Source : the age
“It’s great to be back at work,” chirped Energy and Climate Change Minister Chris Bowen in a shameless propaganda video shot for social media in his Parliament House office on his first day back in Canberra since the election. “The Liberals said they wanted a referendum on energy, and the Australian people decided.”
He was making it clear that Labor was claiming a mandate for its plan to remake Australia’s energy system.
Chris Bowen has claimed Labor’s victory as a win for renewables.Credit: Alex Ellinghausen
In few areas can Labor’s thumping victory have as much immediate consequence on the Australian people than in climate and energy policy. Whatever diehards might say in Sky News interviews, any prospect of turning to nuclear power has been parked, and as a result, the nation’s fleet of old and decaying coal-fired power stations will be shut down, mostly over the coming decade.
Labor has reaffirmed that it will pursue its goal to reduce carbon dioxide levels by 43 per cent by 2030 and set a new goal for 2035, to be on course to reach net zero emissions by 2050. To do so it will pursue its target for reaching 82 per cent renewable energy in the grid, also by 2030.
Before the election, the renewable energy industry in Australia feared it might be derailed by a hostile federal government within weeks. Today, its optimists believe it has not just three years but six years of clear Commonwealth government support. And by the end of the decade it believes the transition to a renewable energy system that is already under way will be locked in.
Government support – and predictable, stable policy – is vital for an industry whose projects might deliver extraordinarily cheap power in the long run, but only after huge outlays upfront. Investors need to know that expensive projects not only have a chance of surviving exhaustive planning processes and long builds, but will also then be connected to the grid and find buyers for the energy they produce at a sustainable price.
According to Richie Merzian, chief executive of Clean Energy Investor Group, which lobbies on behalf of renewables investors in Australia, the industry in this country has been hampered by years of political uncertainty, which Labor’s victory significantly reduced.
Among programs the industry feared would be axed under a Coalition government was the Capacity Investment Scheme, which Labor established in its first term. The scheme underwrites renewables projects to supercharge the construction of 23 gigawatts of renewable energy generation by the end of the decade, as well as 9 gigawatts of additional “dispatchable” assets, such as batteries and pumped hydro.
With Labor’s victory, Merzian says, more investors are planning to tap the $70 billion program. “I know about a dozen companies that are now preparing their bids for all these future projects, and there were a couple who were on the line about whether to do so.
“It’s worth remembering that 70 per cent of Australia’s investment for large-scale clean energy projects comes from overseas. And so investors have a choice of where they put their money … and this is giving a boost to Australia being the destination choice.”
Investors are poised to take advantage of government support to supercharge their renewables projects.Credit:
Merzian warns, though, that the industry faces other road blocks. For the federal government to reach its goals it must secure the construction of transmission lines capable of reliably moving this new power from regional renewable energy zones to the cities. Efforts to rebuild the transmission system have been hampered by resistance from some community members who resent the imposition of vast towers and lines across landscapes they love.
The sector also relies on the support of state government planning departments that the Commonwealth cannot control. Where once the industry complained about delays in the NSW Planning Department and gravitated towards Queensland, a change of government in Queensland has seen a change in its priorities.
For Danny Nielsen, the Australian country manager of Danish-based global wind giant Vestas, there are immediate practical implications from the certainty that Labor’s re-election brings.
Vestas owns or co-owns nine energy projects in Australia, including a 1200 megawatt wind farm near Tara, in the Western Downs area of Queensland, which is planned to include up to 164 turbines the company expects to cost between $2 billion and $3 billion when complete, as well as projects near Toowomba in Queensland and Mudgee in NSW.
Enel’s Bungala Solar Farm, near Port Augusta in South Australia.Credit:
“We now know that policy [supporting the renewables industry] is going to stay in place,” Nielsen says. “We have a very clear certainty on that … and that means we can shore up the supply, and we can shore up the manpower.”
And what does that mean in practical terms? “What I’m looking into for the next four years is that we will probably see our workforce grow by 50 per cent, and we’re employing just over 1000 people today.”
Most of those jobs will be in construction and development, but Nielsen says there will be jobs in servicing and maintaining the wind farms throughout their life, which is expected to be up to 35 years.
“These are long-term, stable jobs for people in regional areas.”
Addressing the Energy Users Association of Australia conference in the days after the poll, economist Ross Garnaut, author of the 2008 Garnaut Climate Change Review for the Rudd Labor government, said Labor’s win was so emphatic that it had secured a historic opportunity to embrace radical reform, particularly in energy and climate policy.
Energy policy and Australia’s participation in the necessary global movement to net zero emissions has been “ground zero for political conflict and policy instability”, he said, making energy more expensive and less secure.
“To establish sound policies, we all have to step back from the clang of climate and energy politics in recent years.”
Garnaut believes Labor’s victory will accelerate the energy transition, to the benefit of the climate, energy users and investors.
But existing policies will not be enough to see Australia reach 82 per cent, let alone to reap the potential benefits of a truly clean economy, Garnaut says.
Through the Superpower Institute, the policy group he formed with economist and former chair of the Australian Competition and Consumer Commission Rod Sims, Garnaut has long argued that if it acts fast enough, Australia can profit from going into negative emissions.
This would see the vast deployment of renewables that would then be used to create export goods such as green iron to help other nations reach their own climate targets. In doing so, Australia would be exporting green energy embodied in the products.
The potential earnings, he argues, would vastly outweigh those we would surrender in ending the export of fossil fuels.
But this would take serious reform, including either the extension of incentives to green investors or a price put on the carbon pollution of older industries.
The government’s Future Made in Australia policy, an economic plan announced last year under which the government has committed to spend $24 billion supporting new industries, is a step in the right direction, Garnaut says. But it is not enough.
“We must systematically reward the innovator, the early investors in new processes, new technologies because the pioneers generate knowledge from which everyone benefits,” he says.
“They’ll make mistakes, they’ll carry additional costs. That’s what pioneers always do. And so that has to be systematically supported by government.”
So, was the size of Labor’s victory enough to silence the sound and fury of politics, or as he calls it “the clang”?
“The electoral catastrophe in metropolitan Australia should cause the Coalition to end the clang quickly, by supporting Australia playing its full part in the global movement to net zero,” Garnaut tells this masthead. “The early signs are that the clang will die slowly, through continuing electoral disappointment. The weakening of the clang allows the government to get on with the job.”
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