained in Australia's "National Hydrogen Study." Similarly, advances in molten salt technology could 'store' excess solar energy generated upstream on site. That 'stored' energy could then be pushed down the transmission system to urban markets during offpeak hours. The system flexibility is there.

Chevrolet Volt, 2010, US$30,000	Plug-in Toyota Prius, 2010, price unknown	Tesla Roadster, available now, US$100,000

 

Satisfying Australia's electricity and transport needs through solar and geothermal would reduce Australia's carbon emissions by two-thirds.	Progressively introducing electric vehicles would also reduce Australia's imports of refined petroleum products, improving the trade balance.
Source: "Tracking Kyoto," Office of the Prime Minister, 2008	Source: ABARE

Surplus Energy -- Exports

Now, think a bit further. Even if Australia satisfies both its electricity and transport needs with clean, green solar and geothermal capacity in the Outback, the resource contained in her Outback is so huge the nation could still be generating a surplus of power. What might it do?

Export it.

The graphics below display the nations of the world in two ways. On the left is the traditional mercator view of the world's nations. On the right, individual nation sizes are adjusted by their respective greenhouse gas signatures. Looking at the carbon-adjusted view China, India, Japan and South Korea look like promising markets for clean solar energy exports in a world of surplus Australian Outback generated concentrating solar power and geothermal and properly priced global carbon.

The question then becomes: how to get it there and how much would such transport cost?

Normal Mercator view of the world's countries.	Carbon-adjusted view of the world's countries.
Source: University of Sheffield	Source: University of Sheffield

GENI

GENI stands for Global Energy Network Initiative.The San Diego-based organization promotes the ideas of the late American futurist Buckminster Fuller.

Fuller believed a global electricity grid could create huge economic efficiencies through more efficient generation and transmission of electricity. He also believed such a system would generate huge global social gains by pushing electrification deeper into the developing world. To illustrate the concept, the GENI chart below shows existing domestic electricity transmission systems (in yellow) and proposed interconnections (in red). Of the needed interconnections, the most significant would be between northern Europe and the east coast of North America, Siberia and Alaska and Australia to Asia. Given that Siberia and Alaska are sparsely populated, and northern Europe and the east coast of the United States are both net energy importers, Australia to Asia seems a natural place to focus near-term efforts in creating a global grid. It also makes sense because Australia has the energy and Asia has the energy needs.

GENI espouses a globally-interconnected electricity system	In Australia's case, this would involve connecting its electricity grid to Asia
Source: GENI	Source: GENI

Consider the practicalities.

In the graphic below left, it can be seen that Indonesia has an electricity grid that traverses its island chain. In the graphic below right, it can be seen that subsea telecommunications cables crisscross Asia. Therefore, there are pathways for power cables connecting Australia to Asia. Such cables would not be much more lengthy than those TREC in Europe proposes to carry North African electricity to the urban markets of Germany, a distance of 1,400 km. Cables that length already transfer Quebec hydropower to New York City, Brazilian hydropower from Itaipu to Sao Paolo, and Three Gorges Dam power from outside Chungking to Shanghai.

Indonesia has power cables that traverse her island chain	Subsea telecommunications cables gird Asia.

Were Australia to lay cables connecting her energy-rich Outback interior to the electricity markets of Asia, there exist several options in doing so. Assuming an Australian terminus at Olympic Dam (although Leigh Creek is another option) cables could stretch either across the western Outback and into the ocean at Port Hedland and up to Indonesia, or overland to Darwin where a power line could go west to Indonesia, or even north through the South China sea to, say, Shanghai.

A cable connecting Olympic Dam to Darwin could then connect to the Indonesian grid.	A cable from Darwin could go directly north to Hong Kong or Shanghai, a distance of around 6,000 kilometres.
Source: Trec-Australia	Source: Trec-Australia

Building a cable like this could unlock international energy export sales opportunities for Australia that could bring gains to the Australian economy even larger than the benefits already realised through stringing a cable from Olympic Dam or Leigh Creek to Roma, Queensland. An international cable could spur international development of renewable energy resources in southeast Asia, primarily geothermal and wind. This would make a huge contribution to battling climate change. It would also cement Australia's reputation as a responsible global power and world climate change leader.

In considering large and expensive new infrastructure, a key consideration is maximising its use in order to pay down its costs as rapidly as possible. That, in turn, would involve seeking additional opportunities to increase its utilisation. As it happens, southeast and northeast Asia is situated in the tectonically-active Pacific "Rim of Fire." This, in turn, means there are huge geothermal resources in the region to be exploited. The Philippines, for instance, already gets 27% of its electricity from geothermal resources. Chevron Corp. estimates Indonesia has 27,000 Mwe of recoverable geothermal resources This is an amount equivalent to twice that nation's electricity consumption. Chevron has plans to ramp up geothermal energy production in Indonesia from 850 MWs to 10,000MWs or more by 2025. It also has the world's most efficient geothermal plant is located at Darajat on the island of Java. The plant provides power for the national capital of Jakarta.

Indonesia has an incentive to develop geothermal. It is running out of oil, may soon quit OPEC, and relies heavily on coal. Producing geothermal for the domestic market and for export would create economies of scale in geothermal development that could generate receipts to the country, reduce global greenhouse gas emissions by supplanting coal-fired power elsewhere, such as in China, Japan, Taiwan or South Korea. It would also plant the seeds of an employment-generating, long-lived future industry that could reduce the amount of opportunistic and illegal migration from Indonesia to Australia (aka 'boat people').

	The Darajat geothermal power plant in Indonesia is the world's most efficient. Darajat provides power for urban Jakarta, but Indonesia also has plentiful other geothermal resources. Source: Chevron Source: Chevron
Southeast Asia has huge geothermal resources.
Source: Geothermal Information Center

In addition, southeast and northeast Asia is rich in wind resources which coincidentally lie along the same corridors through which a major Australia-China power cable might run. The graph below shows a global map of wind resources, indicating abundant exploitable wind right throughout the southeast Asian region and up through coastal China. This would further open up enticing possibilities of catalytic investment leading to huge economic, social and environmental gains throughout the region.

Southeast Asia has huge wind resources.

Source: Evaluation of Global Windpower

Taken altogether, the wind and geothermal resources of southeast Asia and China suggest attractive potential for a green energy "superhighway" across the region through which renewable energy resources could be developed and transported. This would catalyse a virtuous circle of economic development, lower green energy costs through economies of scale and innovation and lower regional greenhouse gas emissions. An even more intriguing advantage may lie in the fact that the seasons are reversed in the northern and southern hemispheres. Australia's hot summer sun could create energy for electric heating in China during the northern winter, while northern hemisphere summer winds harvested by Chinese wind turbines could keep Australia warm during the southern winter. What's more, stored energy collected during the Australian day could be used to power China during morning hours in that nation due to east-west time differences. Synergy indeed.

Such an interconnection carrying renewable power would also have the benefit of reducing the need for coal-fired power throughout the region, as shown in the graph at the lower right.

A 'comparative advantage' map of Asia shows the region has several locations where renewable energy can be developed.	Both Australian and Indonesia are major coal exporters, both to China, but also Japan, Taiwan and South Korea. Exports of solar and geothermal could replace coal over the long-term.
Source: TREC Australia	Source: ABARE

A Big Cable: Who Might Build it?

Australia has 'world-first' skills in laying cables. The world's longest buried terrestrial HVDC power line is the 177-kilometre "Murray Link" connector between Victoria and South Australia. The 300-kilometre "Basslink" cable is the world's longest subsea cable, built in the harsh conditions of the Bass Strait.

Australia already has expertise in laying world-class cables.

Source: TREC/DESERTEC Australia

Building out Australia's solar and geothermal renewable energy resources in the Outback and connecting them to domestic and international markets utilises existing Australian skills. Yes, connecting Australia to Asia with big cables for exports of clean energy is audacious. But so was the Overland Telegraph project in the late 1800s that connected Australia to the world. And so was the Snowy Scheme in in the 1950s that provided cheap hydropower. Both projects ended up as iconic symbols of Australian national development. A cable connecting Australia's vast Outback renewable energy resources to the markets of Asia could become another iconic symbol of Australia, this time as a "clean energy superpower" and serious global climate change player.

How to Pay For It?

Big cables don't come cheap.

According to ABB, the Swiss global power and automation equipment supplier and the main player in high capacity, 4,000MW-rated power cables, such transmission capacity costs around $1.23 million per kilometre. Scaled up to meet the 220,000MW constant energy needs of China and stretching the 6,000 kilometres between Olympic Dam and Shanghai, such a cable project would cost around $500 billilon. Given Australia's GDP is only about $800 billion, that makes the idea plainly ludicrous, right?

55 4,000MW rated DC power lines stretching 6,000km from Olympic Dam to Shanghai would cost about $500 billion

Source: ABB

Click image to enlarge

Not necessarily.

In 2007 China emitted an estimated two billion tonnes of CO2 through domestic electricity production. Were these emissions valued at prevailing European traded carbon prices of US$40 per tonne (25 Euro), that's $77 billion per year. And that's only part of the scope of the problem in China. The China Daily newspaper reported last year that 'pollution' (broadly defined) costs the Chinese economy about $200 billion a year.

For a country committed to (among other things) food self-sufficiency, it's unsustainable to keep producing this level of pollution, greenhouse or otherwise, if it wants to ensure any kind of agriculture industry to keep social peace. As a result, China has big incentives to think creatively about its greenhouse problem. For its part, Australia has incentives to think creatively about greenhouse-friendly energy exports. That's because Australia is rich in just those resources.

Just as an Olympic Dam to Roma, Queensland HVDC cable which would pay itself off in roughly one year based merely upon increased efficiencies it would bring the domestic Australian grid, a cable between Olympic Dam and Shanghai would pay itself off in 6.5 years based upon the carbon savings in China it would yield. In addition, the cable could serve as the centrepiece of a kind of 'Southeast Asia clean energy superhighway' carrying renewable energy supplies throughout the region, including Indonesia and/or Philippine geothermal power, and Southeast Asian wind supplies. The catalytic effect on regional economic development would be huge, if for no other reason than that it would spread electrification, itself is a marker of economic development and increased political stability by giving the poor a greater stake in rising economic wealth.

Research has shown a correlation between electrification and national development.

Source: United Nations Development Report (2006)

The examples above are aimed at illustrating the kinds of opportunities that the "New Economics" of climate change and carbon presents. Therefore, rather than think about how expensive greenhouse gas remediation is, why not start thinking about the expense of the status quo?

A prime example is China's Three Gorges Dam. China says the dam project cost US$25 billion. Independent estimates, taking into account the environmental and social damage the dam project is creating, have put the tab at something more akin to $50 billion Some estimates are as high as $80 billion.

In Australia, carbon emissions resulting from electricity generation (valued at US$40 per tonne) amount to $10 billion per year. Hurricane Larry cost Australia roughly $10 billion, and experts tell us that uncontrolled climate change will make disastrous storms like that ever more common. In terms of securing access to energy resources and the battle for geopolitical power, Australia has spent roughly $3 billion in Iraq. It also plans to spend $6 billion on US fighter jets to deter China since neither Indonesia nor New Zealand pose any threat to the Australian mainland. Wouldn't it be smarter to tie China into long-term regional energy agreements that encourage geopolitical stability as a means of restraining the emerging giant than buying a few symbolic jets that would be wiped out quickly in any serious initial military conflict with China?

For its part, China says global warming is a problem created by western industrialization. China says global warming is a problem that is up to the west to solve. A "Southeast Asian Clean Energy Superhighway" might be one solution. China gets clean energy and greater assurance of domestic stability since pollution is becoming a focal point for political unrest in the rapidly country. Australia and other countries get a China bound more deeply into regional multilateral arrangements in which geopolitical stability is in everyone's interest. Australia should encourage this, if for no other reason than to lower its own needs for military spending and for the expanded exports it would bring.

Yes, the numbers involved are huge. But the International Energy Agency has estimated the world needs to spend $20 trillion dollars between now and 2030 to maintain adequate energy supplies. The overall numbers involved are huge. The numbers above are just one subset.

How To Pay - Exports of Gas

Australia has huge reserves of natural gas. They're enough to last the country, at current rates of production, until well after fossil fuels have been replaced by cleaner fuels. These reserves represent a huge resource for the nation -- not least of which because exporting gas doubles the 'bang for the buck' in reducing global carbon emissions.

Australia has huge reserves of natural gas that will be worth less and less as time goes on.

Source: ABARE

As it builds up renewable energy resources such as solar and geothermal, Australia should redirect of its gas resources toward a peaking power and load-balancing role in the domestic grid. The reason is that renewable energy can be sporadic. Natural gas is the ideal backup fuel for cloudy days when solar thermal isn't producing large amounts of power, or cloudy and still days in which wind and solar may be producing less than optimum. By using natural gas primarily for peaking power and load-balancing in the domestic grid and exporting marginally freed up gas supplies, Australia gains twice. How?

By increasing exports of gas, Australia gains near-term export receipts it can use to pay for imported technology to build up a world-class solar and geothermal industry. Once once it has built up a world-class solar and geothermal industry, it can then sell those skills into Asia.

Money today. Money tomorrow. Win-win.

	If natural gas is used primarily for domestic grid load-balancing, the surplus can be exported, generating export receipts and reducing carbon emissions overseas.
	Source: ABARE

How To Pay -- New Economics III -- Flat Price Energy

The 'New Economics' of carbon pricing changes everything.

It will radically transform markets through creating a shift to low emission energy sources. Assuming renewables win the battle against rent-seeking fossil fuel industries seeking future sinecures -- the global economy will reap even larger gains through flat price energy.

With renewable energy, fuel is 'free.' This is unlike fossil fuels or nuclear. Those energy generation source must continually pay fluctuating market prices for fuel. With renewables, initial plant and equipment cost a lot to build (dams, windmills, solar farms). After that's done, water, wind and sun are virtually 'free.' Once construction costs and interest rates are locked in, renewable energy production costs become highly transparent for the lifecycle of the plant. This raises the possibility that energy costs, and hence energy prices to consumers, could be forecast years in advance. In renewable energy, there are no wildcat strikes, oil or gas well explosions or any of the other unpredictable events that constantly bedevil fossil fuel markets and make prices gyrate. in terms of increased global financial stability, the positive implications are impossible to overstate.

Ever since the oil crises of the 1970s, energy prices have been volatile. For a generation, unnecessary and destructive energy price volatility has fed directly into inflation measures. These in turn have forced monetary policy to be conducted with a heavier hand in order to keep inflation under control. This has limited the 'speed limits' of economies. Worse, such volatility has spawned hugely and perversely destabilizing risk-shifting, zero-sum casinos known as futures markets and over-the-counter derivatives markets. The huge growth of these markets is a direct result of fluctuating price risks across entire economies generated, at their core, by volatile energy prices.

Crude oil prices, and other energy commodities have fluctuated wildly since the 1970s

Source: The Wall Street Journal

Once wildly fluctuating energy prices are stripped out of the system, unnecessary complexity disappears. Price gyrations are less. Inflation-adjusted price signals are less obscure. Miscues are fewer. Better business investment decisions result. Capital is used more effectively.

Most of today's global economic pathologies, including volatile financial markets, wars over energy, bank bailouts and business failures -- are all due to uncertainty and the mistake-prone devices used to limit it. And most of this uncertainty has a direct lineage traceable back to the oil crises of the 1970s. If energy market volatility is removed from the equation, the entire global economy will benefit. Another virtuous circle will be created.

The global macroeconomic positive externalities are absolutely huge:

--better signals for investment because real prices become more apparent, reducing scope for inefficient investments to be made resulting from inflation-obscured prices.
--eased the load on financial market regulators, who can't keep up with the financial sector's ability to keep losing money through reckless schemes and the 'moral hazard' risk they ultimately dump on society.
--greater certainty for consumers.
--reduced military and security expenditures through greater transparency and assurance of energy supply.
--much longer view can be taken of future supply and demand by dramatically reducing the variables involved in forecasting future needs.
--reduced/eliminated worries about "peak oil" (ie the fear we're running out of oil). That's because "peak sun," "peak geothermal," and "peak wind" (to name just a few) still lie about two billion years in the future.

The microeconomic positive externalities are also huge. Consider these:

$2 trillion: notional amount of outstanding energy hedging contracts
$1.5 trillion: Daily foreign exchange trading
$4 trillion: OTC credit derivatives

All of the above are centrally affected by movements in energy and its derivative effects on inflation and interest rates. Eliminate the major underlying source of instability, and the world becomes a vastly simpler place requiring less 'insurance' and risk management through financial markets. That frees up labor and capital trapped in those markets to engage in more productive economic activity.

It also makes the global economic system safer. Enron, Amaranth, Long-term Capital Management, Barings -- these were all financial disasters caused by wrong bets on financial volatility caused by, or at least unnecessarily exacerbated by, energy market volatility. We need to see these disasters as 'effects' and not 'causes.' The underlying problem is 'caused' by energy market volatility.

Take another example: food prices. They're going up. One reason is energy prices.That's because there is a large energy component in food. But another reason is the biofuels industry - an energy industry -- is currently soaking up corn supplies in order to create a petroleum alternative. With abundant, flat-price solar and geothermal energy, biofuels aren't needed. Volatility is decreased and transparency increased in food supplies.

One reasons today's oil prices are over $100 barrel and may go to $200 is because of a lack of investment in opening up new sources of supply occurred throughout the 1990s. And throughout that decades, analysts saw the current train wreck approaching. But nothing was done because -- energy prices were low. All else equal flat energy prices, even if at an average higher level than fluctuating prices, brings clarity to long-term decision making and encourages long term investment in capacity due to greater clarity over long-term returns. This allows a better alignment of long-term supply and demand.

Another argument in favor of renewables is that it takes 5-10 years to develop a new oil or gas field, and such fields remain finicky throughout their productive life span. New capacity in wind or solar can be put on line in just a year or two, and is arithmetically-scalable.

Energy is the world’s largest commodity market. Make it a flat price market and amazing things can happen. As above, consider the fact that "peak sun" is still 2 billion years away. "Peak geothermal" is the same. By contrast, we're virtually at "peak oil."

Fossil fuels are running out, while "peak sun" and "peak geothermal" remain 2 billion years away

The New Industrial Revolution Led by Energy

In the 1940s, economist John Maynard Keynes used the fabulous phrase "animal spirits" to describe creative forces at work in an economy. The phrase provokes optimism. His underlying point is: 'you never know what smart ideas motivated entrepreneurs will develop."

The fatal flaw of centrally-planned economies was that they suppressed 'animal spirits.' Conversely, properly constructed markets with credible incentives encourage these 'animal spirits.' Right now, huge amounts of 'animal spirits' are at work in renewable energy markets. Fabled Silicon Valley venture capital John Doerr has even gone so far as to call cleantech 'the mother of all emerging markets.' Even discounting for Yankee hyperbole, he has a point.

'Animal spirits' has a corollary in the 'Law of Accelerating Returns' developed by futurist Ray Kursweill. The 'Law of Accelerating Returns' posits that new discoveries encourage subsequent discoveries to occur even faster. The 'Law of Accelerating Returns,' on the macro level, is just a broader expression of "Moore's Law" in the computer industry, which posits that computer power doubles in capacity and halves in price every 18 months.

Here's some real world examples of how unleashing 'animal spirits' leads to the "Law of Accelerating Returns."

In the 1980s, the International Energy Agency developed forward forecasts of the uptake of wind energy globally, believing it would slowly march forward and upward as in the graph below. But real expansion in capacity turned out to be multiples of that. That was 'animal spirits' at work, largely set loose by Germany and Denmark's ground-breaking system of 30-year guaranteed premium 'feed in' tariffs for wind energy (and, later, solar).

The International Energy Agency's 1980s forecasts for windpower uptake were woefully low

Source: Wind Energy Association

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Now, consider telecommunications. In the 1970s, reforms in the industry deregulated government-owned monopoly phone services and increased the power of markets. The result is that globally telephony charges have fallen so low as to be virtually free due to 'animal spirit'-encouraged startups like Skype.

With deregulation, competition and the advance of technology, telephony costs have shrunk to the vanishing point.

Source: OECD

Once proper incentives are in place (and that means carbon pricing in energy markets) things have a way of happening ALOT faster than you think. The idea of a pan-Asian green energy super cable carrying Australian sun and geothermal energy northwards, and picking up regionally-generated renewable energy supplies along the way, may seem crazy today. But like the wind industry, the computer industry and the telecommunications industry -- what seems nutty today may seem obvious tomorrow.

The comedian Sid Caesar once said: "the man who invented the first wheel was an idiot. The man who invented the other three, he was a genius."

The point is that ideas first derided as crazy can turn out in hindsight to be flashes of brilliance. Never discount the unorthodox.

Even More Power

If Australia built an Outback energy generation system based upon serendipitously co-located concentrating solar power and geothermal, the question might arise once again: is there a way to squeeze even more out of the investment? As it turns out, there's another location in Australia that could also provide huge energy resources to the nation: the Nullarbor Plain.

Consider the largely uninhabited area located just west of the Western Australia/South Australia border. To get an idea of the resources available, consider the graphics below. On the left is an Australian wind map. The Nullarbor, in addition to being the least inhabited area of Australia's southern coast also, has world-class wind resources. Developing these in an area where few people live would encounter less civil society opposition. Serendipitously, the ocean off the Nullarbor has some of the world's strongest wave energy (see graphic lower right). This means there are two energy sources located in the same place.

An intensively-developed wind farm in an area of high wind resources along Australia's southern coast could power the nation.	The Great Australian Bight off the Nullarbor Plain has the world's most powerful wave energy
Source: Stephen Lincoln, University of Adelaide	Source: Carnegie Corp.

Looking more closely at the Nullarbor Plain, there's a roughly 100-kilometre long stretch of coast that lies outside parks. A series of wind turbines packed densely in a 10-kilometre long line along the coast and stretching inland as well, coupled with wave energy machines (and possibly wind turbines as well) located offshore, could provide massive amounts of power and could be transmitted roughly 600 kilometres to Olympic Dam via high-voltage, direct current power lines.

A roughly 100-kilometre length of Nullabor coastline just west of the WA-South Australia border lies outside national parks.	A large windfarm located in the area could provide power to the national renewable energy nexus at Olympic Dam via 660km long high-voltage, direct current power lines.

Templates: The North Sea and Texas

There are templates for a project like this. In the UK, a 1-gigawatt wind farm is planned in the North Sea off the Kent coast. In Texas, natural gas billionaire T. Boone Pickens is planning a huge wind farm for the panhandle area of Texas. In the UK, the power will be used to power London. In the case of Texas, the power generated by large windfarm located in the windy northern panhandle of the state will be carried south to power to the populous cities of of Austin, San Antonio and Houston.

The world's largest wind farm is planned for the North Sea off Suffolk in the UK.	A 4,000 MW wind farm is planned in remote Texas by natural billionaire T. Boone Pickens
Source: Forbes	Source: Forbes

What Australia needs to do now

Institute Carbon Pricing

Australia is on its way to doing this through a system of carbon trading. However, energy intensive industries and the fossil fuel industry are already aggressively seeking exemptions which would gut the process. These must be resisted. The price mechanism must be allowed to work unfettered. Battling climate change is not a technology problem. Battling climate change is an economic reform problem. That economic reform is credible carbon prices with no exceptions for favored, crony industries.

Fund Infrastructure that Can Be Used to Develop Renewables

This includes building power lines connecting either Olympic Dam or Leigh Creek to Roma, Queensland and thus opening out the Outback to renewable energy exploration and development.

Stop attempting to 'pick winners'

The Howard government had few qualms about handing out huge amounts of unsupervised public money to entrenched fossil fuel industries. The Rudd government looks set to do the same through various grants passed out to favored interests. A far less discriminatory system, and one more in line with economic thinking, would be to offer premium feed-in tariffs for low energy power (or prizes). This places the onus on competition, not lobbying and rent-seeking.