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Pages tagged "Energy & Environment"

Seeing the forest for the trees: Exploring alternate land use options for the native forests of Tasmania

Australia is home to some of the world’s most ancient forests. These native forests are some of the most biodiverse environments on the planet, and are a valuable tool in the fight against climate change through their ability to capture and store carbon and regulate the water cycle.

This paper offers policymakers a blueprint for assessing the true value of our native forests. Recognising the inherent preferencing of the quantitative (particularly when it comes to Expenditure Review Committee processes), we conduct a comprehensive cost-benefit analysis of conserving Tasmania’s native forests, in particular those which are currently subject to logging by the state-run firm Sustainable Timber Tasmania (STT). This paper builds upon Blueprint’s previously published studies on the economic potential of alternate land uses of native forests in Victoria’s Central Highlands, and New South Wales’ North Coast.  

Using a cost-benefit analysis based on cash flows, we evaluate the economic potential of native forest conservation by modelling the value of carbon sequestration against continued logging. Our forecast shows that if STT ceased their native logging operations in FY2025 instead of FY2049, the use of this land for carbon sequestration would provide a net-benefit valued at $72 million in present day dollars. We find that a move to alternate land uses will result in a positive net present value, even when factoring in the estimated cost of providing a transitional package to the broader forestry industry to facilitate its move toward a more sustainable plantation-based future.

Our cost-benefit analysis incorporates a range of assumptions that were deliberately designed to overstate the costs and minimise the benefits of halting STT’s native timber logging. Were we to remove these assumptions from our cost-benefit analysis, we find a net benefit of $936 million in ceasing logging immediately. By including these favourable assumptions, we, methodologically speaking, have given the logging industry the benefit of the doubt—demonstrating that even when every conceivable dollar is counted in favour of STT’s native timber operations, it nevertheless shows itself economically uncompetitive against alternate land uses. 

The native forests of Tasmania have significant capacity to generate major alternate revenue streams that can replace that which is generated from logging—on the proviso that a robust carbon methodology is put in place, to enable the generation of Australian Carbon Credit Units (ACCUs) from a cessation of timber harvesting. In particular, we find that managing Tasmania’s native forests in a manner consistent with conservation principles would abate an average of one million tonnes of carbon annually. This equates to a net present value of $345 million at current ACCU spot prices. 

Lastly, we must comment upon the unusual and declining transparency in STT’s annual reports. Other state-run forestry corporations that we have studied were noticeably less opaque, particularly with respect to pricing information. The lack of publicly available pricing information likely acts as an impediment to private investment by increasing uncertainty, thus deterring private plantation-based competitors from entering the market.    

In light of our findings, we encourage the Tasmanian Government and Opposition to work in concert with the Federal Government to enact the following recommendations:

  1. Immediately cease all government subsidies to STT.
  2. Legislate the end of STT’s native forest logging operations in Tasmania by FY2025.
  3. Implement a robust carbon methodology that would enable the generation of ACCUs through a cessation of native timber harvesting and a suite of conservation-based management practices.
  4. Expand timber plantations to meet timber demand.
  5. Incentivise private investment in timber plantations.
  6. Improve STT’s transparency to match that of other state-run forestry corporations, particularly as it relates to the price of timber.
  7. Create a ‘natural capital’ weighting that increases the value of native forests, thus ensuring that they have a higher Benefit Cost Ratio when Expenditure Review Committee decisions affecting them are made.
  8. Support the development of environmental markets to channel private capital toward nature-positive biodiversity outcomes in Tasmania

The lowest cost net-zero grid: A critical analysis of nuclear energy in Australia

AEMO has repeatedly warned that electricity shortages and blackouts may arrive as soon as 2025 as coal plant closures accelerate and investment in new generation capacity lags. Therefore, independent of its cost, nuclear energy is not a technically realisable solution to the NEM’s immediate crisis. In order to avoid calamitous blackouts, we have no choice—at least in the short-term—but to double down on renewables and conventional and proven firming technologies. This means a drastically accelerated deployment of batteries, solar, onshore wind, pumped hydro, and gas, along with a corresponding build out of transmission infrastructure.

Accordingly, this paper’s assessment of the potential role of nuclear energy in Australia is strictly limited to a decade or more from now—specifically, from 2040 forward. As we will show, a holistic model that takes into account the total system cost (TSC) of a fully decarbonised NEM in 2050 reveals a strong argument that a small, but significant, level of nuclear energy has a critical role to play in order to achieve decarbonisation at the lowest possible cost. 

If there is a single point we would like readers and policymakers to take away from this paper, it is that inappropriate and misleading metrics are being used now to make critical decisions that will lock us into a suboptimal and more expensive decarbonisation pathway far into the future. Instead of analysing the cost of each generation technology in isolation—like levelised cost of energy (LCOE) or overnight capital cost (OCC) does—it is critical we instead look at the total system cost (TSC) of the grid. That is the metric that ultimately matters because it determines what consumers will end up paying for, either indirectly through taxes and subsidies or directly through electricity bills. 

It is precisely through this holistic TSC approach, that we have identified that nuclear power—specifically small modular reactors (SMRs)—unexpectedly could have a small, but vital role in minimising consumer costs in a heavily decarbonised NEM in 2050.

Specifically, our analysis shows that in 2050, a 90-99% decarbonised NEM without SMRs would result in an additional TSC of $4.5-5/MWh or approximately $1.3-1.4 billion per year. This cost would ultimately make its way to the consumer in one form or another and is likely to increase over time. 

Contrary to orthodox thinking within the climate advocacy movement (of which Blueprint is certainly a member), our analysis conclusively demonstrates that one of either nuclear or Carbon Capture Storage (CCS) is needed to achieve deep decarbonisation levels of greater than 90% in the NEM in 2050. Indeed, without the use of nuclear or CCS technology, attaining NEM decarbonisation levels of greater than 98% in 2050 would result in an extreme increase in TSC to the consumer of $70.8/MWh or $20.2 billion per year.

Considering the potential necessity of nuclear power in the upcoming decades, along with the requirement for widespread social licence to repeal the legislated ban, and the long lead times for technology of this nature, the government must begin a rational conversation—free of ideological bias—with the Australian public now. 

This paper initiates this desperately needed conversation. Accordingly, we have prepared a set of six recommendations for the government to begin implementing immediately to ensure the stage is appropriately set for the gradual introduction of nuclear power in Australia beginning in 2040 and beyond.

Recommendations

  • Lift the ban on nuclear energy generation in Australia.
  • Commit further to building capacity of renewables in recognition of the fact that in the lowest cost decarbonised grid they still have the largest role to play.
  • Design education campaigns around safety and the potential role of nuclear in decarbonising the grid in order to obtain broad social license. 
  • Initiate community engagement programs to acquire social license for potential SMR sites and transmission infrastructure regions.
  • Develop an appropriate plan for long term radioactive waste disposal in Australia.
  • Adopt the IAEA’s Milestone Approach and commence the necessary feasibility studies to determine optimal locations for SMR construction and associated costs. 

Summary of findings

  • Achieving a net-zero grid at the lowest cost to consumers demands technology agnosticism from decision makers. The more technologies are limited (including nuclear), the more expensive the total system cost.
  • With all technologies available, the lowest total system cost grid in 2050 still requires a large growth in renewables to 120-145GW—supplemented by 20GW of storage.
  • In order to attain deep decarbonisation levels of greater than 85% in the NEM in 2050, nuclear energy—in the form of SMRs—is required to minimise costs. Specifically, a 90-99% decarbonised NEM lacking SMRs—but including every other available generation technology—would result in an additional TSC of $4.5-5/MWh or approximately $1.3-1.4 billion per year in today’s dollars.
  • Without the use of SMR nuclear or CCS technology, attaining NEM decarbonisation levels of greater than 98% in 2050 would require more than 300GW of renewables and almost 50GW of storage capacity. This exponential growth of the grid is entirely unfeasible and results in an extreme increase in TSC to the consumer of $20.2 billion per year.

Branching Out: Exploring Alternate Land Use Options for the Native Forests of NSW

Australia is home to some of the world’s most ancient forests. The benefits of native forests are extensive—they are efficient carbon sinks, they are amongst the most biodiverse environments on the planet, and they provide vast quantities of water (and preserve the quality of the water table).

This paper offers policymakers a blueprint for assessing the true value of our native forests. Recognising the inherent preferencing of the quantitative (particularly when it comes to Expenditure Review Committee processes), we conduct a comprehensive cost-benefit analysis of conserving the native forests of the Upper and Lower North East Regional Forest Agreement areas of New South Wales, also known as the North Coast. This piece of work builds upon Blueprint’s previously published cost-benefit analysis of alternate land uses versus logging in Victoria’s Central Highlands. We assess the economic potential of native forest conservation by modelling the value of carbon sequestration and tourism against continued logging. Our findings demonstrate conclusively that there is no economic case for continued logging of native forests on the North Coast of New South Wales. As in the Central Highlands of Victoria, logging of native hardwood forest on the North Coast is a loss making enterprise, subsidised by Forestry Corporation of New South Wales’ (FCNSW) profitable softwood plantation division, along with the taxpayer via periodic equity injections from the state government. Based on its own merits, we find that FCNSW’s native hardwood division is not commercially viable.

Using cost-benefit analysis modelling we find that ending native forest logging in 2023–24 instead of 2039-40 (the date that the North East Regional Forestry Agreement is currently scheduled to expire), and instead utilising the land for carbon sequestration and tourism will deliver a net benefit valued at $45 million in present-day dollars. This includes the estimated cost of providing transitional packages to the industry as it shuts down, as well as the cost of breaking wood supply agreements that extend to 2028.

The native forests on the North Coast have significant capacity to immediately generate major alternate revenue streams that can replace revenue generated from logging. In particular, we find that managing the North Coast region in a manner consistent with conservation would abate an average of 0.45 million tonnes of carbon annually. This equates to a net present value of $174 million. Our analysis also indicates that increased tourism to the region could, over 17 years, provide a net present value of $120 million. In totality, from present to FY2040, using the forests of the North Coast for purposes other than logging will generate at least $294 million in revenue.

The next government-led five yearly review of the logging industry will commence in 2024, making now an ideal time for impactful analysis. We encourage the New South Wales Government and Opposition to enact the following recommendations

1. Immediately cease all government subsidies to FCNSW.

2. Create a ‘natural capital’ weighting that increases the Benefit Cost Ratio of native forests when Expenditure Review Committee decisions affecting them are made.

3. Legislate the end of native forest logging in New South Wales.

4. Expand land valuation methodologies to include carbon storage, tourism and water.

5. Expand hardwood timber plantations to meet hardwood demand.

6. Incentivise private investment in timber plantations.

7. Expand formal policy mechanisms aimed at conserving native forests.


Achieving Prosperity in a Net-Zero Future market-friendly climate and energy blueprint for the 47th Parliament

The economic case for action on climate is clear. Over the past decade, the precipitous decline in the cost of renewable energy has opened a window of opportunity.

The race to decarbonise is gathering pace—future growth and prosperity will be determined by our ability to capture green capital and low-carbon industry. Countries that deny or delay this change will be left behind. Australian investors and business leaders know this and are desperate for the Federal Government to meet them on the same page.

This paper offers a suite of ‘low-hanging fruit’ policies for the 47th Parliament to consider and for the government, opposition, and crossbench to embed in their respective policy platforms. These policy recommendations are the result of extensive consultation with experts in the relevant fields and capture valuable lessons learned—from within Australia and abroad— from what has and has not worked in the past. They are actionable and ambitious, they can be implemented immediately, are affordable (in many cases revenue positive), and will have a beneficial impact in delivering emissions reductions.


Logging off: A cost-benefit analysis of land use options for the native forests of the Central Highlands, Victoria

Australia is home to some of the world’s most ancient forests. The benefits of native species forests are extensive—they are efficient carbon sinks, they are amongst the most biodiverse environments on the planet, and they provide vast quantities of water (and preserve the quality of the water table). 

This paper offers policymakers a blueprint for assessing the true value of our native forests. Recognising the inherent preferencing of the quantitative (particularly when it comes to Expenditure Review Committee processes), we conduct a comprehensive cost-benefit analysis of conserving the wet forests in the Central Highlands of Victoria. The Central Highlands has been selected as the case study for this paper—but our general approach could be applied to any native forest area in Australia.

We model the value of carbon sequestration and tourism against continued logging. Our findings clearly demonstrate the economic benefit of an immediate halt to logging of native wet forest in 2022–23, as opposed to the status quo of a delayed exit by 2030. Specifically, we find that ending logging in 2022–23 will deliver a net benefit valued at $59 million in present-day dollars.

Yet these results have been slow to translate to policy action. Presently, the Victorian government has loosely committed to phasing out logging of native forests by 2030. However, this is not legislated—a significant (and intentional) oversight. In the meantime, the native logging industry is propped up by government to protect an ever-decreasing number of jobs and placate misguided pressure from vested interests. Economic protectionism is damaging and regressive at the best of times. This is amplified exponentially when it results in severe environmental degradation.

Our native wet forests are at high risk of collapse unless the right policy settings are put in place to protect them into the future. It is critical that policymakers take a more expansive view when assessing land value—that they move away from the ‘what’s in it, what’s on it, how do we sell it’ paradigm that has dominated land valuation methodologies to date.

In response to the findings from our modelling and research, Blueprint Institute calls on the Victorian Government to enact the following changes:

  1. Commit to ceasing the logging of native wet forest in 2022–23 (as opposed to 2030),
  2. Legislate the ending of native forest logging (to give weight to verbal commitments),
  3. Amend or repeal The Forests (Wood Pulp Agreement) Act 1996,
  4. Expand land valuation methodologies to include water, carbon storage, and tourism, and
  5. Strengthen formal policy mechanisms designed to conserve ancient wet forests.

Breaking new ground: Challenges and opportunities of a changing energy landscape in regional Australia (Latrobe Valley, Victoria)

A new Blueprint institute series takes a deep dive into the regional realities of Australia’s shift to a clean energy future—and what that will mean for communities on the ground. Alongside the already released South-West Queensland paper, they examine Central Queensland, the Latrobe Valley of Victoria, the Central Coast of NSW, and the Collie region of WA. Across these five regions—home to all our remaining coal-fired generators, and most of our coal mines—Blueprint’s analysis finds that while opportunities are abundant (in renewable energy and more broadly), and significant prospective projects are underway, uncertainty caused by a lack of definitive policy direction is hampering their development. 

In the Latrobe Valley of Victoria:

  • In the next eight years, renewable energy projects in the region could offer 3,160 positions in construction and installation, and 740 ongoing jobs in operations and maintenance.

This represents a significant opportunity, but also a stark reality check—government must do more to enable wider regional economic diversification in these communities.

Expecting renewables alone to compensate for the stable, high-paying jobs that coal has provided is unrealistic. But importantly, our analysis finds that all of the regions studied are full of untapped potential that the clean energy economy, broad diversification, private investment, and targeted government backing in vital areas can unlock. 

“Institutions set up to deal with Hazelwood’s sudden closure in 2017, such as the Latrobe Valley Authority, have shown us that locally led initiatives can spur economic diversification. As we look to the future, vast opportunities such as the Valley’s offshore wind resources, among others, can further support the region’s bright future,” said CEO David Cross.

A detailed outline of the opportunities available to the Latrobe Valley is available in the full paper.


Breaking new ground: Challenges and opportunities of a changing energy landscape in regional Australia (Central Queensland)

A new Blueprint institute series takes a deep dive into the regional realities of Australia’s shift to a clean energy future—and what that will mean for communities on the ground. Alongside the already released South-West Queensland paper, they examine Central Queensland, the Latrobe Valley of Victoria, the Central Coast of NSW, and the Collie region of WA. Across these five regions—home to all our remaining coal-fired generators, and most of our coal mines—Blueprint’s analysis finds that while opportunities are abundant (in renewable energy and more broadly), and significant prospective projects are underway, uncertainty caused by a lack of definitive policy direction is hampering their development. 

In Central Queensland:

  • From 2022 to 2027, current renewables projects alone could offer 11,040 jobs in construction, and 720 ongoing operations and maintenance positions.

This represents a significant opportunity, but also a stark reality check—government must do more to enable wider regional economic diversification in these communities.

Expecting renewables alone to compensate for the stable, high-paying jobs that coal has provided is unrealistic. But importantly, our analysis finds that all of the regions studied are full of untapped potential that the clean energy economy, broad diversification, private investment, and targeted government backing in vital areas can unlock. 

“Economic diversification is underway in Central Queensland—new opportunities in renewable energy and critical minerals mining exist in swathes, but more must be done to secure the region’s long-term future in a net-zero world,” said CEO David Cross.

A detailed outline of the opportunities available to Central Queensland is available in the full paper.


Breaking new ground: Challenges and opportunities of a changing energy landscape in regional Australia (Central Coast NSW)

A new Blueprint institute series takes a deep dive into the regional realities of Australia’s shift to a clean energy future—and what that will mean for communities on the ground. Alongside the already released South-West Queensland paper, they examine Central Queensland, the Latrobe Valley of Victoria, the Central Coast of NSW, and the Collie region of WA. Across these five regions—home to all our remaining coal-fired generators, and most of our coal mines—Blueprint’s analysis finds that while opportunities are abundant (in renewable energy and more broadly), and significant prospective projects are underway, uncertainty caused by a lack of definitive policy direction is hampering their development. 

In the Central Coast region of New South Wales:

  • Between 2022 and 2025, new renewable projects could offer 5,080 construction jobs, and 320 ongoing maintenance and operations positions.

This represents a significant opportunity, but also a stark reality check—government must do more to enable wider regional economic diversification in these communities.

Expecting renewables alone to compensate for the stable, high-paying jobs that coal has provided is unrealistic. But importantly, our analysis finds that all of the regions studied are full of untapped potential that the clean energy economy, broad diversification, private investment, and targeted government backing in vital areas can unlock. 

“As coal declines, New South Wales’ Central Coast has the opportunity to secure a sustainable future built around renewable energy and clean industry. But supportive state and federal policy must match local ambition,” said CEO David Cross.

A detailed outline of the opportunities available to New South Wales’ Central Coast is available in the full paper.


Breaking new ground: Challenges and opportunities of a changing energy landscape in regional Australia (Collie WA)

A new Blueprint institute series takes a deep dive into the regional realities of Australia’s shift to a clean energy future—and what that will mean for communities on the ground. Alongside the already released South-West Queensland paper, they examine Central Queensland, the Latrobe Valley of Victoria, the Central Coast of NSW, and the Collie region of WA. Across these five regions—home to all our remaining coal-fired generators, and most of our coal mines—Blueprint’s analysis finds that while opportunities are abundant (in renewable energy and more broadly), and significant prospective projects are underway, uncertainty caused by a lack of definitive policy direction is hampering their development. 

While Western Australia’s Collie region lacks any confirmed upcoming renewable energy projects, the region has much to offer—both in energy generation and more broadly.

The lack of current projects is a stark reality check—government must do more to enable wider regional economic diversification in this community to capture its potential.

Expecting renewables alone to compensate for the stable, high-paying jobs that coal has provided is unrealistic. But importantly, our analysis finds that all of the regions studied are full of untapped potential that the clean energy economy, broad diversification, private investment, and targeted government backing in vital areas can unlock. 

“The effort to build a prosperous future for Collie, built around clean energy, has received a massive boost with $550 million in new investment announced by the Western Australian government in June. But engagement with local stakeholders through institutions like our proposed coal adaptation authority is key to ensuring Collie’s economic future. Top-down handouts will simply not be effective,” said CEO David Cross

A detailed outline of the opportunities available to the Collie region is available in the full paper.


Untangling the NEM: A policymaker's guide to the National Electricity Market

Australia is home to some of the world’s most ancient forests. The benefits of native forests are extensive—they are efficient carbon sinks, they
are amongst the most biodiverse environments on the planet, and they provide vast quantities of water (and preserve the quality of the water
table).

This paper offers policymakers a blueprint for assessing the true value of our native forests. Recognising the inherent preferencing of the
quantitative (particularly when it comes to Expenditure Review Committee processes), we conduct a comprehensive cost-benefit analysis of conserving the native forests of the Upper and Lower North East Regional Forest Agreement areas of New South Wales, also known as the
North Coast. This piece of work builds upon Blueprint’s previously published cost-benefit analysis of alternate land uses versus logging in
Victoria’s Central Highlands. We assess the economic potential of native forest conservation by modelling the value of carbon sequestration and tourism against continued logging. Our findings demonstrate conclusively that there is no economic case for continued logging of native forests on the North Coast of New South Wales. As in the Central Highlands of Victoria, logging of native hardwood forest on the North Coast is a loss making enterprise, subsidised by Forestry Corporation of New South Wales’ (FCNSW) profitable softwood plantation division, along with the taxpayer via periodic equity injections from the state government. Based on its own merits, we find that FCNSW’s native hardwood division is not commercially viable.

Using cost-benefit analysis modelling we find that ending native forest logging in 2023–24 instead of 2039-40 (the date that the North East Regional Forestry Agreement is currently scheduled to expire), and instead utilising the land for carbon sequestration and tourism will deliver a net benefit valued at $45 million in present-day dollars. This includes the estimated cost of providing transitional packages to the industry as it shuts down, as well as the cost of breaking wood supply agreements that extend to 2028.