The role of fossil fuels in our renewable energy future

UNSW Centre for Ideas: In this thought-provoking discussion about the rocky-road to net zero, you'll hear from expert panellists Dr Kerry Schott AO, Chair of the Carbon Market Institute, Amy Kean, Director of Stride Renewables & Advisory Board Member of the NSW Decarbonisation Innovation Hub, Professor John Fletcher, Director of the UNSW Digital Grid Futures Institute and Professor Iain MacGill, Co-Director of the UNSW Collaboration on Energy and Environmental Markets.

Dani Alexander: Good evening and welcome to our event. The Role of Fossil Fuels in our Renewable Energy Future. My name is Dani Alexander and I'm the CEO of the NSW Energy Institute, and I'll be your emcee for this evening. Before we get started, I would like to acknowledge the Gadigal People of the Eora Nation, that are the traditional custodians of this land. I would also like to pay my respect to Elders both past and present, and extend that respect to other Aboriginal and Torres Strait Islander people here today. I would also like to acknowledge the importance of engaging traditional custodians in our renewable energy future. This is the topic of this evening's discussion and we understand that more than 40% of our renewable energy infrastructure is likely to be sited on the Indigenous estate. This is just one critical element of many to consider in our renewable energy future, along with the role of fossil fuels that we are here to discuss tonight. So it is now my pleasure to introduce the Deputy Dean of Industry Engagement, Innovation and Research at UNSW Engineering, Professor Ian Gibson, to give an address.

Ian Gibson: Thanks, Dani. Good evening everybody. It's great to see you all here. And you've come to listen to our distinguished guests, not to me. So I'll get done as quickly as I can. So my job really is to set the scene for this conversation. But before I do that, you'll have to forgive me. I'd like to tell you about a little experience that I had recently. So I was fortunate enough to attend the ATSE Gala Awards night last week. ATSE is the Academy of Technological Sciences and Engineering. And I'm sure there's some people in the room here tonight that were there. Now, one of the awards that ATSE gives is the Traditional Knowledge Innovation Award. Now, this was awarded to Uncle John Watson, who's a Nyikina, Mangala man, an elder, from the Kimberley region, and his colleague, Professor Ron Quinn from Griffith Uni. Now, Uncle John had the tip of his finger bitten off by a crocodile back in 1986. So what did he do? He sought the bark of the mudjala mangrove trees seeking pain relief. He chewed on a strip of bark and applied it as a dressing to his wound. It worked. His finger was healed. Of course, he knew that. Ron Quin heard about this and sought out Uncle John. Together, they've developed a completely new product, a new, powerful pain relief gel that contains a complex cocktail of active ingredients. All from the mudjala  mangrove tree. Now, Uncle John is a very quiet, softly spoken man. He's not loud, but Ron Quinn listened to Uncle John, because he knew that his people had been studying the medicinal nature of what they could find on their land for a very long time. Ron had the respect to realise that they might know what they're talking about, and they do. 

So when I started, I didn't give a traditional Acknowledgement of Country right at the top. I've held that off to now. So I do pay my respects to Indigenous Peoples and I pay my respects…  I have a deep respect of their knowledge and recognize that they have been careful custodians of this land for a very long time. We need to listen to their voices. That was a story about someone's finger being bitten off. What's that got to do with fossil fuels? One thing that our world today is not short of is loud people with opinions about the role of human activity in causing climate change, and what to do about it. How many of those voices that we hear really know what they're talking about? While in no way do I try and compare UNSW’s expertise to Indigenous knowledge, we have actually been looking at issues relating to energy for quite a long time. You probably know, you're probably aware, Professor Martin Green and his team from UNSW developed the PERC solar cell, which accounts for around about 90% of all solar cells shipped. You UNSW invented the solar cell. Professor Green and his colleagues also established the world's first ever School of Renewable Energy Engineering in 2006. The CEOs, and or the CTOs, of ten of the 12 largest PV manufacturers in the world are alum of UNSW. Through its research and teaching, UNSW has brought to the world fundamentally important technologies to enable the decarbonization of the energy supply chain. But this has been a 50 year journey. What you may not know is that another UNSW Professor, Professor Maria Skyllas-Kazacos and her team developed what is probably the world's first viable grid scale battery technology, vanadium redox flow battery, in the 1980s. But we also have a Mining School. I think one of only three in Australia. We have been teaching mining engineers how to safely mine for coal and drill for oil for over 70 years, and we still do. We also have Australia's only nuclear engineering degree actually. We also have world leading teams looking at hydrogen production, grid control and stabilisation, sequestration, carbon capture and many other topics that are important as we head to a zero emissions future. I do need to mention World University rankings. So universities pay forensic attention to world rankings, as far as I can tell, no one ever mentions them, and so I'm going to do that. UNSW is currently ranked equal 19th in the world, in the last QS rankings. I do have to mention, although I shouldn’t, that our frenemy down the road at the University of Sydney, is actually also ranked equal 19th, as it turns out. But it is fair dinkum to say that UNSW,  is Australia's, and one of the world's, leading teaching and research institutions when it comes to energy technologies.

UNSW Engineering prides itself on being a place where all ideas are respected and listened to, and opinions are formed on facts established through evidence, quality science and analysis. Fossil fuels are an unfortunate reality at the moment, but for how long in the future? So we've put together an absolutely stellar panel for you tonight, to dive into this issue and so my advice and the theme of my introduction is, do listen to them, they do know what they're talking about. I'm going to be listening. I'm super interested to hear what they have to say, as we navigate our way along these complex quadruple constraints of cost, reliability, emission elimination and equity of access in designing the energy system of the future. Thank you very much. 

Dani Alexander: Thank you Ian. I'd now like to invite our speakers to the stage to begin our panel discussion, and to set the scene, I would like to invite each of our speakers to introduce themselves and respond briefly to our first question, which is; can renewable energy resources replace fossil fuels in the short term? 

John Fletcher: Good evening, everyone. My name is Professor John Fletcher. So onto this first question; can any renewable energy technology replace fossil fuels in the short term? I guess the answer to that is both a yes and a no. There are the technologies available that will allow us to make that transition, but one of the, many of the challenges we have are really around the supply chain. Not just the supply chain of equipment that we need, because after all, every nation on the planet really wants to try and do the same thing at the same time, with the same resources and the same people, and within the same timeframes. And that's going to put a huge amount of pressure on those supply chains. And partly that leads us to really have to think about all the different technologies we can bring to bear. So from my point of view, the electrification technologies, which include making our grid more renewable, but then translating and transferring all of the energy that we use in our transportation systems and put that onto the grid itself, and then electrifying all the other things we want to electrify. So there's a huge amount of effort we need to put in, just to the grid, in order to make this transition from where we are today, where we have a good mix, at the moment, of renewables and fossil fuels. And we should be proud with what we're doing as a nation, we've got a very high percentage of renewables in our grid, around about 40%, in terms of energy, but we have to also think about the grid in all the other contexts in which it operates. It's not just about where the energy comes from — that is primarily the discourse we have in the public domain — we also need to start thinking about how we're going to make the grid operate with the, not just the intermittency, but the much faster response of all the interfaces that we use, to place renewables onto the grid. And there are pathways, there are many pathways we can go down, and many different finishing points that we can end up in. And I guess one of the other big challenges is, do we really have a plan on how we're going to do that? And with that, I'll end. Thank you. 

Amy Kean: Thanks John. I'm Amy and I left UNSW about 25 years ago and started working in the sustainable energy industry, which was pretty wacky at the time. And there was a lot of arguments whether or not we should have a policy of 2% renewables. And we had, at the time, about a 1.5 kilowatt solar system, and that was like science fiction, pretty much. There was a lot of researchers doing a lot of work, but the public didn't understand it. And now when I look at the NEM, we're at 40% renewables. Last week it was at 70% for a couple of days, and South Australia is regularly way over 100%. I'm an optimist, but I think those numbers are pretty extraordinary. When I look at the cost trajectory, particularly of solar, it is way, by far the cheapest energy, and Australia has the highest abundance of solar in the world and we're heading for over 100%. So we need to make the most of that. We need to align our industry processes to give us a competitive advantage, which I very much think we can. But to get to 100% is tricky, and it's not without complex engineering problems, but it's absolutely doable. We just need to really get the policy right, and the finance right and some of the technology right. The technology is there, but we need to look forward and have an ambition, because the opportunities are so huge, And quite frankly, we have no choice. And you know, I also started my first job and my boss thought it was crazy that everyone had a computer, and I certainly didn't have a mobile, and thought I was stupid as well. You know, and Sydney was run on whale oil. So I think we can change. 

Iain MacGill: Hi, everyone. Ian MacGill. I'm a professor in Energy Systems at the University of New South Wales. I started working on clean energy transition 30 years ago. When I started my PhD. I worked on integrating utility wind and solar into electricity markets, and at that time the east coast of Australia had no utility wind and solar, and it didn't have an electricity market either. And I think that kind of speaks to the timeframe of research, and thinking about these issues before, as John reflected on. We're pretty close to 40% renewables now, and it's probably around 32, 33% wind and solar now in the grid. And our Federal Government has a target of 82% renewables for seven years time, and we ain’t going to get a whole lot more hydro or biomass, so it's going to be doubling and more of wind and solar, if we're going to hit that target. With, sort of, 30 years looking at this, I reckon there's three key things that I'd take from that. One is the climate science is worse, or the climate challenge is worse than we probably thought back then. As we're seeing right now. We've wasted a lot of that time not getting on with it. But the good news is, our options for cleaning up energy have just got so much better. You know, it used to be about how we subsidise wind and solar, because they're really expensive compared to the alternatives. That's not our challenge now. Our challenge more is around taking the cheapest energy in history, as the International Energy Agency says, PV and wind, and integrating them into a system which has to be secure and reliable, picking up on some of the issues, John was saying. So I was thinking about this topic, can they replace fossil fuels in the short term? I'm not sure what the short term is, but I mean, they already are replacing, right? If we look at the last ten years, clean energy, which is renewables and nuclear, has gone globally from around 13% to 18% of the mix. So that's great. But it does mean fossil fuels is still around 80% of the energy mix, and we have to be realistic about how quickly you can transition away from that. In the latest World Energy Outlook, the International Energy Agency says we're looking at peak emissions from fossil fuels globally maybe this year, if not maybe next year, and then a peak in total fossil fuel consumption — they’re slightly different because of the mix of coal and gas, right? — by 2030. We have to get spending on clean energy up 250%, two and a half times. We have to get fossil fuel investment down to about 40% of current levels and that's our challenge, just for 2030. If we can do all that, they reckon we can get fossil fuels down to 66% of the energy mix, and then we just keep going from there. So short term, seven years, I think that's a useful time frame for us to be thinking about, what we should be focusing on, right here now. 

Kerry Schott: Thanks. Thanks for coming, everybody. It’s… Uni of New South Wales has certainly provided the leadership of engineers in this space, and it's good to be here talking to this audience. And I know you've all got better things to do, but it's an interesting topic. I am currently chairing the Carbon Market Institute, but I'll just talk about the time I had on the Energy Security Board, and the job we had then was to design the National Electricity Market so that it could cope with a huge influx of renewables, which was starting. And it's quite interesting for engineers, what all of that means, and I'm not one, but I'll explain it to you in a way that's very simple because that's the way I understand it. With wind and solar coming in in enormous amounts, you've got a lot of asynchronous power coming into the grid, and it causes huge problems for system security, as the build up of renewable energy increases. Frequency control becomes harder, inertia becomes harder, and just system stability starts basically getting the wobbles, and it's because the stability that the old fossil fuel plants provided is gradually going, and it's actually going not so gradually in some places, and it's a real, there's a real demand for systems engineers to work at places like AEMO, working on how to get the grid stable to manage this. And it's not just the transmission grid, the other big challenge, and for those of you who like software and designing games, put your minds around what's happening with rooftop solar and household batteries, and EVs coming into the system. AEMO, the operator of the system, reckons that by 2025, like the year after next, we will have about 70% renewables in the system, including rooftop solar. And Australia's got the biggest uptake of rooftop solar by far of any country on the planet. And South Australia —  is, I always think, a canary in the coal mine about these things — they've been running on 70 or 80% renewables for quite a long time, some days 100%, as Anna said. And the upshot of that is enormous challenges for the distribution networks. And I always thought of distribution utilities as rather staid, sort of, utilities run by engineers in brown cardigans. And in fact, what happened in Adelaide was fascinating because suddenly all these rooftop solar on houses meant that from about half past ten in the morning until three o’clock in the afternoon, there is no demand for grid electricity. And that's the case every day the sun's out. And what has happened in South Australia is that there's actually no easy way to control all of this because the operator doesn't have visibility of this stuff.

Inverters are supposed to go in with a particular specification so that they can be controlled, but only about 35% of them are being installed properly, or have the right spec, and that's… we've got challenges enough without that, but that's causing a few dramas. So what AEMO does to control the system, which is very sad actually, is they just turn the solar output off. So if you've got a solar panel and you think that it's being charged by the sun in the middle of the day in Adelaide, it probably won't be because it will have been turned off because they need to get power in that system for the grid stabiliser. So there's all sorts of inefficiencies happening and huge engineering challenges, not just in transmission, but in the distribution network. If you think about where we're headed, and I'll just talk about the technology we've got, not about where we're going, we are headed to very high percentage of renewables, both big ones and the small rooftop solar and EV’s and the like, and small batteries to go with it. We'll end up with a lot of renewables. With renewables, you need something to run the system when they're not there, and in the short duration, and that's batteries, and we've got batteries that can run… most of the big batteries going in at 2 hours, you can get batteries now that run four hours, the vanadium flow batteries that Uni of New South Wales can run longer. But at the moment, the longer, sort of, time for batteries that's being put in, really, is 4 hours and that's a real push. But what we then need is something for when we really don't have any wind, for a time, and we have rain for a couple of weeks. And in Australia the contenders to fill that long duration storage are hydro, where you can pump water effectively up the top of the hill and let it go when you need to. And that provides you with long duration storage. There are various sorts of relatively small technical solutions around that don't amount to many megawatts. But the only other solution around is gas. And everybody hates the thought of gas continuing, but the reality is that gas at times when you need it, at the moment with technology, is what's likely to happen, and should happen in my view. And it's what the South Australians are using for their long duration needs, and what you won't turn that gas plant on very much might run about two weeks a year, it's better than running a coal plant the whole year and burning coal, and only getting dispatched probably two weeks. Nobody is going to run a coal plant like that, and it's sort of bonkers to think about it. But at the moment that would be where we would end up. Now, once hydrogen comes along, if it comes along, it can replace gas. There are other technologies coming along that may replace gas, longer duration batteries. But at the moment, that's the way to do it and we can do it now. Two things that are stopping it are the very slow rollout of transmission, and those of you who are into building things, you really need to get the community onside when you think you're going to stick some high transmission lines through their paddocks, because nobody wants a high transmission line anywhere near them if they can avoid it. And that means they need to get benefit for it, so they have to be paid. Similarly for wind farms, no one's terribly fond of them, or solar farms. There must be payment for the community to put up with that. And the regions in particular where all of this work is happening, feel like, yet again, they're going to put up with all the costs and roads and stuff, and all of the benefits will flow back to the load in the cities, and again, they won't get anything. So governments are, finally, getting their head around doing some stuff to address these social licence issues so that the build can happen. And the main problem with the slow build of transmission is that social licence and approvals problem. We are short of labour and we are wanting everything at the same time as everybody else, but the big problem is social licence. And the other big problem is revenue certainty for developers of wind and solar. The wholesale market’s a fascinating market, but at the moment it's quite difficult for a developer to estimate whether they're going to get dispatched, and how often they'll get dispatched, and therefore make some money. At the moment that's being addressed through renewable energy certificates, which are a form of payment, but it will be addressed by the federal Government giving some sort of underwriting on revenue going forward, I think, and probably some cap on what people can earn. So we can get there, and we're running slow, and we need to get  a serious move on, but I don't think we should underestimate where we are. And South Australia has done a terrific job, much easier with a smaller population. Other states are, sort of, moving along at pace, and that's where we are. And we need engineers. 

Dani Alexander: Wonderful. Thank you. In fact, you're doing an excellent job answering questions I haven't even asked, so I really appreciate that. I might touch on a point that maybe, Kerry, you raised at the end here about investment. And a question I have here that has a couple of votes as well is, how can we best encourage the capital investments we need to get the energy transition done, if we are to achieve net zero? Would anyone like to jump in on that to begin with? Perhaps Ian, you might like to start us off?

Ian MacGil: Yeah, certainly. Happy to have a crack at it. I should first say, and this picks up on Kerry's point, they reckon for this year we're probably spending about 1.8, almost two times as much money on clean energy investment, than we are on fossil fuel investment. And that's changed from basically being equal, five years ago. So the money is moving, it just takes time. In terms of encouraging the capital investments, firstly, you've got to decide where the key place to put money is, because there's quite a range there. And again, I keep coming back to the IEA, but I think their work is excellent and if you don't know the International Energy Agency, they're not a bunch of environmental greenies, let's put it that way. They were set up 50 years ago, almost, it's the rich countries oil buying club, but they're really engaging in energy transition in a really important way. And they've got five pillars about where we should be putting money. They say by 2030 we should be trying to triple global renewable capacity. So getting lots more renewables, globally, and here in Australia — clearly part of that — we should be doubling the rate of energy efficiency improvements and that's a big gap in Australia. The good news is, that means a lot of opportunity because we haven't been focusing on it. We've got to slash methane emissions from fossil fuel operations by 75%, hugely important here in Australia, and the current numbers are underestimating the problem. We've got to get financing into emerging and developing economies, and we've got to get measures to ensure an orderly decline in the use of fossil fuels. That's the International Energy Agency's sort of position of prioritisation. And look, we've got policy experience around the world pretty much in all of those, not saying they're easy, but we do have experience here in Australia that we can draw upon as well as globally, on the leaders to push to make that happen. 

Dani Alexander: Amy, would you like to jump in?

Amy Schott: Yeah, look, as Kerry said, the price of energy is set by the peak energy prices. So when we're using the most energy, and at the moment that's very much set by gas, which is expensive. So we need to get investment into that peak demand, or firm power. And you know, there's some technologies, particularly pumped hydro, we've used that around the world, it's used for 97% of storage globally. That has a lot of construction risks, like big infrastructure projects, they take time. I think we've really got to think about how the finance addresses the construction risk and particularly supply risk in the current global environmental market and global supply market. And I think we need to think about consumer bills. Moving on from the social licence, yes, we've got to share the benefits with the rural communities that actually have to absorb this infrastructure, but also consumer bills are going to go up unless we can address that peak energy prices, and relying on gas and international impact, such as what we're seeing globally, isn't the way to get prices down, and to benefit the benefit from the cheap solar we've got particularly. So I think, you know, just how do we get investment in mechanisms that just put the price directly on consumer bills in the short time frame, the ten years we're talking about, is going to result in political issues that we need to be real about. So we need to think about long term bonds, for example, that can then wear these costs. I mean, we're talking about a massive industrial transition, that we've seen before, but it takes time. So we need to allocate the time to do so. I think the latest estimate is $120 billion in capital markets. So we need, we've done it before with infrastructure, and we need to think outside the square.

Dani Alexander: We've talked a lot about the supply side and I was interested, John, in your perspective, rather than just focusing on the supply side, what role does the demand side need to play in the transition, and are we on track to achieve this?

John Fletcher: Well, yeah, I think we're falling into that challenge again where we really just talk about the generation sources, and we do need to have a really good conversation about how we prepare the grid. And part of that investment needs to be focused on getting the grid in a position where it can deal with all the renewables it has to deal with. But also, yes, looking at the demand side, where we can have a tremendous impact on how we use and when we use energy. And that can have a really big impact on how much energy we need to generate, and when and where. So, you know, some of these technologies need to be incentivized also at the demand side, as well as the generation side. 

Dani Alexander: Would anyone else like to comment on that side of the equation? 

Kerry Schott: I might comment on prices. For the overall price, the wholesale prices of electricity have been falling, and people who think that renewables are causing prices to go up are completely in the wrong place. Renewables have been forcing wholesale prices down markedly ever since they started getting into the market. And what happens in the wholesale market is that generators bid in every 5 minutes, to have their power dispatched and they get dispatched on a price merit order. So if you're a solar or wind, you basically bid in at your marginal price, which is naught, sometimes negative, so you get dispatched. If you're coal, you don't get dispatched until wind and solar stop. And if you’re gas, you don't either. So… and gas will be in lower than coal because it would have been running all day. So you get a merit order around your technology. The prices of networks, transmission and distribution, will go up, but they’re not going up mightily, and governments are picking up a lot of the cost of the networks, as they should, because as the energy transition will drive net zero emissions in the rest of the economy. So it's an industry wide, economic wide thing, and they ought to be picking up a fair amount of the bill, and they are. But it's a huge bill, the transmission build alone is 30 billion, but it doesn't have to be all be spent until towards, you know, the 2040s. We don't have to do it all tomorrow. And there's a big build going on at the moment, and it needs to be faster, and we're spending billions a year, and we need to keep doing that and a bit faster. So, I think the reason why prices have gone up is really associated with international increases in coal and gas prices, which is associated with war basically, and upheavals globally.

Dani Alexander: There is a question here that has got quite a lot of votes, which relates to, I guess, international markets, which is, ‘How will the end of fossil fuel exports, if that is what's going to happen, affect Australia's economy?’ Is that something that you would also like to comment on? 

Kerry Schott: I've recently been doing some work for ARTC, which is a company that owns all the rail tracks. And they watch what's happening with coal exports very carefully because it's one of their major revenue earners. And already the volumes of coal exports are starting to decline, as you'd expect. And under the Paris agreements, all countries will be cutting back on their fossil fuels. The good quality black coal in the Hunter will probably last a lot longer than a lot of brown coal in other places, because it's got less carbon in it. But it will decline. And it's possible that for metallurgical purposes… so, thermal coal will decline, metallurgical coal will hang around for a bit longer, and it will be a transition that'll be over at least a decade. But for the Australian economy it's going to have huge consequences, because we're very big coal exporters. We're also third in the world with our methane emissions, largely from open cut coal mines. So it does have a good benefit, as well as a negative one, on jobs.

Dani Alexander: Iain, would you like to jump in? 

Iain MacGill: Yeah, Yeah. Look, I think there's a sort of way they measure the value of exports, of course, and that's iron ore, number one, and then I think it's coal, and LNG, and international students is up there, in these export rankings as well. I think we need to be a little cautious, because there is always the question of how much of that money actually sticks in the country, because obviously there's profits associated with this, and after royalties and taxes, which may not be paid by all of our large energy resource companies, there's a question of the actual value that the Australian public is deriving from this now. There’s jobs, very high paid, great jobs, but if we just take the example [of] theWest Australian Government, they're saying they're looking to earn more from lithium royalties than gas royalties, as things are moving. Lithium, of course, key ingredient for batteries going, electric vehicles and utility storage and so on. So it's important that we focus on the opportunity as well. And at one level, we can fight it, and try and say we should be able to keep exporting. But as Kerry's flagging, and others have, if the buyers are leaving, then your real task is to adjust your economy accordingly. So visions of renewable energy superpowers, hydrogen exports, hydrogen derivative exports, that's a really key challenge for us, if we want to continue to supply the world of energy, we've got to make sure it's clean going forward.

Amy Kean: Yeah, I was just going to say also, I think green iron, and green steel, using electric arc furnaces, there are alternatives and we can export this abundant energy in different forms. And I think we have to be realistic about what the markets are saying and it is going in a downward decline. So we need to be honest about that. And there is technology at the moment, it is expensive, but all technology is when it starts.

Dani Alexander: I'm going to take the liberty here because I have the iPad, and consolidate a couple of questions, because a few people are asking about different technologies here. And you've mentioned hydrogen on a number of occasions here, but there are questions around also the ability to achieve net zero without, say, carbon capture, or nuclear energy, particularly, say, small modular reactors or SMRs. Perhaps, John, you could start us off in terms of the technology side, and what mix we may need.

John Fletcher: Okay. Yes, that's a great question. And I would make the point that Australia exports about 3000 petajoules of uranium energy every year, which is about as much as the energy we use for the whole of the Australian economy. So there is potentially a really big business opportunity there. And I say that given that many North European countries are really going to have to look seriously at nuclear builds to support their energy consumption and the electrification of their gas and their coal based systems. Some of that may well be met by small modular reactors, these are reactors that can be built, almost mass produced, if you can imagine such a thing with nuclear reactors. One of the big challenges with large nuclear reactors is they end up being built on site, one nuclear reactor ends up never being the same as another. Whereas if you can build them in a factory, and ship them out on a containerized system, usually by rail, then you get some of the benefits of the engineering being taking place in the same plant. These reactors are somewhere between 30 and 300 megawatts, depending on which technology you’re attaching your flag to. Some of these technologies are getting close to being licensed for first builds. And I can imagine maybe in ten, 15 years that we could potentially see portfolios of these in the Northern Hemisphere, in particular. 

Dani Alexander: It would be great to hear other perspectives as well.

Kerry Schott: Can I just comment that the CSIRO has done a study, recently, of the costs of energy from particular sources, and on the small modular reactors, they make the point that they're not likely to be available until the mid thirties, and when they are, the cost of power from them will be greater than the cost of power from other sources in Australia, and whether or not that stays the same, I don't know. And I do think it's important to try and stay technically neutral about this, but I think a lot of the hype around small nuclear reactors is ignoring the reality that they're not commercial yet, and the timeframe looks about the same as hydrogen at the moment. 

Dani Alexander: Iain? 

Iain MacGill: Yeah, I think the International Atomic Energy Agency did a report last year on small modular reactors. There's 83 designs that they covered. There actually are some that are now operating. The Russians have put these small reactors, they put onto their nuclear powered icebreakers, opening up that northern route, top of Russia. They’ve put them on a barge. And this barge is a small modular reactor. It’s probably just under 100 megawatts of generation. The Chinese have just constructed one and just connected it to the grid, and they're just ramping that up. But I don't think that's what people have in mind buying from the Russians or Chinese with this technology, and the Western technologies as Kerry and John flagged, there’s a wait for those to come through. And the economic challenges of nuclear don't necessarily go away with small modular reactors. You fix some of them, but inevitably our challenge with nuclear has been, you can build cheap nuclear — that's what the Russians built at Chernobyl — you can build safe nuclear, but you can't build cheap, safe nuclear. Well, not yet. Some of these technologies are very promising, but they're going to take some time to arrive. So there's things we really need to focus on now. And clearly, renewables, EV’s, we've got pathways that are really clear, the technologies are well proven, that we can be rolling out now, while we get a sense of what these promising, but unproven small modular reactors can actually do.

Kerry Schott: I think there's a question too, of whether you actually want baseload power back in the grid at all. Because if we're running a system that's got intermittent renewables in it, with storage backup, that's adequate, both short and long duration, then you don't need something like coal or nuclear that just chugs along all the time. And it's different in the northern hemisphere, partly because of their weather. We're quite blessed with good… we don't have much water, but we've got pretty good sun.

Dani Alexander: John?

John Fletcher: Sorry, I was just going to make the point that energy storage works for renewables as well as nuclear, in terms of matching baseload with intermittency. 

Amy Kean: Yeah. Look, they're lovely. So are unicorns. And my daughter would love to meet one, but they're only theoretical, so they're not out in reality, they haven't been constructed yet. So if we can make it work, great. But right now we have the technology available to meet our energy needs and to think about something that is a theoretical concept, apart from a couple in Russia, whilst not focusing on the… what right now in New South Wales, we've got 40 weeks of wind, 40,000 megawatts of wind, in the planning system and 25 gigawatts of batteries, we’ve got loads and loads of pumped hydro. The technology is right here, and quite frankly I'm concerned it's a distraction from what we need to do urgently. 

Dani Alexander: So lets… oh sorry, go on. John. 

John Fletched: Do we have the grid that can cope with all of that? 

Amy Kean: No, we need to build it very quickly. Absolutely. 

Dani Alexander: And so perhaps… I've got another question here, and let's look at gas. So we spoke about that earlier, and there's a question here that states the economics of gas relies on high utilisation. So how do you see its intermittent use affecting the value proposition for alternative options for storage, like batteries? If that is the alternative here. Would anyone? 

Kerry Schott: I think batteries are an alternative for a short duration storage, but if you get two weeks of no wind and no rain, a battery is no use to you. Like, we’ll all be in darkness. And the Germans have got a good word for it, which I've actually forgotten, but in Europe we do get periods of no wind and considerable dark in the winter, and they really struggle with long duration storage. And it will happen to us. So the fact that the gas plant goes on for a short period of time does mean that plant’s not economic, but it must get a payment like an insurance payment, to just hang around and be there for when we need it. It’s called a capacity payment and there's been dreadful arguments about them. But it'll have to happen. 

Iain MacGill: And it picks up on Kerrey's point about nuclear. I think the economic structure of nuclear is: it's expensive to build, but really cheap to run. Not as cheap as renewables, but cheap to run. But if you've got a lot of wind and solar and you're trying to deal with periods where often you've got more wind and solar than you know what to do with, but then there are these occasional periods where there's no wind and there's no sun, the last thing you want to build is something that's really expensive to build, and cheap to run, because you barely run it, right? So then you're wanting stuff that's cheap to build, even if it's expensive to run. The issue with gas in part is going to be, you know, it's an industry for a lot of fixed costs. So as you reduce the amount of gas flow going through, effectively, you've got to cover those fixed costs with less and less volume of gas being used. So that's going to hurt the economics of the gas sector, right? You know, if you imagine a customer who says, I only want to buy from you two weeks a year, but when I'm buying, I want to buy 30 gig of generation. That's a really tough industry structure for you to build, right? That's just like air conditioners. It's the… so that's going to really make the economics of gas pretty challenging. And gas is also very likely to lose some pretty key customers right now, households with household electrification, the commercial sectors leaving gas, industry’s staying, but there's other options. So yeah, I think gas economics are not going to move necessarily in an attractive direction, even as we're using less and less of it. Normally it’s, if we're using less, it should get cheaper, nah, but that might not happen.

Dani Alexander: So if we carry on that thought and say that we do want to reduce that… that requirement, how do you see the role of government in reducing the transition time between the use of any fossil fuels, say, and the full renewable energy future? 

Kerry Schott: It's called hydrogen. 

Dani Alexander: Mmmm. Can we talk a little bit more about hydrogen? Because we've mentioned it a few times, but perhaps not everyone is across the opportunity.

Kerry Schott: The idea with hydrogen in the energy system is that it would be used to effectively run gas plants, and the gas plants would switch to hydrogen. Hydrogen doesn't cause emissions. It is, however, extraordinarily energy intensive to make, and uses a lot of water. So it'll be by the sea and use desalinated water, and it won't be cheap. But it… Australia does have an enormous amount of renewable energy resources that it can use to make it. So that's the advantage that we've got, and there's an enormous amount of research globally going into it. As I'm sure you're aware. 

Dani Alexander: John, I think you have an interesting perspective here, I guess at the grid side of that hydrogen deployment.

John Fletcher: Yeah, well, it's interesting when you look at the economics that if you want to make hydrogen, you're not going to buy it from the grid, because it doesn't make economic sense. You have to build your own electricity plant to drive your own electrolyzers. And that's the way it kind of works. The actual technology itself is still relatively immature, I'd say. We have a number of really good companies in Australia developing hydrogen technologies, but they're still in the development phase. So there's a lot of work still to be done on getting hydrogen plant that really delivers the goods. And that's not just electrolyzer technologies, that's fuel cell technologies as well, where to get the economies, you really have to couple up the heat energy that a fuel cell produces with the electrical energy it produces, otherwise you're down at 50 or 60% efficiency. 

Amy Kean: Just in terms of the role of government, I think at the moment the market’s flooding towards sort of four hour solutions. As Kerry said, that’s where the batteries are, they're fairly cookie cutter now and very easy to accept the risk associated with them from a financing perspective. But the current policies and the capacity schemes, particularly the capacity investment scheme nationally, and New South Wales, LTESAs scheme, I think have failed to deliver for long duration storage at the scale we need it, and incentivize the technologies that are there. Because we need a diverse mix of technologies that can actually provide that weather gap that Kerry talked about, that’s absolutely coming, we can see it as clear as day. It's not far away. And unless we start to build that infrastructure now and provide the finance and the incentive for it, gas absolutely has a role, but I'm worried. 

Iain MacGill: Yeah. I think the other thing with hydrogen is that it helps us clean up sectors that are otherwise really hard to clean up. So yeah, it's got a role in electricity, I think. But if you think about shipping and shipping fuels, it's not going to be gaseous hydrogen, or liquid hydrogen, very likely. It's going to be what we call hydrogen derivatives, might be ammonia, possibly methanol, renewable methanol. You can actually make renewable natural gas. You can make renewable what's called SAF: sustainable aviation fuels. So a big part of the opportunity in hydrogen, remember, electricity is currently 20% of final energy demand, bit over that globally. There's all these other sectors, you know, they call it the iceberg, electricity, sitting on top, and all of this energy use below. But hydrogen can really help us clean that up. Now, it ain't going to be a hydrogen pipe to the home, hydrogen stove and things. I think we've kind of realised that's… there’s better options, electrification. But there's certainly going to be some applications we think it’s pretty hard to electrify. Long distance international shipping or international aviation, or some steel making, some you can electrify, but not all. So hydrogen’s got a pretty key role there. Now there's a question of how we make it? Do we make it from natural gas with carbon capture and storage? Which came up before, or do we use renewables and electrolysis, you know, stick electricity into water, you get hydrogen and oxygen. I think the electrolysis pathway is probably looking the better longer term bet, and Australia's pretty well placed. But that's also the way to think about hydrogen pathways forward.

Dani Alexander: Thank you. We're coming close to the end of our time here, but I have two other questions that I'd like to ask. So I would like to ask the first, but maybe keep the answers a little shorter so that we can get to the final closing comments. It's a good point here. We've talked about the tip of the iceberg in terms of decarbonization, but there's also the tip of the iceberg in terms of sustainability of renewable energy as well. And the question here is, how are we going to deal with the supply and environmental issues on recycling solar cells which have a shelf life of 25 to 50 years? It's somewhat in a different direction, but I think it is a good question if anyone would like to tackle that, before we go to our closing comments. 

Iain MacGill: You know, look… oh, John. 

John Fletcher:  Well, I was just going to say from the point of view of having been involved in semiconductor processing myself, it's a shame that we're going to be chucking huge square kilometres of silicon semiconductors into landfill, potentially. So let's hope we can do something useful with it. 

Kerry Schott: I was just going to note there are businesses starting to deal with recycling it, so that it doesn't go to landfill and it gets reused somehow. I'm not across the technology, but I'm sure it's going to happen. 

Amy Kean: Yeah, I think there's some great programs and it's starting and it's critically important. But there hasn't been the economies of scale yet, but hopefully we've learned from mistakes in other industries, and it's certainly an area of government to manage, I think as well. 

Iain MacGill: Yeah, and I think, you know, we've got a couple of innovative companies here in Australia, just starting on the recycling journey for PV. There's aluminium frames, there’s glass, there’s some stuff they're not able to work out how to get out yet, which is potentially valuable. And we'll also see it with lithium ion batteries. We're already seeing recycling companies coming up on that. But it is a huge part of it because a clean energy transition that has unsustainable practices in it, be it mining operations in Africa using child labour, or whatever. That's just not something going to be able to accept in the supply chains for this. I would just say one thing though, which is fossil fuel supply chains aren't pretty either. But, you know, we've got to set very high standards on the way we do clean energy transition.

Dani Alexander: So this is my final question. And again, I'd encourage each of you to answer, if you would like. And it actually goes back to the way that Iain started us off, about good information shared and understood. Because this question is; how do we overcome misinformation and disinformation about climate change, renewables, transmission lines, etc., to continue prioritising the energy transition? 

John Fletcher: I think we have to respect the experts, As Iain said. 

Amy Kean: Look, I think, a true expert. I'll take the chance to thank UNSW for hosting this event, and events are important, like this, to have discussions. But I actually think the benefits need to be shared equitably as well, because often the misinformation is coming from another place. And I know that well with large scale wind and solar. As soon as you can simply make sure that there's a rental radius of benefit sharing with the neighbours, and we need to do the same with batteries, and the same with transmission. So that transition brings everyone along, particularly communities, and collaboration as well. 

Iain MacGill: Yeah, I think one of the challenges we sometimes see with social consensus is this idea. We've got to persuade them that what we're doing is the right thing, and you've probably got that wrong. You've actually got to engage the stakeholders and communities to help you design the solutions, rather than just work out how to sell it to them. And so that's a really key part of what we've got to do. And I think there is actually clean energy transition pathways that make the world less fair and less just. And would we be surprised that large numbers of the public and stakeholders really don't want to go that path? There's a lot of risk in energy transition as well. There's no escaping the risk involved with technologies that don't work out, you know, other things. So governments have a really key role in building consensus. Consensus is not, everyone agrees, not going to achieve that, but we get sufficient agreement that we can go forward. And it's great to see the increased focus of this government and all state governments, and Australian Energy Market Operator in thinking about ways that we build consensus by engaging key stakeholders in the process of the decision making. It does take time to do well, but I think that's where we've got to get to. If we really, if we've got to do energy transition, we've got to make sure that enough of the community understand the need for it, believe that it will be as fair and just as it can be, and that the government's making sure that that's going to be the case.

Kerry Schott: I just don't think the younger generation is going to put up with another ignorance of climate change, of the kind that we've just had years of, and we've started down a path and I can't see us going back on it. So I'm quite optimistic, actually. 

Dani Alexander: Wonderful. Well, I think that is a wonderful finish to an excellent conversation. I would now like to invite you all to join me in thanking our excellent panel for the insights that they have given us this evening. 

UNSW Centre for Ideas: Thanks for listening. For more information, visit centreforideas.com, and don't forget to subscribe wherever you get your podcasts.