Australia steps up on renewable energy and green manufacturing

In late 2021, all of Australia’s major political parties embraced a national 2050 net zero target heralding an end to what many had dubbed a two-decade war of disputed climate policy.? In 2022 the new Federal Government successfully introduced national legislation enshrining the 2050 net zero goal along with ambitious interim emissions and renewable energy targets.

In reality, Australia’s clean energy transition had been well underway for over a decade, and the government was playing catch-up as markets pulled ahead of policy.

However, the world is never static and other economies, notably the US, Japan and across the EU, introduced substantial financial incentives to supercharge their clean energy transition. This has drawn in global capital, including from Australia.

Add to this, delays to many critical clean energy projects from community and other planning issues, along with Covid-driven supply chain and cost pressures, and it became obvious the transition was in trouble.

It’s been a sharp learning curve.

The federal 2024-25 budget aims to be a game-changer

Recognising the need to act, the Federal Government announced in May 2024 a major new $22 billion stimulus for clean energy and green manufacturing through its Future Made in Australia (FMIA) package.

To quote the Prime Minister “The Future Made in Australia plan is about attracting and enabling investment, making Australia a renewable energy superpower, value-adding to our resources and strengthening economic security, backing Australian ideas and investing in the people, communities and services that will drive our national success.”

The strategy, which melds energy and climate security with national security through a focus on supply chain development, is heavily targeted at renewable energy (particularly hydrogen) and critical minerals, but also includes green metals, low-carbon liquid fuels and green manufacturing.

There is also a focus on energy storage and batteries along with grid stability technologies, considering Australia has the world’s largest single-connected electricity grid spread across over half of its continent.

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But it’s not just about financial incentives

FMIA will be driven by a coordination and front-door portal for investors in the Treasury Department to ensure rigour in public investment and to provide that centre-of-government drive. To address lagging approvals FMIA is being supported by new streamlining foreign investment regulations to fast-track investment from low-risk sources.

The government is also moving to reform and streamline its environmental protection and approvals regime with legislation currently being considered by Parliament to establish two new environmental agencies – the Environment Protection Agency (EPA) and Environment Information Australia (EIA). A key goal is to improve certainty and guidance for project proponents.

This reform is the second stage of a three-part ‘Nature Positive’ reform package, with stage three - the substantial rewrite of the Environment Protection and Biodiversity Conservation Act - now being deferred for further confidential consultations.

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Will it work?

Major reforms generally come with risk and this is no exception.

The bi-partisan approach to climate is starting to fray in the face of rising energy costs and cost-of-living pressures, and the government is being squeezed from the left and right for either harder or softer action. Again, Australia is no exception to this global trend, and just last week the Opposition Leader boldly added a fresh debate on nuclear energy, including nominating sites for possible small modular reactors.

However these debates go, there is no question that the rapid transition, shifting consumer preferences and new government support create an exciting opportunity for businesses across many sectors.

Finally, and as always, it is not just the financials or use of cutting-edge technology or innovation that determine success. Its skilful engagement with government at all levels, building support in local communities, and managing external risk that will ultimately see a project stand or fall.