Just transition in the Hunter Valley region

At a LEAN (Labor Environment Action Network) Zoom meeting recently I was privileged to witness a presentation from Tim Lang, an environmental activist in Newcastle, active through the NSW branch of LEAN and a co-founder of the Hunter Jobs Alliance. This post of 03 November, 2020 on the National LEAN site recorded the Hunter Jobs Alliance Launch:

    UNLIKELY STEP: That’s how AMWU official Cory Wright describes the joining of union and environmental groups to form the Hunter Jobs Alliance. With him from left are Tim Lang, Justin Page and Georgina Woods.

    A new alliance of union and environment groups in the Hunter will officially form this week with the aim of ending the failed “jobs versus environment” dynamic that they say is holding the region back. The Alliance has been spearheaded by the NSW Branch of the Australian Manufacturing Workers Union, working in partnership with Labor Environment Action Network and state and regional environmental groups.

    The Hunter Jobs Alliance is an initiative of thirteen local and statewide unions and environmental advocacy groups in the region and will officially endorse and lodge its constitution in Maitland on Tuesday 3 November.

    NSW Secretary of the AMWU, Cory Wright said, “Our union has thought long and hard about how we might intervene effectively in the fractured politics of energy that are short-changing workers, regional communities and future generations.

    “We have taken the unlikely step of building a coalition with other trade unions, community and environmental groups to start the long process of advocating for industry and regional investment and the first thing we’ll be pushing for is a local statutory authority that can assist the region in this process.”

At that stage Tim Lang was spokesperson for the NSW branch of LEAN, Justin Page was NSW Secretary of the ETU and Georgina Woods was a Newcastle environmentalist. They already had a Hunter Jobs Alliance declaration and a snapshot of projects, which included converting Tomago aluminium smelter to run on renewable energy, public investment to retrofit 264,000 homes in the Hunter with heat and energy efficiency technology plus solar and batteries over five years, and a concept of making building materials out of 150 million tonnes of fly ash waste.

The founding groups were:

    Australian Manufacturing Workers Unions NSW Branch, Electricity Trades Union NSW & ACT Branch (ETU), United Workers’ Union;The Australian, Municipal, Administrative, Clerical and Services Union NSW & ACT Services Branch (ASU), Community and Public Sector Union (CPSU), National Tertiary Education Union (NTEU); Teachers Federation NSW Branch, Independent Education Union of Australia NSW/ACT Branch, The New South Wales Nurses and Midwives Association (NMA), Labor Environment Action Network is a Founding Organisation, Lock the Gate Alliance, Hunter Community Environment Centre, The Nature Conservation Council of New South Wales.

The last-mentioned is an umbrella body for environmental groups in NSW.

On origins, a greenleft article assigns the authorship of the Alliance to Steve Murphy “former New South Wales and now national secretary of the Australian Manufacturing Workers Union (AMWU)”.

An interview with Murphy Australia Needs a Working-Class Environmental Movement in Jacobin makes clear that the idea was born at a meeting of AMWU coal mining delegates called by Murphy in 2018. He invited Felicity Wade as a guest speaker. Wade was and is National Co-convenor of LEAN, but was invited in her capacity of NSW LEAN Co-convenor. Wade spoke, inter alia, of the working class roots of Labor, and the Green Bans of the BLF in the 1970s. Over a coffee after the lecture, the Hunter Jobs Alliance movement was born.

Now the Alliance has a very attractive site and a Facebook page. I strongly recommend this December 2020 YouTube Hunter Jobs Alliance, with Steve Murphy and Felicity Wade.

Murphy takes the position that capital’s modus operandi is by nature exploitative, so workers need to take their own action. He says it helps if people act without seeking credit for their action, because when credit is sought the action becomes political at that point.

Wade talks of the need to build social capital and a social licence for green action. Rather than just be granted a seat at the table she wants to create the table.

They have been wonderfully successful. Community groups, local and state government, the university, business and industry have come on board. The State Government has recently chipped in with $25 million from the Royalties for Rejuvenation program.

Now they are seeking the establishment of a ‘Hunter Valley Authority’ to secure the region’s prosperity.

I was stunned that Tomago really is considering using renewable energy when their contract for coal-fired power runs out in 2028. CEO Matt Howell had said repeatedly that baseload power is necessary to run aluminium smelters, and no smelter in the world ran on renewable power.[See Update below]

I had two questions, one about the relevance of Joel Fitzgibbon, the second as to whether Angus Taylor would try to subvert Tomago’s choice of renewable energy.

Lang was diplomatic about Fitzgibbon, but it is clear that he is completely irrelevant to what is happening in the Hunter. Not so to the media, and some in the caucus see some future in coal and gas, a complex issue which I won’t attempt to deal with here.

As to Angus Taylor, he will always intervene to limit renewables and prolong the use of fossil fuels, as Cleantechnica observe in Angus Taylor & His Multiverse of Madness.

That too is for another day but Giles Parkinson at RenewEconomy says After three years, Taylor is finally succeeding in his promise to stop wind and solar

I prefer the take by Tim Nelson and Joel Gilmore from Griffith University As the world battles to slash carbon emissions, Australia considers paying dirty coal stations to stay open longer.

Whichever is nearer the mark, states should beware of an environment minister pretending to cut emissions while prolonging the use of fossil energy, and willing to use the power of the purse.

In summary, transition to a new, more sustainable economy and social relations is clearly happening in the Hunter. For me the big message is that while state actors need to be supportive, initiatives best come from the community itself. The situation in the Hunter is unique, but that is the point. Every community needs to find its own strengths and path forward. Expecting political parties to lay everything out on a platter is impossible and unreasonable.

Update 3.9.21 on Tomago:

During a heatwave on Friday 10 February power supplier AGL turned off the power supply to run the potlines at Tomago smelter in order to avoid wide-spread blackouts, as reported by the ABC. Tomago consumes about 11% of NSW power supply. However, if the potlines shut down for about three hours or more, they gum up or ‘freeze’ and can’t be started again.

In a submission to the Australian Government Review into the Future Security of National Electricity Market Tomago made clear that they saw the intermittency of wind and solar power as fundamentally problematic, together with the need for consistent low-cost pricing instead of the increasing peaking of spot prices since renewable energy entered the NEM (National Electricity Market). At the time the CEO was represented in the media as fundamentally opposed to renewable energy. A closer reading suggests that he identified issues that did indeed need to be resolved.

At the time an AEMO report revealed that the outages in the power system on that afternoon were mainly due to gas and coal plants failing or underperforming.

In November 2017 an Australia Institute report found gas and coal to be a liability in the entire heatwave that rolled over the southeast of the continent. In fact 3600 MW, or 14%, of coal and gas generation failed during the February 2017 heatwave. Solar actually prevented far worse disruption and load-shedding. So the report called for the National Energy Guarantee (NEG) to require “heat safe” back-up for coal and gas plants. Power from renewable sources could be used to support existing coal power.

Then came the kerfuffle over AGL’s plans to close Liddell coal-fired power station and replace it with a portfolio of projects, including 1600 MW of renewable power, 750 MW from high-efficiency gas power, 250 MW from a big battery, and 100 MW from demand response. Kriti Nagrath, Senior Research Consultant, University of Technology Sydney, ran the ruler over the plan and found AGL’s plan to replace Liddell is cheaper and cleaner than keeping it open.

Meanwhile the Federal Government was strenuously trying to keep Liddell open as Josh Frydenberg lobbies AGL board to force Liddell power plant sale.

Also, in May 2017, Snowy 2.0 was announced, so effectively the market had been transformed with the advent of new players, comprising batteries, pumped hydro, gas peakers, and ‘demand response’, where consumers are paid to use less power. Last year Giles Parkinson at RenewEconomy suggested that Australia’s big smelters could also be giant batteries, and go green at same time. Already in Canada and Norway smelters are working on a new business model which continually switches operationally between power supply and smelting according commercial opportunity, so they:

    can make an objective, value-maximising choice between ramping up aluminium production (and using more electricity) when aluminium prices are attractive and curtailing production (and selling surplus electricity) when that provides a better return.

Returns from the power system can be substantial, with spot prices spiking up to the cap of $14,700 MWh. In the case of Tomago, however, significant investment would be required to facilitate switching.

The Commonwealth Government under Minister for Energy and Emissions Reduction Angus Taylor succeeded in completely disrupting AGL’s plans, and through ownership of Snowy Hydro announced the construction of a gas peaker at Kurri Kurri which could run as little as 2% of the time. The development was welcomed by Tomago to maintain steady power supply, but condemned by others as a shocker because, firstly, firmed renewables are now cheaper than fossil fuel generation, and secondly, the IEA (International Energy Association) and everyone seriously concerned about the planet knows that we should be constructing no new fossil-fired power.

In fact people with a vision looking forward understand that opportunities present for Australia, as one of the world’s best provinces for harnessing renewable energy, should plan for an expansion of minerals processing. LEAN’s Rebuilding Australia pamphlet suggests:

    If we smelted half Australia’s alumina exports, we would require 4 or 5 new aluminium smelters and increase current aluminium production by seven times. We would increase electricity demand nationally by one quarter.4 That’s a lot of build out of solar and wind to keep people in jobs for the next decade.

Tomago has obviously been talking with the people in the Hunter Jobs Alliance before their launch, or it would not have been identified as a project. Looking to use renewable energy when their contract runs out in 2028 is a major step forward. Moving to a new business model by employing demand response could be a vital part of a major pivot towards the reindustrialisation of Australia.

See also:

21 thoughts on “Just transition in the Hunter Valley region”

  1. Thankyou, John, and I’m glad the software the blog runs on approves your comment!

    I think everyone who is remotely relevant is now involved and on board, except Joel Fitzgibbon and Angus Taylor.

  2. I’ve added a substantial update at the end of the post on the Tomago story, because it illustrates the advances made in renewable energy since a great heatwave of February 2017 shut Tomago down.

    Now, with new technology and ‘demand response’ about to become a standard feature of the NEM, Tomago has the possibility of rejigging its business model to become in part a power company.

  3. Brian: I claim no expertise in aluminum smelting.
    My take is that:
    Al smelting is made for cheap baseload power.
    Up to a point it could operate with fluctuating power.
    The key problem with unreliable power is that it must keep the cell contents fluid. If cells freeze it costs mobs to get the cell going again.
    Don’t know how much power to cells could be cut back without creating a freezing risk. Your article implies a shutdown of 3 hrs will freeze the cells. Presumably this could be extended if some power or other heating option were available. (Suspect Tomago has done some calcs here.)
    I would also assume that the plant could be set up so that cell could be drained before it froze?

  4. John, I’ve got some graphs I’ll use in another post which show how ‘baseload’ coal is being ramped twice a day, early morning and evening when peak load coincides with no of little sun. It’s a short period. Coal can’t be ramped far enough or accurately enough to cover demand.

    At present the main ‘dispatchable’ power to fill the gaps between coal and renewables is gas.

    During these periods the spot market comes into play. I think rule changes are now making payment segment of 5 minutes rather than half an hour, which would be good for batteries.

    Whether the opportunities for a facility like Tomago are in this daily spot play, or when there is a real threat of blackout from weather and such, I don’t know.

    I think refitting goes to pot design and the capability of having heat reserves right there, but all that is way beyond my technical understanding. However, turning off potlines is unlikely to be an easy or routine thing.

    There is a lot of kerfufle at present about ‘capacity markets’ where generators would be paid not for the energy they produce but for having capacity available to generate if required. Again, more in a future post, but Kerry Schott is saying the cap on spot prices may have to be lifted from $14,700 to something like $60,000 in a future NEM where power generation is mostly decentralized and local.

    This obviously changes everything.

    1. With an 800 MW demand being able to curtail for 3 hours give a battery equivalent of 2,400 MWh, about twice the size of the largest battery planned for Australia.

      1. Thankyou for doing the sums, Peter. I get the impression that Matt Howell, Tomago CEO, would rather just produce aluminium, but at some stage he might think about other opportunities.

      2. Peter: “With an 800 MW demand being able to curtail for 3 hours give a battery equivalent of 2,400 MWh, about twice the size of the largest battery planned for Australia.” You are right. In some cases using something that can be shut down quickly for a few hours in return for lower power prices may make more economic sense than batteries that will feed very little into the grid except in a short crisis.
        Aluminum comes with the problem of potline freezing but this issue might be reduced with better potline design aimed at slowing freezing and/or making it much easier to restart a frozen line. (I have no expertise in this area and have no idea how much potline power consumption can be cut back without risk of freezing.)
        Industries like the coal industry where I worked also offer potential. For example, draglines, trains and coal washeries can be shut down without problems as long as a bit of time to do the shutdown. (May make sense to do things like combine aluminum (assume very fast shutdown with things that take a bit more time to shut down properly.)

  5. Brian: “There is a lot of kerfufle at present about ‘capacity markets’ where generators would be paid not for the energy they produce but for having capacity available to generate if required. Again, more in a future post, but Kerry Schott is saying the cap on spot prices may have to be lifted from $14,700 to something like $60,000 in a future NEM where power generation is mostly decentralized and local.”
    Having Taylor supporting capacity markets is a problem for someone like me who thinks capacity markets are a sensible way to go. (Everything Taylor does is so suss”.
    The current power trading system is a problem because prices vary so much and some problems occur because power suppliers sometimes choose not to start up because it is doubtful whether they will be able to sell anything.
    My version of capacity markets is:
    1. Power producers bid for long term contracts for the supply of power. For a coal fired power producer the bid may be for various types of standby plus a payment formulae for actually produced power.
    2. The power system operator determines what state they want each power source to be in. For example, during spring the operator may want a particular coal fired power station able to produce X with y weeks notice. (Power station does major shutdown.) Later in the year the operator may pay to have the station to a higher level of availability such a running with spinning generators and no power output etc. Penalties may apply if the power station isn’t at the condition being paid for.
    What it means is that investors have the certainty they need to invest and the operator has the tools to meet demand.

  6. John, to be honest, I think we are struggling here. I never aspired to understand the electricity system, but have been drawn into it by the effect a lack of policy has had on plans for emission reduction, plus the way politics has poisoned the well.

    I think under the Finkel Review we had a proposal called the Clean Energy Target (CET). The enabling legislation was never put to the parliament, because Turnbull could rely on some of his troops crossing the floor, and wasn’t prepared to trust any promises on support Bill Shorten might make.

    However, the standard under the NEM was that if a consumer wanted electricity they had to transact through a retailer. This was never the case in Qld until Peter Beattie foolishly allowed retailers in, in my mind ticket clippers. Of course, every state operates under state law, and Queensland still uses grid operator Ergon, or it’s latest manifestation, to supply country areas.

    My understanding of the CET was that the onus was on retailers to drive emissions down by purchasing a specified amount of renewable energy. In that system, and always in the NEM the market operator (AEMO) is basically an enabler, but one with power to enforce market rules.

    I think one of AEMO’s fundamental principles is that the NEM should be made up of private market operators. They always argue that government interference is unnecessary.

    I think interference is in Angus Taylor’s DNA, plus I think he thinks he basically owns the show. He appears to be trying to misrepresent AEMO, and I’m suspicious that if Kerry Schott retires he’ll nix the ESB and say that his department can coordinate the AEMO, the AEC and the AER. See January this year Schott’s Blistering assessment gives Australia ‘just months’ to fix nation’s energy security:

      Australia has “just months” to fix major problems with the electricity market, according to a blistering assessment of the state of the energy sector.

      Chair of the Energy Security Board, Dr Kerry Schott, said “years of insufficient action” and “band-aid solutions” have characterised Australia’s response to growth of renewable energy generation.

      She warned the market needed a rapid redesign to ensure the lights stay on.

    She’s right, of course, but I worry that Taylor thinks it’s his job to do the redesign.

  7. Peter Casey of LEAN Qld suggested that I send the link of this post to Tim Lane.

    Tim has just replied saying it read well (glad to hear, because I didn’t feel in the zone) and he was going to share with their co-ordinator.

    With that blessing I’ll share with a few others I’ve met who are not regulars, and many don’t even know of the blog.

    Not expecting an influx of new commenters, however.

  8. Working for Thiess for all those years made me conscious of the variety of operating contracts and ownership breakdown that can be used for doing things like running mines, power supply systems etc. and what needs to be taken into account when deciding what to use.
    For example two key questions are “who has the expertise?” and “how important is it?” If the owner lacks the expertise and something is not particularly important it makes sense to use contractors. If it is important it may make sense for the owner to acquire the expertise etc.
    The current spot market we use for power supply is the sort of dumb thing an economist might come up with.
    The characteristics of power supply systems is highly variable. For example coal fired is characterized by high capital costs, very slow startups, significant operating costs and predictable peak outputs. Logical contracts might have a standby charge, payments for various levels of availability and an operating charge that reflects the cost of coal etc.
    By contrast, a solar/ battery combination has high capital costs, very low operating costs, very controllable output and the ability to respond to very rapid changes in demand in very small increments. The contract should probably be dominated by a capacity charge which may change with the season.
    It is this operating/maintenance based thinking that should be replacing the spot markets that economists so love.

  9. Selwin Hart,UN Special Adviser on Climate Change, joins calls for Australia’s Government to adopt more ambitious emissions reduction goals:

      The UN official quoted a previous call by Secretary-General António Guterres that wealthy countries phase out coal by 2030 and other countries, which have had less opportunity to develop using fossil fuels, to stop its use by 2040.

      “If adopted, this timetable would leave nearly a decade for Australia to ensure a just transition for its coal workers and others affected”, he said.

      “We are at a critical juncture in the climate crisis”, he said, noting that if G20 industrialized nations choose business-as-usual, “climate change will soon send Australia’s high living standards up in flames”.

      By contrast however, if countries including Australia choose bold climate action, “a new wave of prosperity, jobs, fairness and sustained economic growth is there for the taking”, said Mr. Hart.

  10. Via an email from the AEMC:

      The AEMC has decided that no delay is needed to the implementation of five minute settlement (5MS), which will begin as scheduled on 1 October 2021. …
      We will publish our final determination on 9 September but have issued this alert to ensure the market has as much notice as possible ahead of 5MS commencement.
  11. Brian: There is a figure I have seen bandied around saying that it only takes 8m2 of good well, watered land to feed a person.
    Me I have visions of a fish raising tank with high intensity gardening/edible insect production unit above it all carried out in an air conditioned enclosed space.
    What I am saying is that Aus broadacre farming is wasteful of water and vulnerable to climate change and there are alternatives that need thinking about.
    BTW the average Aus is about 240m2 with an average of 87m2 per person. Plenty of room to feed the occupants.
    Given the ag outlook it is not surprising that the Nat vote dropped when Barnaby became leader again.

  12. John, there was an interview I heard recently that said the European invasion essentially massacred the landscape they found here, as well as essentially displacing the human inhabitants, or worse.

    However, tree planting of single or limited species to store carbon or produce biofuels isn’t a good answer either.

    I’m with you in using smaller space, and alternative food production, but we need a broader debate on what ecological restoration should be.

  13. Brian: The idea of ecological restoration is attractive. Problem is that climate change could make it difficult to achieve major gains in practice. What you are planting will need rain to progress.
    That said there are certainly many species that grow in places like the Pilbara that might be used in places that may reach these extreme levels in the future.

  14. John, my vision for the new Anthropocene is to reduce CO2 concentrations to 280 ppm, then keep it steady to let the heat in the ocean slowly reduce. My back of the envelope science says that might take the planet a couple of thousand years to get back to the kinds of temperatures we used to have, which created a stunningly beautiful world.

    As a species we should learn to take up less space.

    The first couple of millennia what would only be a prelude to true planetary rewilding, where rain and weather patterns would again become more consistent and friendly to the forms of life that flourished in the Holocene.

    Humans could then also flourish in harmony with the rest.

    Better go to bed and do some real dreaming.

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