Energy targets need a pinch of reality dust

When Peter Pan pointed through the nursery window and said “second star to the right and straight on till morning,” he made the way to Neverland sound obvious. Wendy, Michael and John, swept up in his confidence (and a pinch of fairy dust), were soon away on a magical journey. 

Energy Minister Chris Bowen seemingly hopes we’ll be similarly swept up by his confidence; identifying the “second star” with the 2035 emissions target on our inevitable course to Net Zero by 2050. 

But it’s time to decide whether we’re the children in the story or adults in the real world. To see which reality we’re living in, we should soberly examine the first star (the 2030 targets) and the “straight on till morning” imperative to hit net-zero by 2050. 

The 2030 goals — 43% emissions cuts below 2005 and 82% renewables — have been exposed as works of fiction. Their source? Labor’s pre-election Reputex report promising $275 off bills by 2025, now disowned even by Labor. In Figure 1 of that report, the 43% and 82% appeared side-by-side with the now-vaporised $275 claim. 

Evidence of impossibility piles higher. Ross Garnaut concedes we’ll likely miss the renewable target “by a wide margin.” The Business Council of Australia shows Australia making less than half the progress needed on wind, solar, storage and transmission. 

And the sprinkle of ‘fairy dust’ propelling the journey is taypayer dollars shredded into subsidies. Garnaut again: “There is now almost no new private grid-scale investment in solar and wind generation that is not underwritten by the CIS (Capacity Investment Scheme).”  

Yet Rystad Energy’s Dixon observes “no evidence yet that the CIS is actually bringing new projects to market,” as participants have underbid, and are left hoping for extra power purchases that haven’t materialised. 

A workforce study sponsored by the Australian Energy Market Operator (AEMO) showed the energy workforce must almost double by 2030 to hit these targets, with critical trades such as electrical engineers having to triple in that time before collapsing to much lower levels.   

Such radical gyrations in the skilled workforce would be impossible without war-like labour market interventions. Or alternatively, astronomical surges in wages and migration, which would escalate project costs. 

An adult interpretation of 2030 must face facts: the original modelling assumed the market would deliver 82% renewables and cheaper bills, and didn’t recommend the current whatever-it-takes subsidy scheme.  

Yet even with unprecedented underwriting, investment still lags; and real-world constraints would hold us back even if it didn’t. 

Assuming the imminent 2030 target is reached requires the same suspension of disbelief as the onward journey to net-zero. The BCA exemplifies this credulity, calling a modest 50% cut by 2035 “achievable” while still pledging to reach net zero 15 years later. 

But to go from 50% in 2035 to zero in 2050 requires annual cuts of 3.3% of 2005 levels each year — more than double the 1.4% the BCA implies between 2030 and 2035, and more than double the rate achieved from 2005 to today. 

Even that estimate overstates current progress. Almost all the reported 28% reduction since 2005 came from ‘Land Use, Land Use Change and Forestry’ absorption, not actual cuts in carbon emissions.  

That means we’ve spent the offset budget early, leaving nothing for the hardest-to-abate sectors like cement and steel.  

The BCA and its consultants at McKinsey admit maintaining current absorption will take effort and offers no promise of expansion, so the hard work begins now. Nothing behind us resembles progress we can scale into the future.  

Reality has also punctured the one remaining happy thought might have helped us levitate towards net-zero: that wind and solar can produce reliable power more cheaply than anything else.  

The plan to decarbonise the remaining two-thirds of our emissions by electrifying everything, and then making green hydrogen, rests heavily on this hope. 

But reality proves that renewables do the opposite. The latest Default Market Offer saw nearly 10% price rises in electricity in NSW, helped by a new half-billion cost passed on to fund the NSW Roadmap for renewables.  

Instead of becoming an extra-competitive “energy and economic superpower”, Matt Kean’s Roadmap is bringing about the opposite, driving businesses and industries away.  Other states’ schemes will also send bills as they mature. 

And CSIRO’s latest GenCost report shows ‘firmed’ renewables at $125–$176/MWh — about 20% higher than six months earlier. The low end of this range assumes implausible wind capacity factors of 48%; the high end assumes just 10% less than today’s average around 33%.   

Once we add in 10% for transmission losses (which GenCost ignores) the upper bound is really a more-credible minimum. Since prime sites are already taken, performance can only degrade from here. 

There are also other reasons the integration costs will climb above CSIRO’s idealised model.   

In May at Energy Week, Alex Wonhas, a veteran of AEMO and CSIRO, suggested battery requirements may double, due to a wind-solar imbalance and implausible perfect foresight assumptions.  

And there’s no allowance for extra gas-firming in GenCost’s integration, because their method assumes “existing capacity available in 2024 is free”, which means our current thermal fleet fills that need. 

In short, CSIRO has confirmed that integrated wind and solar will push prices up. Instead of Institute for Energy Economics and Financial Analysis analyst Tim Buckley’s 2020 claim of $70/MWh for firmed renewables, we face costs much more than double that.  

Attempting to electrify everything or make green hydrogen at those prices risks turning a dream into a nightmare. 

The Peter Pan story ends when Wendy realises she’s grown up. Australia needs a similar moment of adult clarity.  

Targets should be grounded in real-world costs and achievable timelines, not magical thinking. Without that realism, our journey to Neverland may not result in flight, but in freefall.