Level up: a transformative week in Australia's energy transition

It's been a transformative week that has supercharged the energy transition in Australia, a positive indicator that the LNP's egregious decade-long legacy of energy policy failure may finally be behind us.

On Wednesday, Climate and Energy Minister Chris Bowen announced the first tranche of the federal ALP government's flagship $20bn Rewiring the Nation plan.

Key commitments included critical infrastructure identified in the Australian Energy Market Operator's Integrated System Plan as necessary to accelerate decarbonisation of the energy grid:
• $1.5bn concessional finance for Victorian Renewable Energy Zones (including for offshore wind) via the Clean Energy Finance Corporation
• Up to $1bn of low-cost debt for Tasmania’s Battery of the Nation projects
• $750m concessional finance for the Victoria-NSW interconnector 'VNI West'
• 20% public equity stake in Marinus Link (shared between Tas/Vic/Feds) connecting Tasmania and Victoria.

VNI West is projected to unlock 4000MW of new renewable power generation, create more than 2,000 jobs during construction and generate $1.8bn in benefits; Marinus Link is expected to create 2,800 jobs and attract $1.5bn in RE investment to Victoria's Gippsland region.

At long last, we are seeing a new era of coordinated action and federal-state cooperation on a coherent strategy to accelerate the transition and reap the momentous climate and economic dividends.  

And yesterday, the Victorian Premier Dan Andrews and Energy Minister Lily D'Ambrosio flagged a monumental stepchange in the state's decarbonisation pathway, with landmark policy commitments including:
• Ending coal power by 2035
• Increasing the Renewable Energy Target to 65% by 2030, and 95% by 2035
• A 2035 emissions reduction target of 75-80% 
• A partial renationalising of power generation and possibly retailing by re-establishing the State Electricity Commission as a major power generator, producing 4.5 GW of clean energy within a decade, in partnership with patient aligned Australian pension capital.

These developments follow the announcement late last month by Queensland Premier Annastasia Palaszczuk and Energy Minister Mick de Brenni of the state's $62bn 10-Year Energy Plan, which included the wind-down of coal-fired power stations by 2035, the world's biggest pumped hydro scheme, a 1,500km SuperGrid linking Brisbane to north and western Queensland, and a $150m jobs guarantee for energy workers.

There were major developments, too, on the critical minerals front this week, where Australia has the potential to lead the world as a global mining and refining superpower. Under President Joe Biden's historic Inflation Reduction Act - the US's biggest ever investment in decarbonisation at US$369bn – three ASX listed critical minerals companies were awarded $816m for minerals processing facilities as part of a US$2.8bn grant program to 20 US based firms.

And this morning, Prime Minister Anthony Albanese announced $50m to establish the Australian Critical Minerals Research and Development Hub, part of the National Critical Minerals Strategy, and underpinned by policy architecture including $1bn Value Adding in Resources Fund and the $2bn Critical Minerals Facility, designed to diversify global EV & battery supplies chains and help drive growth in the Australian sector.

Climate Energy Finance has been active in the media analysing the week's big news. You can find our take on these key issues below.

This newsletter is not intended to provide, and should not be relied on for, tax, legal, investment or accounting advice, nor is it an offer or solicitation of an offer to buy or sell, a recommendation, endorsement, or sponsorship of any security, company, or fund. CEF is not responsible for any investment decision made by you. Unless attributed to others, any opinions expressed are our current opinions only. Certain information presented may have been provided by third parties. CEF believes that such third- party information is reliable, and has checked public records to verify it wherever possible, but does not guarantee its accuracy, timeliness or completeness; and it is subject to change without notice.