Towards a clean and secure energy future in the Indo-Pacific
Speech at the Centre for Strategic and International Studies (CSIS), Washington, D.C.
Thank you for that welcome – it’s a great honour to be here speaking with you this afternoon at an institution as important as CSIS.
In Australia we have developed the practice, as a matter of respect and inclusion of recognising the traditional Indigenous owners of the land we gather on at the beginning of speeches.
I live in Western Sydney, on the lands of the Cabrogal people of the Darug nation. I pay my respects to Australian Indigenous elders and any Australian First Nations people present. In that vein, allow me to also acknowledge the Piscataway and Nacotchtank people, the First Nations custodians of the land we gather on here in Washington DC.
I also want to acknowledge CSIS’s creation of the Australia Chair, generously funded by Anthony Pratt, and congratulate Dr Charles Edel on his appointment as inaugural Chair. This is welcome recognition of the importance of having a strong dialogue around the role of the US in the Indo-Pacific region, and the importance of the Australia-US relationship in these turbulent times. There’s no shortage of content to work with.
Tonight’s function is my last in this trip to the United States. It rounds out a productive week which began with the United Nations General Assembly and included a productive Clean Energy Ministerial in Pittsburgh. There has been a sense of “productive urgency” in the air this week. And there needs to be.
It’s that urgency that I want to focus my remarks on this evening. The urgent need to reduce emissions this decade and the urgent need to secure our supply chains as we do so.
This is in keeping with your theme today: a clean and secure energy future in the Indo-Pacific. We have less than a decade to ensure we keep the world to as close as possible to 1.5 degrees of warming. Every one tenth of a degree above 1.5 has serious implications for our health and the health of our planet.
And the other element of urgency is supply chains. When I think about the possible impediments to achieving Australia’s ambitions to reduce emissions by 43% and move our electricity grid to 82% renewables by 2030, two things spring to mind: labour shortages and supply chain constraints. Co-operation between likeminded countries on supply chains will be key to achieving our respective ambitions.
The energy transformation
In both our countries, years – indeed decades – have been wasted.
Wasted arguing about whether climate change is real.
Wasted scaring workers that action on climate change would come at the cost of their jobs.
When all the while, the sooner we started the transition, the smoother the journey would be.
But that’s behind us.
It took us decades to get here, but the task can now be broken down to months.
2030 is 87 months away.
The United States has 87 months to reduce its emissions by 50% on 2005 levels.
Australia has 87 months to move its electricity system to 82% renewables and meet its economy-wide targets.
The world has 87 months to take the actions that can hold our temperature rise to as close as possible to 1.5 degrees.
Friends, 87 months is not long.
We need to unleash the billions of dollars of public and private investment necessary to achieve this task in this timeline.
The passage of the Inflation Reduction Act in the United States and the Climate Change Act in Australia within weeks of each other shows how closely our countries are aligned.
But both the Biden Administration and the Albanese Government are of one mind: this is not the end of the task. It is barely the end of the beginning.
Environmental success must mean economic success as well. The climate policies of the Albanese Government have been modelled to create 604,000 jobs in Australia over the next decade.
Carmichael Roberts from Breakthrough Energy Ventures has said that up to 1000 companies will be created by the Inflation Reduction Act, from the unleashing of entrepreneurial spirit and venture capital which has been crying out for leadership like that we’ve now seen from the Biden Administration.
As big as the economic dividend is, we should also be honest about the size of the task and the possible impediments - allowing us to focus on efforts to deal with those impediments - which brings me to energy security and supply chains.
Towards sustainable energy security
The COVID-19 pandemic and the impacts of Russia’s illegal and immoral invasion of Ukraine exposed deep vulnerabilities in global supply chains.
The war in Ukraine has had devastating impacts on energy security, with much of Europe held captive over the supply of oil and gas from Russia. We have seen how this European energy supply crisis has cascaded across the world, even to the shores of Australia.
The current challenges highlight the flaws in energy security reliant on concentrated fossil fuel supply chains.
By contrast, renewable energy has in-built security advantages.
The one supply chain that no geopolitical crisis can disrupt is the supply of sunlight to our land and the supply of wind to our country's coasts and hills. As long as we have the infrastructure established to capture, convert and store it.
That’s why we will have to complement the global phase-down of fossil fuels with investment in clean energy technologies and resilient and diverse supply chains.
This is the best way to protect our economies from the shocks of the next crisis.
Good climate policy, is good economic policy, is good energy security policy.
The task ahead
As I say, let’s be straight about the task we face.
We face a collective endeavour of almost unprecedented scale.
We need to mine, move and manufacture immense volumes of material, energy and equipment.
We need to train and mobilise hundreds of thousands of skilled blue- and white-collar workers to fill new quality jobs.
For example, to achieve Australia’s emissions reduction target of 43% by 2030, it’s estimated that we will need to install about forty 7-megawatt wind turbines every month until 2030.
For solar, while Australia is a global leader in deployment, we still need to install more than 22,000 five hundred-watt panels every day – and 60 million by 2030.
I know other countries in our region have similar ambitions.
India, for example, expects to double its installed capacity by 2030 to over 800 GW, with a target of 50% of that capacity coming from renewable energy sources.
By one estimate, Australia will require 34 times the current amount of utility-scale variable renewable energy in our national electricity market to meet our hydrogen export ambitions.
We’re under no illusions that meeting our 43% target in the next 87 months requires dogged efforts and calls for an industrialising drive that takes in value adding capabilities.
Supply chain vulnerabilities
Right now, the stark reality is that we have an urgent need for action, a significant amount of investment, global competition for finite manufacturing components – coupled with a clear vulnerability in the supply chain.
Today, more than 80% of solar PV production is concentrated in one country. This is expected to reach over 95% soon. I reckon that meets the definition of a monopoly - and in the context of a global energy system that needs to de-carbonise, a potential risk to energy security the world over.
It’s a similar story with lithium batteries and the electrolysers used to produce hydrogen. The simple truth is that no one country can or should produce enough clean energy inputs to meet the global need.
Even if we were comfortable with the concentration in the supply chain, the stark fact is current production won’t be enough to meet future demands on the path to net zero.
To achieve net zero, we all need to be producing the components to get us there. More reliable supply chains and more supply chains in total.
The CEO of Australian critical minerals company, Lynas, Amanda Lacaze spoke earlier today about the instrumental role her company has played in diversifying rare earth supply chains – key ingredients for the magnets in EV motors and wind turbines.
Japan, the United States and Australia have played an important role in supporting the change in this sector. But we need to do more to diversify the clean energy supply chains needed for the energy transition.
I think there are two important principles underpinning the need for Australia, the United States and other likeminded countries to be focussed on renewable energy supply chains.
Firstly, reliability. It is in America’s interests for Australia to be developing renewable manufacturing capacity – and vice versa – because we represent a reliable and secure supply chain for each other.
Our minerals will be essential – but we must be more than a quarry.
We need to add value, make things, and expand our place in global value chains.
Secondly, these must be ethical supply chains.
Moving to a renewable economy is a moral imperative as well as an economic opportunity, but we must ensure that transition itself is conducted in an as ethical way as possible.
Transparency is critical – it is much easier to verify, for example, that there is no child labour or unethical labour practices used in the value add of Australian lithium or cobalt than it would be other potential sources around the world.
The rapid scale up of production required should not be used to mask unethical labour practices – this is a shared responsibility as well.
While the task is enormous, so are the opportunities.
I’m fond of saying the world’s climate emergency is Australia’s jobs opportunity, because I know while concepts like GDP and billions of dollars invested are important, what really makes a difference to ordinary people’s lives is their standard of living, and in particular their jobs.
Addressing climate change is not only an opportunity for more jobs, it represents an obligation to ensure those jobs pay decent wages, have good conditions, and deliver better lives for ordinary workers.
The best way to counter the naysayers who still call for delay and denial is to demonstrate that working people stand to benefit from action. That is why our Government takes the view that the economy needs to work for people, not the other way around, and that is true for the transformation of our economies to address climate change just as much as it is for any other area.
Australia and US relationship
Australia and the US share a deep commitment to addressing these issues.
In July, Secretary Granholm and I signed the Australia–US Net Zero Technology Acceleration Partnership.
The Partnership will accelerate the development and deployment of zero emissions technology, including long duration energy storage, digital electricity grids and technology to integrate variable renewable energy, hydrogen, and direct air capture.
The new partnership also enables our two nations to cooperate on critical minerals supply chains to support emissions reduction and economic growth.
The partnership is a commitment to make climate change a centrepiece of our alliance with the US.
But it also recognises the need to work together to overcome the immediate energy security and supply chain challenges – and build resilience into the future.
This week we also signed a Letter of Intent on the Clean Energy Demand Initiative with John Kerry in Pittsburgh – in recognition that the public and private sectors must work together to achieve shared climate and energy-related goals.
The Clean Energy Demand Initiative aims to increase transparency for investors and link companies with countries – sending a message that Australia is open for business as a reliable investment partner.
I’m pleased that Apple, Johnson & Johnson, Google and Amazon are some of the US companies that have expressed interest in investing in Australia’s clean energy generation infrastructure, and it’s estimated they could invest up to $2.9 billion to increase renewable deployment.
Supply chain discussions also dominated the first meeting of Quad Energy Ministers that I chaired in Sydney in July - and will no doubt figure heavily in further Quad Energy Minister discussions.
The Indo-Pacific place in the equation
Allow me to finish with some observations on the Indo-Pacific.
As CSIS has pointed out, there’s a growing need for technological expertise in Indo-Pacific countries to support the transition.
And it makes good economic and climate sense to support them.
The fastest growing region in the world, 60 per cent of global energy supply, and more than half of the world’s energy consumption and emissions.
Failure to engage with the Indo-Pacific would set a failure to achieve global net zero.
These are some of the countries most impacted by climate change and the increasing frequency of natural disasters.
But they are also some of the countries who have shown the most leadership in fighting for more global action on climate change – because they are seeing the real-world impacts on their communities and livelihoods.
Australia is already working closely with our Pacific family to build their technological capability and support their energy transformation.
We are also working with regional partners, like Japan, Korea and Singapore, to catalyse and scale up new clean energy trade in renewable energy.
And in this discussion about the path forward on energy security – I reiterate once again, that the Indo-Pacific needs to be at the heart of any global conversations.
Earlier this month, I was in Bali, Indonesia, to attend the G20 Energy Transition Ministerial Meeting.
It was an opportunity for Australia to support the Indonesian G20 Presidency, which secured important outcomes on sustainable energy transitions.
I held bilateral meetings with my Indonesian counterpart, marking the first of an annual Indonesia–Australia Energy Dialogue.
Australia will increase its support for our Pacific partners, including through a new Pacific Climate Infrastructure Financing Partnership, to back climate-related infrastructure and energy projects in Pacific countries and Timor-Leste.
There’s scope for Australia’s alliance with the US to bolster these efforts.
Australia sees not only an opportunity but a responsibility, as a trusted partner, to step up and build new and resilient global clean energy supply chains.
Friends, during the last century, Australians and Americans saw the need to collaborate militarily but also commercially.
They came together to build some of Australia’s first oil and gas supply chains.
These have powered industry and transport in Australia and overseas for decades.
Today, our two nations are working together to develop the 21st Century’s energy industries by tapping the sun, wind and other renewable and clean energy sources.
To power our economies and to help achieve our climate ambitions.
To deliver new job opportunities and improve the lives of working people.
And to ensure energy security for the Indo-Pacific region.
Because policy and investment will only go so far if we do not have a secure, reliable supply chain underpinning our transformation.
The climate change emergency is an economic opportunity waiting to be seized.
Australia looks forward to continuing to work in partnership with the US to help accelerate the greatest economic transformation in modern history – not just for our individual nations, but for our region, and for the benefit of the world.