As Australia rebuilds its economy after the coronavirus shock, projects that move the country to net zero emissions must be prioritised.
Whether we like it or not, COVID-19 has given us a major reset on the economy, and climate change is now central to this discussion.
This is a once-in-a-generation opportunity to build a more resilient and prosperous Australia, which benefits everyone, especially future generations who will live in the economies we can now redesign, with energy playing a central role.
Governments around the world are now focusing directly on this opportunity, and Australia cannot afford to be left behind.
This unprecedented situation creates an opportunity to make investments that accelerate the transition to net zero carbon emissions, delivering lasting jobs and economic development and building a highly competitive and productive Australian economy.
The investments we make now must not become stranded or obsolete within the next few years.
Investment in renewable energy projects should be part of the economic recovery.
We must think differently. Australian companies, investors and our superannuation funds should invest in the development of ideas that can lead to long-term nation building or breakthroughs in the transition to net zero emissions.
This can be done in co-operation with government but there must be a willingness to invest in our future before waiting for investments to be fully formed.
We need to ensure that accelerating the energy transition that is occurring in Australia is central to any recovery plan.
The Australian Energy Market Operator notes, even on a business as usual scenario, there is no technical barrier to operating the electricity system with up to 75 per cent instantaneous penetration of wind and solar.
Chief Scientist Alan Finkel is advocating for Australia to be an energy superpower, generating 600 per cent of its needs, which would create a massive renewable energy export opportunity.
To achieve this we need to push ahead with key projects, such as the development of the Snowy Hydro expansion, and fast-tracking of key transmission infrastructure, such as the Victoria to NSW interconnector, a second Basslink cable, development of renewable energy zones and fast-tracking offshore wind. We also need to increase energy efficiency and productivity.
With our abundant sun, wind and land resources, we can feasibly produce vast amounts of green hydrogen. Production of hydrogen through electrolysis at scale is the key to unlocking this opportunity. Over the longer term, $2 billion to $3 billion in support to industry will be required for Australia to succeed in this new global market.
In turn, this enables Australia to use renewable energy to produce minerals and metals for export, particularly those minerals critical for renewable energy systems, such as solar panels and batteries.
At the same time, we should look to develop our own domestic processing of such resources and rebuild our domestic manufacturing industries in areas such as batteries and electric transport.
When such energy is combined with existing and emerging technologies this also facilitates the ability to drive decarbonisation of many of our key industries.
Last week, the Grattan Institute released its report on green steel production, noting that of Australia’s clean energy opportunities, the largest and most economically viable appears to be using renewable hydrogen to produce “green” (near zero emissions) steel.
It goes on to note that “Australia has an historic opportunity to create a new, export-focused manufacturing sector based on globally competitive renewable energy. The opportunity is more than building wind and solar farms – we can use wind and solar to make energy-intensive ‘green commodities.”
Australia should maximise the value of its natural capital, not only our sun and wind for energy but also our landscapes, reefs and coastal ecosystems.
We should invest in restoring landscapes and coastal ecosystems and assist farmers to adopt more regenerative agriculture, where we maximise the health of our soils and increase productivity.
Martijn Wilder is a founding partner of climate change advisory and investment firm Pollination Group, and chairman of the Australian Renewable Energy Agency (ARENA).