Something interesting is happening in Australia.
A new study by the research firm Bloomberg New Energy Finance has found that unsubsidized renewable energy is now cheaper than fossil fuels like coal and gas.
In fact, it’s a lot cheaper.
Data shows that wind farms in Australia can produce energy at AU$80/MWh. Meanwhile, coal plants are producing energy at AU$143/MWh and gas at AU$116/MWh.
Unlike the United States, where energy companies can pollute and have the costs (from illness to environmental degradation) picked up by the taxpayers, Australia has a carbon tax, which partially explains why renewables have a price advantage. But the data shows that even without the cost of carbon tax factored in; wind energy is still 14-cents cheaper than coal and 18-cents cheaper than gas.
And this is in a nation that relies more heavily on coal than any other industrialized nation in the world. But that coal reliance will soon change, as companies in Australia are quickly adopting new, cheaper renewable energies. As the study found, banks and lending institutions in Australia are now less and less likely to finance new coal plants, because they’ve simply become a bad investment.
And, while Australian wind is cheapest now, by 2020 – and maybe sooner – solar power will also be cheaper than coal and gas in Australia. The energy game is rapidly changing in that country.
Michael Liebrich, the chief executive of Bloomberg New Energy Finance, noted, “The perception that fossil fuels are cheap and renewables are expensive is now out of date.”
Well, here’s a news flash: That perception has been out of date for a while now – even right here in the United States.
According to the Energy Information Administration, looking ahead to 2016, natural gas is the cheapest energy in the United States at roughly $66/MWh. Coal comes in second at $94/MWh. But right behind coal is renewable wind at $97/MWh, which in large part accounts for why U.S. wind energy production has tripled since 2000.
And, unlike in Australia, none of those US prices account for the externalities associated with fossil fuels like pollution, cancers, military protection, or global warming. In America, the fossil fuel industry has made sure those externalities are paid for not by the coal and gas energy producers, but instead by you and me.
The fossil fuel industry doesn’t pay a penny of the cost of rapidly accelerating climate change. Or the healthcare costs from exhaust- and refinery-driven diseases and deaths from air, water, and other pollution. Not to mention the community costs of decreasing property values when a coal plant is put in your backyard. Nor do they put a cent toward the cost of our Navy keeping the oil shipping lanes open or our soldiers “protecting” the countries that “produce” all that oil.
All of these externalities come with fossil fuel production, but pretty much don’t exist with renewable energy production. And those externality costs are not only not paid for by the fossil fuel industry – they’re never even mentioned in the corporate-run “news” media in America.
Research from the Annals of the New York Academy of Sciences concludes that the total cost of these externalities, if paid by the polluters themselves, would raise US fossil fuel prices by as much as nearly $3/MWh. And that’s an extremely conservative estimate. Which puts wind power on parity with coal in America.
The trend lines here are pretty clear: Buggywhip, meet automobile!
Renewables are getting cheaper, and fossil fuels are getting more expensive.
Which is why we as a nation need to throw everything we have at making renewable energies our primary way of powering America into the 21st century.
Think of it as a new Manhattan Project. We need green energy, local energy, and a 21st century smart grid to handle it all.
Over time, the marketplace will do this for us. But with just about every developed country in the world ahead of us, and our dependence on oil making us more and more tightly bound to Middle Eastern dictators and radicals, to wait and hope big transnational corporations will help birth a new America is both naïve and stupid. Instead of depending on them, we should be recovering from them the cost of those externalities – a carbon tax – that can be used to build a new energy infrastructure in America.
Let’s take a lesson from Australia and the Eurozone, which have both set up carbon taxes to make 19th century energy barons pay for at least some of the damage they’ve done. And then use that revenue for a green energy revolution here in America.
Considering the threats of climate change, war, and disease, only an idiot – or a fossil-fuel billionaire like Charles or David Koch – would want us to bring in more oil with a pipeline or take any other steps to continue America’s dependence on dirty and costly last-century fuels.