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Lindisfarne On the table around the crust in my fingers it was like a dancefloor, with dominant birds and watching wallflowers

Sparrows had gathered in a coffee house courtyard on a late summer afternoon on Holy Island. Most of the tourists were chasing the ebb tide across the causeway as the North Sea wiped and revealed a sacred history every few hours. With the tide out, the island’s holy precincts endured their heritage quietly, with a few stragglers and the birds.

Furtive and mouse-like, the sparrows scuttled under tables, the lookouts venturing on to chair backs to scope out possibilities. They have an acute instinct for a good mark, and I had a sparrow-friendly vibe and a sandwich.

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Good news for Tesla drivers, with CTO JB Straubel saying the company expects "10 maybe 15 year life at a minimum" from its EV batteries.

The European Commission’s latest Quarterly report on electricity markets makes sobering reading down under.

Over the last year wholesale electricity prices have been falling just about everywhere across the developed world except here in Australia, where they are skyrocketing.

Figure 32 from European Commission’s Quarterly report on electricity markets analysing wholesale market price trends to the end of Q1 2016, in Euros per megawatt hour. The Platts PEP is the Pan European Power price index. Note that as recently as early 2015, Australia had the cheapest prices, now it is heading rapidly towards the most expensive. European Commission Quarterly report on electricity markets, see https://ec.europa.eu/energy/sites/ener/files/documents/quarterly_report_on_european_electricity_markets_q4_2015-q1_2016.pdf

Australian prices are now above European prices, well above the US prices and rapidly converging with Japan, which is still recovering from the shock of Fukushima in 2011 when prices rose to over eight times Australian.

With Japan now reactivating nuclear power production, and Australian LNG exporters putting the squeeze on domestic gas markets, it can be anticipated that Australia will soon be top of the price tree. Indeed, with 2016 Q2 and Q3 Australian prices rising at unprecedented rates, it probably already is.

Combined with exorbitant power distribution costs, the alarming trends highlighted by the EC’s report will be exercising the mind of our new Federal Minister for the Environment and Energy, Josh Frydenberg.

Comparison of wholesale electricity prices shown in the figure above as percentage of Australian prices. Note logarithmic scale. Data sourced from European Commission's Quarterly report on electricity markets, see https://ec.europa.eu/energy/sites/ener/files/documents/quarterly_report_on_european_electricity_markets_q4_2015-q1_2016.pdf How fast are Australian prices rising?

The trends highlighted by the EC’s report are expressed in Euros, so they somewhat obscure local dynamics. In reality, Australian wholesale prices are rising more steeply than ever before, having risen by around 45% over the last year. Prices over the last six months are now higher in aggregate than at any comparable time during the carbon tax period, which added around 50% to wholesale prices in the period 1/07/2012 - 17/07/2014. When the impact of the carbon tax on 2014 prices is removed, prices are up by more than 65% in just 2 years.

Wholesale prices averaged by season, on the Australian National Electricity Market (NEM) from spring 2009 through to winter 2016. For the carbon tax period 1/7/2012 through 17/7/2014, filled coloured bars show the prices with the carbon tax component subtracted, assuming an emissions intensity of 0.85 tonnes per megawatt hour. Actual prices for this period are shown by the open lines. Data sourced from AEMO half-hour aggregated price and demand datasets.

Compared to the same period one year earlier, wholesale prices have risen across all seasons and all jurisdictions in the last year, excepting summer in Queensland. The rate of increase has risen steadily from the spring 2015 through to the winter 2016. For the winter period of 2016, prices were up by an average by 85% compared to the previous winter, with the increase ranging from 65% in Queensland to 115% in South Australia.

Annual percentage changes in wholesale electricity prices on the National electricity market. The prices are calculated for the Spring of 2015 through Winter of 2016, compared to the same period one year earlier, for each of the mainland regions comprising the NEM. Data sourced from AEMO half-hour aggregated price and demand datasets. Why are electricity prices falling everywhere but Australia?

The reasons for wholesale electricity price falls in Europe and Japan are straightforward.

Both are dependant on imported gas, and with the oil-linked price for gas falling, so too are electricity prices. In the US market, the flood of shale gas greatly exceeds export capacity, so there is a continuing glut of cheap gas [1].

The story in Australia is quite different. Despite a three fold increase in gas production in the last few years, due to the opening up of new coal seam gas (CSG) fields in Queensland, the Australian domestic market is being squeezed as LNG exporters struggle to meet supply contracts.

In the Australian CSG industry it is an open secret that some exporters agreed punitive clauses in contracts should they fail to fill their LNG trains. Despite strong opposition from former industry champions such as John Ellice-Flint, exporters such as Santos stretched themselves on production by committing to two LNG trains. Now gas is being diverted from domestic markets to avoid industry collapse. The consequence is that Australian gas consumers are increasingly subject to scarcity pricing when domestic prices can rise to many times that which international buyers have contracted for the same gas.

Not surprisingly, steep rises in the cost of gas is causing a reduction in gas use in domestic electricity markets. In Queensland gas fired power output in winter of 2016 was down about 250 megawatts, over 20% on the year before. Meanwhile black coal generation was up 450 megawatts, with Queensland’s CO2-production from the electricity sector increasing by 5%.

An illustration of the impact of the rising cost of gas on the Australian electricity market are summarised in the figures below, which show how market prices varied with gas dispatch in Queensland over the winters of 2015 and 2016, respectively. In winter 2015, when gas dispatch averaged 1076 megawatts, there was no correlation between wholesale prices with the amount of gas dispatch, consistent with gas generation being a price taker. Then the average price of electricity was $39.6 per megawatt hour.

By winter 2016, when gas dispatch averaged 833 megawatts, a strong price correlation had established as gas generators increasingly set the price. Average prices had risen to $65.2 per megawatt hour with spot prices increasing on almost $100 per megawatt hour for each additional gigawatt of gas dispatch in winter 2016.

Pattern of market prices with gas dispatch in Queensland in winter, 2015. Abundant ramp gas during this period meant there electricity prices were decoupled from gas use. The grey points represent individual 5-minute dispatch intervals. The violin plots shown the distribution of price event for 8 gas dispatch bins, while the black circles show the means for each of the 8 bins. The red shade shows the linear fit to the 5 minute data at the 95% confidence level. Data sourced form AEMO 5-minute dispatch tables. Pattern of market prices with gas dispatch in Queensland in winter, 2016. Gas scarcity in the domestic markets during this period meant there electricity prices were strongly coupled to gas use, with prices rising on average $92/MWhour for each additional gigawatt of gas dispatch. Data sourced form AEMO 5-minute dispatch tables. We really need to talk about gas

In 2015, the availability of “ramp” gas made Queensland settings somewhat analogous to the US, where cheap gas increasingly fuels electricity generation. By winter 2016 when more LNG export trains had been commissioned, scarcity pricing was manifesting in our domestic gas markets impacting our electricity market, big time.

As the EC’s quarterly market report flags, this is a terrible outcome for Australia, obliterating our competitive advantage as a cheap provider of electricity in a little over a year. And it is hurting like hell, most severely in South Australia which has always been more exposed to gas prices than other states by virtue of its limited coal reserves.

While several compounding factors have played out in extreme price rises in South Australia, as discussed in my last post, the broader rises across Australia have their underpinnings in the rising gas prices as well as contractual arrangements in the gas market, including piping. The smoking gun is the steep rises in Queensland - a market that to this day remains essentially a renewable free zone.

The damaging reality of the situation is highlighted by a recent post on the tech website Whirlpool

• “We are a business in SA [South Australia] with high usage (use up to 14MW), on spot pricing since June 1st – and are turning everything off when a spike hits – but the last 5 minute spike was at the end of the half hour pricing cycle (price is averaged in half hour periods). We just chewed through $75,000 worth of power in a half and hour! (we are used to paying $1000). This period while the interconnector is down could effectively burn about 3 years of profits in 4 working days if the forecast prices come to fruition.”

One might ask why such energy users exposed themselves to spot (wholesale) pricing (the norm is via the contract market). Whatever, the cautionary is that 14 MW represents 1% of average South Australian power consumption. Ten such business at threat of going under would be devastating, with potential to reduce South Australian electricity demand by 10%.

The horse has bolted, so what next?

The EC’s quarterly market report was already flagging in Q1 2016 that Australian electricity production was expensive by international standards. Since then, further steep price rises across the NEM in autumn and winter 2016 have further exacerbated price differentials, surely now placing Australia amongst the most expensive producers of electricity in the world.

No doubt the gas lobby will absolve the gas industry from any responsibility for the recent events that have transpired on our electricity markets, arguing the solution lies in even more gas production, and that renewable energy policies are more to blame.

To be sure, eastern Australia is short on supply of cheap conventional gas from the offshore Gippsland Basin and a few other locations. Expanding the gas base by exploiting unconventional resources such as CSG was always going to come at a price, since such resources are inherently more expensive.

But developing the new CSG fields at such scale was always going to risk that production would fall short of targets. As much was acknowledged by the joint Department of Industry and Bureau of Resources and Energy Economics study into Eastern Australian gas markets

The current development of LNG in eastern Australia and the expected tripling of gas demand are creating conditions that are in stark contrast to those in the previously isolated domestic gas market. The timely development of gas resources will be important to ensure that supply is available for domestic gas users and to meet LNG export commitments. Such is the scale of the LNG projects that even small deviations from the CSG reserve development schedule could result in significant volumes of gas being sourced from traditional domestic market supplies

The hope is that the events of 2016 are transients, related to temporary development schedule difficulties. If they are not, then god help domestic consumers. A broader question for our gas exporters is why should so much risk from such development schedule difficulties be defrayed onto domestic consumers?

In prosecuting the case to deliver more of our national gas resources to market, perhaps it is not too much to ask that domestic consumers are offered some insurance against any further development schedule difficulties incurred by our exporters? After all, it is our gas.

Domestic reservation, anyone?

Notes

[1] Shale gas economics in the US is linked to co-produced liquids, and thus differs markedly from the CSG fields in Australia where there is no liquid hydorcarbon production.

Disclosure

Mike Sandiford receives funding from the ARC for geological research.

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Australia has sought to water down climate declarations made through the Pacific Islands Forum

The success of commercial lighting continued to weigh heavily on energy efficiency prices in Victoria, while audit delays causes prices to rise in NSW.

US and China decision to join the pact to combat climate change means Paris climate agreement could come into force as soon as next year.

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• Nine of 14 distinct populations to be removed from endangered list
• Four populations still listed as endangered, one as threatened

Federal authorities are taking most humpback whales off the endangered species list, saying they have recovered enough in the last 40 years to warrant being removed.

The National Marine Fisheries Service (NMFS) said on Monday that nine of the 14 distinct populations of humpbacks will be removed, while four distinct populations remain listed as endangered and one as threatened.

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New research from Swansea University challenges the idea that older people are dangerous drivers.

Australia’s Prime Minister Malcolm Turnbull will have some explaining to do when he attends the Pacific Islands Forum leaders' meeting in Pohnpei, Micronesia, this week.

Australia’s continued determination to dig up coal, while refusing to dig deep to tackle climate change, has put it increasingly at odds with world opinion. Nowhere is this more evident than when Australian politicians meet with their Pacific island counterparts.

It is widely acknowledged that Pacific island states are at the front line of climate change. It is perhaps less well known that, for a quarter of a century, Australia has attempted to undermine their demands in climate negotiations at the United Nations.

The Pacific Islands Forum (PIF) – organised around an annual meeting between island leaders and their counterparts from Australia and New Zealand – is the Pacific region’s premier political forum. But island nations have been denied the chance to use it to press hard for their shared climate goals, because Australia has used the PIF to weaken the regional declarations put forward by Pacific nations at each key milestone in the global climate negotiation process.

In the run-up to the 1997 UN Kyoto climate summit, Pacific island leaders lobbied internationally for new binding targets to reduce emissions. However, that year’s PIF leaders’ statement was toned down, simply calling for “recognition of climate change impacts”.

Likewise, in the lead-up to the 2009 Copenhagen talks, Pacific island countries called for states to reduce emissions by 95% by 2050. But at that year’s PIF meeting in Cairns, the then prime minister, Kevin Rudd, convinced leaders to scale back the proposed target to 50%. Pacific media branded the outcome “a death warrant for Pacific Islanders”.

Ahead of last year’s Paris summit, Australia again exercised its “veto power” over Pacific climate diplomacy. Over the preceding years Pacific island leaders had made their climate positions quite clear, both at UN discussions in New York and in a string of declarations including the Melanesian Spearhead Group Declaration on the Environment and Climate Change, the Polynesian Leaders' Declaration on Climate Change, and the Suva Declaration on Climate Change.

Nevertheless, the official climate declaration issued after last year’s PIF in Port Moresby was significantly weaker in several key areas. Most notably, it failed to call for global negotiations to limit global warming to 1.5℃ above pre-industrial levels. This is a threshold that Pacific island states have consistently argued should not be crossed, because that would threaten the very existence of low-lying states such as Kiribati, Tuvalu and the Marshall Islands.

These countries are understandably very unwilling to compromise on this position. At the Port Moresby meeting, Kiribati President Anote Tong suggested that Australia should leave the forum altogether if it was not prepared to back the islands' positions in global climate negotiations.

There is little doubt that Australian attempts to gag its Pacific island neighbours in these negotiations have aroused anger in the region. This has been compounded by the fact that Australians are among the world’s highest per capita greenhouse gas emitters and the Australian government is committed to increasing exports of the dirtiest source of emissions – coal.

Pacific perspectives on Australia’s coal addiction

If Pacific islands are to avoid the most catastrophic impacts of climate change, there is little doubt that most of the world’s coal must stay in the ground. No serious policymaker disputes the basic fact that our carbon budget is severely limited. There is no scenario in which building new coal mines, and expanding existing ones, is compatible with effectively tackling climate change.

Pacific island governments are calling for a global move away from coal. In September 2015, the Pacific Islands Development Forum (a new regional body that meets without Australian representation) called for an urgent international moratorium on the development and expansion of fossil-fuel-extracting industries, particularly new coal mines.

Leaders from the Cook Islands, Kiribati, Marshall Islands, Nauru, Niue, Palau and Tuvalu issued a similar statement on the sidelines of the Port Moresby summit. President Tong wrote personally to world leaders before the Paris talks, asking them to support the moratorium.

Australia’s view could scarcely be more different. It is the world’s largest coal exporter, and both major political parties are financially backed by the coal lobby. Rather than move away from coal, the government is seeking to expand exports dramatically, with public subsidies and taxpayer-funded infrastructure.

Australia wants to keep its coal rolling. CSIRO/Wikimedia Commons, CC BY-SA

These exports are still largely shielded from discussions about Australia’s contribution to climate change. Because Australian coal is burned in China, Japan and elsewhere, the emissions are ascribed to those nations.

In 2016 Australia will export around 1 billion tonnes of carbon dioxide emissions, embodied in coal. By some estimates, over the next five years Australia’s “carbon exports” will overtake those from Saudi oil.

Australia’s coal addiction has implications for its relations with Pacific island neighbours. For a start, it has undermined any claim that decisions made at the Pacific Islands Forum represent the “true” Pacific voice on climate change.

The ramifications may go deeper still. While Pacific leaders still accept the need to meet with their wealthier and more powerful neighbour – Australia is a crucial partner in times of natural disaster and a key source of development aid – joint decisions made at the PIF are beginning to ring hollow. Island states are increasingly using other multilateral forums to pursue their interests.

Pacific leadership and global climate diplomacy

To be sure, Pacific island states have long pursued independent diplomatic strategies to tackle the root causes of climate change. The first UN proposal for multilateral climate action – which later became the Kyoto Protocol – was proposed in 1994 by Pacific diplomats working through the auspices of the Alliance of Small Island States (AOSIS).

Twenty-one years later, Pacific leaders were again crucial in securing the Paris Agreement, the first truly global agreement for tackling climate change. Last week US President Barack Obama told Pacific island leaders in Hawaii that agreement would have been impossible “without the incredible efforts and hard work of the island nations”.

Pacific island states have been able to exercise global climate leadership despite Australia’s efforts. How Pacific island countries pursued recent climate diplomacy is instructive. In the lead-up to the Paris talks, Pacific ambassadors to New York met regularly as the Pacific Small Island Developing States (P-SIDS) grouping, where previously they were more likely to meet under the auspices of the PIF.

Last year, the P-SIDS ambassadors wrote a “zero draft” of a Pacific island declaration on the global climate change negotiations, which ultimately became the strongly worded Suva Declaration on Climate Change. It had been finalised at the 2015 Pacific Islands Development Forum leaders’ meeting and released just days before the watered-down Port Moresby statement. Unsurprisingly, Pacific states pursued the Suva position once they arrived in Paris.

These tactics proved crucial to the advancement of Pacific islands' position in the global climate talks. But Pacific states also acted on their own. Remarkably, the Marshall Islands was almost single-handedly responsible for the successful negotiation of an ambitious Paris Agreement.

Six months before the December Paris conference, the Marshall Islands government convened a series of private meetings that paved the way for the formation of a “high-ambition coalition” of climate-progressive states. By the second week of the summit, this group had swelled to include the United States, the European Union and more than 100 other countries. This coalition ultimately had a crucial say in formalising the agreement’s 1.5℃ goal.

In the months before the Paris talks, Australia was not invited to join the high-ambition coalition. It attempted to join right at the summit’s tail end, but was later snubbed by coalition members at the Paris deal’s signing ceremony in New York in April.

There seems little doubt that Australia was left out in the diplomatic cold precisely because its climate “ambitions” are so dismally low. Indeed, when Australia announced its intended emissions targets for the Paris Agreement, the Marshall Islands' foreign minister, Tony de Brum, complained that if the rest of the world followed Australia’s lead, his country, and other vulnerable nations on Australia’s doorstep, would disappear.

The contrast could not be starker. While Pacific leaders are praised for their efforts to develop global climate solutions, Australia faces ignominy. Unless Australia changes direction, it will continue to be seen as an irresponsible middle power – a rogue state undermining global efforts to tackle climate change.

Australian governments will also find it increasingly hard to convince Pacific island countries they are a friend as well as a neighbour.

Wesley Morgan does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.

Exclusive: Department of Environment confirms agency’s ‘mid-September’ move from Melbourne ‘to improve operating efficiency’

The Climate Change Authority will be moved from Melbourne to Canberra within the next fortnight, putting its independence from government under the spotlight.

A spokesperson for the Department of Environment has confirmed the move in “mid-September” to Guardian Australia, and said it was being done “in order to improve its operating efficiency”.

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Shipping routes across the Arctic are going to open up significantly this century even with a best-case reduction in CO2 emissions, a new study suggests.

While the call by Pope Francis that religions should take far more responsibility for rampant environmental damage is most welcome (Environmental destruction is a sin, says pope, 2 September), he should be reminded that by far the most damaging cause of impending crisis is the huge near-threefold increase in the human population over the last 75 years to more than 7 billion.

Organised religion has stubbornly resisted all realistic forms of birth control and must take its share of the blame for this catastrophe. Worse still, even in the face of this evidence they persist in treating control as a sin. Is this not time for a rethink?
Emeritus Professor Colin Green
University College London, Northwick Park Institute for Medical Research

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Major savings reported across all sectors before 2020 goal but analysts warn UK could reverse gains after Brexit

Europe has met a landmark goal of slashing its energy consumption six years ahead of time, cutting greenhouse gas emissions equivalent to the switching off about 400 power stations.

In 2014, the EU’s 28 member countries consumed 72m tonnes of oil equivalent less than had been projected for 2020, according to a report by the EU’s science arm, the Joint Research Centre (JRC). The figure matches Finland’s annual energy use.

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