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Infrastructure Australia -- Submission

DESERTEC-Australia -- "Clean Energy From Deserts"


GENI - The Global Energy Network Initiative

The Way Forward


By exploiting its unrivalled supplies of sunshine, natural gas, wind, geothermal energy and uranium, Australia could power Asia. In coming
years, Australia should capitalize on this opportunity by:.
"The man who invented the first
wheel was an idiot. The man who
invented the other three, he was a
genius."
Sid Caesar,
comedian

"We need to use different


thinking in soliving problems
than the thinking we used when
we created them."
Albert Einstein

--Rapidly expanding domestic natural gas electricity


This would require building out natural gas capacity between now and 2020 at a rate of roughly 12% per year in coming years, twice the currently
forecasted rate.
-Banning new coal-fired power plants without carbon capture and storage.
This is common sense. But it should be accompanied by a progressive phase-out of non carbon capture equipped coal-fired power over the next 25 years.
The idled capacity can be kept on standby. Owners would be compensated through higher prices for less power.
--Building out Australia's large-scale renewable energy resources such as concentrating solar power, geothermal and wind power.
The market will do this anyway once coal is stripped of unfair market advantages. Smaller scale renewables such as solar photovoltaics and biomass also
should be encouraged.
-Exporting surplus energy. As the buildout of renewable energy capacity picks up speed, it will create large surpluses of clean energy that can be
exported to Asia, particularly China. A combined electricity/natural gas export infrastructure can carry the energy to market.

The Background
"There's no energy shortage,
there's no energy crisis, there's a
crisis of ignorance."
Dr. R. Buckminster Fuller

Solar, geothermal and wind are rapidly falling in price. The compounding effects of innovation and experience are bringing these technologies to price
competitiveness. Carbon capture and storage has no similar potential. It's still unproven and it has limited price reduction potential. Further, coal just
doesn't have the scale of solar, geothermal and wind. This is critical.

"Global warming has the


potential to focus our national
imagination."
Michael Pusey,
sociologist
UNSW School of Social Sciences

"Long-term economic health


depends on environmental
health"
Sydney Morning Herald

"We must build long-term


competitive strengths in the
global industries of tomorrow industries that will provide the
high-paying jobs of the future."
Kevin Rudd, Prime Minister,
Australia

Renewable energy, led by high-volume concentrating solar power, geothermal and


wind, offers the prospect of low-cost, clean, abundant energy in coming years
Sources: ABARE, IEA, IPCC

"Animal spirits" in the marketplace are already sensing the dynamics. The result has been major announcements in the area of renewable energy,
particularly wind, geothermal and solar. As a result, Australia may soon start seeing the investments needed to satisfy 25% of the nation's electricity
needs by 2020 from renewable energy sources like solar, geothermal, wind and biomass.

The Current 'State of Play'

Worley Parsons

"BHP Billiton has recognised


that our company, as well as
society generally, must make
real behavioural changes and
accelerate technological
progress if we are to achieve a
meaningful reduction in energy
use and greenhouse gas
emissions."
Chip Goodyear,

Worley Parsons is a major, publicly-listed engineering company. It has Australia's largest mining companies as clients. It is investigating the feasibility
of rolling out 34 250MW parabolic trough concentrating solar power plants around Australia by 2020. That's 8,500 Megawatts (MWs) of capacity
totalling 25 Terawatthours (TWh) Gwhs of electricity. That would amount to 7% of Australia's 2020 forecast of 344 TWhs of electricity demand.

Chief Executive,
BHP

"The powerful cost reductions


now taking place in solar, wind
and other renewable energy
sources coupled with dramatic
price increases for oil and coal
have radically changed the
economics of energy."
Al Gore
Worley Parsons estimates 34 250MW concentrating solar power plants could
be operating in Australia by 2020

Source: "Advanced Solar-Thermal: Utility-scale Renewable Power for


Australia," Worley Parsons/EcoNomics, 2008

"The costs of effective climate


protection are far lower than the
Geothemal
costs of inaction. The longer we
delay, the more expensive climate
protection will become. "
The Australian Geothermal Energy Group estimates 2,250+MWs of geothermal capacity could be on line in Australia by 2020, producing 17.5 Twhs of
"New Impetus for Climate Policy", electricity by 2020, or five percent of consumption. Output by 2040 could be multiples of that. Over time, experts believe geothermal could easily power
the entire country.
German Advisory Council on
Climate Change

"When demand for oil and coal


goes up, the price goes up.
When demand for solar and
geothermal goes up, the price
goes down."
Al Gore,
Environmental educator

"All indications are that solar


CSP is moving to the forefront of
renewable energy technologies."
Emerging Energy Research

Source: "Installed Capacity and Generation from Geothermal Sources by


2020", McLennan Magasanik Associates Pty Ltd, 2008

Wind, Biomass
The Business Council of Australia (BCA) estimates Australia can handle 2,500MWs (18.6 Twhs) of biomass energy generating capacity and 7,500MWs of
"Concentrating solar power is a wind. Assuming both are achieved by 2020, it would mean that Australia could be satisfying 24% of its electricity demand from solar, geothermal,
wind and biomass alone by that year.
well-proven and demonstrated
technology, with over 100 years of
accumulated operating experience
since 1984."
"Power Generation Options For
Australia,"
Cooperative Center for Coal in
Sustainable Development

"The Cooper Basin can generate


more (geothermal) power than
eight to 10 Snowy Mountain
(hydro) schemes. It's a very, very
significant energy resource and we
know it's there."
Adrian Williams, Geodynamics

"We've got four times more


energy in the Cooper Basin than
Australia has in all its gas
reserves ... so all we have to do I
think is get on with it and do it."
Adrian Williams, Geodynamics

So-called 'long-term' limits of new renewable energy capacity could easily be


reached by 2020

Source: "Modelling Success: Designing an ETS that Works," Business


Council of Australia, 2008

Prices
Geodynamics, Australia's leading geothermal energy company, estimates it can eventually generate hot dry rock geothermal energy for 4.4c per kwh.
That's on a par with natural gas without carbon capture and storage.

"CSP technology is likely by


2015 to become competitive with
world market prices of most
fossil fuels, especially fuel oil,
natural gas and liquid natural "gas. "
"Concentrating Solar Power for
Seawater Desalination,"
German Aerospace Center (DLR),
2007

Hot rock geothermal power could generate electricity at A4.5c/kwh


Source: Geodynamics

"At at time when deep cuts to


greenhouse gas emissions are
being called for, solar thermal can
be installed in large capacities,
yet constructed of modular,
repeated components."
"Strategy for the Market
Development of Concentrating
Solar Power,"
World Bank, 2005

Meanwhile, the US National Renewable Energy Laboratory estimates that parabolic trough concentrating solar power is on a downward price path
that will reduce its cost to about US4c/kwh by 2020. At the current pace of rollout of this technology worldwide, it's likely this price forecast may prove
conservative, and the 4c/kwh level could be reached by 2015 if not sooner.

Solar thermal power stations can


deliver power on demand, making
use of their thermal storage
capability and hybrid operation with
fuels. They are the natural link
between fossil fuels and other
renewables."
European Union

Parabolic trough concentrating solar power is expected to fall to around


5c/kwh by 2020
Source: "Assessment of Parabolic Trough and Power Tower Solar Technology
Cost and Performance Forecasts," Sargent & Lundy LLC Consulting Group (for
US NREL), 2003
Coupled with similar downward price trends in wind and biomass, this provides a huge opportunity for Australia to exploit solar, wind and geothermal
energy for both clean and cheap electricity. Doing so would yield very attractive weighted prices of around 5c/kwh in 2020. That's less than
carbon capture and storage. And it would come from more proven technology.

"Geothermal power plants can


provide extremely reliable baseload capacity
24 hours a day."
"Energy Technology Perspectives: Geothermal
Scenarios and Strategies to 2050,"
CSP
International Energy Agency, 2008
Wind
Biomass

Renewable Energy Growth Rates and Costs


2010

2020

10-year

MWs

MWs

Growth Rate

50
50
2,000
300

2,250
8,500
7,500
2,500

46%
67%
14%
24%

Post
Post 2020
2030
Growth
Growth
Rate
Rate
15%
15%
20%
15%
20%
15%
5%
2%

CSP, geothermal, wind and biomass could be satisfying 24% of


Australia's electricity needs in 2020.
"The potential of the geothermal
industry in Australia is truly
staggering It provides clean
baseload power."
Martin Ferguson,
Federal Resources Minister
Australia

"Geothermal energy has the


potential to generate one fifth of
Australia's total electricity needs
over the next 25 years without
producing any carbon dioxide
emissions."
Anna Bligh
Premier, Queensland

Renewable Energy Growth Rates and Costs


102010
2020
Delivered
year
Growth Cost per
MWs
MWs
Rate
kwh
Geothermal
50
2,250
46%
$0.04
CSP
50
8,500
67%
$0.05
Wind
2,000
7,500
14%
$0.05
Biomass
300
2,500
24%
$0.04
$0.05

Renewable energy prices in 2020 would cost about 5c/


kwh, including transmission charges to urban
destinations

Sources: Worley Parsons, Australian Geothermal Energy Group, US NREL, TREC estimates and others
Concentrating solar power, geothermal and wind should be aggressively built out in Australia between now and 2020 and current coal-fired
capacity should be idled at the rate of five percent per year with natural gas used as a 'bridge' energy source.
Under this scenario, the graph below shows that the proportion of natural gas in the nation's electricity supply would rapidly swell to meet the energy gap
created by falling amounts of coal fired power. The second graph below indicates that the percentage of natural gas power in the national electricity system
would rise to 35% before renewables begin contributing large amounts of power to the grid.

"Current CSP plants are


achieving costs of about US12c/
kwh, which are the lowest of any
solar technology. The
technology can also be
combined in hybrid form (solar
thermal plants coupled with
fossil fuel boilers), achieving
costs of about US8c/kwh."
"Synergies with Renewables:
Concentrating Solar Thermal,"
Cooperative Research Centre for
Coal in Sustainable Development,
Australia, 2006

Gas would take the place of coal for new capacity

Gas would comprise up to 35% of national generating capacity during the transition
period.
Source: Desertec Australia

"Deep cuts in emissions are


This short-term "dash to gas" would require a doubling of the curent forecast rollout pace of natural gas capacity. But the greenhouse gas impact
compatible with continuing
would be dramatically positive. It would result in a rapid decline in greenhouse gas emissions from stationary energy, the largest component of the
strong economic growth and
nation's greenhouse gas signature.
improvements to living
standards."
CSIRO, Response to Issues Paper,
Prime Ministers Task Group on
Emissions Trading

"Australia can afford to take a


leadership position in
committing to substantial
reductions in our net
greenhouse emissions, in order
to help manage the economic
risks to Australia, and to
contribute to the global
momentum and concrete actions
required to avoid dangerous
global climate change."
Leader, Follower or Free Rider,
Climate Institute, 2007

A rapid buildout of natural gas would


require a roughly 10% annual expansion of
capacity, twice current estimates

A 'dash for gas' between now and 2020 will drastically reduce Australia's
greenhouse gas emissions

Source: ABARE

Source: Desertec-Austraila

Between now and 2020, experts believe the geothermal and concentrating solar power industries can expand by 45-67% per year, while wind
may expand more slowly due to short-term grid constraints. After 2020 onwards, concentrating solar power and geothermal's growth rates can be
expected to fall back to 20% per year as they grow larger in size, while wind's expansion may accelerate due to vanishing grid constraints thanks to new
infrastructure spending. After 2030, wind and geothermal can be expected to expand at slightly slower rates due to technical uncertainties, while
concentrating solar power continues to expand rapidly.

We need to act now. We need


roadmaps that accelerate
international technology
development and implementation,
but that leave room for flexible
responses on a country level,

Geothermal
CSP
Wind
Biomass

2010
MWs
50
50
2,000
300

Renewable Energy Growth Rates and Costs


2020
10-year
Post 2020
MWs
Growth Rate
Growth Rate
2,000
45%
15%
8,500
67%
20%
7,500
14%
20%
2,500
24%
5%

Post 2030
Growth Rate
10%
20%
15%
2%

Sources: Worley Parsons, Australian Geothermal Energy Group, US NREL, TREC estimates and others

Nobuo Tanaka, Executive Director,


As the chart below shows, after 2020 as the amount of renewables in the grid will grow to be sizeable. At that time, Australia will need to consider
International Energy Agency
caps on the amount of such energy allowed into the domestic grid to ensure stability. Reasonable maximums might be 25% apiece for wind, geothermal
and concentrating solar power. After 2020, gas would continue to play a crucial load-balancing role (as would hydro), but its contribution could fall once
baseload carbon capture and storage coal-fired power plants start coming on line. The beauty of the system is that it provides maximum flexibility as
Australia's builds out its electricity generating capacity to meet its needs and to start serving export markets.

"Earlier action (on global


warming) allows a more gradual
transition to a low carbon
economy, allowing individuals
Australia will begin generating surplus energy by around 2020
and businesses to adjust and
Source: Desertec Australia
learn over time. This learning
process will give us a
competitive advantage."
Under the scenario above, several intriguing things start happening around 2020. The first, of course is that solar, geothermal and wind start creating
Draft Carbon Trading Green Paper significant amounts of energy. The second is that the rapid 2010-2020 'dash to gas' gives way to falling domestic needs for additional gas-fired electricity as
carbon capture and storage comes on line. After 2020, therefore, some gas-fired power capacity becomes surplus and therefore could be redirected to an
electricity export market. As concentrating solar power, wind and geothermal cross over their respective 25% domestic market thresholds around 2025,
they could join gas in generating power for export as well. By 2030, Australia could be producing electricity equal to nearly twice its electricity needs
export nearly 400 Twhs of electricity per year.

Around 2030, geothermal would enter the export mix after it surpasses the 25% domestic energy threshold. By 2039, Australia could be generating
nearly 3,000 Twhs of low-emission electricity, six times its domestic electricity needs.

"Greentech could be the largest


economic opportunity of the 21st
century. Leaders are calling for
alternatives to $60-a-barrel oil, and
entrepreneurs are rising to the
challenge."
John Doerr,
partner, Kleiner Perkins, a Silicon
Valley venture capital firm.

"Markets for low-carbon energy


products are likely to be worth at
least $500bn per year by 2050,
and perhaps much more.
Individual companies and countries
should position themselves to take
advantage of these opportunities."
Stern Review

By 2050, Australia could be expected to be generating huge amounts of clean, low


emission energy
Source: Desertec Australia

After so many years of inaction, it


is impossible for Australia to be in
front of the rest of the world
in tackling climate change. A
greater risk is being left behind a
world of emerging economic
opportunities.
Peeny Wong,
Federal Climate Minister, Australia

"We must build long-term


competitive strengths in the
global industries of tomorrow industries that will provide the
high-paying jobs of the future."
Kevin Rudd,
Prime Minister,
Australia

Connecting to Asia
With increasing energy surpluses to export, Australia will need an export delivery mechanism. In the graphs below show, clockwise from upper left,
Asia's electricity, natural gas pipeline and telephone networks. The graph at the lower left shows how they form a backbone connecting Western Australia
to China, the region's largest economy and energy consumer. A largely-comprehensive utility grid already spans the Asian region, with Australia as
a notable outlier.

Asia's electricity grid

Asia's natural gas pipeline system

Telecommunications cables between Australia and


Asia

An overlay of them all shows a backbone from


Australia to Asia

There is a path to Australia


being a low-emissions economy
within around 40 years,
consistently with
continuing strong growth in
material living standards."
Prof. Ross Garnaut

Sources: ASEAN, Teleconnect, NEMMCO

To the composite picture above should be added two very significant infrastructure projects. The first is China's large-scale buildout of High
Voltage Direct Current (HVDC) power lines to carry western hydropower to the country's eastern cities. The second is the Association of Southeast
Asian Nations (ASEAN) 'Trans-ASEAN Gas Pipeline' (TAGP).

"The Energy Supply Association


of Australia (ESAA) has
estimated that, by 2030,
additional installed generation
capacity to meet Australias
electricity demand growth will
cost at least $35 billion."
"Energy Reform: The way forward
for Australia"
The Energy Reform Implementation
Group
2007

Given that Australia has potentially huge supplies of renewable energy to offer after 2020, HVDC cables should be strung from the renewable energyrich Australian interior up to the existing Asian electricity grid. This could be done in one of two ways: either through connecting to the Indonesian grid
or through connecting directly to China by laying an HVDC cable across the South China Sea to Guangdong and interconnections with China's own
planned HVDC system. The capacity of HVDC cables is increasing all the time. This is driving down their cost. An HVDC connection to to China would
become a major economic asset to Australia.

"Australia's power grids are


beginning to show their age - we
need a blueprint to renew those
grids as more efficient and
China is building out huge HVDC capacity
to carry hydropwer to her eastern cities
responsive Intelligent Networks.
We need to put the digital age to
Source: ABB --Click Image to Enlarge
work for our network customers"
Craig Murray,
The ASEAN nations are planning to fill in the gaps in their existing regional natural gas pipeline infrastructure. The new bits of the network will traverse
managing director, Country Energy.
some of the same route an Australia-China HVDC cable might traverse. Furthermore, the additions to the Trans-ASEAN Gas Pipeline (TAGP) would
result in a major interconnection point at the Natuna gas field off Malaysia. This would offer the potential of a major Asian natural gas and
electricity nexus. Among other things, it would offer Australia a interconnection point to Palawan Island in the Philippines, to which China is considering
building its own natural gas import pipeline.

Asia's existing natural gas pipeline system is


fragmented

ASEAN is planning to connect its pipeline


systems under the Trans-ASEAN Gas Pipeline
project

Australia could hook into or transit the TAGP


network in delivering natural gas to China

or deliver the gas to Palawan Island in the


Philippines, to which China is aleady
considering building a natural gas pipeline

Source: ASEAN Energy Department, Chinese government, Desertec-Australia

Therefore, the potential exists for Australia to bundle HVDC and natural gas export infrastructure to complement infrastructure buildouts already
planned for Asia. This would immensely deepen trade and energy ties in the region and enhance regional energy security through a network that would
ultimately look something like the below.

"The cost of an HVDC Light link


now approaches the cost of
an overhead line."
ABB

"We don't have an energy


problem. We have an energy
conversion and distribution
problem."
Hans Mller-Steinhagen,
German Aerospace Center

"There is no physical restriction


limiting the distance or power
level for HVDC underground or
submarine cables."
ABB

Australia's power and gas lines could either intersect with the gas
networks and electricity grid of ASEAN or press on for bilateral trade
with China
Source: Desertec-Australia
The result would be an trans-Asian energy network with Australia as a key -- possibly dominant -- supplier. Naturally, the undertaking would be
ambitious. The subsea HVDC and natural gas pipelines would be the longest of their kind in the world. The infrastructure project would be among the
largest in the world. But Australia's huge energy resources, coupled with the pressing need for cost-effective Chinese carbon emission reductions
and the huge costs of climate inaction, make such a project highly sensible since it would provide long-lasting infrastructure ensuring regional energy
security and lower hemisphere greenhouse gas emissions.
Farsighted investment along these line is aleady being made overseas. Noway is the leader here. It has two projects of relevance: the 1,200-km
"Climate is one of the greatest
challenges of our time - and our Langeled subsea natural gas pipeline connecting Norway to England and the 580km, 700MW Norned HVDC cable connecting Norway to The
Netherlands.
response must be decisive. It
must also be delivered in a way

that helps us build a stronger


economy for the future."
Kevin Rudd,
Prime Minister, Australia

The 1,200 km Langeled undersea gas pipeline carries


20 billion cubic meters a year of natural gas from
Norway to England

The 700MW, 580km Norned


HVDC cable carries
hydroelelectricity from Norway
to the Netherlands

Source: Norwegian goverment

Source: ABB

Both projects are operations and delivering low emission energy (ie natural gas and hydro) to European countries without Norway's resources. To date,
Norway to date has not taken advantage of bundling infrastructure.
Another relevant project is Nord Stream, a proposed 1,200-kilometer subsea natural gas pipeline from Russian territory on the Baltic Sea directly to the
German market, bypassing Russia's prickly former Baltic State Warsaw Pact allies. While the motivation for Nord Stream is clearly political, it is being
considered seriously.
Instead of running all of the
worlds generators half the time
which is very inefficient we
are talking about running half the
worlds generators all the time
much more efficient.
Michael Powers,
Global Energy Network Institute

By connecting regional
electricity grids around the world
into a global network, it will be
possible to tap new renewable
resources and phase out our
worst polluting coal-fired power."
plants
Michael Powers,
Global Energy Network Institute

The proposed 1,200-kilometer Nord Stream gas


pipeline project would connect Russia with
Germany under the Baltic Sea

Source: Nord Stream


"A global energy network makes
enormous sense if we are to
meet global energy needs with a Australia's energy resources are so vast it's in a position -- with some forethought -- to bundle cross-border HVDC and natural gas pipeline
minimal impact on the world's
infrastructure. Roughly half the cost of a land-based natural gas pipeline and two-thirds of an offshore one, lies in labor costs. Splitting labor costs
environment."
between a natural gas pipeline and HVDC cables laid simultaneously, therefore, should reduce overall project costs by 25%. That's significant.
Al Gore,
environmental activist

"I want to see an energy freeway


between Australia and East-Asia
where we are supplying needs
that a growing East-Asia will
have. This is an enormous
opportunity for Australia but it is
important for these countries. They
are going through with China,
massive industrialisation, they need
to be assured that they are going to
get energy. "
Peter Costello,
Federal Treasurer (1996-2007)
Australia

Labor accounts for nearly half the cost of


land-based gas pipelines

and nearly 60% of offshore pipelines

Source: Oil & Gas Journal


Carbon pricing in Australia could be expected to alter the economics of liquid natural gas (LNG) exports versus pipelines. At present, cross-ocean
LNG transport is considered more economical for natural gas when distances are greater than ~2,000 kilometers. However, compressing natural gas into
LNG is highly energy intensive. LNG requires nearly 30% of the underlying natural gas energy to achieve the compression. Carbon pricing will
make this compression process more expensive, adding to an already highly-expensive, extremely complicated infrastructure. By contrast,
natural gas delivery by pipeline eliminates the need for ships, ports and expensive LNG trains.

Transporting natural gas as LNG requires huge, expensive and


complicated infrastructure pipelines don't require
Source: Center For Energy

The reduced labor costs from bundling subsea natural gas pipelines and HVDC power lines, coupled with the carbon savings of avoiding
energy-intensive LNG compression could significantly 'push out' the 'crossover' point between natural gas pipelines and LNG. Assuming 25%
project savings through labor and 10-20% carbon emission cost reductions from avoiding LNG, the crossover point between pipeline and LNG could lie at
around 2,200 miles (3,666) kilometers. That's roughly the distance from Port Hedland to Guangdong, China through the South China Sea.

"We need to start moving now to


start building the infrastructure
to meet the deadlines that nature
will impose on us."
Tim Flannery

"We will have to find ways of


satisfying our energy needs with
Carbon pricing and bundled infrastructure labor savings could transform the
near-zero net emissions of
economics of Australia natural gas exports.
greenhouse gases in order to
avoid the worst damage from
climate change. This will require
an almost complete turnover in
In addition, offshore wind farms could be placed along the gas pipeline/HVDC route. The wind farms could access and feed into the trunkline and
the world's energy
generate huge amounts of wind power.
infrastructure."
International Energy Agency

Wind farms could be located alongside Australia-Asia HVDC power


lines

Similar projects are under active consideration in Europe. The UK has drawn up plans for a network of offshore wind turbines connected by an
offshore HVDC trunk connected both to the the UK and continental Europe. Japan is already considering something like this with its eco-rigs
plan.

Designs are being drawn up for a series of


North Sea wind farms

The UK has drawn up plans for a major


offshore HVDC network to carry wind power
to the UK's mainland

Finally, a combined HVDC/natural gas pipeline system connecting Port Hedland to Asia fits well with other large investment proposals like 'Iron

Boomerang' and the development of Queensland coal seam methane resources. A gas pipeline and/or HVDC power lines strung alongside the
proposed Bowen, Queensland to Port Hedland, Western Australia 'Iron Boomerang' rail system could fill out a northern Australian pathway for energy
exports to Asia.
This, in turn, begs the question whether natural gas exports to China, South Korea and Japan are best handled through pipeline exports centered
at Port Hedland rather than through expensive, environmentally-questionable LNG trains in Gladstone, Queensland. Queensland's natural gas/
coal seam methane could be pumped to Port Hedland over a continental pipeline either for delivery to Asia through a gas pipeline, or by the 'gas-by-wire'
alternative of placing natural gas-fired electricity-generation plants around Port Hedland and pumping the electricity to Asia over high-voltage direct current
power lines rather than putting the natural gas through the pipeline system.

Australia has some unusual


diplomatic assets in the
developing countries that are
centrally
important to successful global
(greenhouse gas) mitigation
policy. Chinese policy is crucial to
a successful global
outcome. A history of close and
productive cooperation on
domestic and international
policy through
the reform period gives Australia
a strong base for cooperation
with China.
Garnaut Climate Change Review
Supplementary Draft Report

With the proper infrastructure, Australia could export wind, solar,


geothermal, gas and 'closed-cycle' nuclear power to China over a
huge capacity, terrorist-proof energy transmission system
Source: Desertec-Australia, East-West Lines, company announcements
Most of Australia's natural gas exports from the Northwest shelf are currently bound for China as LNG, typically offloaded in Guangdong which,
coincidentally, is just where a proposed subsea natural gas pipeline from Port Hedland would reach land. Therefore, a massive Australia-China
energy pathway carrying both HVDC electricity and natural gas could feed into China's natural southern nexus for both. China is already
developing an offshore gas field at Huizhou, connected to Guangdong by a 369-km pipeline. Ultimately, this could end up being the first leg of a 1,500kilometer pipeline from Guangdong to Palawan in the Philippines.
With an unrivalled richness in energy resources, Australia is unique in having such an opportunity to build its own energy pathway to
international markets. China has a renewable energy market expected to grow to $550 billion by 2020. By generating massive clean energy export
revenue that could dwarf the $20 billion Australia currently gets for coal, Australia could singlehandedly make a significant dent in global greenhouse gas
emissions while expanding its geo-political geo-economic power hugely.
This kind of energy export-oriented plan speaks directly to Australia's strengths. Australia has huge resources of natural gas. Australia has huge
amounts of sun and geothermal energy. And Australia has expertise in laying subsea and buried terrestrial HVDC cables by virtue of having buillt Basslink
and Murraylink.

"It's dead obvious, we have to find


a way of exporting energy in
greater volumes than our gas
resources can produce and with
higher value than uranium can
generate."
Keith Lovegrove

Australia is set to see huge increases in natural gas exports in coming years. This is sensible since the gas fetches higher prices overseas than in the
domestic market. Furthermore, natural gas is a key transition fuel for the next 10 years as renewable energy sources build up volume.

Australian natural gas exports are set to


rise sharply in coming years

This is sensible since natural gas yields


higher prices overseas

Source: "Australias Natural Gas: Issues and


Trends, Research Paper no. 25, 200708,"
Australian Federal Parliament Library

Source: EnergyQuest

The massive energy transfers that could occur between Australia and China between now and 2050 clearly argue in favor of big infrastructure to handle it.
If Australia follows the roadmap above, it could be providing China and/or the economies of Northeast Asia as much as 10,000 Twhs a year. That's enough
to satisfy more than a third of China's much enlarged energy needs expected in that year.

"Australia has a clear


responsibility to develop its
uranium resources in a
sustainable way - irrespective of
whether or not we end up using
nuclear power."
John Howard,
prime minister, Australia (19962007)

"I have very great concerns


about the current fragile safety
regimes (regarding nuclear
power) and the porous nature of
(nuclear) safeguards because of
the International Atomic Energy
Agency's inadequate monitoring of
safety issues."
Peter Garrett, Federal Labor
Shadow Environment Minister

"The current Australian


Government came to office with
a new commitment to seek to be
much more active... as a nation
on nuclear non-proliferation and
disarmament matters."
Stephen Smith,
Foreign Minister, Australia

Australia could be exporting 10,000 Twhs by 2050...

..amounting to nearly 35% of China's electricity consumption that year

And with those kinds of transfers, a combination of gas pipeline and HVDC system would provide maximum flexibility for very high throughput.
By building both to handle such huge energy transfers, Australia reduces price risk by having a flexible delivery infrastructure that can adapt to changing
prices. As such, bundled infrastructure would be the 'low-risk' strategy, particularly since it would be complemented by existing LNG
infrastructure as a supplementary delivery method.

"Renewable energy generally has


a positive effect on energy
security, employment and on air
quality."
Integovernmental Panel on Climate
Change

Source: "Electric Power Grid Connections in the APEC Region," APEC 2004

Nuclear Power
In a 2007 report, the pro-nuclear Howard government suggested building out 25,000MW of nuclear power capacity by 2050 (Ziggy Switkowski' only
spruiked for 6,000MW), claiming it would have a big impact on reducing carbon emissions.

"A (emissions trading) scheme


should allow the flexibility to
accommodate substantially
increased Australian exports of
low emission fuels to world
markets, which would have a net
beneficial effect on the
environment."
BHP Billiton, Submission, Prime
Ministerial Task Group on
Emissions Trading

Renewable energy can be built out now, pending a buildout


of nuclear capacity after 2020
"Uranium Mining, Processing and Nuclear Energy Opportunities for Australia?" Department of Prime Minister
and Cabinet, 2007

However, even with 25,000MW of capacity, nuclear would only credibly contribute at the margin as the graph below shows. However, it could
forestall a buildout of nuclear capacity elsewhere in Asia, enhancing geopolitical stability, as would a pipeline infrastructure.

Even a 25,000MW of nuclear power capacity would be dwarfed by Australia's


renewable energy output.
Source: Desertec
Nonetheless, there is an argument to be made for nuclear power. If nuclear power must take root in Asia, it should be undertaken in Australia where
it can done in a safe, 'closed-cycle' manner entirely at Roxby Downs, South Australia. By opting to sell only higher-value electricity instead of low
value uranium Australia develops another lucrative long-term revenue stream and limts the risks of nuclear proliferation. Centering an Australian nuclear
industry at Roxby Downs, and putting that energy into the HVDC power lines serving Asia, will bring Australia commercial, safety and geopolitical benefits.

Selling uranium to China creates a


proliferation threat for tomorrow

China is building up a nuclear industry that


could be supplanted by energy imports
from Australia

Source: Deloitte Insights

Source: IEA

The Beneifts to China, Japan, South Korea and Asia


Continued reliance on fossil fuels is risky on environmental, economic and geopolitcal grounds.
China is bulding out one coal-fired power station a week, and is creating a fleet of coal-fired power stations each year equivalent in size to ALL
of Australia's electricity generation capacity. Solutions must be found. In addition, Japan and South Korea are large greenhouse pollutors. Solving
clmate change, then, means solving the energy issue in Asia. The plan above offers one way to do that.

Traditional mercator map view of the world Carbon emission-adjusted view of the world
Source: University of Sheffield
The plan above would help China meet the objectives laid out in the Garnaut Review, in which economically-developing China's greenhouse gas
emissions are allowed to rise on a per capita basis until they reach those of the greenhouse gas-reducing developed countries. At that point, China would
join the developed world in lowering per capita greenhouse gas emissions at the same rate. As it happens, Australia's exports of 'clean energy' to China
would occur around 2020, the same year China's per capita greenhouse gas emissions would meet those of the developing world, compelling China to
match reductions made in developing economies.

"It is in every nation's interest for


China to strengthen its links to
the global economy and to
become an increasingly positive
stakeholder."
Kevin Rudd,
Prime Minister, Australia

Energy exports to China beginning in 2020 could meet the


recommendations of the Garnaut Review
Source: Garnaut Review

The Plan Makes a Virtue of Necessity, on Supply Grounds...


China must stop relying on coal. So must the world. Independent researchers estimate that the world, far from having abundant coal supplies, is
running out of the resource, with China particularly at risk. Should China face a coal crunch in 2020 with its attendant risks of economic and social
dislocation due to power interruptions, Australia could find itself in the sights of a militarily-aggressive China obssessed with securing its own energy
supplies. Australia would be far better off helping devise ways to satisfy China's huge energy appetite on economic instead of military terms.

World energy supplies of coal, oil and natural gas are expected to decline
sharply in coming years

China's coal production has already peaked and is declining


Source: "Coal, Resources and Future Production," Energy Watch Group, March
2007

..And Energy Security Grounds


At present, the Asian region is hugely vulnerable to disruptions in energy supply, particularly of LNG shipped from the Middle East through the
Straits of Malacca. Terrorist sabotage of a LNG ship that closed the main shipping lane between Asia and the Middle East could cause huge economic
dislocation in Asia. Having an alternative supply line from Australia reduces this exposure through having a reliable, hardened, subsea infrastructure that
can ensure uninterrupted deliveries and presents no obvious weak spots for a terrorist attack.

"We need to have a vision for an


Asia-Pacific community, a vision

that embraces a regional


institution, which spans the
entire Asia-Pacific region including the United States, Japan,
China, India, Indonesia and the
other states of the region."
Kevin Rudd,
Prime Minister, Australia

The European Parliament has


shown its commitment to fair
access to the electricity grids,
which is essential if the EU is
ever to attain effective
competition in the power market
while meeting its objective of 20%
renewable energy by 2020.
Christian Kjaer,
Chief Executive, European Wind
Energy Association

East Asia is vulnerable to natural gas and LNG supply disruptions through a closure of the
Straits of Malacca
Source: ASEAN Center for Energy, 2007

Allowing power generation


companies to own the
transmission grid makes no
more sense than allowing an
airline company to own the sky.
Christian Kjaer,
Chief Executive, European Wind
Energy Association

East Asia is similarly highly vulnerable to oil supply disruptions from shipping

The Garnaut Review: Great Erudition, Utter Lack of Vision


Despite being nearly 700 pages long, the Garnaut Review offered nothing more than a cursory examination of non-hydro renewables, dismissively
assuming they will play little role in Australia's energy system until after 2050 while coal retains a favored place for another century. DESERTEC rejects this
reflexive acceptance of coal as the dominant fuel. The two charts below illustrate the fundamental differences between the visions.
The Garnaut plan involves dirty coal with no environmental remediation providing the majority of Australia's electricity until 2033. After that, carbon capture
'ready' coal fired power plants will take over. In 2033, under the Garnaut vision, non-hydro renewables will still account for only about 10% of Australia's electricity output. In 2063, non-hydro
renewables will account for only about half.

Ross Garnaut's plan foresees coal-fired power as far as the eye can see.
Source: Chapter 20, Final Garnaut Review, page 19 in Acrobat, 485 in overall
report

DESERTEC's vision, by contrast, starts immediately winding down non-carbon capture equipped coal-fired power. The DESERTEC vision eliminates non-carbon capture coal-fired power by

2030 with renewables providing three quarters of Australia's electricity that year.

Desertec's plan

Another fundamental difference between Garnaut's vision of Australia's energy future and DESERTEC's is that Garnaut clings to the rather hopeless fiction that Australia's electricity
consumption will rise by only 1% per year going forward, resulting in a 250 Twh national demand by 2020. DESERTEC believes this is naive. DESERTEC believes future consumption in
Australia will rise as it has in the past at 2% per year, meaning 2020 demand of 343Twh and up to 800 Twhs by 2050. This is more in line with ABARE's estimates (see below).

Source: ABARE