australia infrastructure

8/17/2019 Australia Infrastructure

1/15

" The man who invented th e fi rst

wheel was an idiot. The man who

invented the other three, he was agenius."Sid Caesar,comedian

"We need to use different

th ink ing in sol i v ing problems

than the thinking we used when

we created them."

Albert Einstein

" There's no energy shortage ,

there's no energy crisis, there's a

cr is is of ignorance."

Dr. R. Buckminster Fuller

" Global warming has thepotential to focus our national

imagination ."

Michael Pusey,

sociologistUNSW School of Social Sciences

" Long-term economic healthdepends on environmental

heal th "

Sydney Morning Herald

"We must bui ld long-term

comp eti t ive strengths in the

global industr ies of tomorrow -

industr ies that wi l l provide the

high-paying jobs of the future ."

Kevin Rudd , Prime Minister,

Australia

"BHP Bi l l i ton has recognisedthat our comp any, as wel l as

society general ly, must make

real behavioural changes and

accelerate technological

progress i f we are to achieve a

meaningful reduction in energy

use and greenhouse gas

emissions."

Chip Goodyear,

The Way Forward

By exploiting its unrivalled supplies of sunshine, natural gas, wind, geothermal energy and uranium, Australia could power Asia. In comingyears, Australia should capitalize on this opportunity by:.

--Rapidly expanding domestic natural gas electricityThis would require building out natural gas capacity between now and 2020 at a rate of roughly 12% per year in coming years, twice the currentlyforecasted 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 alsoshould 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 beexported to Asia, particularly China. A combined electricity/natural gas export infrastructure can carry the energy to market.

The Background

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

Renewable energy, led by high-volume concentrating solar power, geothermal andwind, 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 electricityneeds by 2020 from renewable energy sources like solar, geothermal, wind and biomass.

The Current 'State of Play'

Worley Parsons

Worley Parsons is a major, publicly-listed engineering company. It has Australia's largest mining companies as clients. It is investigating the feasibilityof 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.

Infrastructure Australia -- SubmissionDESERTEC-Australia -- "Clean Energy From Deserts"

GENI - The Global Energy Network Initiative

http://news.smh.com.au/climate-change-can-help-build-nation/20071212-1ghk.htmlhttp://www.theage.com.au/news/editorial/economy-or-environment-its-a-false-choice/2007/04/24/1177180647969.htmlhttp://www.theaustralian.news.com.au/story/0,25197,23154600-5013404,00.htmlhttp://www.theaustralian.news.com.au/story/0,20867,21928185-5005200,00.htmlhttp://www.theaustralian.news.com.au/story/0,20867,21928185-5005200,00.htmlhttp://www.theaustralian.news.com.au/story/0,25197,23154600-5013404,00.htmlhttp://www.theage.com.au/news/editorial/economy-or-environment-its-a-false-choice/2007/04/24/1177180647969.htmlhttp://news.smh.com.au/climate-change-can-help-build-nation/20071212-1ghk.html


2/15

Chief Executive,BHP

"The power fu l cos t reduc t ions

now taking p lace in solar , wind

and other renewable energy

sources coupled with dramatic

pr ice increases for oi l and coal

have radical ly changed theeconom ics of energy."

Al Gore

"The costs of effect ive cl imate

protection are far lower than the

costs of inaction . The longer we

delay, the more expensive climate protection will become. ""New Impetus for Climate Policy",

German Advisory Council onClimate Change

" When demand for oi l and coalgoes up, the pr ice goes up.

When demand for solar and

geothermal goes up, the pr ice

goes down ."

Al Gore,Environmental educator

"Al l indication s are that solar

CSP is moving to the forefront of

renewable energy technologies."

Emerging Energy Research

"Con centrat ing solar power is a

wel l -proven and demonstrated

technology , with over 100 years of

accumulated operating experiencesince 1984.""Power Generation Options For

Australia,"

Cooperative Center for Coal in

Sustainable Development

" The Cooper Basin can generatemore (geothermal) power than

eight to 10 Snowy Mou ntain

(hydro) schemes. It's a very, very

significant energy resource and weknow it's there." Adrian Williams, Geodynamics

" We've got four times moreenergy in the Cooper Basin than

Austral ia has in al l i ts gas

reserves ... so all we have to do I

think is get on with it and do it." Adrian Williams, Geodynamics

Worley Parsons estimates 34 250MW concentrating solar power plants couldbe operating in Australia by 2020

Source: "Advanced Solar-Thermal: Utility-scale Renewable Power forAustralia," Worley Parsons/EcoNomics, 2008

Geothemal

The Australian Geothermal Energy Group estimates 2,250+MWs of geothermal capacity could be on line in Australia by 2020, producing 17.5 Twhs ofelectricity by 2020, or five percent of consumption. Output by 2040 could be multiples of that. Over time, experts believe geothermal could easily powerthe entire country.

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 ofwind. 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.

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

http://macintosh%20hd/Users/stewarttaggart/Documents/000ClimateProtectionPositiveSumGame/New%20impetus%20for%20climate%20policyhttp://www.emerging-energy.com/user/category_docs.aspx?l1=2&catid=GlobalConcentratingSolarPowerMarketsandStrategies200720201451383184&docid=/user/GlobalConcentratingSolarPowerMarketsandStrategies200720201451383184_sub/Section1GlobalConcentratedSolarPowerMarketsandStrategies2007.pdf&cattype=MarketStudieshttp://www.ccsd.biz/publications/IAF_Report/%20CCSD%20IAF%20complete%20rpt.pdfhttp://www.ccsd.biz/publications/IAF_Report/%20CCSD%20IAF%20complete%20rpt.pdfhttp://www.abc.net.au/news/newsitems/200702/s1853760.htmhttp://www.abc.net.au/news/newsitems/200702/s1853760.htmhttp://www.pir.sa.gov.au/__data/assets/pdf_file/0006/78846/AGEA_Final_Report.pdfhttp://www.pir.sa.gov.au/__data/assets/pdf_file/0006/78846/AGEA_Final_Report.pdfhttp://www.bca.com.au/DisplayFile.aspx?FileID=469http://www.bca.com.au/DisplayFile.aspx?FileID=469http://www.pir.sa.gov.au/__data/assets/pdf_file/0006/78846/AGEA_Final_Report.pdfhttp://www.pir.sa.gov.au/__data/assets/pdf_file/0006/78846/AGEA_Final_Report.pdfhttp://www/desertec-australia.org/000-images/000-twf/twfbig/twf-3big.pnghttp://www.desertec-australia.org/000-images/000-twf/twfbig/twf-2big.pnghttp://www.abc.net.au/news/newsitems/200702/s1853760.htmhttp://www.abc.net.au/news/newsitems/200702/s1853760.htmhttp://www.ccsd.biz/publications/IAF_Report/%20CCSD%20IAF%20complete%20rpt.pdfhttp://www.ccsd.biz/publications/IAF_Report/%20CCSD%20IAF%20complete%20rpt.pdfhttp://www.emerging-energy.com/user/category_docs.aspx?l1=2&catid=GlobalConcentratingSolarPowerMarketsandStrategies200720201451383184&docid=/user/GlobalConcentratingSolarPowerMarketsandStrategies200720201451383184_sub/Section1GlobalConcentratedSolarPowerMarketsandStrategies2007.pdf&cattype=MarketStudieshttp://macintosh%20hd/Users/stewarttaggart/Documents/000ClimateProtectionPositiveSumGame/New%20impetus%20for%20climate%20policy


3/15

"CSP technology is l ikely by

2015 to become com peti t ive with

wor ld market pr ices of most

fossi l fuels, especially fuel oil,

natural gas and liquid natural "gas. ""Concentrating Solar Power for

Seawater Desalination,"

German Aerospace Center (DLR),2007

"At at time when deep cuts togreenhouse gas emissions arebeing called for, solar thermal canbe instal led in large capaci t ies,

yet constructed of modular ,

repeated comp onents."

"Strategy for the MarketDevelopment of ConcentratingSolar Power,"World Bank, 2005

Solar thermal power stat ions can

deliver power on demand, makinguse of their thermal storagecapability and hybrid operation withfuels. They are the natural l inkbetween fossi l fuels and other

renewables ."

European Union

" Geothermal power plants canprovide extremely rel iable base-

load capaci ty

24 hours a day ."

"Energy Technology Perspectives:Scenarios and Strategies to 2050,"International Energy Agency , 2008

"The potential of the geothermal

industry in Au stral ia is truly

stagger ing … It provides clean

baseload power."Martin Ferguson,

Federal Resources Minister Australia

"Geothermal energy has the

potential to generate one fi f th of

Austral ia's total electr ic i ty needs

over the next 25 years without

producin g any carbon dioxide

emissions."

Anna Bligh

Premier, Queensland

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

Source: Geodynamics

Meanwhile, the US National Renewable Energy Laboratory estimates that parabolic trough concentrating solar power is on a downward price paththat 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 proveconservative, and the 4c/kwh level could be reached by 2015 if not sooner.

Parabolic trough concentrating solar power is expected to fall to around5c/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 geothermalenergy for both clean and cheap electricity. Doing so would yield very attractive weighted prices of around 5c/kwh in 2020. That's less thancarbon capture and storage. And it would come from more proven technology.

Renewable Energy Growth Rates and Costs

2010 2020 10-year Post 2020Post2030

MWs MWs Growth RateGrowth

RateGrowth

Rate

Geothermal 50 2,250 46% 15% 15%

CSP 50 8,500 67% 20% 15%

Wind 2,000 7,500 14% 20% 15%

Biomass 300 2,500 24% 5% 2%

Renewable Energy Growth Rates and Costs

2010 202010-year

Delivered

MWs MWsGrowthRate

Cost perkwh

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

CSP, geothermal, wind and biomass could be satisfying 24% of Australia's electricity needs in 2020.

Renewable energy prices in 2020 would cost about 5c/

kwh, including transmission charges to urban

destinationsSources: 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 gapcreated by falling amounts of coal fired power. The second graph below indicates that the percentage of natural gas power in the national electricity systemwould rise to 35% before renewables begin contributing large amounts of power to the grid.

http://www.dlr.de/tt/aqua-csphttp://www.dlr.de/tt/aqua-csphttp://www.smh.com.au/news/science/hotrock-industry-stakes-a-claim/2008/08/19/1218911717520.htmlhttp://www.energycurrent.com/index.php?id=3&storyid=12075http://www.nrel.gov/csp/pdfs/35060.pdfhttp://www.nrel.gov/csp/pdfs/35060.pdfhttp://www.nrel.gov/csp/pdfs/35060.pdfhttp://www.nrel.gov/csp/pdfs/35060.pdfhttp://www.energycurrent.com/index.php?id=3&storyid=12075http://www.smh.com.au/news/science/hotrock-industry-stakes-a-claim/2008/08/19/1218911717520.htmlhttp://www.dlr.de/tt/aqua-csphttp://www.dlr.de/tt/aqua-csp


4/15

"Current CSP plants are

achieving costs of abou t US12c/

kwh, which are the lowest of any

solar technology. The

technology can also be

comb ined in hybr id form (solar

thermal plants coupled with

fossi l fuel bo i lers), achievingcosts of about US8c/kwh."

"Synergies with Renewables:Concentrating Solar Thermal,"Cooperative Research Centre forCoal in Sustainable Development, Australia, 2006

"Deep cuts in emissions are

compat ib le w i th cont inu ing

s t rong economic growth and

improvem ents to l iv ing

standards."

CSIRO, Response to Issues Paper,

Prime Minister’s Task Group onEmissions Trading

"Au stral ia can afford to take a

leadership posi t ion in

comm itt ing to substantial

reductions in our net

greenhouse emissions , in order

to help manage the economic

r isks to Au stral ia, and tocontr ibute to the global

momentum and concrete ac t ions

required to avoid dangerous

global cl imate change."

Leader, Follower or Free Rider ,

Climate Institute, 2007

“ We need to act now . We need

roadmaps that accelerate

international technologydevelopment and implementation,but that leave room for flexibleresponses on a country level”,

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

This short-term "dash to gas " would require a doubling of the curent forecast rollout pace of natural gas capacity. But the greenhouse gas impactwould be dramatically positive. It would result in a rapid decline in greenhouse gas emissions from stationary energy, the largest component of thenation's greenhouse gas signature.

A rapid buildout of natural gas wouldrequire a roughly 10% annual expansion of

capacity, twice current estimates

A 'dash for gas' between now and 2020 will drastically reduce Australia'sgreenhouse 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 beexpected 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 newinfrastructure spending. After 2030, wind and geothermal can be expected to expand at slightly slower rates due to technical uncertainties, whileconcentrating solar power continues to expand rapidly.

Renewable Energy Growth Rates and Costs2010 2020 10-year Post 2020 Post 2030MWs MWs Growth Rate Growth Rate Growth Rate

Geothermal 50 2,000 45% 15% 10%CSP 50 8,500 67% 20% 20%Wind 2,000 7,500 14% 20% 15%

Biomass 300 2,500 24% 5% 2%

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

http://users/staggart5/Documents/Websites/000-Trec/www.pmc.gov.au/emissionstrading/%20submissions/149_sub_emissionstrading.pdfhttp://www.climateinstitute.org.au/images/stories/CI058_ER_FullReport_NEW.PDFhttp://www.climateinstitute.org.au/images/stories/CI058_ER_FullReport_NEW.PDFhttp://users/staggart5/Documents/Websites/000-Trec/www.pmc.gov.au/emissionstrading/%20submissions/149_sub_emissionstrading.pdf


5/15

Nobuo Tanaka, Executive Director,International Energy Agency

"Ear l ier action (on global

warming) al lows a more gradual

transi t ion to a l ow carboneconom y, al lowing individuals

and businesses to adjust and

learn over time. This learning

process wi l l give us acomp eti t ive advantage."

Draft Carbon Trading Green Paper

"Greentech could b e the largesteconom ic opportuni ty of the 21st

century . Leaders are calling foralternatives to $60-a-barrel oil, andentrepreneurs are rising to thechallenge."John Doerr,

partner, Kleiner Perkins, a SiliconValley venture capital firm.

" Markets for low-carbon energyproducts are l ikely to be worth at

least $500bn per year b y 2050,

and perhaps much more.

Individual companies and countriesshould position themselves to takeadvantage of these opportunities."Stern Review

“After so many years of inaction, itis impossible for Australia to be infront of the rest of the worldin tackling climate change. Agreater r isk is being left behind a

wor ld of emerging economic

opportuni t ies. ”

Peeny Wong,Federal Climate Minister, Australia

"We must bui ld long-term

comp eti t ive strengths in the

global industr ies of tomorrow -

industr ies that wi l l provide the

high-paying jobs of the future ."

Kevin Rudd ,Prime Minister, Australia

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 considercaps on the amount of such energy allowed into the domestic grid to ensure stability. Reasonable maximums might be 25% apiece for wind, geothermaland concentrating solar power. After 2020, gas would continue to play a crucial load-balancing role (as would hydro), but its contribution could fall oncebaseload 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.

Australia will begin generating surplus energy by around 2020


Under the scenario above, several intriguing things start happening around 2020. The first, of course is that solar, geothermal and wind start creatingsignificant 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 ascarbon capture and storage comes on line. After 2020, therefore, some gas-fired power capacity becomes surplus and therefore could be redirected to anelectricity 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 needsexport 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 generatingnearly 3,000 Twhs of low-emission electricity, six times its domestic electricity needs.

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


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 Australiato China, the region's largest economy and energy consumer. A largely-comprehensive utility grid already spans the Asian region, with Australia asa notable outlier.

http://www.news.com/Kleiner-Perkins,-PARC-warm-to-clean-tech/2100-11746_3-6041141.htmlhttp://www.theaustralian.news.com.au/story/0,25197,23154600-5013404,00.htmlhttp://www.theaustralian.news.com.au/story/0,25197,23154600-5013404,00.htmlhttp://www.news.com/Kleiner-Perkins,-PARC-warm-to-clean-tech/2100-11746_3-6041141.html


6/15

“There is a path to Australiabeing a low-emissions economy

within around 40 years,

consistently with

continuing strong growth in

material living standards."Prof. Ross Garnaut

"The Energy Supply Assoc iat ion

of Aus tral ia (ESAA) has

estimated that, by 2030,

addi t ional instal led generation

capaci ty to meet Austral ia’s

electr ic i ty demand growth wi l l

cost at least $35 bi l l ion."

"Energy Reform: The way forward

for Australia"

The Energy Reform Implementation

Group

200 7

"Au stral ia's power gr ids are

beginning to s how their age - we

need a bluepr int to renew those

gr ids as more efficient and

responsive Intelligent Networks.We need to put the digital age towork for our network customers"

Craig Murray ,

managing director, Country Energy.

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

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 HighVoltage Direct Current (HVDC) power lines to carry western hydropower to the country's eastern cities. The second is the Association of SoutheastAsian Nations (ASEAN) 'Trans-ASEAN Gas Pipeline' (TAGP).

Given that Australia has potentially huge supplies of renewable energy to offer after 2020, HVDC cables should be strung from the renewable energy-rich 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 ownplanned HVDC system. The capacity of HVDC cables is increasing all the time. This is driving down their cost. An HVDC connection to to China wouldbecome a major economic asset to Australia.

China is building out huge HVDC capacity to carry hydropwer to her eastern cities

Source: ABB --Click Image to Enlarge

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 traversesome of the same route an Australia-China HVDC cable might traverse. Furthermore, the additions to the Trans-ASEAN Gas Pipeline (TAGP) wouldresult 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 consideringbuilding its own natural gas import pipeline.

http://www.erig.gov.au/assets/documents/erig/ERIG_main_report20070413181231.pdfhttp://www.erig.gov.au/assets/documents/erig/ERIG_main_report20070413181231.pdfhttp://www.erig.gov.au/assets/documents/erig/ERIG_main_report20070413181231.pdfhttp://www.erig.gov.au/assets/documents/erig/ERIG_main_report20070413181231.pdfhttp://www.erig.gov.au/assets/documents/erig/ERIG_main_report20070413181231.pdfhttp://www.marketwatch.com/news/story/ibm-australia-team-up-develop/story.aspx?guid={2FB04FBE-D9E8-4D1D-A941-84541810F46F}&dist=msr_1http://users/staggart5/Documents/Websites/000-Trec/000-images/000-twf/000-twfbig/twf-19-large.pnghttp://www.marketwatch.com/news/story/ibm-australia-team-up-develop/story.aspx?guid={2FB04FBE-D9E8-4D1D-A941-84541810F46F}&dist=msr_1http://www.erig.gov.au/assets/documents/erig/ERIG_main_report20070413181231.pdfhttp://www.erig.gov.au/assets/documents/erig/ERIG_main_report20070413181231.pdfhttp://www.erig.gov.au/assets/documents/erig/ERIG_main_report20070413181231.pdfhttp://www.erig.gov.au/assets/documents/erig/ERIG_main_report20070413181231.pdfhttp://www.erig.gov.au/assets/documents/erig/ERIG_main_report20070413181231.pdf


7/15

" The cost of an HVDC Light l inknow approaches the cos t of

an overhead l ine ."

ABB

"We don 't have an energy

problem. We have an energy

conversion and distr ibutionproblem."

Hans Müller-Steinhagen,German Aerospace Center

"There is no physical restr ict ion

l imit ing the distance or power

level for HVDC undergroun d or

subm arine cables ."

ABB

" Climate is one of the greatestchal lenges of our time - and our

response must be decisive. It

must also be delivered in a way

Asia's existing natural gas pipeline system isfragmented

ASEAN is planning to connect its pipelinesystems under the Trans-ASEAN Gas Pipeline

project

Australia could hook into or transit the TAGPnetwork in delivering natural gas to China

or deliver the gas to Palawan Island in thePhilippines, 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 alreadyplanned for Asia. This would immensely deepen trade and energy ties in the region and enhance regional energy security through a network that wouldultimately look something like the below.

Australia's power and gas lines could either intersect with the gasnetworks 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 beambitious. The subsea HVDC and natural gas pipelines would be the longest of their kind in the world. The infrastructure project would be among thelargest in the world. But Australia's huge energy resources, coupled with the pressing need for cost-effective Chinese carbon emission reductionsand the huge costs of climate inaction, make such a project highly sensible since it would provide long-lasting infrastructure ensuring regional energysecurity 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-kmLangeled subsea natural gas pipeline connecting Norway to England and the 580km, 700MW Norned HVDC cable connecting Norway to The

Netherlands.

http://library.abb.com/GLOBAL/SCOT/scot221.nsf/VerityDisplay/776A210BF39A662AC1257297002F8F45/$File/The%20ABCs%20of%20HVDC%20Transmission%20Technology%20web.pdfhttp://library.abb.com/GLOBAL/SCOT/scot221.nsf/VerityDisplay/776A210BF39A662AC1257297002F8F45/$File/The%20ABCs%20of%20HVDC%20Transmission%20Technology%20web.pdf


8/15

that helps us build a strongereconomy for the future."Kevin Rudd,

Prime Minister, Australia

“ Instead of running al l of thewor ld’s generators’ hal f the time

– whi ch is v ery ineff icient – we

are talking about run ning half the

wor ld’s generators al l the time …much more efficient.”Michael Powers,Global Energy Network Institute

“ By connecting regionalelectr ic i ty gr ids around the wo rld

into a global netwo rk, i t wi l l be

possible to tap new renewable

resources and phase out our

worst pol lut ing c oal- f i red power." plants”Michael Powers,Global Energy Network Institute

"A global energy network m akes

enormou s sense i f we are to

meet global energy needs with a

min imal impact on the wo r ld 's

environment. "

Al Gore,environmental activist

"I want to s ee an energy freeway

between Aus tral ia and East-Asia

where we are supplying needs

that a growing East-Asia wi l l

have. This is an enormou s

opportu ni ty for Austral ia but it is

important for these countries. Theyare going through with China,massive industrialisation, they needto be assured that they are going toget energy. "

Peter Costello, Federal Treasurer (1996-2007) Australia

The 1,200 km Langeled undersea gas pipeline carries20 billion cubic meters a year of natural gas from

Norway to England

The 700MW, 580km NornedHVDC cable carries

hydroelelectricity from Norwayto 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 theGerman market, bypassing Russia's prickly former Baltic State Warsaw Pact allies. While the motivation for Nord Stream is clearly political, it is beingconsidered seriously.

The proposed 1,200-kilometer Nord Stream gas pipeline project would connect Russia with

Germany under the Baltic Sea

Source: Nord Stream

Australia's energy resources are so vast it's in a position -- with some forethought -- to bundle cross-border HVDC and natural gas pipeline

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 costsbetween a natural gas pipeline and HVDC cables laid simultaneously, therefore, should reduce overall project costs by 25%. That's significant.

Labor accounts for nearly half the cost of

land-based gas pipelines and nearly 60% of offshore pipelinesSource: 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-oceanLNG transport is considered more economical for natural gas when distances are greater than ~2,000 kilometers. However, compressing natural gas intoLNG is highly energy intensive. LNG requires nearly 30% of the underlying natural gas energy to achieve the compression. Carbon pricing willmake 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 andcomplicated 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 avoidingenergy-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 ataround 2,200 miles (3,666) kilometers. That's roughly the distance from Port Hedland to Guangdong, China through the South China Sea.

http://www.news.com.au/dailytelegraph/story/0,22049,24385572-5001031,00.htmlhttp://www.news.com.au/dailytelegraph/story/0,22049,24385572-5001031,00.htmlhttp://www.treasurer.gov.au/tsr/content/transcripts/2006/170.asphttp://www.treasurer.gov.au/tsr/content/transcripts/2006/170.asphttp://www.norway.org.uk/business/news/ormenlange.htmhttp://www.abb.com/cawp/gad02181/8c5558c304d0eb13c1256f77003a33a1.aspxhttp://www.nord-stream.com/en/http://www.nord-stream.com/en/http://www.abb.com/cawp/gad02181/8c5558c304d0eb13c1256f77003a33a1.aspxhttp://www.norway.org.uk/business/news/ormenlange.htmhttp://www.treasurer.gov.au/tsr/content/transcripts/2006/170.asphttp://www.treasurer.gov.au/tsr/content/transcripts/2006/170.asphttp://www.news.com.au/dailytelegraph/story/0,22049,24385572-5001031,00.html


9/15

"We need to s tar t mov ing now to

star t bui lding the infrastructure

to meet the deadl ines that nature

wi l l impose on us."

Tim Flannery

"We wi l l have to find ways of

satisfy ing our energy needs with

near-zero net emissions of

greenhouse gases in order to

avoid the worst damage from

cl imate change. This wi l l require

an almost complete turnover in

the wor ld's energy

infrastructure."

International Energy Agency

Carbon pricing and bundled infrastructure labor savings could transform theeconomics of Australia natural gas exports.

In addition, offshore wind farms could be placed along the gas pipeline/HVDC route. The wind farms could access and feed into the trunkline andgenerate huge amounts of wind power.

Wind farms could be located alongside Australia-Asia HVDC powerlines

Similar projects are under active consideration in Europe. The UK has drawn up plans for a network of offshore wind turbines connected by anoffshore 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 ofNorth Sea wind farms

The UK has drawn up plans for a majoroffshore 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

http://www.news.com.au/adelaidenow/story/0,22606,22747613-5006301,00.htmlhttp://www.theaustralian.news.com.au/story/0,20867,21621911-5005200,00.htmlhttp://www.theaustralian.news.com.au/story/0,25197,24277690-30417,00.htmlhttp://www.theaustralian.news.com.au/story/0,25197,24277690-30417,00.htmlhttp://www.theaustralian.news.com.au/story/0,25197,24277690-30417,00.htmlhttp://www.theaustralian.news.com.au/story/0,20867,21621911-5005200,00.htmlhttp://www.news.com.au/adelaidenow/story/0,22606,22747613-5006301,00.html


10/15

Austral ia has some unusual

diplomatic assets in the

developing cou ntr ies that are

central ly

important to successful global

(greenhouse gas) mit igation

pol icy . Chinese policy is crucial to

a successful globaloutcome. A history of close andproductive cooperation on

domestic and international

pol i cy through

the reform per iod gives Austral ia

a strong base for cooperation

with China.

Garnaut Climate Change ReviewSupplementary Draft Report

"It's dead obvious, we have to finda way of export ing energy in

greater volumes than our gas

resources can produce and with

higher value than uranium can

generate."

Keith Lovegrove

Boomerang' and the development of Queensland coal seam methane resources. A gas pipeline and/or HVDC power lines strung alongside theproposed Bowen, Queensland to Port Hedland, Western Australia 'Iron Boomerang' rail system could fill out a northern Australian pathway for energyexports to Asia.

This, in turn, begs the question whether natural gas exports to China, South Korea and Japan are best handled through pipeline exports centeredat 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 currentpower lines rather than putting the natural gas through the pipeline system.

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-Chinaenergy pathway carrying both HVDC electricity and natural gas could feed into China's natural southern nexus for both. China is alreadydeveloping 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 1,500-kilometer 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 tointernational 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 gasemissions 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 hugeamounts of sun and geothermal energy. And Australia has expertise in laying subsea and buried terrestrial HVDC cables by virtue of having buillt Basslinkand Murraylink.

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 thedomestic 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 torise sharply in coming years

This is sensible since natural gas yieldshigher prices overseas

Source: "Australia’s Natural Gas: Issues and

Trends, Research Paper no. 25, 2007–08,"

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 enoughto satisfy more than a third of China's much enlarged energy needs expected in that year.

http://www.news.com.au/heraldsun/story/0,21985,23811816-664,00.htmlhttp://www.chinadaily.com.cn/china/2008-09/03/content_6992467.htmhttp://www.aph.gov.au/library/pubs/rp/2007-08/08rp25.htmhttp://www.aph.gov.au/library/pubs/rp/2007-08/08rp25.htmhttp://www.aph.gov.au/library/pubs/rp/2007-08/08rp25.htmhttp://www.aph.gov.au/library/pubs/rp/2007-08/08rp25.htmhttp://www.chinadaily.com.cn/china/2008-09/03/content_6992467.htmhttp://www.news.com.au/heraldsun/story/0,21985,23811816-664,00.html


11/15

"Au stral ia has a clear

responsibi l i ty to develop i ts

uranium resources in a

sustainable way - ir respective of

whether or not we end up u s ing

nuclear power."

John Howard ,

prime minister, Australia (1996-2007)

"I have very great concerns

about the current fragi le safety

regimes (regarding nuclear

power) and the porous nature of

(nuclear) safeguards because of

the International Atomic Energy Agency's inadequate monitoring ofsafety issues."Peter Garrett , Federal Labor

Shadow Environment Minister

"The current Austral ian

Government came to off ice with

a new commitm ent to seek to be

much more active... as a nation

on nuclear non-prol i ferat ion and

disarmament matters."

Stephen Smith,

Foreign Minister, Australia

" Renewable energy general ly hasa posi t ive effect on energy

secur i ty, employment and on air

qual i ty."

Integovernmental Panel on Climate

Change

"A (emissions trading) scheme

should allow the flexibility to

accommodate substantially

increased Australian exports of

low emission fuels to worldmarkets, which would have a net

beneficial effect on the

environment."

BHP Billiton, Submission, Prime

Ministerial Task Group on

Emissions Trading

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 changingprices. As such, bundled infrastructure would be the 'low-risk' strategy, particularly since it would be complemented by exist ing LNGinfrastructure as a supplementary delivery method.

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' onlyspruiked for 6,000MW), claiming it would have a big impact on reducing carbon emissions.

http://www.smh.com.au/news/national/pm-unveils-nuclear-plan/2007/04/28/1177460025506.htmlhttp://www.smh.com.au/news/national/garrett-to-vote-no-to-uranium-change/2007/04/19/1176697003227.htmlhttp://www.abc.net.au/news/stories/2008/02/01/2152713.htmhttp://www.abc.net.au/pm/content/2007/s1914985.htmhttp://www.abc.net.au/pm/content/2007/s1914985.htmhttp://www.pmc.gov.au/emissionstrading/submissions/198_sub_emissionstrading.pdfhttp://users/staggart5/Documents/Websites/000-Trec/content/www.ieej.or.jp/aperc/pdf/GRID_COMBINED_DRAFT.pdfhttp://www.desertec-australia.org/000-twf/twfbig/NuclearGHGcutsOz.jpghttp://users/staggart5/Documents/Websites/000-Trec/content/www.ieej.or.jp/aperc/pdf/GRID_COMBINED_DRAFT.pdfhttp://www.pmc.gov.au/emissionstrading/submissions/198_sub_emissionstrading.pdfhttp://www.abc.net.au/pm/content/2007/s1914985.htmhttp://www.abc.net.au/pm/content/2007/s1914985.htmhttp://www.abc.net.au/news/stories/2008/02/01/2152713.htmhttp://www.smh.com.au/news/national/garrett-to-vote-no-to-uranium-change/2007/04/19/1176697003227.htmlhttp://www.smh.com.au/news/national/pm-unveils-nuclear-plan/2007/04/28/1177460025506.html


12/15


13/15

"It is in every nation's interest forChina to strengthen its links to

the global economy and to

become an increasingly positive

stakeholder ."Kevin Rudd,


" We need to have a vision for anAsia-Paci f ic comm unity, a vision

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 socialdislocation due to power interruptions, Australia could find itself in the sights of a militarily-aggressive China obssessed with securing its own energysupplies. 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 declinesharply in coming years

China's coal production has already peaked and is declining

Source: " Coal, Resources and Future Production ," Energy Watch Group, March2007

..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 economicdislocation in Asia. Having an alternative supply line from Australia reduces this exposure through having a reliable, hardened, subsea infrastructure thatcan ensure uninterrupted deliveries and presents no obvious weak spots for a terrorist attack.

http://www.theaustralian.news.com.au/story/0,25197,24451335-5013404,00.htmlhttp://www.theaustralian.news.com.au/story/0,25197,24451335-5013404,00.html


14/15

that embraces a regional

inst i tut ion, which spans the

enti re Asia-Paci f ic region -

including the United States, Japan,China, India, Indonesia and theother states of the region."Kevin Rudd ,


“The European Par l iament has

shown i ts comm i tment to fa i r

access to the electr ic i ty gr ids ,

which is essential i f the EU is

ever to attain effect ive

comp eti t ion in the power market

while meeting its objective of 20%renewable energy by 2020.”Christian Kjaer,Chief Executive, European WindEnergy Association

“ Allowing pow er generationcompanies to own the

transmission gr id makes no

more sense than al lowing an

air l ine comp any to own the sky.”

Chr ist ian K jaer,

Chief Executive, European WindEnergy Association

East Asia is vulnerable to natural gas and LNG supply disruptions through a closure of theStraits of Malacca

Source: ASEAN Center for Energy , 2007

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, dismissivelyassuming they will play little role in Australia's energy system until after 2050 while coal retains a favored place for another century. DESERTEC rejects thisreflexive 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-hydrorenewables 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 overallreport

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

http://www.theaustralian.news.com.au/story/0,25197,23812768-5013404,00.htmlhttp://www.unescap.org/esd/energy/dialogue/cooperation/soc1/documents/Presentation%20ASEAN-CFE.pdfhttp://www.unescap.org/esd/energy/dialogue/cooperation/soc1/documents/Presentation%20ASEAN-CFE.pdfhttp://www.theaustralian.news.com.au/story/0,25197,23812768-5013404,00.html


15/15

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 electricityconsumption 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