Guest essay by Eric Worrall
If you want to invest in Australia, especially in an extractive industry like coal mining, you better be prepared for intense scrutiny and bullying from climate activists and overzealous government agencies.
Why climate change is keeping directors awake
Nov 12, 2020 – 12.01am
Boards have been promising to clean up their act on climate risk for years, but 2020 is shaping up to be a year of reckoning for those yet to take decisive action.
Industry watchdogs, climate change advocates and climate-conscious consumers have been on the warpath this year. And companies that still fail to address climate change in the boardroom have been left with nowhere to hide.
Addressing climate change in the boardroom has been on the agenda for a growing number of corporate giants.
More than 80 companies have so far ruled out being involved in the increasingly contentious Adani coal project, deeming reputational risk as being too great.
It means they won’t share in the $1 billion in contracts that the project will generate. Adani itself has rebranded its Australian arm as Bravus Mining and Resources.
There is no chance of an Australian green revolution succeeding. Even Australia cannot keep the sun shining 24 x 7. Quite apart from the impossibly expensive materials cost, energy storage is a huge problem; parched Australia does not have have a lot of pumped hydro opportunities.
Wind power will not fix the problem; Australia experiences geographically vast wind droughts which can last entire seasons. The CSIRO predicts the wind droughts will get worse, as global warming will allegedly increase the risk of large scale blocking stationary high pressure weather systems. When such systems occur in the Summer, temperatures soar, along with demand for air-conditioning.
Batteries are impractically expensive, that huge expensive battery South Australia is so proud of is only capable of powering all of South Australia for a few minutes. I’m not even going to bother doing the calculation of the cost of the battery capacity you would need to carry Australia through a 3 month wind drought, it should be obvious this is a non-starter.
Hydrogen storage – there are substantial losses at both ends of the conversion chain. Converting renewable electricity to hydrogen results in losses, and converting the hydrogen back to electricity results in losses. Even if you have 80% efficient conversion at both steps, conversion to and from hydrogen back to electricity, you only get to keep 0.8 x 0.8 = 0.64 = 64% of the electricity you originally put in. This does not count transmission losses, energy expended to pressurise the hydrogen for storage, and leaks. You start with renewable energy which is already so expensive it needs a subsidy or market distorting mandatory purchase regulations, and end up with hydrogen energy which is at least twice as expensive as the original already unaffordable renewable energy.
Given what activists are demanding is financially impossible, all activist pressure on Australian companies can achieve is capital flight, as businesses which can relocate get fed up with unreliable electricity and being the bad guy, and get fed up with paying Danegeld to a growing alphabet soup of environmental organisations, whose disruptive activities appear to be increasingly supported by over zealous government bureaucrats.