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

1 NOVEMBER 2024

STORM CLOUDS FOR QLD’S CLEAN ENERGY LEADERSHIP AS LNP ASSUMES POWER

The Queensland election last week saw the David Crisafulli-led LNP form a majority government. QLD is now at serious risk of being locked into high-emissions fossil fuels to power the state, derailing the crowding-in of tens of billions in renewable energy and green industry capital unlocked by critical new transmission and grid firming investments made under the previous government. 

The last state budget comprised $26bn of strategic public investment into renewables and enabling energy transition infrastructure, the largest state investment package to-date in Australia, part of the $62bn transformational Energy and Jobs Plan.

Backtracking on the LNP’s vote to support the legislated 80% by 2035 carbon reduction target, and pushing against the 80% renewables by 2035 target, incoming Premier Crisafulli has now promised to extend the life of coal power clunker Callide B past its scheduled closure in 2028, declaring QLD’s coal plants will “burn indefinitely”. The Smart Energy Council has said Crisafulli’s promise is “coalkeeper on steroids”. The LNP has also promised to scrap the planned large-scale pumped hydro project, Pioneer-Burdekin.

Queensland’s record investment into the energy transition was underpinned by former Treasurer Cameron Dick’s progressive coal royalty scheme, which added a staggering $33bn to QLD’s budget from FY22-24. Premier Crisafulli has signalled reforms to ‘free’ the state’s coal industry from taxes and regulations, but the Miles Government’s Progressive Coal Royalties Protection (Keep Them in the Bank) Act, passed in September, means changes to the regime require legislative amendment.

Worst case scenario is all of the above will leave QLD falling behind as the rest of Australia, and the world, continue to accelerate decarbonisation. 

We urge the Crisafulli Government to embrace the opportunities of lower cost, sustainable energy for industry and consumers, rather than the myopic self-interest of fossil fuel lobbyists trying to hold back the tide. Qld will pay the long-term price.

>> Read Matt Pollard’s full analysis.

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CSIRO: CLIMATE IN TROUBLE AS 1.5 DEGREES BREACHED 

The CSIRO State of the Climate 2024 report out today is yet another red alert that we must act now at speed and scale to avert climate catastrophe.

The report finds we have already breached the 1.5°C Paris Agreement threshold. Australia’s weather and climate has continued to change with an increase in extreme heat events, longer fire seasons, more intense heavy rainfall, and sea level rise. Internationally, we have seen climate destruction in action overnight in Spain, and this month in Florida and Nepal.

What will it take for our governments to stop the reckless expansion of coal and gas? We're uniquely endowed with world-leading resources to speed our energy transition and pivot from a global top 3 petrostate dependent on fossil fuels to a thriving future as a zero-emissions energy, trade and investment leader – with the resulting benefits for climate, plentiful, permanently lower-cost clean power, the economy and jobs.

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AEMO: NEW CAPACITY PIPELINE SURGING BUT 'NEED FOR SPEED' – AND SCALE – REMAINS

AEMO's Quarterly Energy Dynamics report for the September quarter finds that wholesale spot prices averaged $119/megawatt hour (MWh) across the national electricity market (NEM) in 3Q2024 – up $56/MWh or +88% year on year (yoy).

This is due to lack of sufficient new firmed renewables supply, particularly battery energy storage systems (BESS), with coal prices still double the long term average – another in a series of sustained indicators that we need to massively accelerate our electricity sector transformation.

More generally, the emerging picture is promising. Despite low hydro generation this quarter (-22% yoy), the overall contribution of  renewables to supply reached a new record Q3 high of 39.3%. A new peak renewable contribution record was set in a half-hour period on 9 Sept at 72.2% of total generation. Australia is well on the way to 100% instantaneous variable renewable energy (VRE) penetration.

Excellent to see that in 3Q2024, 45.6 gigawatts (GW) of new capacity was progressing through the connection process from application to commissioning, +36% yoy. This includes 14.6GW of battery projects, +87% yoy.

Australia desperately needs to get this new infrastructure approved at speed and into construction, then commissioned. Only a significant amount of new firmed generation capacity will permanently reduce the fossil fuel hyperinflation smashing Australians over the last 3 years – and slash emissions.

There are signs regulators and planning departments are finally waking up to the cost to Australians of their lethargy. Connections projects reaching milestones during 3Q2024 increased substantially, with 2.6GW reaching application approval, 3.5GW registered and connected to the NEM, and 1.3GW progressing through commissioning to reach full output. But this needs to double again.

Figure 5 above highlights the solar duck curve in full operation, and the clear and rising need for accelerated deployments of BESS, behind the meter energy storage and batteries-on-wheels to time shift cheap, zero-emissions solar generation to when it is needed, and for demand response management capacity deployments as well. BESS can be deployed rapidly and where most needed, to overcome delays to VRE deployments waiting for massive grid projects, reducing the overall need for grid expansions.

Speed and scale will solve the energy cost of living crisis, and allow end of life coal clunkers to retire – key to decoupling our energy system from climate-destroying fossil fuels.

>> Read Tim’s fuller AEMO QED analysis.

>> See Tim on ABC TV News Breakfast speaking about the peak of 73.6% renewables penetration in Sept; and on ABC Radio Illawarra on this topic.

>>Read Tim’s commentary in PV Magazine on the IEA’s forecast that Australia will add 53GW of renewable capacity between 2024-2030.

>> See Tim’s commentary in PV Magazine on the surge in BESS-under-construction.

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IEA: FOSSIL FUELS DECLINING, CLEAN ENERGY ACCELERATING, MUST GO FASTER

The International Energy Agency (IEA)'s World Energy Outlook 2024 out this month reaffirms that we are in the process of a profound global shift with momentum on renewables additions accelerating at what the IEA says is an ‘unprecedented rate’– essential as geopolitical tensions heighten the need for nations to build energy security, resilience and independence. 

It projects that demand for all fossil fuels will peak this decade, before 2030; and that the surge in renewables is 'more than enough' to cover growth in global electricity demand and ‘push coal-fired generation into decline’. By decade’s end, the IEA says, global economic growth can be sustained ‘without additional amounts of oil, gas or coal’.

Australia – a top 3 global fossil fuel exporting petrostate – should read this as a key warning. The fossil fuel era is drawing to an inevitable close. Our future prosperity depends on hastening our energy transition and repositioning as a value-adding zero emissions trade and investment leader. We should be deploying our sun and wind to process our energy transition materials like green iron and critical minerals essential for clean tech onshore pre-export.

The IEA reports that global investment into cleantech is double the capital spent on oil, coal and gas combined, reaching ~US$2tn in 2024. However it warns that this investment rate needs to double again to accelerate transition momentum, especially in grid and storage where investment lags.

The IEA also highlights a global theme CEF sees as key. China dominates the world in cleantech, in domestic installation and manufacturing, but also exports and more recently, investing in global partnerships to deploy cleantech manufacturing & projects. This includes committing billions into building capacity in the Global South. 

The WEO showcases that China accounted for 60% of new RE added worldwide in 2023 and that its innovation and manufacturing leadership drives down costs of batteries, solar etc, enabling faster global deployment including in emerging economies where the benefits of transition are less well distributed.

Critically, the IEA cautions that nations’ current climate and energy policy settings mean we are on track for a dangerous 2.4°C of warming by 2100 despite an expected 2030 peak in emissions.

This brings home again the existential and economic imperative that the global community work together to pivot at speed and scale to firmed renewables – slashing GHGs in line with the Paris 1.5°C limit, delivering reliable low-cost energy to the world, and building thriving economies of the future.

>>See Tim Buckley’s commentary on Renew Economy and PV Magazine.

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CHINA – STILL THE BIGGEST ENERGY STORY ON EARTH

China continues to deploy renewable energy at a globally unprecedented rate, installing 24GW of renewable capacity in September. By comparison, Australia installs about 6GW annually! 

China’s massive ongoing ‘electrification of everything’ continues to drive electricity demand, up +8.7% yoy in September. With weak hydro generation (-14.6% yoy), even excellent growth in wind and solar generation – skyrocketing +37.5% yoy – couldn't match demand growth, resulting in a surge in thermal generation (+8.9% yoy). Including small-scale generation, total power system generation January-September was 7,445TWh, +6.3% yoy to-date. Within this, thermal power is a relatively modest +1.9% yoy to date this year.

(China National Bureau of Statistics energy data; Ember's electricity data.)

Climate Energy Finance's new report, Green Capital Tsunami, released at the beginning of this month, details how China’s exceptional domestic deployment of renewables is complemented by its >$100 billion outbound cleantech investment since 2023, which is turbocharging global energy transition. Four new deals this month since our report’s release exemplify how China is “going global” in its domination of zero-emissions industries of the future:

• Battery giant CATL and State-owned Indonesia Battery Corporation sign an MoU to build a new US$1.5bn 15GWh capacity battery cell plant in Karawang, West Java. 

• China’s HiTHIUM Energy Storage joined Saudi firm MANAT on  a 5GWh production facility in Saudi Arabia. To enhance grid stability as renewable energy capacity increases, Saudi Arabia plans to build 24 GWh of BESS  between 2024 and 2025. 

• Illuminate USA’s new solar module factory was commissioned in Ohio, owned in JV by Invenergy (51%) and China’s LONGi Solar (49%), one of the near 30GW of solar module manufacturing capacity being built in the US in partnership with Chinese solar leaders. 

• China’s SANY Group secured sales agreements for over 1.6GW of wind turbines in India.

>> Watch Tim on SkyNews discussing China’s phenomenal foreign direct cleantech investment detailed in our Green Tsunami report, and see the SCMP article featuring the report (other media on the report listed in our previous newsletter is on our website).

>> See Tim’s commentary in the Japan Times on China’s cleantech supply chain dominance.

>> Hear Tim on The Energy Transition Show podcast discussing China’s transition and energy dynamics in India and Australia.

ON A RELATED NOTE, in Australia…

Investment into Australia by leading private Chinese cleantech corporates has lagged – hitting a multi-decade low of only $613m in 2023. But there are strong signs this is turning around into 2024, particularly in the firmed renewables sectors. 

There was excellent news this month of a partnership between Australia's super-efficient solar cell innovator SunDrive and Chinese solar manufacturing giant Trina Solar – an endorsement of the Federal Government’s $1bn investment in the Solar Sunshot program and its Future Made In Australia strategy.

The deal will build bridges between Australia and China, extending our competitive advantage and knowledge in world-leading solar technology development, and leveraging China's RD&D, supply chains, robotics and manufacturing scale. This provides an excellent opportunity for Australian solar engineers in training to work in commercial scale roles to ‘learn by doing’ on the job. A reindustrialisation of our economy, one step at a time, in partnership with world technology leaders.

The proposed JV will be majority Australian-owned, and should not preclude SunDrive from qualifying for taxpayer support under the ARENA grant program. In fact, this makes an investment in Australian advanced manufacturing and robotics a far more realistic investment proposition, while capitalising on the global value-add of the SunDrive solar cell technology (replacing silver with copper). 

AGL as a possible Australian equity partner would also bring balance sheet strengths and leverage the existing industrial base at the former Liddell coal power station, bringing jobs to the Hunter Valley and credibly illustrating the opportunities of the global energy system transformation in former fossil fuel heartland regions. A win-win all around!

>> Read Tim’s commentary on the deal in AFR and in PV Magazine.

>> See our US Studies Centre op ed on why collaboration with China is key both to Australia's national strategic interests in decarbonisation and collective global efforts on climate.

>>See China Daily’s article on the opportunities for Chinese private cleantech investment into Australia detailed in our Green Tsunami report.

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SEC DELEGATION TO JAPAN

Tim Buckley reports from his trip to Japan this month:

It was brilliant to join our partner the Smart Energy Council (SEC) in an Australian Delegation to Japan, led by Joanna Kay (Executive General Manager, SEC) and Annastacia Palaszczuk (International Ambassador, SEC). 

Beyond seeing some breathtaking Japanese cultural sites from Mt Fuji to Sumo wrestlers, highlights included catching up with the Renewable Energy Institute for a detailed briefing on the state of the energy transformation in Japan.

We attended a private briefing with the Australian Deputy Ambassador to Japan and a SEC-WWF Green Steel roundtable with Japanese industry participants. We had two excellent site visits to the Iwatani Advanced Hydrogen Technology Centre and an integrated behind the meter hydrogen fuel cell / BESS / solar hybrid proto-type at Panasonic RE100 (pictured above).

Other highlights included a private briefing on the prospects for green steel with JFE Steel.

This provided excellent context from Australia’s second largest trade partner, as Matt Pollard finalises our new CEF report on developing a green iron industry in Australia in partnership with North Asia, ‘Green Metal Statecraft: Forging Australia’s Green Iron Industry’. 

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GUPTA’S WHYALLA WIPEOUT, BUT (GREEN) STEEL PRODUCTION COULD ARISE ANEW

In 2017, GFG Alliance’s Sanjeev Gupta rode into Whyalla, SA, like a white knight, promising billions of dollars worth of projects when he acquired the steelworks, then in administration. Hamstrung by declining global steel prices, huge financial leverage, reports of fraud, and bankruptcy proceedings across Europe, Gupta’s SA operations are now unsustainable, and the plant’s fate appears increasingly aligned with his global portfolio of idled plants. 

Last week Australian rail freight giant Aurizon suspended its iron ore transport services to Whyalla while it chases unpaid bills on its contracts for millions of tonnes a year freighted from Gupta’s Middleback Ranges mines. September 2024 saw the SA Government seek advice from insolvency experts about the steelworks, given the risk of GFG going into administration, as the group falls behind in royalty payments, slashes major investment into sustaining capex, and delays electrification and decarbonisation, all while taking its dated blast furnace increasingly offline for longer periods.

Whyalla’s massive potential as a green iron and steel hub has been widely reported, but it needs recapitalisation to deliver. A move into administration by the GFG assets in Australia could be an excellent opportunity to bring in a credible, well-capitalised consortium with Asian steel expertise and synergies, supported by public interest equity and debt capital from the National Reconstruction Fund and/or the CEFC. 

With access to the existing steel mill and port infrastructure, there is a case for major investment in both the new electric arc furnace, which significantly reduces the emissions of steelmaking, and a green iron processing plant, leveraging the South Australian government’s green hydrogen initiatives. 

A strategic metals production tax credit in MYEFO in December 2024 for green iron, tied to a credible decarbonisation and domestic value-adding strategy, could dramatically enhance the investability of the above.  

With the right strategic vision and timely deployment of ambitious policy and investment levers, we could be on the brink of a new lease of life for the old beating heart of Australia’s steel production, and a key opportunity for regional revitalisation and Australia as a zero-emissions trade and investment leader.

>> Hear Tim on ABC Radio National’s Saturday Extra on a defining moment for Whyalla.

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NORWEGIAN GIANT’S THUMBS DOWN ON BHP’S CLIMATE-BILKING TRANSITION PLAN 

Norges Bank Investment Management (NBIM), which manages the massive US$1.7tn Norwegian Sovereign Wealth Fund, voted against BHP's Climate Transition Action Plan (CTAP) this week – bravo! The vote is a stark reminder that the “Big Australian’s” interim targets are nowhere near ambitious enough to respond to the climate crisis. They are also complacent about the long-term strategic threat to BHP's core businesses – zero-value-add iron ore and coking coal exports – while ignoring the opportunities ahead of a global green iron market and the inevitability that the company must pivot to secure its future.

BHP’s largest foreign competitor, Vale of Brazil, is partnering with China’s Jinnan Iron and Steel Group in a joint investment of US$627m in an iron ore concentration plant in Oman with the capacity to process 18Mtpa of low-grade iron ore from 2027, aiming to produce 12.6Mtpa of high-grade concentrate. Vale will invest $227m to connect the plant to its pelletizing facilities and  Jinnan $400m to build and operate the plant, which it will own. A first major step towards Oman building a HBI / green iron capacity. 

Meanwhile, BHP is investing in pre-feasibility studies for tiny pilot proposals.

Great work from our colleagues at the ACCR on analysing BHP’s CTAP to expose its misalignment with both Paris goals and portfolio resilience for BHP’s investors, as its competitors streak ahead.

NBIM's own 2025 Climate Action Plan clearly details their climate leadership expectations for their investment companies, aligned to the drive towards net zero in 2050, but necessarily also focussed on a shorter time horizon reflective of mounting climate pressures, i.e. in the form of time-bound interim emissions reductions plans.

At the BHP AGM this week, the regressive management succeeded in putting various stakeholders offside, from climate advocates unhappy with the company’s utter, protracted failure on leadership in decarbonisation, to unions protesting at its unfair labour hire practices. The icing on the cake is the CEO’s vocal opposition to the former QLD Labor Government’s progressive coal royalties, invoking the old self-interested chestnut that paying a fair share of tax deters investment, even as BHP’s BMA had booked 70% ROCE in a single year!

How dare the QLD government require that the ‘Putin windfall’ be shared with the public suffering a cost of living crisis exacerbated by the escalation in fossil fuel commodity prices filling multinationals’ coffers! Thanks to the Miles Government’s determination to act in the public interest, the state has raked in tens of billions in royalties to return to the people, underpinning a massive rollout of firmed renewables – the only solution to permanently slash power prices and emissions.

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TOP QUOTES__________

“Worst deal ever.” – 

CCA chair and brilliant former NSW energy minister Matt Kean’s apt summation of the NSW Labor Government’s capitulation to coal as it agreed to pay private operator Origin $450m of taxpayer funds to extend the life of Australia’s biggest coal wheezer, Eraring, for two years beyond its planned closure date of 2025. Kean revealed the deal was on the table when he was leading decarbonisation in the state, but he – a Liberal minister – opted to progress the Waratah Superbattery instead. A lesson for the current incumbents.

“The Australian economy faces an important challenge to reduce greenhouse gas emissions, and sourcing opportunities for investment in the energy transition will be a feature of our strategy.” –

Future Fund chairman Greg Combet flags that our $225 billion sovereign wealth fund is actively hunting for investments linked to the green energy transformation, a welcome corrective pivot from the approach of the previous chair, Peter Costello. Australia urgently needs greater strategic public interest investment to crowd-in private capital to decarbonisation. CEF calls on the Treasurer to establish a new $20bn special purpose mandate within the Fund to invest in equity and infrastructure to support pre-export value-adding our critical minerals and strategic metals, leveraging our currently underinvested world-leading renewables potential.

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OUR MEDIA |

View our recent media here, including Tim’s regular fortnightly commentary on the Spark Club podcast.

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. 

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AJ for Tim, Matt and Xuyang (see more on our team here).

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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.