Wednesday, 22 November, 2006

by Paul Kelly
The Australian

The Switkowski committee has obliged John Howard, but there's a greenhouse catch attached

THIS is John Howard's revenge on the greenies. It will drive the Left mad. It compels Labor to another anti-Howard scare campaign to save Australia. And it guarantees a passionate anti-nuclear power crusade in Australia.

Ziggy Switkowski's draft report puts nuclear power firmly on Australia's agenda. It is a confronting document. It will test Howard's nerve, his political judgment and his ability to successfully set our energy policy agenda.

Howard wanted the nuclear option on the table and Switkowski's committee has obliged him. At one stroke its impact is to unite the Labor premiers, the city mayors, the Kim Beazley-led federal ALP, the trade unions, the Democrats and the Greens in a crusade against nuclear power. It will become a grassroots movement.

The message from Switkowski's report is that nuclear power is coming. It is a "practical option for Australian electricity production". This is the conclusion Howard wanted. It mirrors his mantra for the past several months. Howard has frequently said public opinion on nuclear power was changing.

The catch, for all sides, is that nuclear power becomes practical only when "the costs of greenhouse gas emissions are explicitly recognised". Switkowski spelt it out at the National Press Club yesterday: You think nuclear only if the community has "a conviction about climate change". It is the vital nexus in his report: greenhouse gas solutions lead to nuclear power in Australia and in the world. The trend is global.

The report pivots on carbon pricing. Without it, you can forget nuclear. But, Switkowski says, with carbon pricing "nuclear becomes not only competitive but quite attractive".

He specifies the price range of $15 to $40 a tonne of carbon dioxide equivalent as the level needed to "make nuclear electricity competitive" in Australia.

The political and economic key to the report lies in this conundrum. Its logic cuts both ways. It means Howard's nuclear option has no economic credibility without his acceptance of carbon price signals. But it means Labor's greenhouse policy has no credibility if it refuses to allow nuclear power as a market-based solution. How will Howard and Beazley respond? Like politicians. Both will be reluctant in the 2007 election year to resolve the contradictions in their stances.

There is a superficial and a substantial view of this report. The superficial is that Switkowski's committee has written a 152-page death sentence for the Government. It highlights the scenario of 25 nuclear reactors from 2020 rolling out across the landscape to produce one-third of the nation's electricity by 2050. Where will these reactors be located? Switkowski's criteria are: near population centres, waterways and perhaps existing power stations. Welcome to Newcastle, Wollongong, Adelaide, Geelong and most other cities. Think of Labor's television ads: stop Howard bringing Chernobyl to your neighbourhood.

What about waste disposal?

"Take your pick," Switkowski said when asked what parts of Australia were suitable. The point is that "just about every part of the continent" meets the criteria. So, if you're unlucky enough to miss one of the 25 power stations, don't worry, you may still get a waste repository near you (though they won't be needed until 2050).

Beazley could hardly contain himself. Howard, he said, had an obligation to tell Australians where the 25 reactors would go and where the waste dumps would go. As for Labor, it opposed nuclear power and opposed carbon taxes. The timing is exquisite. As industrial relations fades as a scare, Labor has got a high-geared substitute.

The Switkowski report documents the huge gulf between Australia today and a nuclear future. Although it says nuclear power is practical, the conditions that make it practical are daunting.

Nuclear doesn't make financial sense at present prices. It is between 20 and 50 per cent more costly than our cheap coal and gas-fired power. It needs an entirely new regulatory regime and nuclear industry skills that Australia doesn't possess. It demands a national repository for the burial of waste. It requires sufficient political consensus and trust that commonwealth, state and local governments can agree. Remember, the building of power plants is an intense local issue.

Switkowski conceded that political bipartisanship was vital, given the long-term investments required. His report further concedes that getting the first reactor built in Australia "may require some form of government support or directive". How much financial support? What sort of directive? Remember, history shows government funding has been critical to getting nuclear power established in many nations.

Switkowski's report is realistic in identifying the scale of the transition to nuclear as well as the consequences of ruling out the nuclear option. Australia's electricity demand will more than double by 2050. At that time 75 per cent of power will come from plants not built today. So Australia faces huge new investment decisions about energy sources. In much of the world there is a shift to nuclear, not as the solution but as part of the solution. This is the philosophy of Switkowski's report. He speculated on a scenario for Australia at 2050 of a 30-20-50 per cent divide relying on nuclear, renewables and fossil fuels respectively.

The critical choice for Australia is whether it really wants to shift to low-emission electricity generation. The politicians still hedge on this. It is little wonder given that Australia's comparative advantage in fossil fuels means it has the fourth cheapest electricity in the Organisation for Economic Co-operation and Development countries.

Reading between the lines, the real message is apparent: if Australia doesn't plan to take serious action on greenhouse gas emissions, then it can forget nuclear. But if it does introduce carbon pricing, then it must allow nuclear power to compete with other low-emission technologies and, in this situation, Switkowski says, nuclear power will be competitive.

This kills the old politics of climate change. That long debate between believers and non-believers is over. The new debate is about energy solutions. This was Howard's plan.

What will Howard do when he gets the final report at year's end?

My guess is he will accept its framework. He will expand the mining and export of Australia's uranium. He will be careful about uranium conversion and enrichment, since the report warns there are few opportunities here. And he will advance a framework that allows Australia to have nuclear power down the track if and when the market permits this. Howard will keep the door open and Beazley will keep it shut. That is the choice.