Michelle Grattan: The cost rules in the nuclear debate

A Dutton government would keep coal working hard for much longer under its nuclear policy, while renewables would provide only a little over half the electricity generated in 2050.

The Opposition has finally put in place the last piece of its controversial nuclear policy, with modelling claiming its alternative would come in substantially cheaper than Labor’s transition path to net zero.

The Coalition policy ensures the issues of coal and climate change will be strongly contested at next year’s election.

The key breakdown in the Opposition policy is that by 2050, renewables would provide 54 per cent of electricity generation and nuclear 38 per cent, with 8 per cent a combination of storage and gas.

This compares with Labor’s transition plan for renewables to provide nearly all the generation by then (and 82 per cent by 2030).

The modelling, done at no charge by Frontier Economics, costs the Coalition plan for the transition of the National Electricity Market (which covers the east coast and South Australia but excludes WA) at $263 billion (about 44 per cent) cheaper than its estimate for Labor’s transition.

The modelling, including a range of assumptions (the same assumptions as the Australian Energy Market Operator except for inclusion of nuclear), puts the cost of Labor’s transition in the National Electricity Market at $594 billion and that of the Coalition’s at $331 billion.

A central feature of the plan is to keep existing coal-fired power stations going for longer.

Then the first of them would be replaced by nuclear generation, in the mid-2030s. The Coalition policy is for seven publicly-owned nuclear plants spread around the country although the modelling is on the basis of units in Queensland, NSW and Victoria.

The Coalition argues coal-fired power stations do not need to be, and should not be, phased out as soon as is now planned by AEMO. Prolonging their lives as compared to AEMO assumptions would save money, it says.

Another important saving, the Coalition says, is that its plan to have its nuclear plants located at or near existing power plant sites does away with the need for a huge new transmission grid.

“The Coalition’s approach integrates zero-emissions nuclear energy alongside renewables and gas, delivering a total system cost significantly lower than Labor’s. This means reduced power bills,” Peter Dutton says.

The release of the costings unleashes a tsunami of claims and counterclaims about numbers. That debate will be eye-glazing for many voters.

Not to worry. We are talking the span of a generation. Numbers that stretch out to 2050 don’t mean a great deal. Hundreds of things — in technology and politics, for starters — can and will change as the years pass.

Moreover, numbers from modelling have an extra layer of complexity and uncertainty. They depend heavily on their assumptions.

Anyone inclined to take modelling at face value should reflect on the Labor experience. Before the 2022 election it released modelling that gave it the basis to promise a $275 reduction in household power bills by next year. We know what happened to that.

Regardless of the problems in attempting to be precise, the broad debate about nuclear’s cost will be intense. Energy Minister Chris Bowen said on Friday: “What the Coalition is asking the Australian people to believe is this: that they can introduce the most expensive form of energy and it will end up being cheaper. It won’t pass the pub test.”

The Opposition’s plan is up against the recently released GenCost report, prepared by the CSIRO. This gave a thumbs down to the nuclear option in cost terms. The Opposition’s attempt to cast doubt on the CSIRO’s expertise is unlikely to fly.

The Coalition policy will go down differently according to which constituency is judging it.

Most obviously, given its reliance on extending the life of coal, it will be unpopular with those for whom climate change is a top-line issue. Teal MPs and candidates will hope to get mileage out of that. Under the Coalition plan emissions would remain higher for longer than under Labor’s transition.

On the other hand, in some regional communities where there has been a bad reaction to the planned new power grid and to wind farms, the policy is likely to be well received.

The question is how it will play in the outer suburban electorates that Dutton hopes will help him cut deeply into Labor’s majority.

For these voters, stressed by the cost of living, climate change is probably less of a priority than it once might have been. And nuclear is less scary than in bygone years. But whether they will see the Coalition policy as more practical than Labor’s, or as a pie-in-the-sky nuclear dream — that’s too early to say.

Bowen was dismissive when the Coalition first promoted nuclear. But Labor would be unwise to be complacent.

Labor’s strongest arguments will be on climate change — the evils of the extension of the use of coal — and cost (relying on GenCost findings and the like).

But it is vulnerable in its rejection of calls to lift the ban on nuclear. Bowen says to do this would be a “distraction”, potentially harming investment in renewables. That’s a simplistic argument.

With households highly focused on their immediate power bills, the Government has been tipped to extend more relief as it burnishes its cost-of-living credentials for the election. The Coalition would have to decide whether to match this. It would be hard not to do so.

The Coalition’s plan for nuclear power is a big idea, of which we don’t see that many in our current politics.

It will test Dutton’s ability to cope with detail under the pressure of a campaign. There will be another test. If the Coalition remains in opposition, will it throw its grand plan into the policy dust bin, so the nuclear debate will be gone for another decade or two?