'We Stand by the Modeling'

Peter Smith25 Sep, 2022 5 Min Read
In Australia, we believe in science.

The Australian Labor Government, in office since May 23, is pinning its hopes and our very future on its plan: “Powering Australia.” Worried? Don’t be. It’s backed by modelling:

A Labor Government will close the yawning gap between our current Federal Government and our business community, agricultural sector and state governments when it comes to investing in the renewables that will power our future. Our plan will create 604,000 jobs, with 5 out of 6 new jobs to be created in the regions. It will spur $76 billion of investment. It will cut power bills for families and businesses by $275 a year for homes by 2025, compared to today.

Read all about it:

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Recently, Chris Bowen, the Minister for Climate Change and Energy; or, as I like to put it, the minister for a contradiction in terms, was asked about the predicted $275 reduction in power bills for families. What did “today” mean he was asked. Is it literally today, which successive tomorrows will soon enough become, or is it when the plan was published before the election. A good question. Since the election power bills have risen by about 15 to 20 percent; by, roughly speaking, $275.

Eventually, after much pressing, Bowen and the government stuck to the prediction. Apparently, the prediction fell out of modelling and there is no gainsaying modelling. Here’s Anthony Albanese (Albo), the Prime Minister, in Parliament on 6 September. Overlook the tortured syntax.

I've said absolutely consistently from this dispatch box… that we stand by the modelling that we did… And what the modelling showed was that with our plan, which includes Rewiring the Nation, making sure that you make the grid 21st-century ready, if you actually enable renewables to fit into the energy grid through the integrated systems plan that's been developed by the Australian Energy Market Operator then what you will do is promote investment in renewables, which are the cheapest form of energy.

Ah, “we stand by the modelling.” Statistical modelling of the future. Something for which failure is endemic. Psychics do better. Thus, no economics model predicted the sub-prime mortgage crisis of 2008 and its aftermath. Hysterical morbidity modelling of the virus armed authoritarians. Kept people locked away, masked, forcibly injected with experimental substances. And, as everyone should know but doesn’t, climate models have performed abjectly; e.g., in falsely predicting increases in extreme weather events. (See, for confirmation, this recent study in The European Physical Journal Plus.)

Some Australians prefer other models.

Models and complex reality occupy different universes. So why Albo’s touching faith in modelling renewables? To be clear. It’s not informed faith. It’s blind faith.

Once you set out your stall to achieve net-zero and announce the steps along the way, including an untenable promise to deliver 82 percent of electricity by renewables by 2030, realism is defenestrated. The imperative becomes how to make the infeasible feasible. Saviour required. Namely, modelling which says it can be done. Better still modelling which says it can be done more cheaply. What a turnup! Show me the wanted outcome (cheap and abundant green energy) and I’ll show you the model.

Mind you, the modelling itself might be logically sound. Assume nine times the current number of wind and solar farms are built on time. Assume rooftop solar grows by five times. Assume 10,000 kilometres of new transmission lines are built. Assume, sufficient recharging points are installed and that electric vehicles wholly replace gasoline-powered vehicles. Assume adequate ‘firming’ can be achieved via batteries, pumped hydro and green hydrogen. Assume a specific growth in energy efficiency. Assume carbon dioxide abatement makes up for greenhouse gas emissions which can’t be eliminated.

Basically, you have the integrated systems plan issued in June by the Australian Energy Market Operator. I reckon if these assumptions were plugged into any purpose-built model, the right answer, net-zero by 2050, would pop out. Any problem; fiddle with the assumptions. Plug in more wind farms for example. Assume greater energy efficiency. Pump up the average wind speed a little. Reduce future demand for power. Remember, in the end result, unless net zero pops out, you ain’t got nothing politically sellable.

Okay, but how do you make power cheaper? I admit, that part has me completely flummoxed; though not the prime minister, as I note below. Battery costs are rising. Materials like lithium, cobalt and nickel are getting progressively more expensive to extract. The costs of building Snowy 2, the only major pumped hydro project afoot in Australia, have sky rocketed by five times and counting. The costs of building transmission lines, still at a preliminary stage, have soared. To boot, no one wants wind and solar farms and transmission lines in their backyards. Maybe they can be paid off? Then there’s the dream of green hydrogen. Desalination plants to produce sufficient pure water; multiple electrolysis plants driven by huge wind and solar farms; plants to convert volatile hydrogen into ammonia for safe transport, and to change it back. At a guess, might cost a dollar or two.

Just pump up the average windspeed a little.

However, Australia’s prime minister occupies an uncomplicated world. As he says: “if you have a shift in the energy mix towards cheaper energy [renewables], as opposed to more expensive energy, then you lower energy prices.” Compelling modelling logic. To reiterate, cheaper energy is cheaper than more expensive energy. No wonder he became PM.

Alas, Australia’s make-believe modelling world is not reflective of real life elsewhere. In Germany, for example, electricity prices trended upwards during the 2010s, notwithstanding Energiewende. A study out of the University of Chicago shows that U.S. states which adopted “renewable portfolio standards” had higher electricity prices than those states which did not. As the authors point out, the higher prices likely reflect costs that renewables impose on the generation system due to their “intermittency” and “higher transmission costs.” Quite so. But this is mere prelude to the brave much greener world ahead.

According to EIA figures, wind and solar accounted for just 12 percent of electricity generation in the U.S. in 2021. Australia is higher at 22 percent. But, vitally, in both countries fossil fuel power is strongly in the mix—61 percent in the U.S. (plus 19 percent nuclear) and 72 percent in Australia. It can still backup intermittent sources of power. Watch out when the balance tips a little further. Coming to your neighbourhood fairly soon: unaffordable electricity, blackouts and, inevitably, authoritarian diktats. Verboten, home heating above 61°F. VIPs excepted of course. To everyone according to their needs.

After a career in economics, banking and payment-systems management, Peter Smith now blogs on the topics of the day. He writes for Quadrant, Australia’s leading conservative online site and magazine. He has written Bad Economics, of which, he notes, there is much.

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2 comments on “'We Stand by the Modeling'”

  1. Eco-Freaks will do anything to get people to pay attention to their stupid Climate Change scam

  2. As you can see, Australians are quite all right with being led around like sheep:
    https://www.city-journal.org/australias-crazy-covid-response
    Ditto the US, Canada, and New Zealand. Some years ago a proposal to establish a renewable portfolio standard was defeated in the Colorado legislature. Not to worry. Supporters got it on the ballot as a referendum, where the people duly voted for it.

    All this is the result of the feminization of western societies under an infantile belief that life must be all bliss all the time, with no risk involved whatsoever.

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