Speech to AFR Climate and Energy Summit
I’m always pleased to join this Conference – this is the third I have been Labor’s energy and climate spokesperson – and my second as Minister.
In 2021 at this conference, when I was the Shadow Minister I called on the then Morrison Government to commit to net zero emissions by 2050, legislate that commitment and significantly improve its medium-term targets for emissions reductions.
They didn’t accept my suggestion. It took a change of government to achieve it but nevertheless it’s now been done.
Last year, five months into government, I spoke about the urgency with which we had hit the ground running to deliver key reforms including the Chubb review and reforming the Safeguard Mechanism – because from day one, there hasn’t been a moment to waste.
And since then of course we’ve done those things –
Including legislating our Safeguard reforms which will deliver 200 million tonnes of abatement by 2030.
One thing that hasn’t abated of course is the need for urgency.
The world just experienced the hottest September on record.
This followed the hottest August on record.
Which of course followed the hottest July on record -which of course was the hottest month ever recorded.
Now, I like the theme of this conference Crunch time for the transition – because crunch time it is.
Crunch time for the implementation of our plans, crunch time for energy security as we work to replace and expand the capacity our grid needs.
Crunch time in the next seven years to reduce emissions for us and for every country if we are to hold the world as close as possible to 1.5 degrees of warming.
Today I’ll do three things:
Provide a progress report on our policy implementation - and a reminder of the energy security imperative behind those policies.
Make an announcement about the next steps in our important plans to develop a green hydrogen industry.
And finally, make some observations about the latest attempts to distract and delay progress in our efforts to become a renewable energy super power.
RENEWABLES AND ENERGY SECURITY
When we announced our plans to reduce emissions by 43 per cent and lift renewables to 82 per cent of our electricity grid, it was fashionable to say this wasn’t ambitious enough.
Now, it’s more fashionable to say it was so ambitious it won’t be done.
We always said this was going to be a difficult task. We have never shied away from the challenges at hand.
But the whole point about setting targets is they require you to plan to get there.
There’s no point in setting a target if business as usual would have got us there anyway.
And ambitious targets of course require a lift of effort to get there.
They need careful, prudent management to achieve it.
But the important thing about our policies is that they haven’t just been designed for emissions reduction – as critical as that is – but that they are also vital for energy security.
Because we have seen over recent years – and will continue to see – ageing and increasingly uncompetitive capacity exit the market, largely our oldest coal plants.
To put in context – Liddell which closed earlier this year, was turned on two years before I was born – a very good innings.
The private sector is not replacing that plant with more coal, nor will it – in fact a new coal-fired power station has not been built since 2009.
A document you are all familiar with and no doubt many of you contributed to – is AEMO’s Integrated Systems Plan, or ISP.
This roadmap for Australia’s grid was developed off the back of working with the generators, developers, market bodies, governments and all the other key players that run our grid.
And the 2022 ISP found that Step-Change was the most likely pace of change.
A scenario where over 80% renewables is the lowest cost way to meet the energy security requirements of our grid as aging and increasingly unreliable plant exits.
Our ambition is in line with the most likely pace of change, in line with the capacity needed in the grid if the Step-Change scenario eventuates.
I remember last winter all too well, as I’m sure many here do too.
We had a perfect storm.
4 gigawatts of dispatchable capacity had left the grid over the last ten years with only 1 gigawatt replacing it.
We had a long cold snap, and flooded coal mines that couldn’t supply generators.
And we had unscheduled outages at many plants across the country, while Putin’s illegal war caused the biggest global energy crisis in 50 years.
With a grid that having been the flashpoint of climate culture wars for a decade, that was extremely vulnerable to all of these and more challenges.
It is one thing to put your head in the sand on the science of the changing climate, it is another thing entirely to watch what is happening in front of your eyes in the energy market and ignore it.
Having been sworn in last year literally in the middle of the energy crisis - there’s not a day that goes by where I don’t think about the consequences of not getting the capacity we need to keep Australia’s lights on.
We inherited a transition to firmed renewable energy that was too slow and too disorderly.
We have worked to make it faster and more orderly. And we will continue to do so.
Including after years of forecast short term shortfalls – by working with Australia’s big energy users and producers, we’ve delivered a gas code of conduct that means more gas at reasonable prices for Australian users – helping to provide that essential peaking power and firm our increasing share of renewables.
We need to continue the task of showing the world’s renewable investors we are a stable, welcoming, certain policy environment.
We need to build on what we have already done and improve the treatment of social licence and community support for important projects.
We need to continue to work hand in glove with the states and territories on management of our grids, entering into funding partnerships and ensuring our planning systems are fit for purpose.
We will continue to do all these things and more, and continue to work with renewable energy investors to ensure our policy settings are unleashing the necessary private sector investment.
Of course, declaring that Australia can’t meet its renewable energy targets is not a new phenomenon.
In 2016 for example, the Fin reported that BIS Shrapnel had concluded that they were:
"…'highly doubtful' the 2020 target of 33,000 gigawatt- hours of renewable energy output can be achieved."
This was moderate and temperate language compared to Judith Sloan who said the same year:
“Read my lips: Australia won't meet its renewable energy target by 2020. In fact, it won't get within cooee of the 33,000 gigawatt hours of electricity."
Of course, the target was met a year ahead of schedule, AND in January 2021 on a 12-month rolling basis.
This achievement was against the backdrop of a Federal Government that was, shall we say, lukewarm at best about the ambition.
In terms of today, I would characterise our progress as good, but also in need of continual improvement.
The Clean Energy Council’s Renewable Projects Quarterly Report showed six energy storage and hybrid projects worth $2 billion reached investment stage in quarter two of 2023.
This is the first time Australian storage projects have broken the billion-dollar barrier in a single quarter.
Going into this summer, we have 3.4 gigawatts more energy available than we had going into last summer, and in the last financial year AEMO issued connections approvals for 6.8 GW of new generation up from 4.2 gigawatts in the previous financial year.
And if compare our progress over the past 18 months, with the few years before, I am heartened.
The former Government’s Underwriting New Generation Investments scheme, announced in 2018, four years before the last election - promised 4 gigawatts of dispatchable power, didn’t even deliver contracts for that power, let alone one additional watt of energy.
The Capacity Investment Scheme, which had been stuck in a stalemate between jurisdictions for years – is now rolling out across the country.
Now we have a big task ahead of us. But of course we aren’t alone.
The International Energy Agency’s latest renewable analysis shows global renewable capacity is expected to increase by almost 2400 GW (almost 75 per cent) between 2022 and 2027.
Nuclear power on the other hand is forecast to add just 124 GW to 2030 in their most ambitious scenario.
In 2023 global investment in solar power is set to eclipse oil investment for the first time.
Renewable energy capacity in the United States is forecast to increase 75 per cent, or over 280 GW from 2022 to 2027, in line with their target of 100 per cent carbon pollution-free electricity by 2035.
Canada – 90 per cent renewable and zero emissions energy by 2030 and 100 per cent by 2035.
Ireland – 80 per cent renewables consumption by 2030.
Germany – 80 per cent renewable electricity by 2030.
I could go on.
Now of course, Australia has advantages over most of these countries when it comes to renewable energy, particularly wind and solar.
For example, comparing Australia with Canada –
Solar is much more efficient in Australia than Canada, because we have the best solar resource in the world.
Solar generation potential in Australia is 5.4 kilowatt hours per meter squared in on average. In Canada, it is 3.5 kilowatt hours per square meter.
That means on average we get over 50 per cent more solar energy on a square meter of land in Australia than Canada.
So, while moving towards a renewable grid is a massive transformation - it is necessary for our economy, for our energy security, and for the climate.
And so, while challenges and bumps in the road remain – including those related to supply chains and labour force – the path we are delivering for Australia makes eminent sense.
Of course, as important as our domestic decarbonisation program is, Australia can make an even bigger contribution to action on climate change, creating thousands of jobs as we do so, in exporting renewable energy.
And developing a green hydrogen industry is key to that potential.
Global demand for renewable hydrogen is projected to reach around 500 million tonnes per year by 2050.
Renewable hydrogen is at the heart of our vision for Australia as a prosperous, self-reliant nation in a net zero future –
As a renewable energy superpower -
And as a country that makes things.
Australia has world class renewable energy potential and an enviable track record of standing up new energy industries and energy exports with international partners.
Renewable hydrogen is a game changer for green manufacturing.
It opens the door to green metals, green fertiliser, and green chemicals – products the world increasingly needs through the net zero transformation.
Industry knows how strong our fundamentals are: Australia has one of the world’s largest pipelines of announced hydrogen projects valued at $230-$300 billion.
We are proud of that. But we want to see that pipeline reach FID and become a reality.
By 2050, Australia’s hydrogen industry could generate $50 billion in additional GDP and create over 16,000 jobs, as well as an additional 13,000 jobs from the construction of renewable energy infrastructure to power the production of green hydrogen.
But we face determined competition from other countries in the hydrogen race.
Whether that’s the United States’ Inflation Reduction Act; the EU’s green industrial package; or the ‘Made in Canada’ measures – substantial actions to drive industry growth are turbocharging and reshaping global hydrogen investment.
Supply chains are becoming increasingly competitive and the race for foreign investment is increasingly competitive.
To deal with these challenges, in the Budget we announced the $2 billion Hydrogen Headstart program.
Since the Budget, we have been working intensively on detailed program design consultations with industry and implementation details.
I’m delighted to announce the next, significant steps in this important project.
Today, on behalf of the Government, ARENA is opening the first stage of the Hydrogen Headstart program through a two-stage, competitive process – with the initial Expression of Interest Stage open until 10 November 2023.
Shortlisted projects will be announced in early 2024, and will have around six months in the next stage to prepare their full applications, including securing offtake agreements and finance.
The production credit will be nominated by projects, at an agreed price per kilogram of hydrogen (or hydrogen derivative product - for example ammonia or methanol).
The projects that win contracts will receive the production credit for up to ten years, based on actual production of renewable hydrogen.
This is the largest government investment in Australia’s developing hydrogen industry.
It’s already working to keep project development in Australia. And boosting confidence that we are acting to make Australia a renewable energy superpower.
Hydrogen Headstart will move the dial on the technical and commercial viability of renewable hydrogen production in Australia.
It will provide price discovery and transparency for developing renewable hydrogen markets.
It will smooth the path for the next wave of developments - developing financing and construction experience, skilled labour and intellectual property.
It will support knowledge sharing throughout industry to grow the industry in Australia.
And it will support domestic decarbonisation, build industry capability, and provide for new manufacturing and export opportunities.
Our plans to decarbonise our energy grid and develop a renewable hydrogen industry are all based around close co-operation with industry, providing policy stability and moving on from ten years of stop-start policy, denial and delay.
And we will continue on this path.
CONTINUED ENERGY POLITICS
Now in the few minutes remaining it would be remiss of me not to comment on the state of the Australian political debate around climate change and renewable energy.
It was possible to be frank with you after the last election that the Liberal and National parties would have got the memo from the Australian people: to move on and end the climate wars.
Stop the delay, distraction, deception and denial. Get with the program.
The memo was sent in May 2022. But it wasn’t received.
Now the latest attempt at energy policy from a party which had 22 goes at an energy policy over their decade in office is nuclear power.
It says something frankly to me that while they had 22 different energy policies while they were in office, not one of them involved nuclear energy.
Because the apparatus of government, the advice from central economic agencies and expert advisory bodies would have been the same to them as is received by this Government -
That nuclear power is too slow, too expensive, too out of sync with the competitive advantages in Australia.
I’ve talked before about the need for policy stability and certainty.
Pretending that nuclear power might play any meaningful role in Australia would be the opposite of policy stability and certainty.
Lifting the ban on nuclear energy in Australia, sending mixed signals from Government about the role of renewables and nuclear in Australia would run the real risk of chilling investment in the firmed renewable energy we need to keep the lights and get emissions down across our country.
Removing the legislative prohibition to nuclear power doesn’t enable potential investment – that would require a long and lengthy difficult process, developing the regulatory and safety regimes, skilling workforce, waste management - taking resources away from ensuring we have the investment need to ensure reliability given inevitable coal closures that I’m talking about.
I’ve talked about Australia’s comparative advantage in renewables.
The opposite is the case for nuclear power.
We have no established nuclear industry. Even establishing a fit for purpose regulatory regime for nuclear power in Australia would take years. Years we don’t have.
My Opposition counterpart, the Shadow Minister, implied in a recent opinion piece in the AFR that we could have nuclear power up and running by 2030.
But he conceded to the Australian that it couldn’t be done until the late 2030s at the earliest.
Again, a delay that we simply cannot afford to contemplate.
Imagine an Australia where we pause renewable energy investment, as David Littleproud and others have asked for while we considered nuclear.
Meaning no replacement capacity, by their own admission, by the late 2030’s for basic energy security that we need today.
I’m going to call out this nuclear folly for what it is.
It’s the latest attempt at deflection and distraction, now that outright denial is less fashionable.
It’s an attempt to continue the culture climate wars in Australia.
Peter Dutton and Ted O’Brien indulge in false claims about the role and potential of nuclear power in Canada and engage in dishonesty about the costs of nuclear power relating to renewable energy in Australia.
In doing so, they are using the right-wing playbook of 2023: Populism, polarisation and post-truth politics.
They are climate charlatans.
It’s time for their games to end.
If they are serious about proposing a nuclear solution for Australia, the simplistic bumper stickers and populist echo chamber has to come to an end.
Show the Australian people your verified nuclear costings and your detailed plans about where the nuclear power plants will go.
Dealing with the challenges and opportunities of decarbonising Australian energy, creating jobs and investment and managing this transition is a serious task.
A serious task requiring serious people and serious plans.
The Government is providing those plans.
The alternative government is not.
In closing – thanks again for the invitation to speak to this AFR energy summit today.
The energy transformation in Australia underway today is fundamentally an economic one.
Managing economic change is what Labor Governments do best. It is the modern Labor agenda.
It’s what Hawke and Keating did.
It’s the fundamental and signature task of this Government.
It’s the most important twin economic challenge and opportunity facing our country in the decade ahead.
It’s fundamental to competitiveness and economic success of our country and the environmental health of our planet.
It’s a challenge I, and we, relish.
Tackling the big challenges is the task of serious governments.
A task we will continue to address with industry, investors and business in an “all-in” national effort.
It’s what this task requires and what we will continue to deliver.