19 APRIL 2024

FUTURE MADE IN AUSTRALIA ACT THE RIGHT RESPONSE TO GLOBAL ENERGY RACE

Three weeks from the 2024 Federal Budget, CEF was thrilled to lead a partnership with key investor groups and energy industry peak bodies to support the Federal Government's Future Made in Australia Act.

The partners included the Clean Energy Investor Group – with $38bn of clean energy assets – Beyond Zero Emissions, Smart Energy Council, Clean Energy Council, Climate Capital Forum and Rewiring Australia.

The alliance called on the Federal Government to hold its nerve against mounting criticism of its landmark initiative from some quarters, e.g. conservative / LNP aligned media and neoliberal economists, and commit the ambitious, strategically-targetted national-interest budget support required to underpin private investor and business confidence in Australia’s once-in-a-century decarbonisation opportunity.

This will position Australia to leverage its comparative advantages in renewable energy, critical minerals, strategic metals and cleantech supply chains, helping to strategically pivot our export profile and secure our economic prosperity, energy independence and sovereign capabilities.

The Federal Government’s move comes as advanced economies the world over commit unprecedented state investment into energy transition.

As joint statement signatory Blair Palese, founder of the Climate Capital Forum, named a 2023 Top 100 Green Energy Player by The Australian, said:

“Prime Minister Albanese’s Future Made in Australia Act provides the vision for how we can become a leader in the global race to decarbonise. The Climate Capital Forum, a network of investors, decarbonising businesses and climate finance experts, believes the Act provides the plan we need to ensure Australia can capitalise at scale on our incredible advantages to be a player in the low carbon market. With affordable and abundant renewable energy, a wealth of rare earth minerals and innovative businesses keen to succeed, what the nation has lacked is the political leadership to incentivise, de-risk and modernise our economy and grab this once-in-a-generation opportunity.”

As signatory Heidi Lee, CEO of leading independent think tank Beyond Zero Emissions said:

“The Future Made in Australia Act is excellent news for Australian households who will see the cost of energy fall as we bring online new renewables at scale, and for local businesses to sell their products into the clean economy.

“Communities in regional Australia stand to benefit from the investment in affordable and reliable clean energy, and modern infrastructure that will link our resource-rich areas to clean industry clusters built around our established ports and smelters. This Act will see jobs and prosperity flow to places that need it most.

“It’s fantastic to see Australia step off the sidelines of the global clean energy race, and set up our communities to capitalise on our critical minerals by manufacturing solar panels, wind turbines with recyclable blades, batteries, heat pumps and parts for electric vehicles.”

Global supply chains are challenged, and traditional economic orthodoxy that decries protectionism needs to be rejected. Modern geopolitics means that free market logic in global trade is entirely outdated. The US$1 trillion US IRA says this clearly, as does China's world leadership in all zero-emissions industries of the future.

We call on Treasurer Jim Chalmers to use the 2024 Australian budget to provide an additional $100bn of public capital and direct budget support, such as production tax credits, to crowd-in $200-400bn of private capital, both from domestic firms but also in partnership with world-leading technology owners.

The Future Fund should be mandated to leverage its massive financial firepower and in-house skills to provide patient strategic public equity in support of new Australian projects, with conditionality to ensure top ESG considerations and decarbonisation opportunities are prioritised.

Great to see the EFA, NAIF, ARENA and CEFC working collaboratively with private project proponents like Arafura Rare Earths, Liontown Resources, Renascor Resources and Alpha HPA to build renewables-powered critical mineral and strategic metal value-adding in Australia, so we export embodied decarbonisation to help our trade partners decarbonise their economies.

International partnerships and collaborations will be key to Australia’s burgeoning opportunity to remake itself as a zero-emissions trade and investment leader.

At a time of growing US-China and EU-China trade tensions – with a US-China trade war building – Australia should chart a different course with the great green powerhouse of Asia, one based on mutually beneficial interests.

A reindustrialisation of Australia is sorely needed, and that can be turbocharged and de-risked by partnering with world leading corporates, including Chinese cleantech supply chain innovators.

Watch this space for our major new China report at the end of April, where we look at how the stunning progress of China’s electricity market decarbonisation prefigures the twilight of coal, and the implications for Australia and its historic reliance on fossil fuel exports (i.e., time to aggressively pivot!!).

>>>Joint statement: Australia’s Leading Energy Industry And Investment Players Join Forces To Back PM Albanese's Future Made In Australia

>>>Coverage of the full statement in the AFR; AFR #2 (including the CEIG comment from the joint statement in the midst of negative editorialising); first AAP story syndicated widely to 100+ mastheads, including Renew Economy; second AAP story leading with the joint statement and incorporating Treasurer Chalmers’ defence of Made in Australia at the G20, syndicated widely as above including Canberra Times.

At the time of PM Albanese's announcement of the Future Made in Australia Act, CEF was active in the media response welcoming this visionary initiative:

>>>See our op ed with Blair Palese in The Australian, an article with Tim’s commentary in The Australian, syndicated across all News Corp mastheads including the Daily Telegraph, an interview with Tim on SkyNews Afternoon Agenda, which foreshadowed the announcement ahead of a live cross to PM Albanese’s speech, Renew Economy, The New Daily, ABC Radio, FS Sustainability, and in a widely syndicated story internationally via AFP, including in WSJ sister publication Barron's and more.

We also talked to Capital Brief about how Greg Combet, newly appointed chair of the Future Fund, can supercharge its role in the net-zero economy.

ON A RELATED NOTE: SOLAR SUNSHOT SECURES SOVEREIGN CAPABILITIES IN SOLAR PANELS

CEF also strongly supported the government’s new $1bn injection into solar panel manufacturing in Australia, which aims to remake the old fossil fuel heartland of the Liddell power station as a cleantech hub, playing to Australia’s strength as the innovator of the most efficient solar panels on earth, while creating jobs, securing sovereign supply chain and manufacturing capabilities, and supplying 20% the Australian solar panel market – fitting as the country with the highest rooftop solar penetration per capita in the world.

The Federal Government's plan to pivot the region and future workforce into the zero-emissions industries of the future presents a stark alternative to the Coalition’s “vision” of a nuclear reactor for every former coal generator site.

>>>See our media including Tim’s interview on ABC PM, our op ed in Renew Economy and further commentary in Renew Economy.

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GREEN (BUILDINGS) WASH? ONLY 7% OF BIG 4 BANKS' “SUSTAINABLE FINANCE” GOES TO RENEWABLES & DECARBONISING INDUSTRY

Australia’s Big 4 banks are chief actors in allocating private debt capital at scale to achieve our sustainable economy growth goals.

Climate Energy Finance’s new research shows that the Big 4 have allocated $385bn (and growing) to sustainable finance targets (SFT) that are, ostensibly, aimed at contributing to climate change mitigation and transitioning Australia to a decarbonised, net zero economy.

However, we find that only 7% of Big 4 banks’ SFTs are directed to renewable energy and industry decarbonisation. Concerningly, the vast majority – between 44% and 72% – is channelled into the low hanging fruit of BAU ‘green buildings’ that meet minimum energy efficiency regulations under the National Construction Code. This leaves the banks open to accusations of greenwash.

We now have the Future Made in Australia Act to send a strong market signal for finance to crowd into future-facing sectors, including clean energy generation at utility-scale, zero-emissions transport and decarbonised heavy industry.

It will be incumbent on the banks to align their capital allocation and reporting to the new taxonomy from FY2025 and, crucially, to prioritise financing that achieves the objectives of the new Act. They must put their money where their mouth is.

>>>Read the full report by CEF’s financed emissions analyst, Nishtha Aggarwal. See articles on this topic posted by Renew Economy, Capital Brief, Investor Daily, PV Magazine, Tasmanian Times and News for Business.

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MORE COAL SUBSIDIES TO EXTEND ERARING?? HARD PASS HELL NO!

As we found in our new report on the ongoing Eraring coal subsidy debacle, released in late March, there is zero case to pay Origin Energy a minimum of $120-150m p.a. in coal subsidies to keep Australia’s biggest coal clunker open.

There is enough replacement capacity in the pipeline in NSW to offset the capacity withdrawn when Eraring closes.

We called on NSW Energy Minister Penny Sharpe to rule out subsidies for Eraring's life extension and instead invest in rapid deployment of distributed firmed renewables across the state, slashing power bills, opening up industry decarbonisation opportunities and putting the state on track to achieve its newly ambitious emissions reduction goals.

>>>See the extensive media on the report including in The Australian, Canberra Times and 100+ mastheads via AAP, the SMH, The Guardian, Newcastle Herald, Renew Economy, as well as an op ed in PV Magazine and an interview with Tim on AusBiz.

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OUR MEDIA |

We were active in the media on a range of topics in addition to the above, including global oversupply of Chinese solar panels, with CEF’s Xuyang Dong quoted in the FT and Reuters, and China’s wind turbine manufacturing dominance, with Xuyang quoted internationally in Reuters.

Tim commented on critical minerals market volatility in Resources and Investment magazine, on Adani in Business Standard, and on fossil dinosaur Japan’s launch of its huge 20GW renewables platform in Renew Economy, as well on the 'hefty' shadow carbon price in Australia's electricity grid, in Renew Economy, amongst other media.

See all our media here.

OUR WORK |

See more of our latest work, including presentations on global decarbonisation and capital shifts.

PREVIOUS NEWS UPDATES |

Our previous newsletters covering major energy news can be accessed here.

Annemarie for Tim, Paul, Nishtha, Matt, Xuyang and Amanda (see more on our team here).

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