Op Ed: Opposition's plan for nuclear – published in Australian Financial Review

Peter Dutton's nuclear plan to wipe out Australia's aluminium smelters

Of all the problems with Peter Dutton’s nuclear energy costings released in the dying days of 2024, probably the biggest is that the entire policy assumes much of Australian heavy industry closes over the next few years.

This is particularly ironic as Mr Dutton claims with a straight face that nuclear power is necessary for industrial growth.

The details of his so-called policy costings reveal the only way the Coalition can make nuclear energy appear cheaper than it is – even Ted O’Brien admits he’s not predicting nuclear will bring power bills down – is to assume Australia will need a lot less power.

It indicates an extraordinary degree of pessimism about Australia’s manufacturing future, specifically for electricity-hungry industries like aluminium smelting.

In releasing those figures, the Coalition has tied themselves to a future scenario predicated on large industrial facilities across the southern and eastern states of Australia halving their energy use by the end of 2030 – and keeping it there.

Specifically, the model Peter Dutton has adopted as the basis for his energy policy, shows a material drop and then permanent flatlining in industrial electricity demand for Victoria, Tasmania, Queensland and NSW.

That is, less than half the energy we need to power our biggest industrial users right now – let alone to enable growth in the future.

Peter Dutton says he supports the aluminium industry, but his own nuclear costings rely on shutting it down.

Analysis of the timing of large loads coming off, shows it coinciding with the end dates of existing power purchase agreements for each of Australia’s four aluminium smelters across those states.

It shows a Liberal Party either cavalier about, or comfortable with Tasmania’s Bell Bay smelter closing in less than 12 months by January 2026, Portland’s smelter winding down in July 2027, plus NSW’s Tomago and Queensland’s Boyne smelter gone by July 2029.

According to the Australian Aluminium Council, together these four smelters account directly and indirectly for nearly 13,500 jobs and contributed more than $3.3 billion to the economy in 2023 alone.

That Mr Dutton spends his time stirring division and cultural discord rather than pushing his pick for treasurer and energy minister to come up with a serious energy policy to meet the needs of industry and households now and into the future should have a lot of people worried.

Instead, the cop-out of assuming lower industrial demand simply signals a country doing less, producing less, and selling less.

The underlying figures the Coalition relies on come from a scenario set out – but ultimately not adopted – by the Australian Energy Market Operator last year, as part of its regular planning process for the nation’s energy infrastructure needs between now and 2050.

AEMO explains that the scenario the Coalition has adopted as its truth represents a world that has recovered from COVID-19 more slowly than what we’re seeing so far, and where there are greater ongoing challenges in global economic conditions impacting Australia’s transition.

Specifically, AEMO says that under this scenario, “economic and international factors place industrial loads at greater risk”.

It also suggests the scenario is unlikely to be consistent with the pace and breadth of change expected to limit global temperature rises to two degrees.

Crucially, it doesn’t adopt this scenario based on stakeholder feedback that found it more likely Australia is on a trajectory for higher economic and energy demand growth.

It begs two questions:

As someone who wants to lead a country, why would Dutton be planning for an economy that’s smaller and an industrial sector that’s worse off with no growth opportunities, before he’s even begun? Why bank on job losses to bring down the cost of his electricity system?

And if you’re not planning for a contracting economy, then where’s your credible energy policy to meet growing demand in the next five, 10 and 20 years?

We need to be planning an energy system for economic growth. We need to be planning an energy system for the future, one that has bigger industry, plus enough electricity to power more data centres, and artificial intelligence.

It’s why Industry Minister Ed Husic has led work to put green metals industries, including alumina and aluminium at the heart of our Future Made in Australia plan, and announced a record $2 billion investment in the industry today.

We’re ensuring Australian industry has the best shot at being domestically and globally competitive, rather than baking in its imminent demise as an easy out for doing serious policy thinking.

The Coalition has painted itself into a corner with this one. Either it believes Australian industry productivity is about to fall off a cliff, or it knows the purported cost savings for its ill-thought-out nuclear energy scheme are hot air. It can’t be both.

The Coalition’s timeline will need major expansion of gas to replace sidelined renewable energy projects, which will be a huge and needless expense.