Misplaced Optimism

16 January 2024
Misplaced Optimism - Featured image

The wishful thinking of Australia’s former Chief Scientist Alan Finkel has set our nation on a course for disaster, warns electrical engineer Ben Beattie.

Forests of wind farms carpeting hills and cliffs from sea to sky, endless arrays of solar panels disappearing like a mirage into the desert, mining on a massive scale, giant factories, untold miles of transmission lines, financing at an unprecedented scale, all combined with strategic government policies to make it happen. Welcome to the first page of former Chief Scientist Alan Finkel’s book Powering Up: Unleashing the Clean Energy Supply Chain. A dystopian future for most, and all to replace barely 19 coal-fired power stations.

Powering Up: Unleashing the Clean Energy Supply Chain
Alan Finkel
Black Inc., 2023,
336pp

An optimist is defined as hopeful or confident of better outcomes. If this is Finkel’s optimism, it is not a good outcome for the environment at all. It is a bad case of the end justifying the means. People who are interested in seeing the many reasons a renewables future will cost far more than the current system should read Powering Up. It is a perfect example of how misplaced optimism can go very, very wrong.

If Australia gets one vote, China gets 60.

Before diving into the pros and cons of the book, let us drift back in time to 1 June 2017, to an estimates session where then Chief Scientist Alan Finkel was asked what effect Australia’s emissions reduction would have on global temperature. The immortal response—virtually nothing—is a fact we all know to be true, regardless of one’s position on ‘The Science’ of climate change or ‘The Transition’ to renewables being forced upon society. What is discussed less often is what Finkel said immediately afterwards, comparing emissions reduction to voting. The analogy he used is that if people thought their vote mattered little and no one voted, we would not have democracy. In Finkel’s mind, even though Australian emissions contribute ‘virtually nothing’ to global warming, the important factor is participation. This is akin to doing it for ‘the vibe’.

Having trouble making the link between democracy and emissions reduction? You are not alone. It is a terrible analogy, so here is one of mine: allowing wind and solar on the grid is like allowing bicycles on the freeway. Bicycles are cheap to buy and run, a claim all too often made of wind and solar. But bicycles are unable to maintain their speed indefinitely and thus disrupt the traffic. Bicycles do not pay any road-use charges. Intermittent wind and solar cannot dictate their output and so disrupt the operation of every other generator that must cater to wind and solar variability. Wind and solar suffer no penalties for the feasts and famines they create in the market. Finkel’s analogy implies emissions reduction is like voting, where a vote is equivalent to a tonne (or a million tonnes) of CO₂ reduced. But does that hold up to inspection? To vote one must meet some minimum qualification such as citizenship and age, and every eligible voter must participate in a common system. The system must have rules and an official count, and everybody gets one vote. People abusing the system or failing to vote get fined.

Every country creates emissions, but not every country participates in an emissions reduction scheme. Some might be tempted to say the Paris Agreement is a common scheme, but I challenge anybody to find commonality across the planet’s 200-odd countries. Does anybody get fined for not reducing emissions? No. Does every country reduce emissions by the same amount? No. To complete Finkel’s analogy: if Australia gets one vote, China gets 60. Apples and oranges…

I took the time to debunk the analogy partly because so many people have used it since, and partly because I believe it shows some insights into Finkel’s thought processes. Anybody can do the same: start with a base of optimism, add a dash of peer pressure, surround yourself with groupthink, and voila: a simplification that does not stand up to inspection. Alan even wrote a blog post to explain himself more thoroughly, using the same example. Not an inspiring outcome when you realise how much impact Finkel’s misplaced optimism has had on our electricity system policy.

Back in 2016 the Chief Scientist was asked by the Coalition of Australian Governments (COAG) to chair a review of the National Electricity Market. The resulting report handed down in 2017 gave birth to several initiatives including AEMO’s Integrated System Plan, the Energy Security Board, and expanded powers for the energy regulators.

All of this was supposed to reward consumers, increase security, lower emissions, and create opportunities for new generators. History will show Finkel’s intervention into Australia’s critical electricity systems has been a complete failure. Consumers now pay more, security is reduced, reliability is reduced, and opportunities for new generators only exist for wind and solar unless it is a government project directly funded by taxpayers, such as Snowy 2.0 and the Hunter Power Project at Kurri Kurri. Stand by for the green hydrogen boom (which boils down to taxpayer subsidies) also championed by Finkel in his 2018 National Hydrogen Roadmap. Green hydrogen is guaranteed to damage our economy.

Like renewable energy policies today, British children’s
television series Teletubbies is set in an imaginary world.

I bring all this up to help the reader get into what I believe is the correct mindset to read Finkel’s book. Finkel is as openly bullish on renewables as he is opaque about his thoughts on the environmental impact of those hill-carpeting wind turbines. But why? Finkel is obviously a smart guy and seems like a nice enough bloke, which makes it difficult to think ill of his whacky ideas on what is best for the environment and Australian electricity consumers. ‘Electrify everything’ he urges, ignoring that deciding the destination before you have assessed the journey is a bad strategy.

Finkel operates in a Goldilocks zone.

The clearest disconnect between Finkel’s optimism and reality is voiced by Finkel himself. By admitting that getting rid of oil, gas, and coal from our lives will never happen if “driven by cost and convenience”, Finkel is stating a universal truth. American author Robert Bryce coined the phrase ‘the iron law of electricity’ where he states that people, businesses, and countries will do whatever it takes to get the electricity they need. Considering the Australian penchant for blowing up coal-fired power stations as soon as possible after closing, I would add the disclaimer ‘if the supply exists at all’.

Finkel’s description of exporting green hydrogen products as ‘shipping sunshine’ is as misleading as his voting/emissions analogy. Producing hydrogen through electrolysis consumes 9kg of water for every 1kg of hydrogen. More accurately, this is exporting drinking water … from the driest continent on the planet!

Finkel is infatuated with batteries: for electric vehicles, grid applications, and homes. The unwavering optimism surfaces here in a glowing description of Tesla vehicles, in particular the Model S with its 100kWh (kilowatt-hours) battery. To put this energy storage in context, the average household in Australia consumes around 20kWh per day, so each Model S contains the equivalent of five days of household electricity. As discussed by an energy analyst in the Substack publication Doomberg, if governments incentivised hybrid vehicles—cars with both a petrol motor and a small capacity electric drive, such as most taxis nowadays—more people would take up these cheaper low-emission vehicles, resulting in greater overall emissions reduction. In addition, battery-only EVs ensure a massive amount of minerals and raw materials are locked up forever in these vehicles, not to mention the huge electrical load that simultaneously charging many EVs places on the distribution grid.

In Finkel’s supply-chain narrative he explains that one of the main components of EV batteries, the anode, is increasingly made from synthetic graphite, itself produced by superheating coal to more than 3,000°C. And, of course, 90 per cent of graphite is manufactured in China. EV batteries are 30-50 per cent graphite, making them an extremely energy intensive product from the mining to the refining and the manufacture. And that is all before you get to the charging.

But Finkel gets all this. He wrote a book about it! He understands the problems, articulates them clearly and logically, as you would expect from an engineer who rose to the position of Chief Scientist. So, the obvious question is: what is he missing?

Finkel’s error lies not in being unable to identify the problems in the clean-energy supply chain; his error is misplaced optimism. He forgets there has to be a reason, a willingness, and a market for the solution. No bank lends money expecting low interest rates will be permanent. No technical standard is written assuming only the best tradesmen and engineers will carry out the work. Reality operates on scepticism, not optimism. In real life banks assume interest rates get higher, standards assume the work will be completed by people with poor attention to detail, low effort, and low care. Finkel operates in a Goldilocks zone among politicians, bureaucrats, and lobbyists where the good outcomes are the most likely outcomes. This is exactly the wrong way to approach public policy and where Finkel’s single-minded optimism creates bad outcomes. In this groupthink bubble, coal-fired power stations must close early, and this will force the market to fill the missing capacity with the approved low-emissions sources. Consumers will not only rush to buy electric vehicles, they will all sign up to have a third party control the battery. Transmission lines will all get built, and as a result of all this optimistic thinking, consumer costs will be lower and the planet’s atmosphere will stop warming.

What has the UN done for us lately?

The title of this article is ‘Misplaced Optimism’ for a reason. To align with Finkel, all you have to do is ignore Murphy’s Law, or any other real-life experience. But it is relatively simple to point out that since South Australia’s Northern Power Station and Victoria’s Hazelwood were suddenly closed and destroyed, the next two coal-fired power stations expected to close have been kept open with taxpayer money while a third is currently negotiating the details of its own government lifeline. You would think the tales of Yallourn, Loy Yang A, and Eraring might cloud those rose-coloured glasses Finkel wears.

Taken at face value, Powering Up is a well-rounded summary of the immense challenges facing the supply chains of wind turbines, solar panels, batteries, hydrogen, and electric vehicles. While illuminating to some, those with any insights into how the world works will see the book as documenting the obvious. Also obvious is the fact that most consumers have no idea that the political push to reduce emissions is not in their best interest. Finkel admits this in Chapter 7, ‘Getting the Policy Settings Right’:

There is no way that the transition would be happening if it had been left to ordinary market economics or immediate end-user benefits. Solar panels would be relegated to powering orbiting satellites and wind turbines would be spinning hard to provide power to lighthouses. Government interventions are essential to realising this unnatural transition.

According to Finkel, the rationale for massive public spending is the urgency for Australia to achieve net zero. He explains that investors should lobby oil companies to invest in net zero technologies. Investor returns are not of much concern here. Biden’s so-called Inflation Reduction Act is given a thumbs up because it provides massive taxpayer support to low emissions technologies. I cannot help wondering how the American taxpayer will feel about it after the first electric school bus catches fire. Let us hope that does not happen or if it does, at least only while charging and not transporting children.

We are told carbon border taxes protect Australians from cheaper fossil-fuelled products and industries in countries that continue to build new coal-fired power stations. Finkel cheers on Australian governments imposing carbon taxes on its own industries, designed to add costs in the form of fines for exceeding emissions thresholds or the costs of purchasing credits.

If you get this far into the book you will then be lectured on ESG, equity, global citizenship, and a host of other concepts entirely useless to the average Australian. We are told we must reduce emissions in order to be part of the change. In other words, we must sacrifice our energy security and increase our cost of living to appease our bureaucracies, who are in turn seeking a kindly nod from the United Nations. To that I say, what has the UN done for us lately?

Alan Finkel, pictured at an event in 2014.
He was Australia’s Chief Scientist from 2016 to 2020.
Photo: WIPO/Gavin Jowitt Photography

And nuclear? Dismissed as too slow, too dangerous, too expensive. Too slow in their operation to fill in gaps created by wind and solar. Too dangerous because of the risk of attack by terrorists and foreign armies. Too expensive because they take too long to build. Finkel is selective in his criticism of nuclear power and goes on to explain the biggest hurdle is building a domestic spent fuel repository. Can anybody say nuclear submarines? Finkel wraps up his nuclear argument by explaining that by the time Australia builds a nuclear power station, it will not be able to compete in an established, low-cost, reliable, renewable electricity system. I suggest to Mr Finkel that there is no such thing based on wind and solar. His book adequately makes that point for me.

What does this mean for Australia and our politically motivated emissions reduction and technology targets? I believe I am not alone in thinking cheery optimism is not in our best interests. In this era of global upheaval, the best strategy is to ensure our own energy security and insure against the very real possibility of conflict causing more energy shocks and energy scarcity. Will the Middle East ever be a reliable partner? Will escalating tensions with China—our largest trading partner—suddenly turn the tap off on our resource exports and our renewable imports? Australia already exports energy security in the form of natural gas and coal to our closest allies in the region. Can Australia be relied on to continue supplying energy security to our allies? I encourage reading Powering Up. But please, balance it out with a dash of scepticism.

Ben Beattie is a Brisbane-based electrical engineer in the power and gas sector who regularly contributes articles to The Spectator Australia and produces The Baseload Podcast.

This article from the Summer 2023 edition of the IPA Review is written by electrical engineer Ben Beattie.

Support the IPA

If you liked what you read, consider supporting the IPA. We are entirely funded by individual supporters like you. You can become an IPA member and/or make a tax-deductible donation.