There are opportunities for Australia to be the world’s main source of metals, other energy-intensive goods and carbon chemical manufactures in tomorrow’s zero-net-emissions world; and a major contributor to the world’s absorption of carbon into land and plants. There are opportunities in rural and provincial Australia. In my latest book Superpower, I describe the course we need to take to join the global effort against dangerous climate change. Australia needs to step up its efforts to reduce emissions. Credit:Wolter Peeters At the UN meeting in Paris in 2015, all countries agreed to reduce carbon emissions enough to hold temperature increases below 2 degrees and as close as possible to 1.5 degrees. That would require zero net emissions for the whole world by 2050 - earlier for developed countries as some developing countries would take longer. Each country sets its own targets along the way to the ultimate goal. These targets are not legally binding. Their purpose is to demonstrate that each country is doing its fair share in the global effort. Initial targets do not add up to the ultimate goal. Periodic inter-governmental meetings review progress, place pressure on laggards and upgrade commitments.

Australia’s 2030 target is the weakest of the developed countries. That makes us a drag on the global effort. In UN meetings in 2020, we can choose to remain a drag, or to substantially upgrade our commitments. If electoral promises block immediate change in targets, it is better to beat than just to meet them, pending revision of commitments in future parliaments. Australian actions will not determine global outcomes. But we should not underestimate the effect of Australia moving from the discouraging to the encouraging side of the chasm. Writing Superpower after the Coalition’s electoral victory in May, I accepted that the government through the current parliamentary term would avoid breaching its 2019 electoral commitments. It would not introduce carbon pricing - the economists’ preferred means of achieving climate objectives at lowest cost or largest gain. It would not take any steps that increased power prices above the giddy heights of early 2019, or take steps that led directly to diminution of the coal industry. Within these constraints, I proposed a set of policies that would lead to Australian emissions falling by 50 per cent on 2005 levels by 2030, and increasing the contribution of renewable energy to half or more of our electricity use. This would be a credible base for Australia to launch towards zero net emissions before 2050.

The role of the Australian Renewable Energy Agency would be expanded to support innovation across the range of low-emissions technologies; and of the Clean Energy Finance Corporation to cover the ACCC’s “Recommendation 4” on underwriting new supply of power to major users. Private investors in new unregulated transmission would be rewarded for their contributions to low prices, security and reliability in the regulated system. Measures would be taken to enhance electricity reliability. Loading Replay Replay video Play video Play video Australia’s participation in the global trend towards greater use of electric vehicles would be accelerated by public provision of vehicle charging facilities. Reform of electricity pricing rules would ensure that the electric car reduced the cost of electricity in other uses.

Recognising that the increase in Australian emissions in recent years has been driven by unconstrained release of methane and carbon dioxide from coal mines and gas processing, such “fugitive emissions” would be reduced, and those that remained offset by purchases of credits from the Australian farm sector. This would be achieved through the Abbott government’s “safeguard mechanism”, phased in over a decade. Offsets for “fugitive emissions’ would provide a major boost for sequestration of carbon in Australian soils, pastures, woodlands, forests and plantations. “Carbon farming” would be supported by research and development to understand the opportunity and to lower costs of measurement. The Australian carbon farming opportunity would be enhanced as we earned access to European and other markets for carbon credits. Loading These steps would reveal large economic gains from reducing emissions.

Bumps along the way will attract attention, but will be short-lived. Expanding supplies of low cost renewable electricity place pressure on established coal generators. One after another, the coal generators will close. But these are interruptions on a downward trend in prices driven by the rise of renewables. Much was made of the effects of closure of the Northern Power station at the end of 2015-16 on SA wholesale power prices. SA prices had always been much higher than NSW or Victoria, because SA coal was poorer and located further from the big city. On average 2007-16, SA wholesale prices were 22 per cent higher than NSW and 32 per cent higher than Victoria. Immediately after the Northern closure, SA prices rose to 34 per cent above NSW and 63 per cent above Victoria in 2016-17. But the rise of renewables to over half total supply set prices powerfully on a downward course, absolutely and relative to the big states. In the current financial year so far (July 1, 2019 to January 15, 2020), NSW prices have been 34 per cent and Victorian 63 per cent above those in renewables-rich SA. SA this summer has also had less reliability anxiety than the two big states. Superpower explains four big changes that have reduced the economic cost of Australia playing its full part in the global effort to reach the Paris requirement of zero net emissions by 2050 -and turned them from an economic cost to a benefit. The cost of renewable energy and electricity storage has fallen dramatically - far more rapidly than anticipated in my 2008 and 2011 reviews. Australia has by far the richest endowment per person of renewable energy resources. This makes us naturally the country with lowest energy costs in the emerging zero emissions world. Naturally, but not inevitably, as poor policy and business leadership could diminish the opportunity. Loading

We also have exceptional abundance of fossil energy resources. However, these do not confer a large advantage on domestic industry, as coal, and gas are traded internationally at prices that are similar to those in Australia. High costs of transporting electricity between continents, directly or as hydrogen, will make renewable energy permanently a source of large advantage for Australian energy-using industries in the zero emissions economy. This makes us naturally the low-cost country for processing Australian iron and aluminium and other ores and raw minerals. The industries of the future can contribute many more jobs and much more income than today’s coal and gas industries. Capital is overwhelmingly the main cost of renewable energy. So the costs of renewable but not fossil energy have been lowered exceptionally by the dramatic fall in the global cost of capital over the past decade. Loading Progress in applied science has greatly increased awareness of the capacity to capture carbon in the landscape. Australian science and farm and forest skills, and a per capita endowment of woodlands and soils suitable for carbon sequestration far greater than in other countries, mean that carbon farming can be a great Australian rural industry.

Similar endowments make us a globally competitive source of biomass for plastics and other carbon-based chemical industries. This will be an important source of advantage in industry when the use of oil, gas and coal is blocked in a zero carbon world. Australia also has advantages in a zero emissions world from known geological structures of exceptional quality for securely storing carbon dioxide. I am encouraged by Prime Minister Morrison’s statements that we will be “evolving” climate policies. We need not be discouraged by his statements that this will be done without introducing a carbon price, or raising the price of electricity, or destroying Australian jobs. I accepted these constraints in designing the bridge. Within these constraints, we can move as fast over the next decade as the Paris temperature goal requires. Do it right, and faster progress on renewables and carbon farming and the electric car will make us more prosperous.