How a ‘superpower’ Australia could snare greater share of green boom
Former competition tsar Rod Sims has thrown his weight behind a campaign for Australia to dramatically accelerate the rollout of wind and solar power, and use it to make green metals, fertiliser and transport fuels for the world.
Describing it as a “once in a century opportunity”, bigger than the Hawke-Keating reforms and China’s industrialisation, he said Australia could become a clean energy superpower by using its abundant green and cheap power and minerals to grab an outsized share of the economic boom presented by the global decarbonisation race.
Australia “can play a large role in the world abatement effort”, says former ACCC boss Rod Sims. Dominic Lorrimer
Mr Sims, who chairs a new Superpower Institute founded by veteran reformer and climate and energy expert Ross Garnaut, said that by moving quickly Australia could decarbonise 8 per cent of the world’s emissions – not just the 1 per cent of the global total produced domestically.
“Australia’s advantages relative to the rest of the world are so significant that their large-scale utilisation would materially improve the prospects of achieving the world’s climate objectives,” he said.
“Australia covers about 5 per cent of the Earth’s land surface; supplying about 8 per cent of the world’s renewable energy is no stretch given our abundant solar, wind and land resources.
Advertisement“We can play a large role in the world abatement effort.”
The superpower campaign challenges the assumptions of Australian industry that the transition should proceed at a measured pace with a prominent role for gas.
Ready to deploy
Mr Sims said most of the technologies for low and zero-carbon industries such as green iron, urea, nitrogen-based explosives, aluminium and silicon were ready to deploy at scale.
Professor Garnaut, architect of the Hawke-Keating reforms as prime minister Bob Hawke’s top economic adviser, as well as the Rudd-Gillard governments’ climate policies, said companies dragging their heels on deployment were just following business school advice to be “early followers” rather than pioneers.
“We hope to contribute to building confidence in innovation. Once the early plans are established in each new industry it will no longer be possible for anyone to say that such activity is impossible. And we will get rapid development after the early innovation,” he said.
AdvertisementProfessor Garnaut said the rapid deployment of renewable energy would require less – not more – gas to firm up supply. New projects such as those proposed by Woodside Energy and Santos risked becoming stranded as the shift accelerated, he added.
“The current argument by gas companies that increasing amounts of gas supply are necessary to support the growth of renewables is wrong. I see this simply as the new frontier of denial of climate change realities,” he said.
“Whether new investments in gas are stranded assets depends on the speed of transition to zero emissions in other countries. A serious risk [is] that major investments in new projects now will waste large amounts of shareholder value.”
Ross Garnaut says the argument by gas companies that more gas is needed to support the growth of renewables is wrong. Louise Gronold
Mr Sims, who succeeded Professor Garnaut as Mr Hawke’s chief economic adviser in the 1980s and later advised industry, said he had become excited by the superpower idea when he launched Professor Garnaut’s book Superpower: Australia’s Low-Carbon Opportunity (the first of a series) in 2019 when still chairman of the Australian Competition and Consumer Commission, and thought “what a game changer”.
He declared himself disappointed by commentary that assumes the economy can only be burdened by climate change and cannot benefit from the clean energy transition. He said the debate had to shift from “‘gosh, how are we going to do this costly transition? It’s a burden on the economy’ to one where we have a real opportunity here”.
Advertisement“Australia can have more employment and higher incomes in the relatively short term, and be much richer in the longer term, by moving early and decisively in building and expanding the zero emissions economy,” Mr Sims told The Australian Financial Review in an exclusive interview.
“Not only is the transition consistent with a rising standard of living for Australians, I think it is also necessary for this to be achieved.
Chalmers needs a growth strategy
“We’ve just got this huge opportunity. And that should be front of mind anyway because of the challenge of climate change. But when you begin to understand the opportunity, it’s dealing with it – I think is an absolutely necessary growth strategy.”
Mr Sims said Treasurer Jim Chalmers, who will present the federal government’s second budget next month against a challenging economic backdrop, “needs a growth strategy – and here is one”.
“We’ve just got every reason to think we could do this if we’re bold enough to want to take it on.
Advertisement“The Superpower Institute, which I am proud to chair, has been established to change the narrative and thereby boost our economic growth by realising Australia’s role as an economic superpower of the post-carbon world,” Mr Sims said.
The Superpower Institute has initial funding from four large donors for projects to use satellites to monitor methane emissions from gas pipelines, which Mr Sims said were poorly measured, and to ramp up the OpenNEM project, which publishes data on the eastern states’ National Electricity Market, which he said was misunderstood.
Mr Sims, who will launch the Superpower Institute in a speech in Adelaide on Friday, said the gas industry might be uncomfortable if methane emissions were found to be greater than its own estimates, but it would benefit from better identification of leaks. The debate over the causes of price spikes in the NEM would also benefit from better information, he said.
Green iron
As it grows, the institute will tackle other energy transition challenges such as making green iron, which Mr Sims said was one of the most immediate opportunities for Australia because of its large reserves of magnetite ore, the raw material most suitable for making green iron using hydrogen rather than coal.
By combining this with the world’s lowest-cost clean energy, which unlike coal and gas is not practical to export, “we should, by comparative advantage, be making the iron metal and the green steel in Australia”.
AdvertisementMr Sims said the same economic logic could apply to other metals and minerals mined in Australia that were critical to the energy transition – of which Australia has some of the world’s largest resources.
“Renewable energy is not easily exported, so it makes sense for industry to relocate to the energy source; that is, by economic logic more of Australia’s minerals should now be processed in Australia,” he said.
It also applied to the production of green hydrogen, while the nation’s enormous sources of biomass – in the form of vast areas of semi-arid land which most countries lack to grow durable mallee trees – could also be used to make zero emissions chemicals.
Hydrogen can be used with biomass to produce low-cost hydrocarbons for heavy transport, which is hard to electrify, such as green methanol for shipping. They can also be combined to make green ammonia, which can, in turn, be used to make urea for fertilisers for agriculture and explosives for mining, which Mr Sims said was vital for the clean energy transition because it depended crucially on metals such as copper, aluminium and steel, as well as transition minerals such as lithium, nickel and cobalt.
Mr Sims said becoming a clean energy superpower could also help with the diversity and security of supply chains, and noted that the world relied heavily on China for silicon for solar panels – another mineral that could be processed in Australia using cheap, clean energy – and on China, Russia and Ukraine for the raw materials for urea.
“So there’s not just the comparative advantage economics, there’s also increasingly the need to diversify supply,” he said.
He said it was imperative to get moving because climate change was “wandering down the road at us” but mindsets needed to change not just among economic commentators but in industry.
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