5 AUGUST 2025

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

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PRODUCTIVITY DOMINATES POLICY AGENDA: CARBON PRICING & REFORMING #1 FOSSIL FUEL SUBSIDY ARE KEY

Ahead of Federal Treasurer Jim Chalmers’ August Productivity Roundtable, the Productivity Commission has released interim reports on two of the Five Pillars of Productivity Inquiry including ‘Investing in cheaper, cleaner energy and the net zero transformation’. The report urges that Australia improve incentives in electricity, heavy industry and transport – which together account for 79% of Australia’s gross emissions – to support an efficient net zero transformation. 

‘Investing in the net zero transformation’ identified a number of key priorities. These included:

• accelerating regulatory and environmental approval timeframes for new energy projects, and

• expanding the Safeguard Mechanism – which requires Australia’s largest emitters to reduce emissions below a declining baseline or pay a carbon penalty – to include more industrial facilities, by lowering the threshold of facilities captured to 25,000 tonnes of CO2 emissions pa from the current 100,000tpa.

This reflects the PC’s positioning that emissions reduction policies in the electricity, transport and industrial sectors should be expanded in a way that mirrors the effect of a broader, nationwide carbon price as Ryann Cropp writes in the AFR – a key takeaway of the report.

Mining giant Rio Tinto’s submission to the inquiry underlined that a market based price on carbon is the critical policy architecture to incentivise the private sector to make low-carbon investments and drive down emissions. CEF wholeheartedly agrees, and notes Professor Ross Garnaut’s warning at the Clean Energy Council Summit that a carbon price is key to Australia achieving its renewable energy target.

The PC report also recommended policy settings to incentivise reductions in emissions from heavy vehicles, by limiting access to the federal diesel Fuel Tax Credit (FTC) Scheme. However, it failed to address the single largest beneficiary – our major miners collectively claiming billions under the Scheme for the operation of off-road mining equipment, including diesel haulage vehicles. 

This massive fossil fuel subsidy will cost the budget almost $48 billion over the forward estimates, and acts as a huge disincentive for mining giants to move from site equipment powered by imported, high-emissions diesel to investing in electrified and decarbonised alternatives. In doing so, it dramatically undermines the net zero transformation of the resources sector. 

Our new report, releasing later this month, urges reform of the FTC Scheme into a ‘cap-and-reinvest’ Transition Tax Incentive (TTI), as advocated by Fortescue, which endorses CEF’s model. 

The TTI would require mining companies to invest any diesel fuel tax credits they receive above a $50m pa threshold into decarbonisation and electrification, e.g., battery electric vehicles and clean-energy infrastructure – a critical step to improving the productivity of Australia’s resource sector. This will displace diesel and safeguard Australia’s economic resilience against diesel price volatility, as it helps Australia to achieve its emissions reduction commitments. 

Our updated analysis will reveal the clear opportunity for converting the FTC Scheme’s huge headwind to net zero transformation into a massive tailwind that accelerates the greening of our world-leading resources sector, with major productivity payoffs.

As for on-road EVs, we roundly disagree with the recommendation from the PC to remove the fringe benefits tax exemption on the assumption that it duplicates the effect of the New Vehicle Efficiency Standard.

As Tim told the AFR this week, the policy is an important tool to drive the uptake of EVs – and safeguard Australia’s future energy security: “The FBT exemption is an effective scheme to accelerate the uptake of the latest technology as fast as possible and to permanently cut our addiction to imported diesel and oil. We’re in the middle of a transformation. Let’s accelerate the technology adoption rather than impede it."

>>> Read the full story quoting Tim on the FBT exemption for EVs in the AFR.

>>> Read an op ed by CEF partner and board member Blair Palese, founder of the Climate Capital Forum in The Australian, featuring the Forum’s 10 Ideas to Grow Australia’s Productivity (including FTC Scheme reform), in the run up to the Productivity Roundtable 19-21 August. 

>>> Tim joined a Climate Capital Forum delegation to Canberra on the 10 Ideas led by Blair Palese at the commencement of parliament last week. Tim, Blair and other CCF members held 28 meetings with officials from Treasury and DCCEEW, numerous senators and MPs, as well as a number of Community Independents – including, in the spirit of nonpartisanship, Bob Katter’s CoS on Mt Isa’s copper opportunity. 

Blair writes: “Not only did we have some incredible and I hope impactful meetings with departments and elected officials on our ten suggestions for how to use decarbonisation, renewables and greentech to ensure Australia's productive economic future, we got into the policy detail. From getting committed funding much more rapidly deployed (ie., via the NRF, ARENA and CEFC) and more early-stage cleantech funding to expanding FMiA Production Tax Credits to green iron and reforming superannuation reporting to encourage investment at home, there was real interest in our thinking and recommendations.”

Climate Capital Forum members take their 10 Ideas to Grow Australia’s Productivity to Canberra (with Tim top row, second from left and Blair middle front)

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AEMO: RECORD HIGH ROOFTOP SOLAR OFFSET DEMAND LAST QUARTER

BOWEN SUPERSIZES CIS & CSIRO RESTATES FIRMED RENEWABLES ARE LOWEST-COST POWER

The Australian Energy Market Operator (AEMO)’s Quarterly Energy Dynamics report for 2QCY2025 showed record high distributed PV output offsetting underlying demand growth. 

Underlying demand across the National Electricity Market (NEM) was up 0.7%, underpinned by rooftop solar, up 15% yoy, leading to a 0.7% reduction in on-grid electricity demand. AEMO is increasingly focussed on maintaining and managing minimum on-grid demand.

The Federal government’s rapid deployment of its flagship $2.3bn distributed battery scheme for households and businesses (with press reports of an extra $1.2bn second phase) is the obvious solution to time-shift low-cost zero-emissions renewables into periods of high cost peak demand, leveraging the existing grid transmission and distribution (T&D). The stunning success of the scheme to-date is a testament to community appetite for renewables, and this momentum now needs to be built on.

Fast to deploy, this leverages the existing grid at speed and scale, allowing for the integration of a lot more new renewable energy capacity. A win for both decarbonisation and for stabilising energy prices for all.

Critically, utility-scale battery energy storage systems (BESS) must be deployed at speed and scale concurrently with DER. 2025 is proving to be the year of the BESS disruption, both in Australia and globally, with rampant capex deflation and scaling up of deployments.

We strongly endorse and applaud the 25% upscaling of the Capacity Investment Scheme (CIS) from 32GW to 40GW by Climate and Energy Minister Chris Bowen and welcome the four CIS tenders due September-November 2025 as ways to accelerate solutions to the minimum on-grid demand issue AEMO highlights.

We need to turn this risk into a massive, cost-effective opportunity to drive the energy system transformation and deliver on Minister Bowen’s ambitious but achievable 82% renewables by 2030 target. This timely increase in climate and energy security ambition will lock in significant replacement and new generation capacity to smooth the retirement of our increasingly unreliable coal clunkers.

AEMO reports:

• variable renewable energy (VRE) and battery output reached new highs. Wind generation was up 31% yoy over 2QCY2025 and grid-scale solar generation increased 17% yoy. This drove an increase in the overall supply share met by renewables to 37.9%, up from 32.2% in 2QCY2024.

• a record addition of 3.1GW/6.4GWh of new BESS capacity entering the NEM since the end of 2QCY2024.

• Coal generation's share declined 3.9% yoy to 40.7% in 2QCY2025 – exactly the direction of change we need to see – and lignite’s share declined 0.9% yoy to 15.3%.

Meanwhile, the gas cartel continues to gouge Australian industry and consumers, free of constraints from the Federal government or ASIC. While methane gas generation plays a role, this is small and progressively declining. Gas-fired generation across the NEM decreased by 12% yoy, with a share of just 6.1% (vs 7.0% in 2QCY2024).

Gas generation was also exceptionally expensive, doubling to average >$400/MWh over the 2QCY2025, driving up average electricity prices for everyone (with pricing exceptionally high in June 2025). 

The best and only solution to permanently reducing fossil fuel hyperinflation in Australian energy is to rapidly accelerate the speed and scale of new firming and zero-emissions generation capacity. 

As the new CSIRO GenCost 2025 report highlights yet again, the lowest cost power is wind and solar firmed by batteries, while nuclear small modular reactors (SMRs) are the most costly. It is absolutely bizarre to see reports that the UK’s next nuclear plant could cost a truly staggering £100bn, making the CSIRO look conservative, and Ted O'Brien in need of a far better consultant!

As former NSW Energy Minister and now Climate Change Authority Chair Matt Kean put it as he met with UN Climate chief Simon Stiell last week, it is now the case that “maximum ambition should be our catchcry”: “‘Shine, baby, shine' and 'store baby store' should carry an Australian trademark and be hollered from our rooftops — perhaps with an Aussie accent.”

Taking a leaf from her predecessor’s book, NSW Energy Minister Penny Sharpe also announced last week a new tender to seek 500MW of firming capacity. The projects have to be built by 2027/28, to align with the closure of Australia’s largest coal fired power clunker, Eraring on the NSW central coast. This is the kind of planning we need to see more of to secure Australians’ low-cost clean energy future.

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UN CLIMATE CHIEF VISIT – AUSTRALIA HAS RICH POTENTIAL BUT NEEDS GREATER AMBITION

What does real climate ambition look like for Australia as it prepares its 2035 NDC and COP31 bid?

Caroline Wang, on behalf of CEF, joined UN climate chief Simon Stiell and leaders across Australia’s climate, finance, and industry community at a roundtable hosted by the Smart Energy Council in Sydney.

The message? Australia is rich in potential – sun, wind, tides, minerals – but poor in execution at scale. While we lead in rooftop solar, we’re falling short where it also matters: scaling up grid-scale renewables. We’re building clean energy infrastructure at only half the pace needed to hit our 2030 targets.

Key barriers include:

• Outdated environmental and planning regulations

• Lack of decarbonisation incentives for high-emitting industries

• Insufficient political conviction and leadership – approvals for new gas projects speak louder than climate rhetoric

• Foreign investment rules are deterring much needed investment into large-scale renewable energy capacity and electrification.

Simon urged us to shift from pressure to constructive, evidence-based guidance to the government on what whole-of-economy implementation could look like – drawing from global best practice.

>>> See Tim’s comments in  Michael West Media on the challenge put to Australia by Simon Stiell.

Meanwhile, China is walking the talk:

• Building the world’s largest renewable energy system

• Building the world’s largest clean tech supply chain

• Undertaking over 1/3 of global clean energy investment

• 75% of clean energy patents

• CO2 emissions plateauing, after peaking in March 2024 (6 years ahead of their climate target)

• A forthcoming economy-wide NDC covering all greenhouse gases.

If Australia is serious about a “Future Made in Australia” and addressing our productivity decline, we should engage pragmatically with the Chinese firms leading the global clean energy race – as many other industrialising nations already are. It’s not just economic pragmatism, it’s the first step to demonstrating regional leadership. PM Albanese's recent trip to China provides the political momentum to get on with it.

Caroline Wang (top, third from left) with other delegates at a roundtable with UN climate chief Simon Stiell. Credit: Smart Energy Council.

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CHINA MONTHLY UPDATE –  NEW WIND & SOLAR ADDS JAN-JUNE 10X FOSSIL FUELS, MAKING UP 90% OF NEW ADDS

☀️ 212GW new solar capacity added in 1H 2025 – up 107% yoy
🌬️ 51GW new wind capacity added – up 99% yoy
⚡ 90% of new capacity additions are wind & solar  
🔥 Thermal generation fell 1.9% yoy in 1H 2025; utilisation rate hit record low of 46%
🔋 21.9GW / 55.2GWh of new battery storage installed in 1H 2025 – +69.4% / +76.6% yoy
🚗 5.5 million NEVs sold – up 28% yoy; China maintains global EV leadership
🧠 +35.6% yoy investment in industrial robots – boosting productivity
🌍 1% of global CO₂ emissions avoided in 2024 via China’s clean tech exports
🏭 China leads in photovoltaics patenting – 80% of global solar PV innovations in 2022
🏗️ Zero-carbon industrial parks prioritised in 2025 policy with new national guidelines
🌐 US$9.7bn BRI green energy projects in 1H 2025 – record high
🇭🇺 🇧🇷 BYD expands Hungary electric bus factory; begins production at Brazil factory
🇮🇩 Trina Solar opens Indonesia’s largest solar plant – 1GW, US$94m investment 

In Australia, CEF’s July engagement highlighted the urgent need to lift renewable energy deployment to compete in a fast‑decarbonising global economy.  At the Australia‑China Clean Tech Innovation Roundtable, industry leaders stressed scaling renewables faster, aligning industrial strategy with manufacturing and innovation, and pursuing joint ventures with Chinese firms to unlock technology transfer and scale. 

PM Albanese’s visit to China saw agreement on a Policy Dialogue on Steel Decarbonisation, but progress will require resolving tensions in Australia’s foreign investment regime, which currently deters Chinese clean energy capital. 

CEF continues to advocate reforms to FIRB to streamline approvals for greenfield renewables and align investment rules with the Future Made in Australia agenda, positioning Australia to seize opportunities in the green industrial revolution.

For Australia, the opportunity is bigger than jobs or panels. With China leading on clean tech – robotics, battery storage, and advanced manufacturing – strategic collaboration could be the bridge back to industrial relevance. The country’s manufacturing share of GDP has sunk to 6%, one of the lowest in the OECD. But with the right technology partnerships, low-cost renewables, and a reformed regulatory environment, Canberra could begin clawing its way back.

>>> See the recent AFR article by Jessica Sier quoting Tim, From solar panels to super dams: China’s clean energy takeover, highlighting the time-critical opportunity for Australia to partner with world-class Chinese green energy and clean tech firms to enable our energy transition and prosperity in a net zero future. As Tim remarked: “The Chinese companies are ready to go. But they’re waiting on clarity around incentives, and a signal they’re welcome.”

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 A MULTILATERAL RESURRECTION FOR WHYALLA?

This week we saw BlueScope, the party that secured a pivotal advantage of a ‘right-of-last refusal’ provision for Whyalla Steelworks, form a heavyweight consortium of world leaders across Japan, South Korea and India to bid for the Steelworks. BlueScope, POSCO, Nippon Steel and JSW Steel lodged an indicative EOI in the first stage of the sale process. 

This leverages the export market potential of India, Japan and Korea, as well as enabling the engagement of valuable export credit agencies that could provide the necessary demand-pull mechanisms and concessional financing required to scale production in Whyalla. The development of an outsized green iron production facility coupled with an electric arc furnace could harmonise the production of steel across Australia, as well as provide valuable feedstock to integrate into BlueScope’s Port Kembla Steelworks to lower the emissions intensity of its operations. 

This venture also has the potential to create a valuable green iron corridor for export to Japan, Korea and India, minimising operational costs through economies of scale and leveraging Australia’s comparative advantage in renewable energy resources, whilst maintaining equity across the steel value chain for global leaders that currently operate integrated steel mills. 

As we wrote in our recent ‘Green Metal Statecraft: Forging Australia’s Green Iron Industry’ report, developing multilateral green metals solutions is key to enabling first-of-a-kind capital deployments of green steel in the East Asian and Pacific markets. This consortium could be a welcome sign of the emerging opportunity to not only salvage the ailing Steelworks, but build a pathway for the region to become a global leader in green iron.

>>> Watch Tim talk about Australia’s enormous opportunity in green iron and steel on Sky Newsday with Kieran Gilbert from Parliament House.

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IEA ELECTRICITY MID YEAR UPDATE – INCREASED PROBABILITY COAL POWER PEAKED IN 2024

The International Energy Agency (IEA) Mid-Year Electricity Update for 2025 shows increased probability that global coal-fired power generation peaked in 2024, with renewables covering all new global electricity demand even as the progressive electrification of everything (led by China, where EV sales were up 32% yoy in 1HCY2025) accelerates electricity demand growth at a rate higher than GDP growth. 

Methane gas fired power generation is forecast by the IEA to grow marginally, cannibalising coal fired power generation. 

This gets to the heart of the false narrative that just because China is adding a lot more flexible new coal fired power capacity, thermal generation is up: actual thermal power generation in China is down 1.9% yoy in the first half of 2025 (more capacity but running at lower operating rates).

The IEA expects global coal-fired output to be surpassed by renewable energy generation as early as 2025.  

It estimates wind and solar generation in 2025 will surpass 5,000TWh, up 25% yoy globally, in 2026 surpassing 6,000TWh, up 20% yoy globally.

Nuclear is a rounding error in terms of global electricity growth.

But the world remains well off track with its COP commitment to treble renewable deployments to 11TWh pa of generation by 2030, with only China and India of the majors deploying at the required scale and ambition, as a new report from Ember details. 

As Australia bids to host COP31 next year, it has a once in a generation opportunity to show leadership domestically and globally on the collective action we need to see to achieve this key goal.

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OUR MEDIA |

See all of our media here.

See our recent media, including Tim commenting on the likelihood that Adani will never pay tax in Australia, as reported by Jonathan Barrett in The Guardian.

OUR WORK |

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

Some of Tim’s recent presentations include the National Manufacturing Summit, where he spoke alongside David Shankey, the director of the Net Zero Economy Agency, noting that as cleantech investment surges and China leads, Australia is responding. CEF advocates carbon pricing and highlights green iron as a strategic opportunity.

Tim also presented to the Asia Pacific Women of Faith Network (APWoFN) Climate Flagship Project 2025, which is leading efforts to prioritise climate change within the Asian Conference of Religions for Peace (ACRP).

See numerous previous presentations here.

PREVIOUS NEWS UPDATES |

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

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