Malcolm Turnbull and his Resources Minister, Josh Frydenberg, would like Australia to get much more involved in the nuclear industry. But this is a complex and politically very tricky business. If they are successful, they will have done an enormous good for Australia.
In fact, the long-term strategic stakes for the Australian economy, and the nation more broadly, are potentially immense. In a few weeks, the royal commission into the nuclear fuel cycle set up by South Australian Premier Jay Weatherill will issue an interim report, with a final report likely in April.
The conjunction of a motivated, pragmatic Labor Premier, a federal government inclined to push ahead, an activist and capable cabinet minister, and the unique economic and geo-strategic circumstances Australia and South Australia find themselves in, just might be enough to overcome the paralysis that routinely afflicts this policy area.
Frydenberg is a strong supporter of the royal commission, though naturally he doesn’t foreshadow Canberra’s likely response.
An insight into the Prime Minister’s thinking came in a radio interview at the end of October.
Turnbull said: “I think a lot of South Australians feel like this ... we have got the uranium, we mine it, why don’t we process it, turn it into the fuel rods, lease it to people overseas. When they are done we bring them back and we have got very stable geology in remote locations and a stable political environment.
“That is a business that you could well imagine here. Would we ever have a nuclear power station in Australia? I would be a bit sceptical about that and I’m not talking about the politics.
“We have so much other affordable sources of energy, not just fossil fuel like coal and gas but also wind, solar — the ability to store energy is getting better all the time and that’s very important for intermittent sources of energy, particularly wind and solar. But playing that part in the nuclear fuel cycle I think is something that is worth looking at closely.”
It’s important not to verbal Turnbull here. There is no sign of any imminent or dramatic proposal from the federal government. But there is one significant move on the immediate horizon, and a predisposition to go in this direction, which is genuinely strategic.
First consider the context. The resources boom has ended. The oil price, at around $US30 a barrel, is a quarter of what it was. Iron ore, our biggest export, has suffered a similar fall. Commodity prices generally are in one of their periodic slumps.
However, we should not panic. Don’t think for a second that the world is turning away from fossil fuels. This is pure green propaganda, often recycled uncritically on the ABC. As Frydenberg has pointed out, global demand for oil is actually greater today than it was in 2008, when oil hit its most recent price peak. What has happened is that there has been, across most commodities, a vast increase in supply.
Whereas only a few years ago we regularly watched alarmist programs on the ABC warning us of the approach of “peak oil”, the point at which useful oil discoveries were at an end and production and supply must decline and soon enough run out, in fact we have an oil glut and a commodity glut.
Similarly, demand for coal will continue to rise.
Much nonsense was talked a few months ago about India turning away from coal. The percentage of India’s electricity generated from coal-fired power stations will fall, but India plans a massive increase in its total electricity and this means increased use of all energy sources.
It will substantially increase the absolute amount of energy generated by coal and it will increase the absolute amount of coal it uses.
Even with the transformation of the Chinese economy away from heavy industry, the massive urbanisation getting under way in India and the continued development of Southeast Asia and South Asia ensure growing markets long-term for Australian commodities.
The present commodity glut is tough for all economies that rely heavily on commodities, but Australia is in many ways uniquely well placed to survive the inevitable shake-out and rationalisation, because our suppliers are so big, hi-tech and sophisticated.
Nonetheless, it is undoubtedly true that we need to broaden our economy and broaden the sources of our wealth.
This does not, however, exclusively mean moving away from commodity exports.
As the federal government’s submission to the South Australian royal commission notes, Australia has a whopping 31 per cent of the world’s reasonably assured known uranium resources, more than any other nation. And of that, South Australia has 78 per cent, most of it at Olympic Dam.
It is another staple of green propaganda that the Fukushima nuclear reactor accident has turned the world away from nuclear power.
Again, this is the complete opposite of the truth. Germany and Switzerland will not now pursue nuclear energy, but much of the rest of the world is accelerating the development of nuclear power.
According to Canberra’s royal commission submission, nuclear power generation will increase substantially in China, India, Russia, the US and South Korea. The United Arab Emirates, Saudi Arabia, Vietnam and Bangladesh are all beginning nuclear power programs. Around the world, 67 nuclear power reactors are under construction.
At the same time, nuclear power technology is changing fundamentally. The development of small modular reactors means much less capital investment, shorter lead times and much greater flexibility. New cooling technology means such reactors don’t need as much water and therefore needn’t be located near the coast.
Surely there’s an opportunity for us here.
At the same time, Frydenberg will soon choose a site for the storage of Australia’s low and medium-intensity nuclear waste, the material we produce mainly for medical purposes.
Frydenberg used an innovative process in which communities nominate themselves and he has narrowed the 28 nominees to a shortlist of six, three of them in South Australia.
The storage site will bring $130 million of construction work and many other benefits.
In one broad sense, it is a test case.
Only political dysfunction stands in the way.
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