A sensational front page headline in News Corp’s Daily Telegraph has declared a “$500B GREEN HOLE” in the cost of Australia’s renewable energy transition plan. But energy experts say the story relies on an analysis that makes an apples-to-oranges comparison to vastly inflate the projected cost and scare the public.
The story, which opposition climate change and energy spokesman Ted O’Brien called “one of the most scandalous con jobs ever attempted on the Australian people,” comes as the federal election season heats up. Some observers see it as the opening salvo in a media campaign to spread fear about the costs of climate action ahead of next year’s vote.
Flawed Analysis Compares Apples to Oranges
The Telegraph’s “$500B GREEN HOLE” claim stems from an analysis by Frontier Economics, which took the $122B the Australian Energy Market Operator (AEMO) estimates will be needed to fully decarbonize the power grid by 2050. By not adjusting this figure for inflation, as is standard accounting practice, Frontier ballooned the total to $642B.
But AEMO’s own analysis already accounts for future inflation, projecting the true cost to be $580B in 2022 dollars—very close to Frontier’s $642B figure before adjustment. The remaining difference comes down to transmission cost estimates, which Frontier argues AEMO has understated based on recent project overruns.
“The community needs to be clear what they’re in for, either way,” Frontier Economics Managing Director Danny Price told The Guardian, explaining that he undertook the analysis at his own cost out of “irritation” that AEMO’s inflation-adjusted total downplayed the scale of future outlays.
Controversial Nuclear Advocacy
While Frontier depicted AEMO’s accounting as overly rosy, some energy experts argued the consultancy, which has advocated for nuclear power, had political motives for the inflationary framing. “This is the first consultant modeling report I can recall which omits to actually model the alternative case which it is advocating for,” Green Energy Markets director Tristan Edis told The Guardian.
Edis and others noted that real-world experience in Europe and North America shows nuclear is very expensive and would likely lead to even steeper power bill hikes of $600 to $1000 per household if pursued in Australia. Frontier’s Price says he’s working on a second report assessing nuclear costs to address those concerns.
Risky Rhetorical Tactic
By comparing far-future renewables spending to 2022 dollars, the Telegraph’s front page uses a rhetorical tactic that could backfire. The same logic would ascribe even scarier price tags to other long-term, big ticket items:
- The AUKUS submarine deal’s current $368B estimated cost explodes when future inflation isn’t discounted.
- Major infrastructure projects often take on an imposing scale when full future costs are stated in present-day terms.
“If it really was the case that policymakers thought they could rely on this sort of thing, then why do we bother with an electricity market?” asked Bruce Mountain of the Victoria Energy Policy Centre, arguing AEMO was “being hoisted by its own petard” through its scenario modeling.
Voters Face Barrage of Energy Claims
With an election year approaching and the energy transition central to Australia’s climate change response, voters can expect an onslaught of competing claims and projections as advocates attempt to shape perceptions.
Both renewable champions and pro-nuclear forces will marshal modeling and headlines to make their economic case. But as the Frontier-Telegraph episode shows, a hefty dose of skepticism is warranted. As one energy insider quipped:
“Least-cost modelers can get these sorts of models to tell them whatever they want to hear. The reality is that real-world energy markets are far more complex and unpredictable.”
– Energy market expert
Amid the coming blizzard of energy cost projections, Australians will need to keep a sharp eye out for apples-to-oranges comparisons and other statistical tricks as they weigh their climate and energy options. With the planet’s future and their pocketbooks on the line, cutting through the spin to discern the true costs and benefits will be both crucial and challenging.
