Renewed interest in the nuclear family

The Prime Minister introduced a new dimension to energy policy by re-opening the debate on nuclear energy.

Energy policy is increasingly being considered within the context of possible global warming from carbon dioxide emissions.

Nuclear energy is the cheapest source of electricity for many countries throughout the world.  This is not the case with Victoria where new coal-based plants can be built at less than $40 per MWh while nuclear would be at least $60.

On these grounds, Energy Minister Theo Theophanous has rejected nuclear power for Victoria.

However, a form of carbon tax to discourage power stations using fossil fuel would change the relative levels.

The form of tax in place in the European Union would raise costs of brown coal by more than $30 per MWh.  If applied here this would make nuclear (which has no carbon emissions) cheaper than coal for new Victorian power stations.

The $30 level of tax would, however, need to be doubled to sharply reduce fossil fuel usage.

With a tax equivalent to $60 per MWh on coal, even wind would be competitive.

Though wind's irregularity means it can be only a minor source of electricity, with a high enough tax on alternative supplies, it could conceivably contribute a 5-10 per cent share.  However, wind and other exotic renewables will always be far more costly than nuclear.

The Victorian Government has said it is committed to having 10 per cent of Victoria's energy supplied through renewable sources.

This is ostensibly aimed partly at forcing Victorians to "do our bit" towards saving the world and also at subsidising the development of a local renewables industry and promoting regional investment.

To estimate the costs, the Energy Users of Association of Australia commissioned Access Economics to examine the Government's proposals using their economic model.  This estimated the costs to Victorians at $830 million.

That's more than the Government's 25-year spend on regional roads or on the Monash-West Gate and it all comes out of the same pockets.

Moreover, because the proposal targets reduced greenhouse gases as well as industry development it achieves neither efficiently.  In fact, far from increasing employment, it would actually cost more than 1100 jobs.

In releasing the Access Economics report, EUAA executive director Roman Domanski pointed to the increases the Government's proposals would bring in electricity prices.

He estimated these at 5 per cent for businesses and 3 per cent for households.

He argued that requiring 10 per cent of energy be provided by renewables would bring net job losses to rural Victoria in spite of the policy supposedly seeking to increase regional jobs.

This is because the proposals would reduce competitiveness in the many regionally based industries that are energy reliant.

Although greenhouse policy is firmly in the Federal Government's bailiwick, the Bracks Government seems bent on adding a state based scheme to existing subsidies to renewables.

This would bring major costs to Victorians.  Moreover, the measures' effects in reducing emission levels would be undermined because Victoria's higher energy prices would simply encourage firms to move offshore or interstate.

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