by Lord Andrew Turnbull
In this article, the author explains the benefits of government taking a flexible portfolio of energy options. The subtitle of the article is actually "When the price of fuel reflects all the costs, government and industry will know where to invest. "
In order to create such a framework, a government needs to balance out three elements: the ecological impact of carbon [and waste as in the case of nuclear energy], the variability of fuel supply, and the costs of energy security.
The element can be implemented using a shadow price for carbon and by setting a carbon-tax, license restrictions and environmental regulations. The second element, as sugguested in the article needs also take into account the volatility of some of the energy sources. The problem with volatility of the price of fuel can be managed by a mix of different energy source: some high-upfront capital source which typically is like to a low continuous running cost (such as nuclear energy as suggested in the article, but I will argue for solar in country like Australia) and some highly source with good response to demand, such as convention generator.
The article does not go into great depth about the energy security except mentioning that government should seek out a source which does not depend on political relationships with some countries, which, in my opinion, is easy to say. However, in today's political climate, a large deposit of harmful waste (nuclear or carbon dioxide) is a potential target for a terror attack and we should avoid as much as possible.
After reading this, I still think Australia's best energy portfolio would be a capped coal-fire generation (capped at present level and put in place a regulatory timetable of reducing emission by clean coal technology), increasing share (to meet the economical growth) from renewable source, solar in particular. If I were to make a decision, I would completely rule out nuclear energy and use our huge reserve of easily to-mine uranium source as a political asset. I don't see why Australia should and would need to monetise such a resource.
Labels: energy market