Australia’s Energy Debate Just Went Nuclear

By ,

Nothing major happened in US markets overnight. Stocks finished a volatile session higher, with the Dow Jones rising 0.44% while the S&P 500 increased 0.37%. Trade ‘worries’ offset the view that strong US economic growth will continue to support US company earnings.

Oil prices rallied strongly. Brent crude was up 2.65% and closed at US$79.44, just below the highs reached in May. Can the rally continue to fresh, multi-year highs?

In Australia, the debate on energy continues. This is interesting, from The Australian:

Victoria will emerge as Australia’s “Capital of Renewable Energy” under an Andrews Government plan to build six new wind and solar farms powering up to 650,000 homes.

As the Victorian government chases an ambitious renewable energy target of 40 per cent renewables by 2025, the government has approved six new solar and wind projects under a reverse auction system to secure new, renewable energy supply.’

Who needs the Paris Agreement when you’ve got Daniel Andrews in charge?

Victoria’s future energy supply is in a precarious position. Bass Strait gas reserves, which have long powered the state, are in decline. Additional gas needs must now travel down the pipeline infrastructure from up north.

For a state with Australia’s fastest population growth, it’s not a great situation to be in. And now the state government is rolling the dice on renewables? What happens when the sun doesn’t shine and the wind doesn’t blow?

Let’s hope battery storage technology improves significantly in the years to come.

The other question is one of cost, which is a topic Labor governments don’t concern themselves with too much. The new projects will cost $1.1 billion. In addition, the government has announced subsidies of $1.34 billion (leading up the election, of course) to encourage the households to take up solar hot water, rooftop solar panels and batteries.

In other words, the government is taxing, or borrowing, to encourage use of renewables because the economics don’t stand up on their own.

If you’re trying to reduce energy costs, that shouldn’t happen through the use of taxpayer funds. Someone is actually paying to reduce prices, so it’s not a lower cost at all.

It’s a classic Labor line. ‘We’ll make your power prices lower (by taxing someone else to pay for it)’.

Revealed today: How Aussie investors could cash in on uranium’s next blockbuster breakout. Free report available now.

Renewables are a part of the solution… but not THE solution

We need a mix of energy to maintain reliability and keep prices down (ensuring economic productivity).

Alan Jones, in a segment on Sky News last night, reckons Scott Morrison needs a ‘game changer’ to win the next election. And that game changer, he says, is energy policy. You can view it here, starting at the 1:40 mark.

Jones says that under the Labor party’s target of 50% of renewable energy by 2030, we’d need to invest $100 billion in new wind, solar and geothermal capacity. That’s a big energy bill.

Jones points out that there are 1,600 coal fired power plants under construction in 62 countries around the world. Australia, despite having an abundance of high quality coal, has none.

He also says that we have 40% of the world’s nuclear energy reserves, but no nuclear power plants. In contrast, as of late 2017, 30 countries operate 450 nuclear reactors. There are 60 nuclear power plants currently under construction in 15 countries around the world. The US generates around 30% of the world’s nuclear energy. We are the only G20 country without nuclear power.

But Australia isn’t even looking at it as an option, despite being in the midst of an energy crisis. The Finkel Review into energy didn’t even look at nuclear.

Jones then quotes NSW deputy premier, John Barilaro, who said in a speech last year:

We know we have a power crisis. That energy costs are crushing businesses, farmers and families. Yet we don’t talk about nuclear energy, guaranteed to power millions, lower bills, and next to no emissions. I know I’ll cop grief, because I’m talking nuclear.

Every year, Jones says, Australia exports 400 shipping containers of uranium, which is enough to generate all of our own electricity, with no emissions. Instead, it helps to provide clean energy for other countries, in the same way our coal does.

The great uranium comeback: Discover how you could take advantage of the next big resource rush today. Download free report now.

So we are happy to sell coal and uranium to our competitors, and for them to use it to help their energy costs and emissions, but it’s not good enough for us?

What a joke. Consecutive governments have for too long sold us out to global technocrats telling us what to do. We’ve been anaesthetised by rising house prices and haven’t noticed the complete undermining of our economic sovereignty.

If you don’t get your energy mix right, your economy ceases to function in a productive manner. And without productivity increases, there are no increases in standard of living.

As I’ve been saying for the past few weeks, there are investment moves you can make to potentially offset some of the energy pain inflicted by successive governments.

There is a new bull market emerging in this form of energy. Alan Jones knows it. Subscribers to my investment advisory, Crisis & Opportunity, know it too.

Click here to find out more.   


Greg Canavan,
Editor, Crisis & Opportunity

About Greg Canavan

Greg Canavan is a Feature Editor at Money Morning and Head of Research at Fat Tail Investment Research.

He likes to promote a seemingly weird investment philosophy based on the old adage that ‘ignorance is bliss’.

That is, investing in the Information Age means you have all the information you need…

Exploring the Investment Outlook of Fossil Fuels

In today’s Money Morning…abandoning fossil fuels will be costly…capital cycles and underinvestment…fossil fuels and the all-or-nothing approach…and more…

India Could Ensure the Commodity Boom Has More Room to Run

In today’s Money Morning…commodities are the obvious highlight…EV demand sets the stage once more…a bigger and better battery metal boom…and more…

Europe’s Dash from Russian Energy a Boost for This Sector

In today’s Money Morning…oil prices have been rising again on supply concerns…it’s been a supply-demand tug of war in energy markets…diversifying away from Russian energy…and more… I hope you enjoyed the Easter break with family and friends. Things have certainly been interesting in energy markets over the long weekend. US natural gas prices spiked on … Read More

The Biggest Oil Trader in the World Dumps Russia — So What’s Next for Energy?

In today’s Money Morning…BP isn’t the only one ditching Russian oil and gas…battery beneficiaries…going nuclear for good…and more…

This Investment Bank Says the Commodities Boom Is Just Getting Started

In today’s Money Morning…the boom still isn’t fading…a record-breaking rally…overlooked and undervalued…and more…

The War in Ukraine Has ‘Turbocharged’ This Sector

In today’s Money Morning…it’s been pandemic déjà vu over there…high gas prices are making green hydrogen more attractive…there’s another factor that could bring green hydrogen costs down…and more…