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The end of coal is approaching 3 times faster than anticipated. It is imperative that governments accept it, and support a just transition’.
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The end of coal is approaching 3 times faster than anticipated. It is imperative that governments accept it, and support a just transition’.

The end of coal is coming 3 times faster than expected. Governments must accept it and urgently support a 'just transition'


Coal is likely to be completely gone from Victoria’s electricity system by 2032 with most other parts of Australia not far behind, a report from the Australian Energy Market Operator (AEMO) declared last week.

The report is called the 2022 Integrated System PlanThis confirms what many of us involved in energy policy know: the end to coal is near, and it may surprise some industries and governments.

The Integrated System Plan (ISP) is effectively the planning “blueprint” the market operator publishes to help industry and policy makers assess how Australia’s electricity system might evolve. It’s an incredibly important document for guiding where and when investment is needed to unlock new renewable resources to meet demand.

Given ISP’s prediction for the rapid closure of coal-fired power stations, it’s critical governments don’t stick their heads in the sand. Refusing to acknowledge the imminent end to coal-fired generation is not in the interests of coal workers and their communities. They urgently need support.

What is AEMO predicting for?

The most important aspect of the ISP is that what used to be called the “step change” has now become the “central scenario”. For the first time, this central scenario is consistent with Australia’s commitment under the Paris Agreement and limiting global temperature rise to under 2℃.

The ISP is forecasting that huge volumes of coal will be retired in the next ten years, including all brown coal and two-thirds of black coal, and significant investments in new renewables and “firming technologies” (such as batteries, gas, and pumped hydro) will take their place.

‘Firming’ technologies like pumped hydro are critical to ensure Australians have electricity when wind and solar aren’t available.

Around 14 gigawatts (GW) of coal is now assumed to be exiting the National Electricity Market this decade – more than three times the amount of coal retirements the industry has announced.

Effectively, AEMO is stating (yet another time) that the incumbent industry is likely to be caught by surpriseBy the speed of the transformation.

It’s not just an explosion of renewables investment that AEMO predicts. For backup generation, there will be an additional 9GW of gas fired generation and 620GW hours of storage (provided via batteries or pumped hydro).

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The demand for electricity is expected to rise to 350 terrawatts by 2050. This includes the uptake of electric vehicles, conversion of natural gas heating to electric in homes and electrifying many industrial processes like low-emissions Steel and Aluminium.

All of these developments will require major grid overhauls. To unlock $29 billion worth of investment benefits, the ISP estimates that around A$12.5 trillion in transmission spending is required.

Why is coal being left behind

Two main factors are driving this significant coal-to-new technology substitution.

First, the cost of these technologiesContinues to fall quickly consumers are voting with their feet. Some of Australia’s largest and most iconic businesses are increasingly buying 100% of their energy from renewable resources, including Woolworths, BHP and Coles.

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Second, state governments filled the void left behind by a lack of a nationally consistent climate and energy policy and are now implementing ambitious policies that will drive renewable energy uptake and firming.

The most ambitious is the NSW government’s 12GW energy roadmap, which helps to prepare for the retirement and investment in new capacity.

Tesla charging station

Electricity demand is expected increase to 2050.

What should governments do?

It is critical governments focus on a “just transition” to these new technologies, and provide support to communities and workersMost affected, such as those living in the Hunter or Latrobe Valleys.

Structural adjustment policiesThese regions need financial support, such as job placements or relocation assistance, to ensure they have the best opportunities. Workers will be able to transition to new careers by retraining prior to closings. new or related industries.

Access to clean energy should be available to everyone who uses energy. The greatest barrier to taking part in the solar and battery revolution right now is owning a home.

The important policy debate was largely dominated by the governments. Australian low-income and rental households should be prioritisedAny future policies that encourage the use of solar and batteries storage should be included.

Roofs with solar panels

Policy debates on renewables have left rental homes out.

It is also important that governments ensure that the private sector, and not consumers, bears the risk of investing in poor projects. As a result, government is increasingly taking on substantial risk for consumers by underwriting renewable energy and investing in large multi-national companies involved in energy.

Some economists (including ours) have been providing these services for some time. alternative modelsFor governments to achieve the same goals, but with a greater focus on reducing consumer risks.

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Given the surge in households and businesses voluntarily buying renewable energy, it’s important consumers know what they’re getting. The Clean Energy Regulator is doing interesting work in this area by creating an emissions and renewable energy calculator. transparency registerAs part of the national greenhouse-energy reporting framework.

If governments really wanted help, they could introduce a carbon price. This policy is considered political poison. However, a carbon price would make it possible to reach this future in a more cost-effective and orderly manner.

The end of the coal era

The ISP predicts a cleaner and better future. Australia has great opportunities from moving beyond the coal age and into the age of efficient renewable energy, as we’re blessed with some of the best renewable resources on the planet

We have a lot of potential to benefit from new industries like green hydrogen and mineral processing, as global leaders are increasingly focused on reducing emissions. Both major political parties at the national level have targets that don’t really push beyond what AEMO now thinks is the status quo.

The stone age didn’t end because of a lack of stones. And the coal age is ending despite an abundance of it – whether governments believe it or not.

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