Australia’s Net Zero Future
The world changes fast. 50 years ago, the five biggest US companies were General Motors, Standard Oil, Kodak, AT&T and IBM. Today, these five have been replaced by Apple, Microsoft, Alphabet (Google), Amazon and Facebook.
What we tend now to refer to as the ‘information revolution’ has changed the structure of economies and the nature of jobs and wealth creation within them.
In the area of energy, a similar revolution is underway. We are shifting from an energy system powered by fossil fuels to one powered by renewable sources. It’s a transformation that has immense potential upside for Australia, if we get this right. We have a huge endowment of potential solar and wind power, meaning we can become a renewable energy superpower.
We can use this renewable energy to produce ‘green hydrogen’, likely to be the liquid fuel of the future, and create a whole new export industry in Australia. We can also use our renewable energy reserves to process more of our raw materials on shore, in a way that will support the reindustrialisation of Australia.
We are endowed with the lithium and rare earth metals necessary to build new energy networks, battery storage and a more electrified and connected world. Rather than coal, these minerals will become the focus of future Australian mining.
With our large land mass, we have immense potential for carbon sequestration in our soils. Increasing our soil carbon not only improves agricultural productivity and drought resilience, but it can also create a valuable income stream for farmers.
These are just some of the opportunities for Australia, and we are pursuing them.
We are installing renewable energy at ten times the global average. Last year we installed a record 7 gigawatts of renewable energy, and we now have the highest solar power per person of any country in the world, with one in four households having rooftop solar.
Our National Hydrogen Strategy is supporting research and development into creating a new hydrogen industry in Australia.
Our Technology Investment Roadmap is supporting new and emerging technologies that will lower emissions, including electrification of our transport fleet, large-scale energy storage, and the manufacture of low-carbon steel and aluminium.
Earlier this year a cattle farm in New England, through improved grazing and livestock management, lifted its soil carbon and sold half a million dollars’ worth of carbon credits to Microsoft.
So this energy transformation underway has immense potential for Australia, and many of the new jobs and industries created will be in the regions, not in our capital cities.
But if we end up on the wrong side of these historical forces, then it will jeopardise our future prosperity and living standards.
As the recent Intergovernmental Panel on Climate Change Report makes clear, countries like Australia are likely to suffer worse and more frequent natural disasters and droughts if we do not address climate change.
Global capital markets, pension funds, insurers and investors are signed up to net zero by 2050, and are increasingly putting a climate risk prism on investments and capital allocation decisions.
For a country like Australia, given our level of integration with, and dependence on, global capital markets, this means our commitment to reduce emissions and reach net zero is inextricably tied to our economic future.
This is why the upcoming climate change conference in Glasgow is so important.
In Australia, we have reduced our emissions by 20 per cent since 2005, a better record than most developed economies. But to remain credible, and to attract the investment that will support these future industries for Australia, we need to do more.
We need to make a firm commitment to net zero emissions by 2050, and we need to increase the ambition of our interim targets and milestones along the way.
These two steps will unlock a bright future for Australia. They will protect our climate and position us to thrive in a low-carbon world.