15 JUNE 2026

Welcome to our news round-up. See previous issues here.

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COP31 LEADERSHIP TO PUSH FOR 35% ELECTRIFICATION BY 2035

COP31 President-Designate Kurum Murat of Turkey and President of Negotiations, Energy Minister Chris Bowen have announced that electrifying the global economy will be a principal focus of the UN climate conference later this year in Turkey, setting an electrification target to raise share of final energy demand met by electricity from just over 20% today to 35% by 2035. The COP31 Presidency also committed to building a global coalition to implement actions in support of this target. 

We endorse Australia’s position put by Minister Bowen that “Accelerating the energy transition will ease shocks to our energy systems, better protect our economies and households from high costs, and help keep bending the curve of emissions downwards. That’s why electrifying the global economy is one of our practical priorities for COP31 – because it’s the fastest way to strengthen energy security, cut emissions and bring down costs.”

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TOMAGO NEEDS URGENT CLEAN ENERGY FIX TO STOP THE BAILOUT CAROUSEL – HERE’S HOW

In a landmark new report, Sovereign Power, the Electrical Trades Union and think tank The McKell Institute proposed a solution this month to Australian heavy industry’s existential issue: how to power energy-intensive industrial operations with clean, low-cost zero-emissions firmed electricity at scale, to ensure we retain a viable processing industry onshore into the future. 

A case in point is Rio Tinto’s Tomago aluminium smelter in NSW, Australia’s largest, which consumes 12% of the state’s energy supply and is Australia’s biggest single energy user. It supports >3,000 direct and indirect high value jobs in a strategically important export industry for Australia. Rio has its begging bowl out for a major taxpayer bailout, with the company threatening that at current power price projections aluminium production at the site would be "unviable" beyond 2028. In March, the Federal and QLD governments announced a $2bn rescue package for Rio's Boyne aluminium smelter in that state. Just last week, state and federal governments committed $105m to save Nyrstar’s zinc smelter in Hobart and lead smelter in Port Pirie, adding to a previous $135m in bailouts. Privatising the profits, socialising the costs, but not solving the core issue – the need for internationally competitive electricity.

Our current system completely fails to align energy supply to the demands of energy-intensive manufacturers at a price that makes them viable and competitive. The ETU and McKell propose the creation of a new government entity – Sovereign Power – that would build, run and finance renewable energy generation to power Australian industry reliably and affordably, offering long-term power purchase agreements (PPA) to industry, including Tomago.

Under the Sovereign Power plan, firmed renewables would be delivered at a cost of ~$66/MWh, compared to average private market PPAs of $117/MWh. This is in line with what Rio Tinto said needs to produce and export green aluminium competitively in the absence of an Asian CBAM to explicitly value embodied decarbonisation, permanently ending repeated calls for taxpayer bailouts every year or two.

As ETU and McKell argue, this would provide industry the certainty to innovate, invest, value-add and expand and be the platform to train a new generation of workers in next-generation skills, delivering valuable jobs with longevity in the regions. Crucially, as the proponents say, the model enables us to refine more of what we dig up, creating value onshore, and putting Australian industry at the centre of economic progress in a decarbonising world. 

The policy problem here is of national significance and a solution is critical for Australia to realise its clean energy superpower and green industrial powerhouse ambitions. Competitively priced large scale, affordable firmed renewables are the precondition for the Albanese government’s Future Made in Australia (FMIA) vision – that is, for Australia to reindustrialise, maintaining and building its onshore processing and manufacturing capabilities, and for us to participate in rapidly emerging markets for green commodities, such as green aluminium, iron and so on, made using renewables. Simply, FMIA needs to be powered by Australian-made clean energy or there is no FMIA. 

This is not rocket science. As ETU national secretary Michael Wright says, we are talking about  "panels in a paddock", complemented by large scale battery energy storage systems (BESS) that can be offloaded from a boat, freighted to site, and essentially just plugged in. A firmed clean electricity supply at public rates could also unlock valuable demand response management (DRM) from Tomago, a firming asset for our national grid. And the deal could align public and private interests, by getting a decent profit share of aluminium upside when prices are at record highs, like now in the middle of a US war against Iran.

Context is important too. China's expansion of new smelting capacity way ahead of demand growth and the lack of a carbon price in international trade (we need a path to an Asian CBAM!) saw Rio Tinto yet again threaten to close this facility. And while some critics of the ETU/McKell model seem happy just to stand back, they ignore the fact that this would leave Australia strategically vulnerable, and be to the detriment of our national resilience. As for the argument that Tomago is old and uncompetitive, in fact it has been well maintained (Rio spends $50m pa on capex), and it is not inefficient by global standards – except for the absence of low-cost zero-emissions energy and a price on carbon pollution.

Further, contrary to the view of some commentators, the proponents are not proposing a nationalisation of the Australian energy system. Nor are they suggesting our government take control of private businesses, not one. They are proposing to build a publicly owned energy entity to increase competition in the national electricity market: more competition, not nationalisation.

Nor is this a case of exceptionalism or special pleading. Our world-leading private LNG export industry – in which multinational fossil fuel majors make massive bank off our public resources while paying little or no tax – only exists because the enabling social and physical infrastructure was created and funded by Australian governments, at taxpayers’ expense, and by our governments creating bilateral agreements with our key trade partners. 

Great ideas for public interest alignment are needed from union leaders, finance and energy leaders, think tanks – and from political decision makers at the state level and federally who must then translate these into action. 

Industry Minister Tim Ayres recently correctly signalled the need for collaborative, creative “industrial statecraft” and significant public investment, crowding in billions more in private sector capital for Tomago and the broader grid. This would involve “leveraging Commonwealth energy assets and special investment vehicles to increase and accelerate new electricity supply to Tomago… on a scale that would improve statewide competitiveness and productivity …creating hundreds of jobs in the energy and aluminium supply chain.” 

Minister Ayres is reportedly considering subsidising power to Tomago through the government-owned Snowy Hydro. While we desperately need a fix such as a new Sovereign Power federal special investment vehicle (SIV) to address the challenges of Tomago, it is clear that this, as currently configured, is not it. Snowy Hydro has failed to demonstrate it can manage two ‘nation building’ projects, let alone many of these. And it has too many conflicting objectives already. 

Oliver Yates, former CEO of the Clean Energy Finance Corporation (CEFC) and UNSW Green Energy Statecraft program leader Professor Elizabeth Thurbon propose a government backed scheme finance vehicle (SFV) to finance a renewables surge and ensure clean energy supply to Tomago and other major industrial facilities at stable, long-term, commercially viable prices. 

In this structural fix, the government would contract for clean energy directly using PPAs and on-sell it to large industrial users under long-term, fixed-price contracts. With government credit de-risking renewables projects at the source, the SFV lowers financing costs across the board. A 1-2% reduction in the Weighted Average Cost of Capital (WACC) translates into 10-20% cheaper renewable power - without ongoing subsidies or fiscal exposure. Yates estimates this innovation would trigger the rapid build-out of around 3GW of renewables plus storage. Explicitly valuing Tomago’s huge demand response management capacity also significantly lowers the net PPA pricing.

If applied to Tomago, the SFV model would mean the public can share in aluminium price upside and recoup our investment. As Yates wrote: “We need long-term solutions that use government funds strategically, efficiently and provide pathways for taxpayers to share in upsides.”

What is increasingly clear is that the clock is ticking and the merry-go-round of taxpayer-gouging subsidies without a sustainable permanent solution needs to stop. We urge Minister Ayres and responsible state and federal leaders to act strategically and with urgency to secure the future of green manufacturing in Australia while the opportunity remains. The Labor national conference in July should lock in the way forward.

>>> See CEF’s November 2025 joint statement with the Australian Renewable Industry Alliance (ARIA) on Tomago.

>>> See our op ed in Pearls and Irritations.

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FARMERS URGE CAP ON DIESEL FUEL REBATE TO POWER ON FARM ENERGY TRANSITION

As volatile fuel prices and supply insecurity – particularly of imported diesel – leave rural communities exposed, Farmers for Climate Action has released a brilliant new roadmap to save costs and improve energy security by switching to locally produced, lower-cost energy: Energy Sovereignty for Regional Australia: Protecting Farmers, Powering the Future

Dependence on the global diesel supply chain means farmers are vulnerable to price spikes that they cannot control. A key recommendation of the report is reform of the Fuel Tax Credit Scheme diesel rebate that would affect only the biggest claimants – almost exclusively major multinational resources companies like BHP who are refunded hundreds of millions of dollars per year, keeping them addicted to diesel and disincentivising them from moving to electrification and decarbonisation of mining operations. The rebate for farmers would be protected.

The report reflects CEF’s call for the diesel rebate to be capped at $50m per claimant. It recommends that a significant portion of the savings be earmarked for a dedicated regional energy shift program that helps farmers adopt best‑fit biofuels, electrification and enabling infrastructure, accelerating the shift to locally produced, lower‐cost, more resilient energy systems.

Australian farmers are already electrifying irrigation, water pumps, and processing machinery, cutting diesel use. The cap would leave not one farmer affected, but enhance energy security by driving electrification of farm equipment using clean energy generated on farm  – one of the biggest opportunities for farmers to reduce costs and ensure energy sovereignty and practical self‐reliance.

>>> See the report by CEF’s Matt Pollard: Transition Tax Incentive: Reforming Fuel Tax Credits

>>> See our commentary on ABC in relation to news that the Iran War delayed Labor’s consideration of FTCS reform, with internal pressure to revisit this issue now building ahead of the ALP Conference in July. Now is the perfect time to create a tailwind to align public policies, energy independence and decarbonisation, mobilising the power and leadership of our world leading mining firms.

>>> Tim’s Spark Club podcast with Grant McDowell, Diesel Fuel Rebate Underpins BHP’s Inaction 

>>> Also see Tim in China Daily on the impacts of rising fuel costs and supply issues on Australians including those in the agriculture sector. 

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RENEWABLES AND BATTERIES SURGE UNDERPINS FALLING EMISSIONS IN LATEST GREENHOUSE DATA

The latest quarterly reporting from Australia’s National Greenhouse Gas Inventory shows emissions for the year to December 2025 were down 2.1% (9.7Mt CO2-e) compared with the previous year to 458.9Mt of CO2 equivalent (Mt CO2-e). 

Decreased electricity emissions (down 3.8%; 5.7Mt CO2-e), reflected record renewables generation and the ongoing displacement of coal and gas, as in the last quarter of CY2025 renewable energy supplied more than 51% of energy in the national electricity grid for the first time.  A key driver has been the unprecedented surge in home batteries, a result of the stunning success of Energy Minister Chris Bowen's Cheaper Home Batteries Scheme.

While emissions in other sectors were also down, bucking the promising trend was industrial emissions (up 3.0%; 0.9Mt CO2-e), primarily due to increased production of steel.

That makes for a very clear impetus for Energy Minister Chris Bowen's Safeguard Mechanism Review later in 2026: we need to reform the SGM by including the electricity sector post 2030 to level the playing field and send the long term pricing signal investors need to deploy capital into electricity infrastructure. Secondly, we need to deepen the reach of the SGM by ratcheting down the emissions threshold for affected industrial facilities from the current 100ktpa progressively over time to cover facilities generating 25ktpa. And finally, we need a floor price on Australian Carbon Credit Units (ACCUs) / SMC that progressively ratchets up over time in real terms, to give investors and corporates the price signal they need. How can finance decisively accelerate their mobilisation away from climate destroying carbon and into renewables absent a price signal, Treasurer Jim Chalmers?

Australian solar farms construction commencements to hit record high in 2026…

Positive momentum is already underway, as more solar farms will begin construction in 2026 than any previous year on record. As Rystad reports, the surge is turbocharged by big miners including Fortescue and Rio Tinto developing large-scale solar projects to enable renewables-powered mining and processing, while laggards like BHP continue to drag their feet. Of the 2.6GW of new solar projects that have started construction since the beginning of 2026, ~95% will have a BESS attached, another sign of the battery revolution gaining pace. The global battery boom – the scale, speed and affordability of which is brought to the West by China, Australia’s number #1 trade partner –  is turbocharging the global energy and transport system transformation, assisted by the hyper fossil fuel inflation inflicted on the world by Trump's war on Iran.

Australia needs to see utility scale firmed renewable energy generation capacity double the current installation run-rate. 2026 looks like the first year we could deliver on that!

IEA: energy investment in clean energy tech massively outpaces fossil fuels…

Meanwhile the International Energy Agency’s new World Energy Investment 2026 report finds that global investment in clean energy technologies is expected to reach $US2.2 trillion this year, nearly double the global cost annually of oil, gas and coal.

As Tim said in The Point, current global “trade and policy disruptions are seeing geopolitical re-alignments and regional agreements, with associated investment opportunities. While climate discussions have generally become lower priority, the heightened focus on energy security still leads to the same conclusion: decarbonisation and energy independence are strategic national priorities.”

>>> See Tim’s commentary on ABC online, Fuel shock spurs business uptake of green equipment including batteries and EVs and on ABC TV’s The Business,  and read the full article in The Point.

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CHINA UPDATE

Watch out for our forthcoming China Monthly Energy Update, in the meantime some highlights since our last CEF newsletter:

Chinese investment in Europe has reached its highest level since 2018, as outlined in new report by MERICS, and surpassed other high-income economies for the first time, with the region accounting for ~25% of Chinese global investment in 2025, up from 17% in 2024 as FDI into the US flatlines. China invested €16.8bn in Europe last year, up 67%  year on year, with 42% directed toward the EV supply chain. 

We have long tracked China's Outbound FDI in the cleantech sector, with  >US$220bn invested globally in cleantech. An additional >US$120bn has been invested in critical minerals and strategic metals mining and upstream value-add since the start of 2023, all part of a clear global vertical integration strategy that makes it exceptionally difficult to compete with Chinese manufacturers. For Australia, that is a relatively simple outworking – we have very little value-add manufacturing left. The absence of cheap energy is telling, despite the fact that Australia is world #3 fossil fuel exporter. We need a price on carbon to value embodied decarbonisation in our value-added exports: bring on a path to an Asian CBAM!

Clean tech exports from China to Europe also continue to rise: auto export volumes were up 15%, battery shipments up 43% and wind equipment exports up 65%.

Globally, Chinese EV exporters are the biggest winners from Trump's war on Iran! As reported in CNEV, while the domestic Chinese EV market remains weak, with auto sales down substantially, China's new energy vehicle (NEV) sector is embracing the nation's 'Going Global' strategy. BYD overseas sales reached 160,644 units, up 80.4% yoy. Geely Auto International sold a record 85,144 vehicles overseas in May 2026, a surge of 183.7% yoy. Great Wall Motor Co. sold 50,688 vehicles overseas in May, growth of 46.8% yoy.

In Australia, EV uptake is surging as noted by Giles Parkinson in The Driven. EV sales hit a record 20% share in May, as sales of diesel utes slump. As reported by Nick O’Malley in the SMH, a purpose-built ship owned by BYD docked in Melbourne last month carrying 5,000 vehicles. Tim noted:  “It’s a turning point for EVs in Australia…an acceleration of the energy system transformation here… We’ve actually made really good progress in the last four years but what the war in Iran has done is highlighted the critical security benefits of energy independence, which comes from the accelerated deployment of EVs, passenger vehicles, freight, and in our mining sectors. I’m in awe of the vertical integration that the Chinese battery and EV manufacturers have achieved in very short order, all the way from the lithium and nickel and copper mines through the batteries, through the EVs, through the distribution, and now even in owning the transportation system to get their EVs to market globally.”

>>> See Tim’s op ed in China Daily: China’s exports offer cost effective path to energy security

>>> Read Tim’s commentary in the SMH: An enormous ship docked in Melbourne on Sunday. Its cargo could permanently change Australian motoring

>>> See Tim’s commentary on Australia/China collaboration on solar energy in China Daily.

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