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Standing Committee on the Environment and Energy
09/10/2019
Prerequisites for nuclear energy in Australia

BUCKLEY, Mr Timothy, Director, Energy Finance Studies, Australasia, Institute of Energy Economics and Financial Analysis

WELLER, Mr Richard, Convenor, Climate Future

[14:02]

CHAIR: I now welcome representatives of the Institute for Energy Economics and Financial Analysis and Climate Future. Do you have any comments on your organisations?

Mr Weller : I represent a grassroots local organisation.

Mr Buckley : IEEFA is a global public interest think tank specialising in the nexus of energy, finance and climate.

CHAIR: Although the committee does not require you to give evidence under oath, I should advise that this hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the House. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. The evidence given today will be recorded by Hansard and attracts parliamentary privilege. I now invite you both to make some brief opening statements before we proceed to a discussion.

Mr Weller : In the simplest terms, it's too late for nuclear energy. The IPCC state that global emissions must reach approximately 50 per cent cut by 2030. Australia can cut its emissions the required half by replacing fossil fuels with renewables in the energy and transport sectors and still save money. Solar and wind, combined with storage, can be in place by 2030. Nuclear can't do this for Australia. At the same time, Australia wouldn't even have finished discussing nuclear energy. Solar with storage is cheaper than coal fired power stations, especially when climate risk is included, and much cheaper than any nuclear proposal.

The South Australian system, with its high renewable content, has shown us the way to integrate renewables storage and create a reliable electricity supply. Proven effective methods for energy storage include batteries and pumped hydro, and recently there has been a proposal for liquefied air, which takes the technology of the liquefied natural gas industry, where large volumes of gas are compressed and liquefied and stored in huge tanks for transport. The same off-the-shelf technology could be used to store energy for electricity very simply without needing to be anywhere except where there is air. Large-scale solar PV can be designed, approved and constructed within a couple of years. Construction of a new nuclear power supply system would be likely to take at least 20 years in Australia, and that is time we just don't have.

Cost assessments of nuclear power generally don't include the cost of storing waste. This fact alone should disqualify nuclear power. There is no storage facility available, and one is not likely to be, either. We have never designed a facility with a useful life of 100,000 years. There is also no stable method for the storage of radioactive materials for such a long time nor any method for cleaning up an old power station site for reuse for agriculture or accommodation. We need to focus all our energy on the quickest pathway to removing fossil fuels. The longer we delay, the worse it gets. Climate change is a terrible inheritance, and going down the path of nuclear would only add to this destructive legacy.

The task before us is to install solar and wind farms on an industrial scale together with storage. The opportunities for Australia for a renewable energy are enormous, as we have the best solar resources of any country in the world. We could be a major exporter of clean energy if we just got on with it.

The climate emergency is just that, an emergency. We cannot waste time talking about unviable options. It's too late for nuclear. It's too expensive, and the fuel and its waste are deadly. We need a new energy system within 10 years, and cheap solutions are already available. Why waste time on nuclear? It would be simply a distraction from the elephant in the room. Our appeal to this committee is to determine that there is no place for a nuclear power system in Australia and that we must get on with the rapid replacement of our fossil fuel industry with renewables.

Mr Buckley : Thank you very much for the opportunity to appear today at this inquiry. I would like to endorse and agree entirely with Mr Weller's comments, and I would certainly recommend against opening up nuclear as a potential option.

As I detailed in my written submission, nuclear power plants take decades to build. They have a long history of extreme capital cost blowouts and are entirely unbreakable in the Western world without massive taxpayer funded capital subsidies. The financial debacles that have been evidenced in Japan, Finland, France, England and America in the last decade all illustrate the widespread ratepayer and investor wealth destruction that the nuclear power industry has actually incurred in attempts to build modern nuclear facilities. New nuclear power is totally uncompetitive with firmed renewable energy. I would reference the latest Lazard estimates for levelised cost of energy. Their estimate for nuclear is A$150 to A$250 per megawatt hour, while EnergyAustralia and Snowy Hydro both estimate in the Australian context that we can do firmed renewable energy at less than A$70 per megawatt hour. There is no cost advantage in doing nuclear. It is so far out of the picture it has no credibility, financially, in my view. In the time it would take—in the decades it would take—to actually build a nuclear power plant in Australia the cost of renewable energy is likely to halve. Fully firmed, it will halve, at least, on our estimates in the next decade, following even a slowing of the rate of deflation that we have seen in renewables in the last decade. So the idea that nuclear is a viable source when a plant won't be operational for more than 10 or 15 years—the cost of renewables by that stage will be a fifth of the cost of nuclear, fully firmed.

IEEFA does recommend against a repeal of the Australian laws that preclude the use of nuclear power. Any such discussion would unleash a massive level of community unrest. It would work directly against the goal of achieving bipartisan energy policy support, and that is what we need to unleash the tens of billions of dollars of capital that need to be invested in the coming decade to modernise, decarbonise and lower the cost of electricity for all Australians.

As to the question that was asked in the earlier session about employment prospects, I look at the financial market interpretation of nuclear. I will leave one Australian example of that. Paladin Energy was one of the biggest uranium manufacturers in the world. In the last decade its shares are down 98 per cent. It's an Australian listed company. Far from adding value to investors, it's lost 98 per cent of the capital of investors in one decade. So I put that on the table to say that the prospects for uranium mining—the financial markets are telling you—have never been dimmer. The World nuclear industry status report 2019 came out after I put in our submission from IEEFA, so I would reference that. It's a comprehensive analysis of the world nuclear outlook and nuclear status. I can reference some of it in any questions you have, but I'll just leave you with one stat: nuclear's global market share peaked in 1996 at 17½ per cent and it is down to 10.2 per cent in 2018. So it's almost halved its market share and the industry is going backwards.

One of Australia's most astute and successful global firms is Macquarie Group. You might be aware that the CEO of Macquarie only a week or so ago announced in New York that they intended to invest US$20 billion in 20 gigawatts of renewable energy in the next five years alone. That makes them one of the biggest investors in renewables in the world in the coming five years, if they deliver on that target. I would note that Macquarie is not investing in nuclear and they're not investing in coal; they're investing in renewable energy. That is what the CEO has identified as the single biggest growth initiative for their group globally.

If I may illustrate with another piece of information that came out on Friday. To me, again, it epitomises why the idea of opening up a nuclear inquiry to discuss it for the next decade and to think about building a plant that might be operational by 2040 is just a waste of time—exactly as Mr Weller said. The example I wanted to quote was a speech that was given last Friday by the largest and most successful utility in America and, potentially, the world. It's the CEO of NextEra Energy. The CEO, James Robo, gave a presentation last Friday. I'll quote verbatim an extract of his speech, which I have a copy of and can give to the inquiry, as well as the presentation slides that he gave. They're very, very detailed. Why do I focus on NextEra? It is the most successful and largest utility in America and Mr Robo's comments, to me, were pretty profound. Just as context on the financial performance, NextEra has increased its earnings per share threefold and dividends fourfold in the last 15 years. So the financial markets rate it as the best utility in the world. It's also one of the biggest nuclear players in the world. Mr James Robo said:

We see renewables plus battery storage without incentives being cheaper than natural gas and cheaper than existing coal and existing nuclear. And that is game changing.

What does that mean in terms of renewables penetration? The Energy Information Administration, I think, forecast 35 per cent renewable penetration in America by 2030. Mr Robo said: 'I think it could be as high as 50 per cent by 2030 and, ultimately, the current system can support renewable energy penetration of 70 to 75 per cent by 2050. I think that is very doable and that would take an enormous amount of carbon out of the US.' He concludes: 'We will have coal roughly contributing 35 per cent of last year's US electricity needs. We think renewables can replace all of that by 2030 and you'll see nuclear continue to decline as part of the mix.' Those are pretty powerful statements, given NextEra is one of the biggest investors, owners and operators of nuclear in the world. The American electricity system is the biggest nuclear operator in the world. NextEra is investing US$5 billion a year in renewable energy, $500 million a year in battery storage and not a cent in new nuclear. I need to emphasise new nuclear—they spend a lot of money maintaining their existing fleet to maximise its current performance.

Duke Energy was the largest utility in America a decade ago. It spent the last decade investing in coal. It's shares have massively underperformed the market, consistently, for a decade. Last Thursday, Duke Energy came out with their integrated resource plan. They announced they were accelerating coal plant closures, they were doing a massive pivot to renewables and battery storage, and they were not spending a cent on new nuclear. I could go on and mention that PacifiCorp also put out their integrated resource planning on Thursday. They announced the acceleration of their closure of coal plants, they announced a massive pivot to renewables and they announced that they're not spending a cent on new nuclear. Those are three of the largest utilities in America, three of the largest utilities in the biggest electricity market in the world that operates more nuclear plants than anywhere else, and they all think that nuclear is uninvestable.

I'll conclude by saying that this week the Energy Information Administration of America put out a discussion paper calling for subsidisation of existing nuclear facilities. They concluded that nuclear cannot compete and that they have noticed that eight nuclear plants have closed in America since 2013. They notified the American government that another five are scheduled to close in the next six years. Therefore, they're calling for subsidies to keep existing facilities open while American rapidly ramps up renewable energy as the least cost, zero emissions technology. Thank you.

CHAIR: Thank you very much, Mr Buckley. Mr Buckley, do you believe the government should lift the current moratorium relating to nuclear electricity generation?

Mr Buckley : I firmly suggest we should not lift the moratorium—that that will increase community unrest, it will increase concerns—

CHAIR: I understand that you've made some points relating to that, including your views on it being too expensive and that it's too late—

Mr Buckley : Primarily. It's just way too expensive and too slow to build. That is exactly the conclusion of the World nuclear industry status report.

CHAIR: Do you think there are technologies in other strategically important industries—such as, say, telecommunications or artificial intelligence—that might be too expensive?

Mr Buckley : There are always potential new technologies, absolutely—

CHAIR: Should there be a moratorium placed on such technologies? Should they be banned from Australia?

Mr Buckley : I've just finished watching the Chernobyl film—looking at the extreme community costs and the dislocation of hundreds of thousands of Russian and Ukrainian residents in perpetuity. The cost to the Russian economy was extreme.

CHAIR: Could you get to answering the question, sir? You've presented on the basis that it is too expensive, it takes too long and the market isn't there, and on that basis the moratorium should remain. My question is: would those conditions also apply to other technologies? You have said yes. My question now is: should there be a moratorium on other such technologies?

Mr Buckley : Other such technologies don't bring the extreme environmental consequences and the extreme financial consequences—

CHAIR: And you're basing that on the Chernobyl television series you saw—is that right?

Mr Buckley : We've also actually got the book, which has more detail and far less superficial analysis than the film. The book certainly documents that. I also have spent quite a long time studying the Japanese electricity industry. I've written numerous papers on it in the public domain. I've interviewed a huge number of Japanese executives, financiers, government officials and regulators. The cost of the Fukushima disaster is unquantified. The Japanese government expects it to be north of $200 billion. TEPCO received a $50 billion bailout, otherwise they would have gone immediately bankrupt post-Fukushima. So you're talking about hundreds of billions of dollars in costs.

CHAIR: Let's understand a little bit more about the economics. We heard from other witnesses today about the economics and they drew a different conclusion to you. If you're assessing that firmed renewables are cheaper than nuclear, what is the operating life and what capacity factors are you assuming for renewables—for solar, let's say?

Mr Buckley : I have copies of my speech which has the Lazard cost curve and it has the cost curve as presented by—

CHAIR: I'm certainly happy for you to table it, but we are also taping for the sake of Hansard. So, if firmed renewables are cheaper, what assumptions are there on their operating life and the capacity factor?

Mr Buckley : I've done analysis on nuclear in Japan and India in particular. We've done a little bit of analysis in Bangladesh as well, in our published research. What I'm referencing in my speech is the cost curve by Lazard, one of the major global investment banks. They publish this in public, and I've given the reference to it. Their cost assumptions are detailed on their website. I've gone through it. NextEra Energy—if you go to the fourth page—has put in the public domain, in their presentation, their cost assumptions for existing nuclear against renewables, as they see them. The top chart is post-2023. There are the presumptions that the world's biggest utility makes in terms of operating assumptions, given they operate nuclear, given they operate wind—they're the biggest owner of wind energy in the world—and given they're one of the biggest developers of solar. They actually understand it. These are their costs, not mine. I rely on what the CEOs in the company say—

CHAIR: That's okay. You say you've gone through it.

Mr Buckley : Yes.

CHAIR: Are you aware of the operating life capacity factors that are assumed? It's okay if you say you don't. It's not a trick question, but, if you do, I'd like you to speak to them.

Mr Buckley : Nuclear operates generally at 80 per cent, give or take. I think the IEA talks about that. Certainly my experience in the Indian market was that they generally operate at 70, 80 or 85 per cent utilisation. The life of a project could easily be 50 or 60 years. Ultimately, when you talk about levelised cost of energy and when you talk about the tariff required to actually produce it, that is all normalised by the financial markets. I've put a lot of focus on Hinkley Point. They require a year 1 tariff of 92 pounds—

CHAIR: That's okay. I was talking about the renewables. I was talking about the operating life capacity factors that are assumed—

Mr Buckley : Sorry; I can answer that in detail. I study that every day.

CHAIR: Then please do.

Mr Buckley : It totally depends on the resource quality. If you go to Far North Queensland or if you go out west—

CHAIR: I'm sorry, Mr Buckley. You have said that firmed renewables are far cheaper.

Mr Buckley : Yes.

CHAIR: And you've said that is due to the Lazard study. My question is: what assumptions are being made with respect to capacity factors and operating life, without going into what's happened in Japan and what's happening up in Queensland? The answer is that it's all provided here in this document—is that right?

Mr Buckley : No. If your question is, 'What are Lazard's assumptions?' each analyst uses their own assumptions, and they test those against market. I have my assumptions for renewable energy. If you want to know the utilisation rate for a solar project, if it's in India it's 15 to 20 per cent; if it's in Australia it's 20 to 35 per cent.

CHAIR: So which of all of these do you use to draw your conclusion?

Mr Buckley : I use all of them.

CHAIR: So all of these analyses show that firmed renewables are cheaper?

Mr Buckley : Not every analysis, no, but most of the analyses I've seen show that firmed renewables are significantly cheaper.

CHAIR: Do those analyses assume a capital refresh for firmed renewables?

Mr Buckley : Categorically, yes. It requires an assumption on the cost of capital.

CHAIR: So, where you're comparing it to nuclear over 60 years or something, you would be assuming capital refreshes?

Mr Buckley : Yes, definitely.

CHAIR: You've mentioned the investment in renewables, and I see your written presentation also goes to that. I think on page 3 it talks about global investors being willing to invest in Australia. I'd appreciate your view on whether or not that investment has been driven by mandated subsidies or guaranteed market share.

Mr Buckley : I think it's very hard to see any energy market that doesn't have government regulations, parameters and subsidies involved.

CHAIR: That wasn't my question. My question is whether or not you believe that the investment in renewables that you have explained on page 3 has been driven by mandated subsidies and guaranteed returns.

Mr Buckley : In Australia?

CHAIR: In Australia.

Mr Buckley : Historically, absolutely. The industry was not competitive five or 10 years ago, and the technology rate of change has been so dramatic that, as of today going forward, I don't expect any material subsidies or frameworks. You need a framework for any investment.

CHAIR: Understood. Thank you.

Mr Buckley : But unsubsidised.

CHAIR: I have one last question, and then I'll ask my colleagues to come in. Would you support nuclear electricity plants replacing retiring coal-fired base-load plants?

Mr Buckley : In Australia?

CHAIR: Yes.

Mr Buckley : If the moratorium were lifted—it's a hypothetical, because it can't happen at the moment—

CHAIR: It would have to be if the moratorium were lifted.

Mr Buckley : Yes. The reality is that it wouldn't replace a single unit of coal in the next 15 to 20 years, because it would take 15 to 20 years to build, and it would require a massive—

CHAIR: Let's assume that time line. Would you support a nuclear plant replacing a retiring coal-fired power station?

Mr Buckley : Would I support a really expensive source of power replacing a dirty but less expensive source of power when the alternative is that we could use wind and solar at a fifth or a tenth of the price?

CHAIR: No, you just rephrased a different question. I just asked you a question, sir.

Mr Buckley : The question is: would I—

CHAIR: Would you support a nuclear power plant replacing a retiring coal-fired power plant in Australia?

Mr Buckley : I'm a financial analyst. I'd look at the numbers. Do the numbers stack up and support that assumption? That's, 'Let's choose the worst or the second-worst option.' If you want me to rank them, I don't do rankings. I look at financial analysis. So I really couldn't answer the question.

Mrs PHILLIPS: Thank you, Mr Buckley. My question is: what do you think the Australian government should be doing in the energy sector?

Mr Buckley : I think the Australian government needs to set the framework and have clarity—ideally it should be bipartisan support for a sensible, stable framework—and then let the experienced executives of the ESB, AEMO and AEMC actually implement it. AEMO put out a brilliant ISP, the Integrated System Plan, in 2018. They updated it last month. I think it sets out a really sensible plan by our most experienced bureaucrats, who've been studying, investing in and managing the industry for decades and decades. I would do exactly what Dr Finkel said: let the ESB decide and let's get on with it. Have a plan, try to get bipartisan support and then let AEMO and the ESB and AEMC get on with it.

I would probably say that, in my view, there is an absolutely critical issue about global warming. So, if we are to address the issue of least-cost, reliable electricity on a sustainable basis, we actually need a market signal for the biggest externality of the energy sector. We had that for a couple years; we were a world leader. It would be simple to put a price on carbon—theoretical, notional or in practice—and have that as part of the consideration or even as part of AEMO's consideration, which they already do anyway. But that would be, to me, an integral part of letting the ESB action side. Let them comply with our Paris agreement commitment. We made an agreement internationally. Almost every country in the world agreed to it. We agreed to it. I think that should be part of the process, because, ultimately, I think the financial market, the operating market, is the best place to actually implement the solution. But it can only do it effectively and at least cost to us, the taxpayers and the consumers, with a proper, stable, sensible framework from the government.

Mrs PHILLIPS: I have a question for you, Mr Weller. What do you think are the biggest concerns that the community has in relation to the development of nuclear energy?

Mr Weller : I would say it's the hazardous material. Obviously, the main part of the cost of building nuclear industry is the hazardous material that has to be handled. We've seen from the major accidents that have happened that large areas of land can be contaminated and made impossible for people to live in. That's what concerns people.

Mr PITT: Mr Weller, in your opening statement you spoke about South Australia as an example of what can and should be done. We heard evidence last week that in South Australia more than $800 million was spent on diesel generators and diesel, and we've heard evidence today that without the Victorian interconnector they simply can't keep the lights on. Given your proposal this morning, in terms of the example, would you suggest that we disconnect South Australia from Victoria and we remove those diesel generators so we can firm up that example?

Mr Weller : I referred to South Australia because they've actually made an effort to go largely renewable and a large proportion of their network is renewable. They have had problems—I don't dispute that—and it's been shown that they certainly need storage to balance up the renewables. That was a part of the development that we needed to learn about.

Mr PITT: South Australia is recognised as having the highest electricity cost in the world.

Mr Weller : South Australia has long had one of the highest electricity costs in the world.

Mr PITT: That's certainly not the reporting I've seen. However, given that they've closed their coal-fired power stations and replaced some with diesel, is that an improvement, or is that something which is more detrimental, in terms of the effect on the environment?

Mr Weller : We have to move to a fossil-free economy. We have to be completely fossil free. How are we going to do it? No-one has done it before. We are going to run into problems along the way, but we need to do it, and we need to do it rapidly. And, as I said in my opening statement, the next 10 years provide us with an opportunity to cut our emissions by half. If we take the electricity supply energy system and the transport sector, those two sectors represent about 60 per cent of Australia's emissions. If we deal with them—and the technology's out there to deal with them right now—then we can cut Australia's emissions by 50 per cent. The other parts of Australia's cuts are much more difficult. How do we replace cement? What do we do about steel smelting? There are a lot of other things that are more difficult to do than building solar and wind energy. So where would we go to get that 50 per cent that we need by 2030? We'd go to the energy sector. And to talk about something like nuclear, which is going to take a lot longer to develop—it is not a solution to climate change. By the time we've talked about it for 10 years, it'll be too late to do anything about our coal-fired power stations. We need to deal with that now.

Mr PITT: Thanks, Mr Weller. Mr Buckley, in the submission you've just provided us, you make the statement that corporate proponents of nuclear are really keen for government subsidies but their actions show they won't spend their own money. We've heard evidence previously that the estimates on the renewable energy target in terms of certificates paid for by consumers is higher than $40 billion. Would you suggest that those subsidies be removed as well?

Mr Buckley : As of today? Yes, categorically. At the end of the day, we're comparing an industry that's been around for many decades versus an industry that has emerged and is transforming the world energy market, and it has emerged in the last 10 years. So any new industry definitely should be helped along. As to any suggestion that nuclear is a new industry or an emerging industry: according to the world nuclear report, it's actually 20 or 30 years into decline. The IEA is forecasting its decline, the EIA is forecasting its decline, and the world nuclear industry report forecasts its decline. So do I suggest massive subsidies to an existing industry? No.

Mr PITT: That's not the question. Do you suggest we remove the existing subsidies being provided to the wind and solar industries right now? They are substantial.

Mr Buckley : Well, yes, and I would probably reference the CEO of Snowy Hydro, Mr Broad, from last year at Senate estimates where he was asked: 'What's the cost of fully firmed electricity today? What's the least cost?' and I think his answer, to paraphrase him, was that wind and solar, fully firmed with pumped hydro, can be delivered at less than 70 Aussie dollars today, and immediately.

Mr PITT: And in recent months the ABC has reported that that cost estimate has increased for the capital cost. But, just on another matter, you've made a lot of comments about the effect on share prices for individual companies affecting the businesses which are overseas. Given that we've seen reports that gentailers in Australia have increased their profits by up to 400 per cent and the Queensland state government has increased its take to $1.5 billion and the effect that that has on consumers and businesses, is there a price which is too high?

Mr Buckley : Just to your comment that the ABC reported the capital cost of firming—

Mr PITT: No, Snowy Hydro 2.0, specifically.

Mr Buckley : Right; specific. NextEra Energy is one of the biggest investors in batteries in the world; their chart on the fourth page highlights that the cost is dropping—

Mr PITT: But that's not the Snowy Hydro, and that's not the comment that I've made.

Mr Buckley : Okay. So your question is—

Mr PITT: Back to the question.

Mr Buckley : If I were technology agnostic, I'd look for the best firming solutions, and the forecast from the most successful utility in the world is: the cost is falling.

Mr PITT: Mr Buckley, back to the question: is there any cost for consumers which is too high, given the increase we've seen in profit margins across the country?

Mr Buckley : Absolutely. So I would be recommending that we go for the least-cost investment options that are available today and that can be deployed in a sensible time frame over the next five or 10 years. So, by definition, nuclear is out. Coal, unsubsidised, is very expensive, according to Lazard and according to all of the studies I've done and according to our major utilities. They all say the least-cost solution for new generation capacity is wind and solar. It does need firming. Everything needs firming. There are costs to that. And AEMO models that as well.

Mr PITT: Certainly I've seen the AEMO plan for extensive transmission, and I can't quite recall the exact number but I thought it was about $28 billion in their initial estimates, and that doesn't include ancillary services, such as voltage and frequency control, which would also need to be added.

Mr Buckley : Is there a time frame on that $28 billion you're referring to?

Mr PITT: That was in the AEMO plan, from memory. I haven't looked at the most recent—

Mr Buckley : I would suggest that's exactly what we've actually spent in the last decade on supposedly modernising the grid in Australia, and, if you look at AEMO's analysis, they estimate that 50 per cent of the cost inflation in the last 15 years has come from the gold plating and incorrect overestimation of demand and wrong positioning of the grid investment in the last 15 years, and that is the single biggest cause of consumer inflation in the electricity market, and they identify gas as the second biggest cause—gas prices trebling. So I think it is important that we do the least-cost, most-sustainable analysis, we base it on finance, we base it on proper analysis and we base it on reliability standards. The people best able to do that are AEMO. And I do think we need to actually recognise that the grid investment—exactly the point you're making—has been the single biggest contributor to inflation in Australia in the last decade, so it needs to be managed carefully.

Mr PITT: Given those reports are that the cost of electricity is fundamentally around 50 per cent of the transmission cost, if there's an additional $28 billion to $30 billion in investment will that be handed straight to consumers? That would be your evidence?

Mr Buckley : I might just remind you that when you invest in an electricity grid, you depreciate it. You actually have to invest to maintain it. So when you're quoting a big number over a multidecade period, it sounds really big—it is a big number—but the reality is that that is divided into how many years that involves. That is the maintenance cost for the grid. They will be doing that irrespective of whether they're incorporating expensive nuclear, which they'd have to reconfigure the grid to handle, or incorporating new coal-fired power plants or renewables. So that grid investment will have to be done regardless.

Mr PITT: But that is a fixed rate of return, which is set by the regulator.

Mr Buckley : Yes.

Ms STEGGALL: There is a significant amount of view around the world that we do need to move within the next 10 years when it comes to evolving our energy supply in Australia. We have a number of coal-fired plants that are due to retire. At great expense there are attempts to lengthen their lives. We have also seen a surge in renewables, and, as you've discussed, Mr Buckley, there's the issue of firm renewables. Your answer to the chair about lifting the moratorium—do you see repealing the moratorium to have an effect on investor confidence in other forms of generation, like firm renewables in Australia?

Mr Buckley : I think it would have an immediate impact on investor confidence, both in Australia and globally, because it would mean that there's going to be continued debate about what Australia needs to do. I think what AEMO is trying to do through their ISP and what the ESB is trying to do through their work is to create a technology-agnostic platform and framework to actually allow investors to move forward. If we start debating about what the framework is going to be for the next 10 or 20 years, investors will hold off, because you can't do nuclear without massive government subsidies. So, if the government turns around and says, 'We're going to go and subsidise one form of generation,'—any form of generation—other players will then have to compete with their hands tied behind their back. It will just create investor uncertainty that will lower investor interest in Australia, and capital is very agnostic; it will go to the markets with the highest rate of return at the lowest unit of risk, so the capital will flow increasingly offshore. We'll lose regional investment, we'll lose regional jobs and we'll lose the opportunity to actually take electricity prices down, as opposed to the upward trend we've seen in the last 15 years.

Ms STEGGALL: From your research and with that presentation you've put to us, is it your fervent view internationally that investment is simply not going nuclear? So Australia would be going completely against the trend to go down this path.

Mr Buckley : No. I would suggest that nuclear is definitely, absolutely, squarely on the agenda in China. China is a Communist country. It is a state planned economy. They are absolutely committed, in my view, to decarbonising and diversifying their electricity needs. China is the world's biggest investor in batteries. They're the world's biggest investor in wind. They're the world's biggest investor in solar. They're the world's biggest investor in hydro. They're also the world's biggest investor in nuclear. What we have seen though, is that China, in the last three years, has not committed to a single new nuclear power plant even though they're the ones building the vast majority of the existing fleet globally. So they've not committed to a single new nuclear plant in three years.

India, likewise, is looking to increase their energy security. They have a major commitment to building nuclear. The trouble is it takes them 15 to 20 years to build and it's really expensive and it requires massive government subsidies. I think their official target was to build 60 gigawatts by 2030. They've built two gigawatts in eight years, and I think going forward their plans are to deliver a fraction on their target. Their old energy minister said the target is totally out of date, and he thought it would be, at best, half of that. But, at the same time, India is proposing—Prime Minister Modi spoke in New York two weeks ago. He committed to investing 450 gigawatts of renewables by 2030, so he's proposing investing half a trillion dollars in renewable energy by 2030 in his country. That is many, many multiples of the investment they are talking about doing in nuclear, but I don't see a lot of evidence that they're actually doing much in nuclear.

Ms STEGGALL: You've raised Paladin Energy and a number of other major companies—NextEra Energy. From your point of view, investment from these major players is only going in the firmed renewable direction?

Mr Buckley : The vast majority. To the point that Mr Pitt made, NextEra Energy talk about spending billions of dollars every year in transmission and distribution. They have to upgrade the network, so they're investing billions in that. They're investing in batteries and they're investing in firmed renewables. They're not building any coal plants. They see gas as peaking. I think you can see from the comments that NextEra Energy make that they see gas in America peaking, so the vast majority of their money is going to renewable energy. It's actually 60 or 70 per cent of their annual capex budget. Duke Energy, which has invested in coal in America for a decade, has now said, 'We're actually going to accelerate the closure of all of our coal plants and we're going to invest almost all of our money in firmed renewables going forward,' and that's detailed—Duke Energy is the third largest utility in America.

Ms STEGGALL: Do you see Australia being able to get 100 per cent firmed renewable energy? We've had very different numbers put to us. The advocates for nuclear will say, 'We couldn't get to beyond 10 per cent.' We've had others say it could get up to 50 per cent—your report from NextEra Energy saying 70 to 75 per cent. Do you believe we can get to 100 per cent firmed renewable energy?

Mr Buckley : It's never been done before. I'm very much an advocate for, 'Let's look at what's commercially doable today, and let's get on with it.' If I use the NextEra Energy example, he references that 70 to 75 per cent firmed renewables is entirely doable—let's focus on that; let's take renewables from a 20 per cent share to 75 per cent over the next three decades and then let's evaluate in 30 years time what we do for the last 25 per cent. I'm 100 per cent in favour of that. We don't know what the technology—maybe SMRs will actually be commercially viable in 30 years. They haven't been viable for the last 50 years, but maybe in 30 years time they will be, and, at that point, I'd be all for evaluating them.

At the end of the day, technology is changing dramatically. The point NextEra Energy makes, the point that Prime Minister Modi makes, the point that the energy minister of India makes and the point that the energy minister in China makes is that renewables prices are dropping 10 to 15 per cent every year, and, therefore, extrapolate that over a decade and you're talking about how, if it's competitive on its own two feet today in most markets, it will be far, far the best option in 10 years time if the technology keeps improving. I had the pleasure of talking to Professor Green from the University of New South Wales, and I asked him, 'How much further can solar go technology wise?' This is the man who's pretty well single-handedly taken the world forward in solar, and he said he reckons solar technologies will double their effectiveness in the next two decades, having just doubled in the last two decades—it can do it again.

Mr PITT: Will they work in the dark?

Mr Buckley : I'd quote Mike Cannon-Brookes' response to that—

Mr PITT: It's a legitimate question.

Mr Buckley : it doesn't rain 24/7, and we still have water 24/7. We need firmed electricity, and we need it at an acceptable price to consumers. So, at the end of the day, the technology for pumped hydro has been around for decades. China is investing $5 billion a year in pumped hydro storage. They think it works. Japan has 25 gigawatts of pumped hydro storage. They think it works.

Mr PITT: We've also heard evidence today that there are 290 new reactors planned for China by 2050, so, in terms of comparisons, there it is.

Ms STEGGALL: Just to finish off: we seem to get into this slightly petty to and fro, but, at the end of the day, is it—sorry, I'll leave it to someone else, Chair. I'll rethink my question.

Dr GILLESPIE: I have a couple of questions for Mr Weller about South Australia. You're familiar with the comments that Mr Pitt made about how much they spend each year on diesel and generators, which I gather they've sold to a private entity now. It appears in their state budget. That's what they budget every year to run the diesel generators in South Australia. It's not made up by me; it's in their budget papers. I've just looked up the electricitymap.org website, which you may be familiar with. The carbon intensity and the comments about climate change I take on board, but are you aware of the carbon intensity of generating electricity from nuclear alone? I know the answer, but I am just wondering if you know it. I was just going to reference what it is in South Australia.

Mr Weller : I think I've made my point pretty clear, that we don't have time to wait for a nuclear power system to be constructed in Australia. We need to get rid of our fossil fuel industry this year. In the next five to 10 years we need to replace our fossil fuel industry. The whole world needs to do it. That means our exports are going to be changing. We need to be prepared for this change. We need a new solar industry in Australia that can export energy to South-East Asia or wherever. There are proposals to do just that, which I'm sure Tim's aware of.

Dr GILLESPIE: Are you familiar with—I just looked it up, so I might as well tell you—the energy intensity in South Australia at the moment is 351 grams of CO2 per kilowatt. Most of it is coming from Victoria, from gas and a bit of solar, but no wind, even though they have huge wind assets. How would you run the system if you went to all these intermittent sources of energy? South Australia has the biggest battery in the world on one spot.

Mr Weller : The Sun Cable proposal in the North Territory is proposing to spend $20 billion to build 15,000 hectares of solar panels and a battery to go with it. The battery would be something of the order of 50 times the size of the battery in South Australia. They're proposing to export that energy to Singapore to provide Singapore with a quarter of its electricity supply. If they can do that on that scale, why can't we do it here in Australia for our own purposes?

Dr GILLESPIE: That battery, the current one, if it ran South Australia if it had another blackout—it has been very useful when they're switching in for those millisecond periods between energy sources, but I'm informed that it would run South Australia's electricity needs for five minutes. Singapore is twice as big as South Australia. They could run Singapore for 250 minutes, which is still not enough in the cycle. I'm scratching my head, from all these depositions we've had, how we confirm so much that you would be able to replace the base-load requirement of either South Australia or New South Wales, when the firming at the moment is coming from hydrocarbon sources most of the time, and coal. As you say, we have a dry continent. We haven't built a big dam for as long as I remember, so where are you going to get all these pumped hydro things done? How are you going to keep the lights on and the industry on if we go down a headlong race into intermittent, variable renewable energy?

Mr Weller : I think Tim has pointed out that there are plenty of opportunities available, that the costs are cheap, and that if we let the industry do what it wants to do, which is to build renewable energy with storage, they will find solutions that will work. I don't think we need to be mired down in the concept of base-load power. South Australia's network has shown that they don't need base-load power, that it's not a necessity. What they need is a stable network that will provide for the peaks. At least 10 years ago Beyond Zero Emissions provided a report which set out how Australia could replace its coal fired power stations with renewable energy. They used off-the-shelf technology of the time: wind and solar. They showed how the demand could be dealt with. They set out how the network would need to be improved to connect to new sections of the country where solar panels could be installed. The whole thing was all laid out. There is no reason why we can't do this. We have to do it, because if we don't we're heading for a catastrophe.

Mr Buckley : Could I possibly respond with an example? I've just recently written a paper with a number of scientists in New Zealand. It's being peer reviewed at the moment. I did present in Delhi to the Indian government last month on how to firm the grid. There were 150 presentations over a three-day period. I spoke to the German government about one of the examples. There is an aluminium smelter in Germany, in Essen, which for the last three years has been providing a ramping up or down of its electricity take by 25 per cent. We have all known for the last 50 years that aluminium smelters have to run 100 per cent of the time. You can turn them down for five or 10 minutes, or maybe an hour, but anything more than that and they risk solidifying. This technology has been commercially deployed for three years in a German aluminium smelter. It has the ability to either ramp up its electricity intake by 25 per cent or ramp it down by 25 per cent immediately, for as long as required.

I spoke to the German government, the head of the energy program at GIZ, which is a German government energy agency. I asked him about this plant. I said, 'Is it factually correct that this aluminium smelter is effectively operating as a virtual battery?' The gentleman just laughed and said, 'Yes.' In the last two years they have made more money from supplying grid-firming capacity to the German government than they have from manufacturing aluminium. That technology has been deployed for three years at commercial scale. We're talking about a major global smelter.

The French at Dunkerque: Sanjeev Gupta, I believe, is proposing to retrofit an existing smelter that he has just bought from Rio Tinto at Dunkerque using the same technology. What it means is that heavy industry goes from requiring 24/7 base-load power—this is exactly the point you've been making—to being a major beneficiary of lower-cost but intermittent variable renewables, and that heavy industry can be a key component of enabling the technology transformation that's going to happen anyway.

Mr PITT: Can that be done without changing the existing smelting technology? For example, in the existing smelters in Australia, that's certainly not the advice I've had any number of times.

Mr Buckley : I can give you a copy of the paper. It's being reviewed, as I said. It's been demonstrated in Germany. It's retrofitted to an existing commercial scale smelter, and the German government has certainly endorsed it. They said it works really well. I can give you the gentleman's name if you want.

Mr PITT: But at what cost?

Mr Buckley : The cost was $50 million to $100 million for a retrofit. Given that we're talking about an aluminium smelter—the paper has references—I think the cost of retrofitting six smelters across India, for example, was a $400 million investment in aggregate. It is probably a fifth to a half the price of a battery, but the flexibility in grid services is phenomenal.

Mr PITT: But I would suggest that that is directly proportionate to the size of the smelter and what its replacement costs are.

Mr Buckley : Absolutely. The owners of that technology are a private company in New Zealand. I'm not advocating for their technology. I actually evaluated it because I though that that's about heavy industry becoming a key enabler of the technology transformation and solving that last 25 per cent question that you are focused on, absolutely rightly, that NextEra hasn't addressed. They said, 'Let's just do the easy yards. Let's just get to 70 per cent. It's cost effective; let's do it tomorrow and then worry about the last 25 per cent.'

I would also emphasise that Dr Alan Finkel has referenced the critical importance of the hydrogen strategy for Australia. I see hydrogen playing a major role in heavy industry. In fact we saw ARENA fund two studies at Incitec Pivot last week. Those studies were all about using variable renewable energy in Queensland at existing ammonia nitrate facilities to effectively start decarbonising heavy industry at no cost to them. That technology hasn't been firmed up. But to the earlier question about whether I see the government's role as being to invest in new technologies—categorically.

Mr PITT: The Finkel report also only allowed for four hours worth of backup in the costing. That has been confirmed any number of times. The ACCC report also identified the Queensland government as playing the market to increase their profit share. So I'm not sure that they're great examples.

Mr Buckley : Sorry—what's not a great example?

Mr PITT: In terms of what you are putting forward, we have individuals out there who are maximising their profits, which is not to the benefit of any Australian consumer. What we are looking at in this inquiry is about what potential there is for this type of industry moving forward. The examples you've put forward—I've said this a number of times to the committee—we have to compare applies with apples. Quite simply, you cannot compare something which runs during the day or when it's windy with backup of just four hours with something which runs based on how long the fuel is available. They are not exactly the same. So we need to ensure that we look at that on a level playing field. I'm am absolutely technology agnostic. We need to ensure that that happens.

Mr Buckley : I agree with you. I would say we need to explore, technology agnostic, a multitude of approaches. There is no silver bullet. The idea that the Tesla battery is going to solve the world's problems—a $100 million dollar investment is about 0.01 per cent of the investment in the Australian energy system. The idea that 0.01 per cent of the energy system can generate electricity to hold the whole Australian economy up is missing. It's not a relevant comparison. We need pumped hydro storage; we need solar thermal; we need vastly expanded grid capacity; molten salt for solar thermal; hydrogen. General Electric and Siemens talk about Power-to-X. It doesn't have to be hydrogen; it could be any number of new technologies We need fast-ramping gas. We potentially need fast-ramping coal.

Mr PITT: Just on gas: are you suggesting that the states lift their moratorium on gas exploration and development of their own gas?

Mr Buckley : Categorically not. We've seen Australia's gas production treble in the last decade, and we've seen Australia's wholesale price of gas treble. Economics 1.01 says that if you increase supply you reduce the price. We've trebled supply and we've trebled the price. The bottom line is that the Australian gas market is being run by a cartel of foreign players. It's being gamed to buggery at the cost of every consumer. To your point: if we want to lower the cost of Australian gas to Australian consumers—for 50 years it was $3 to $4 wholesale. It still costs $3 or $4 or $5 wholesale. Let's bring in a $5 price, supply Australian industry, supply the Australian consumer with Australian gas to them at $5, and then export what is surplus; not export the base and then make the Australian pay export prices.

Mr PITT: So you want domestic gas reserved, but not in the states which have a moratorium on exploration—is that the proposal?

Mr Buckley : My proposal would be that we replicate Western Australia's gas moratorium and we make Australian industry competitive by using existing cheap Australian gas, as it was for 50 years, for Australian industry, and we stop taking direction from foreign gas cartels that run our market. The idea that we're allowing the four major global fossil fuel companies to dictate Australian energy security issues, to me, is farcical. They have gamed us to buggery, and we wouldn't be going to them to get advice on how to fix it. I would be looking at using Australian resources—gas production has trebled in the last decade. We don't need more production; we need to use the existing production for our industry to make our industry competitive again. Sorry, I do feel strongly about that.

CHAIR: Before I go to Ms Stegall, I want to clarify something and make sure that your position hasn't changed since we've been speaking. You were talking there about the importance of being technology agnostic. I thought we started this conversation with you saying that nuclear technology should not be considered. Should we technology agnostic, or should we not be?

Mr Buckley : As Mr Weller said, the cost of solving nuclear waste in perpetuity or until technology works out a solution is prohibitive. The cost of a nuclear disaster is prohibitive. So when I talk about technology agnostic, I talk about loading all the cost in. We can risk adjust the cost. Let's put in the carbon emissions; let's put a price on that. Let's remove all of the Renewable Energy Target subsidies for renewables. Let's level the playing field. All the externalities have to be factored in. At the end of the day, the chance of nuclear succeeding in that environment, in my view, is almost 0—but, who knows? In 10 years time, maybe an SMR works, so let's consider it when there is even a single commercially deployed example offshore. Then we need to think about what the cost will be to the Australian taxpayer of skilling up the Australian workforce to do it safely. But if we look at it as technology agnostic and it's fully costed, I'm all for it.

CHAIR: Sorry, I'm still confused. You consider technology agnostic as a level playing field, then finish by saying you're all for it. On one hand I hear you say we need to be technology agnostic, but on the other hand I feel as though there's a big 'but' there. 'We need to be technology agnostic but for one type of technology.'

Mr Buckley : No, all technology—let's load in the external cost of all technology and quantify them.

CHAIR: That is including nuclear.

Mr Buckley : Yes, because how you—

CHAIR: Okay. Thank you. So you believe we as a country should be technology agnostic, and that includes the consideration of nuclear energy.

Mr Buckley : No, because we cannot internalise the cost of a nuclear disaster. We cannot internalise the cost on a private company of waste disposal.

CHAIR: With respect, isn't that the very antithesis of being agnostic? Either you're agnostic or you're not, right?

Mr Buckley : I'm not agnostic about wanting a planet either.

CHAIR: So you're saying we should be technology agnostic in this country when it comes to energy, but then you go on to say, 'But we shouldn't be considering nuclear energy.'

Mr Buckley : No, I didn't say I'm technology agnostic about energy; I'm saying I'm technology agnostic when you consider all the external costs of each type of technology—

CHAIR: And do you apply that to nuclear as well or not?

Mr Buckley : If it can be done without subsidies and if it can be demonstrated that it's credible and safe and that the cost of the externalities, even if they're a really remote probability—let's look at Fukushima. Fukushima bankrupted TEPCO overnight. How do you actually internalise that into a financial structure? Yes, I am caveating the words 'technology agnostic', because you can't use a financial market to price in an extreme cost event. So maybe I'm not 100 per cent technology agnostic. I actually think we need to evaluate sensible, commercially deployable technologies that are available today or in a sensible time frame.

CHAIR: So you're technology agnostic with the exception of nuclear technology.

Mr Buckley : No, because I consider the idea of having to move hundreds of millions of people for one disaster a cost that is actually unviable for the financial markets to quantify.

CHAIR: My read of that is, with the exclusion—

Mr Buckley : You're welcome to read it anyway you like.

CHAIR: I can't get a straight answer out of you, with due respect. You keep talking about Fukushima. You have based most of the discussion here today on being technology agnostic, but at the same time you're saying that nuclear energy should not be considered. For me, those two can never reconcile. You're either technology agnostic or you're not.

Mr Buckley : You're welcome to any view you like.

Ms STEGGALL: I might suggest that maybe the chair doesn't like the answer! The point is that SMRs are being touted as this big solution—that, somehow, we have some new prospect on the nuclear stage. It's been put to us in evidence that large-scale is just not viable and would be ridiculous, but somehow SMRs are this newfound technology that's going to resolve the problems in 10 to 15 years time. Is it correct to say that this is not new technology? In fact, SMRs have been around for some time. How can we then explain this apparent disconnect between this idea that, all of a sudden, SMRs are the solution, yet they are an unproven technology? With all these supposed benefits of small modular reactors, why is there slow uptake in a commercial sense around the world?

Mr Buckley : Given there is not a single small-scale reactor deployed commercially in the world anywhere, I can't actually analyse them and I can't analyse the commercial cost. What I would do, though, is revert to experts who I'm familiar with. Page 28 of last month's World Nuclear Industry status report said that it is evident in 2019—versus the 2017 review—that SMRs are even less competitive than large nuclear plants, which themselves are increasingly uncompetitive. They detail Argentina, Canada, China, India, Russia, South Korea, America and the UK all talking about SMRs, and they all say that no-one is expecting to commercialise a single unit within the next five years. In the mid-2020s, America might have a single deployed unit, and that's with massive government subsidies. At the end of the day, I can only revert back to the experts in the industry. This has been around for decades. It's been talked about, as you said, for decades. Their summation is there's been no progress in the last two years of any substance. In fact, it's less commercially viable than it was considered two years ago.

We're talking hypothetical. No-one knows, because it's never been done, and it's not being done in Australia. So I would say let's defer the debate for a decade. Let's see if there's one single operating SMR and, when there is, let's evaluate whether it's commercially viable, whether it's able to be deployed safely in Australia, whether we have the skilled workforce to implement it and whether it can stand on its own two feet. That's a discussion for a decade from now, when the proponents of this great technology—I mean, people have been talking about cold fusion for decades as well, but it's no closer to fruition. It's always a decade or two away.

Ms STEGGALL: That gets us back to the moratorium. What are the prerequisites for the circumstances of lifting it? You've had the debate with the chair in relation to agnostic technology. Your view is ultimately that this isn't an existing technology that's operational as such. It's not a technology to put on the starting lane by lifting the moratorium, because it's simply not possible.

Mr Buckley : We couldn't put it on the starting line, correct.

Ms STEGGALL: But also the downside would be that the impact to investment would be significant when it comes to firm renewables. The risk we run for the next five to 10 years as a nation and for this government would be considerable.

Mr Buckley : I consider it considerable. I think we need energy policy certainty, and we need to stop debating hypothetical technologies when you do actually have to get on with it now. Let's leave it to the experts. I would take Dr Finkel's view and I would take the ESB's view. I would take AEMO's Integrated System Plan. I don't see any mention of nuclear in there. I would implement the least-cost technology agnostic approaches that can be commercially deployed today in the Australian context. I'd let the market get on with it. The markets in the last two years have shown that, as soon as they have a whiff of an opportunity, they will deploy tens of billions of dollars in the lowest-cost sources of new supply and are very confident that they can firm that supply through a range of existing technologies. I don't hear any CEOs of Australian energy companies advocating for their balance sheet to be deployed in nuclear.

CHAIR: In your response to Ms Steggall's question, are you confirming that you're concerned that, if the moratorium were lifted, less investment might go to renewables?

Mr Buckley : I think Australia, as an energy investment destination, would be destabilised by continued debate about what our energy policy is. I think the government needs to actually form an energy policy or defer to our experts—as I've said, the ESB—and take the policy that AEMO has already put on the table and let it run.

CHAIR: Sorry, maybe I misheard, but I thought you were agreeing that a risk of lifting the moratorium on nuclear energy would see less investment allocated to renewables.

Mr Buckley : I think that would be a likely outcome, yes.

CHAIR: And that would be of concern?

Mr Buckley : Yes, because the less investment we have in new generation, and in the lowest-cost sources of new generation, the more it will cost Australian taxpayers. The longer we wait, the longer we stall investment. Bloomberg New Energy Finance has talked about a massive reduction of new capacity investment in the last six months, so we need to let investment deliver the least-cost solution.

CHAIR: I'm just looking at the letter at the start of your submission. You conduct 'research and analyses on financial and economic issues related to energy and the environment'. Who funds IEEFA?

Mr Buckley : I am funded 100 per cent by Australian philanthropy. I'm Australian. My Australian team is entirely Australian. IEEFA has offices and staff in seven countries around the world. We've got 25 analysts and we're funded internationally by philanthropy. I can categorically say that I have no vested interest in any technology and I am therefore free of conflicts. I work on public interest research and I've got 30 years experience. I was managing director, head of equity research, at Citigroup—the biggest bank in the world at the time—for 17 years. I know how to do financial analysis, and I'm looking at Australia's national interests. I'm free of conflicts, in my view.

CHAIR: Thank you, sir. I'm just looking at the website now. The fund has listed the Rockefeller Family Fund, Energy Foundation, Mertz-Gilmore Foundation, Moxie Foundation, William and Flora Hewlett Foundation, Rockefeller Brothers Fund.

Mr Buckley : All those foundations provide money for public interest research, and they fund IEEFA. We don't disclose my Australian funder, because he has been subject to punitive Australian government inquiries and he would rather remain anonymous. He funds 100 per cent of my work.

Ms STEGGALL: Chair, I'm going to put in an objection formally on the record, because we haven't required funding disclosure of all the other components that have given evidence, and question marks could certainly have been raised.

CHAIR: No, only anything on the public record—I would agree entirely. Anything private should not requested; I'm not requesting that. I support entirely what you're saying there.

Ms STEGGALL: I'm just raising that as your line of questioning—

CHAIR: What I'm going through is not unlike your line of questioning this morning which went to people's independence based on the positions they were putting. I'm not all that familiar with IEEFA. Based who is publicly listed—this is not a private question—would I be right, Mr Buckley, in saying that these are US funds focused mainly on renewables or fossil fuel divestments?

Mr Buckley : By history, the Rockefeller family is the Standard Oil dynasty.

CHAIR: I might be wrong. It's just a question.

Mr Buckley : They have made all of their money from oil, so they're actually historically 100 per cent invested in oil. The family has divested from oil because they believe climate change is a globally pressing imperative. To focus on the Rockefellers, because that was who you asked about, they invest in four areas. They do public education, public health and public energy, and they've got one other factor. I only work on the energy side. Given they don't fund me, I don't focus too much on what they do. We disclose some, with their approval. But Rockefeller has, as far as I'm aware, no great investment in renewables. They certainly have no conflicts of interest that I'm aware of. The family, the descendants of Rockefeller Standard Oil, which is now Exxon, are interested in public advocacy on public issues. You're welcome to interrogate them on—

CHAIR: No, thank you very much.

Mr Buckley : I'm not aware of them owning a single wind farm, but they might. I have no idea. They certainly don't talk to me about it.

CHAIR: Colleagues, we still have five minutes, if there's anything else. Otherwise, we might wrap it up.

Ms STEGGALL: If we've got five minutes, I'll use them. We've had a number of submissions that say that this is putting the horse before the cart, in that we have no long-term plan. A lot of the proponents for lifting the moratorium so that nuclear may be considered base their view on decarbonisation. What would your view be? One of the concerns you've certainly raised about lifting the moratorium is that it would be destabilising because we would have further debate and further uncertainty. In terms of what would be the prerequisites or circumstances for certainty for a stable debate so that there could be that maximisation, what would you see as the key prerequisites for a stable energy policy?

Mr Buckley : I would think an alignment of interest at the state and federal level by putting a price on the key externality that's left unpriced in Australia—by that I'm referring to carbon emissions. If we were to put a price on carbon emissions, that would send a market signal. Then, at the federal level, we probably need bipartisan support. That means actually coming together from both sides of the House to look at Australia's national interests.

I'll go back: for 50 years Australia had the lowest wholesale electricity prices in the world. We had the lowest gas prices in the world for 50 years. It's only in the last decade that we've seen the tripling of gas prices domestically to way above export parity price, and we've seen a doubling or tripling of wholesale electricity prices. That's destroying our competitive advantage in heavy industry and in light industry and the consumers are paying for it. I think we need to actually stand back, decide on a platform, ask the experts—ask the ESB what they think the platform should be. They're the ones the government actually asked to create a platform. Let's let them implement it. The Finkel review put forward 50 recommendations. Let's implement those 50 and let's get on with it. A plan is better than no plan. A plan that's going to deliver the least cost, sustainable, reliable electricity system in the long-term for Australia would be great.

Ms STEGGALL: You said 'bipartisan support'. The most recent near-bipartisan support was the NEG, until about mid last year. Is it your view that that's the kind of arrangement or system that should be in place?

Mr Buckley : I think the fourth best option is better than no option. I would go for the NEG in the absence of any other better solution. If we eliminate the first three, then take the NEG, resurrect it and get on with it. Any policy would be better.

You can't invest for 20, 30, 40 or 50 year time frames without government policy certainty. We need investment. At the end of the day what I would be advocating is that new renewable energy is the least-cost generation today, and we know we've got an ageing coal fleet. We're very, very dependent on coal for 70 per cent or so of our generation. It's going to expire. We need to plan and invest today for the expiry of those end-of-life coal plants. We've seen, in South Australia, the implications of a coal plant coming to its end of life without a viable transition plan. The proponent just upped and left and closed the plant and the South Australia people were left exposed, so we need a plan—bipartisan would be great. We need state and federal as well.

CHAIR: We have a couple of minutes, Mr Weller, if you would like to make a comment?

Mr Weller : Can I hand this out? It's just a graph from the IPCC that shows what we need to do to remain with some chance of achieving a liveable climate. In my opinion—

CHAIR: Before you continue, Mr Weller, I'm sorry, could I please have a motion put by a member that the document presented by Mr Weller be accepted as an exhibit?

Ms STEGGALL: I put that.

CHAIR: Thank you, Ms Steggall. There being no objection, it is so carried.

Mr Weller : It's a graph from the IPCC. I'll be brief. Basically, it shows the pathway we need to take from today, from 2019-20, in terms of global cuts in emissions. If we're going to achieve that we can't waste our time talking about nuclear. We've got to have a policy—bipartisan would be good—that takes into account the externality of carbon emissions. There is nothing in the Australian government policy, currently, that will really deal with this issue. We have to reach a 50 per cent cut in 10 years. That's not, 'Deal with it 10 years from now.' It's, 'Deal with it now in order to reach those cuts in 10 years.' That's a very important point that people need to remember about this so-called 'within 12 years we've got to deal with climate change'. It's now that we've got to deal with it in order to reach the required cuts within that 10 year period. I will leave it at that.

Ms STEGGALL: Do we interpret that to mean that your prerequisite circumstance is, in fact, a goal from a decarbonising point of view?

Mr Weller : Yes. A price on carbon, as Tim suggested—some sort of mechanism to drive this change. We need to have change that's driven by our government policy.

I'll just read one short quote from a report called United in Science, released by the UN:

The existing stocks, in combination with what is currently planned and under construction … account for a significant share of the available carbon budget for a 2 °C target, and would make a 1.5 °C target infeasible.

Right? We're already in a situation today, with currently planned construction, where we're going to overshoot the 1½ degree target. Unless we pull our finger out, metaphorically, we're not going to make two degrees, and the changes to our environment and the changes to our climate will be horrific. It's as simple as that. Everybody here who's in government needs to take that very seriously, because now is the time to act. We have delayed for 30 years. We've mucked around on this issue and have not taken proper action.

CHAIR: Thank you, Mr Weller and Mr Buckley. I thank both of you for your attendance here today. If you have been asked to provide any additional information, could you please forward it to the secretariat. The committee may have additional questions for you to respond to on notice, which will be sent to you from the secretariat. You'll be sent a copy of the transcript of your evidence and will have an opportunity to request corrections to transcription errors.