There has been a lot of talk lately about a revival of nuclear power, partly in response to the need to replace the energy previously supplied by Russia, and partly as a longer-term response to climate change. To the extent that this means avoiding premature closure of operational nuclear plants, while coal is still operating, this makes sense. But new nuclear power does not.
The misconception that nuclear makes economic sense remains widespread, but has been refuted many times. Less remarked on is the misconception is that the big obstacle to nuclear power is opposition from environmentalists.
Thanks to the efforts of Environmental Justice Australia (EJA) and the Environment Council of Central Queensland (EcoCeQ,), Environment Minister Tanya Plibersek reopened the environmental assessment process for 16 coal mines and two gas projects that had previously been approved. To take part, it was necessary to submit new information not available at the time of the original approvals.
I wrote the same comment for all of the coal projects*.
I wish to draw attention to the following information which was not available at the time this project was approved. This information implies that the climate damage caused by the project will be worse than seemed likely at the time, while any offsetting benefits will be smaller.
International agreement on the necessity of phasing out, or phasing down, the use of coal by 2030 reached at COP26 in Glasgow. This agreement is inconsistent with an expansion in the global supply of coal. It follows that any new mine can operate only at the expense of existing mines, which will in any case be required to reduce their output. It is highly likely that the resulting job losses will be incurred in existing coal-reliant communities elsewhere in Australia
The idea that coal-fired electricity generation could be rendered ‘clean’ through carbon capture and sequestration has now been abandoned. Most of the handful of projects that were put into operation have been closed down (Petra Nova) or scaled back (Boundary Dam). Other projects have been abandoned with large losses (Kemper). Hence any damage caused by additional use of coal cannot be prevented by CCS
Rapid reductions in the cost of solar PV, wind and storage technology have rendered new coal fired power uneconomic everywhere, and have led to an accelerated closure of existing coal-fired power station. Although China continues construction of new coal-fired power stations, competition from clean energy means that many coal-fired plants will operate only seasonally, or as reserve capacity. This implies reduced demand for coal.
At the time the project was evaluated, it seemed likely that coal would be replaced by gas, at least in the short term. This implied a smaller net benefit from eliminating coal than if the replacement is an immediate move to renewables+storage as now seems likely.
John Quiggin Professor of Economics, University of Queensland
I meant to write something on gas, but ran out of time. Submissions closed yesterday.
A new sandpit for long side discussions, conspiracy theories, idees fixes and so on.
To be clear, the sandpit is for regular commenters to pursue points that distract from regular discussion, including conspiracy-theoretic takes on the issues at hand. It’s not meant as a forum for visiting conspiracy theorists, or trolls posing as such.
The economic situation facing the majority of Australian households is dire. However, the common framing of the problem in terms of the “cost of living” distracts attention from the real problem, which is the decline in the real purchasing power of wages. Having remained stagnant for years, wages have now fallen far behind inflation. Moreover, the average rate of tax paid is rising because of bracket creep and because of the expiry of the Morrison government’s low- and middle-income tax offset, which was not extended in the October budget.
Under our current policy approach, economic welfare is declining
Neither of these outcomes is likely to improve significantly during the current term of government. The budget papers predict a further decline in real wages this year, and only a partial recovery over subsequent years. And while those on high incomes will benefit from the stage-three tax cuts, there is nothing for those on incomes below $45,000. Even the indexation increases in pensions and benefits lag behind inflation by six months.
In response to this crisis, Albanese has said, in effect, that his hands are tied. First, he denounces relief for low-income earners as “a cash-splash, a one-off giveaway to buy a headline. Cheap politics and hugely expensive economics”. But the same is true, in spades, of the massive stage-three tax cuts, which Labor promised to implement for fear of losing a few marginal high-income voters.
If the stage-three tax cuts had been cancelled or deferred in the October budget, Labor would have had room to improve the position of the worst-off voters, while maintaining a broadly stable ratio of debt to GDP. But Labor was too frightened of negative headlines to grasp this nettle.
Albanese’s other argument is that any expansionary fiscal policy would be cancelled out by the RBA, which would raise the interest rate. He observed that “fiscal policy needs to work with monetary policy, not contradict it”.
There’s an element of truth here, but also a huge problem. As well as maintaining price stability, the RBA is supposed to act to achieve full employment and “the economic prosperity and welfare of the people of Australia”. But under our current policy approach, economic welfare is declining. Unemployment is expected to rise, and real disposable incomes to fall, even in a situation where GDP is growing steadily.
Under the policy of central bank independence, first introduced under the Howard government, there is nothing that can be done about this. The Reserve Bank pursues its inflation target without regard to the policies of the elected government. But this policy has not served Australia, or other countries that have followed this course, at all well. It was necessarily abandoned during both the GFC and the Covid lockdown. If fiscal policy must work with monetary policy, the reverse should also hold true.
It is clear enough that our current economic policy institutions are not fit for purpose. Sadly, that includes the policies of the Albanese government.
It seems highly likely that the Republican Party will win control of the US House of Representatives, and possibly also the Senate, next week. Unless the margin is so narrow that a handful of believers in democracy can tip the balance, that will mean the end of electoral democracy in the US for the foreseeable future. Most House Republicans voted to overturn the 2020 election. All (except a few who were on the way out) voted against the Electoral Count Act which is supposed to make cheating more difficult, but which will surely be ignored if necessary. That’s without considering the vast numbers of election deniers who will win (or already hold) crucial offices at state and local level, and the likelihood that the Supreme Court will enable them further. And once the Republicans hold all the levers of power, they will never let go of them.
There is still a slim chance that this disaster can be staved off but, even if it isn’t, it will be a shameful memory to have abstained, or voted for a third party with no chance, in this last real election. That’s true whether the decision is out of laziness, hopelessness or a pseudo-left (in reality, aristocratic) view that both sides are equally bad. If you fall into one of these categories, (or if you actually want a Trumpist dictatorship), please don’t comment on this post, or interact with me in any way from now on.
Everyone in the world will be affected by the end of American democracy, but the great majority of us have no vote. All we can do is appeal to those who do to make the right choice, as I am doing here.