Despite the RBA’s surprise ‘commitment’ to rate rises this week, the bigger story continues to be energy.
Australians, particularly on the east coast, are fretting about their power bills. It’s a fact that has been amplified by the ongoing gas crisis.
As a result, the newly elected government has finally decided to address the matter…
Chris Bowen conducted an emergency meeting for ministers across Labor, the Liberals, and the Greens. The agenda was to hopefully settle their political differences and come to a rational energy solution.
The result of this meeting of minds is supposedly some 11-point plan.
From what few details I can find, though, this ‘plan’ is mostly talk and little action.
In fact, the biggest proposition put forward — a payout for power generators to store excess capacity — isn’t even applicable to gas and coal! Instead, this ‘capacity mechanism’ will be reserved exclusively for renewable energy solutions such as batteries.
That’s all well and good when the technology is ready, but it does nothing to solve the current issue.
But, of course, for politicians it’s never about solving current issues…
Short-term problems need long-term planning
The current energy predicament we find ourselves in does, in fact, have a solution.
I talked about it last week. It’s called the Australian Domestic Gas Security Mechanism, or ADGSM.
The whole point of this mechanism is to force local gas producers to prioritise local customers. In other words, curb exports in order to keep our prices from reaching extremes.
But Labor is unwilling to pull the trigger.
They’ve given plenty of reasons why, but I suspect the biggest one is because they don’t want to be seen as pandering to gas. After all, despite their constant comments about its importance as a transitionary fuel, it’s clear they don’t want to rely on it long term.
Personally, I’d have no qualms about that if they had a logical alternative in mind.
Relying on innovation from renewable energy solutions is not something anyone can plan for. We don’t know how, what, or when this sort of technology will be ready to meet all our power needs.
Don’t get me wrong, I fully expect developments like battery storage to one day become commonplace, but that is not the case right now. What we need are transitory solutions to keep us supplied with power until they’re ready.
So if the government is unable or unwilling to make gas work (as it seems currently), we need a new solution…
Fortunately, there is one.
Reigniting the nuclear debate
The reason we’re in the midst of this energy crisis right now is because our politicians have failed us.
Neither major party has been willing to bite the bullet and plan for energy security — a fact that is a complete joke seeing as we dig up and export so much fuel for the rest of the world.
All our politicians would need to do is commit to a viable long-term solution.
And right now, the best long-term power solution has to be nuclear.
Because while it would certainly take both time and money to establish plants in Australia, they would be the perfect transitory source of energy. Not only because they are efficient, but also because they are far more green-friendly than fossil fuels.
Critics, of course, would suggest that nuclear is likely to become just as obsolete as these fossil fuels in the coming decades. But I disagree.
Nuclear power continues to show signs of development. One of the most exciting of which is, of course, nuclear fusion power — a technology that could one day provide near limitless power. That, in my eyes, is just as important to consider as the potential advances in renewable and energy storage innovation.
More importantly, though, moving away from these hypotheticals, we know that nuclear power can produce hydrogen. By now you’re probably aware that hydrogen itself is also being talked about as a future energy source.
Right now, the most common way to produce hydrogen is from natural gas. But nuclear plants could provide a viable alternative — not only producing greener hydrogen but doing so at an economically competitive price.
As a comprehensive report by Energy Options Network (EON) notes:
‘An inherent advantage over technologies that only produce electricity (like wind and PV) is nuclear’s capacity to produce both electricity and heat, affording it the ability to take advantage of all hydrogen production technology options.’
This is why we can’t simply dismiss nuclear power.
Politicians can’t afford to ignore these facts, and neither can investors.
Australia, and the rest of the world, needs new energy solutions. Nuclear power, despite its many critics, is one that should be seriously considered. Not just because it is proven to work, but because it can also become a cornerstone of new innovation as well.
Hopefully, our leaders will realise this huge potential before it’s too late.
After all, no one should be happy to endure an energy crisis like this ever again…
Editor, Money Morning
Ryan is also co-editor of Exponential Stock Investor, a stock tipping newsletter that hunts down promising small-cap stocks. For information on how to subscribe and see what Ryan’s telling subscribers right now, click here.