The net zero economy is rushing towards us at pace. The building blocks are being hauled into place. Labor's Minister for Climate Change and Energy, Chris Bowen, is the master builder. And, as we saw in the federal budget, he has won over the Treasurer.
Mr Bowen has laid out a reconstruction plan not seen since the decades following WWII. Its essence is the removal of fossil fuels from the nation's energy supply, an enormous task for an economy founded on coal, gas and petroleum. The switch is to renewables, to electricity generated from solar, wind and hydro. Giant batteries will step in when renewables are in short supply, and be re-charged when renewables are in abundance. Pumped hydro will supply further back-up.
The budget continues the nation's massive spend on the switch. Bowen's immediate target is for renewables to satisfy 82 per cent of electricity needs by 2030, a hard enough task. After that, however, generation from renewables needs to soar to stratospheric levels to meet a net zero greenhouse gas emissions target by 2050. Everything that can be electrified will be: cars and trucks, tractors, smelters and refineries, cement and brick kilns, data centres, boats and ships, even aircraft.
Then, to ensure future economic success, even more renewable energy is needed to build a thriving export sector. Export earnings are crucial to prosperity. Yet successful net-zero export sectors will depend on energy surpluses, a grid capable of not only delivering to newly electrified household, transport, commercial, manufacturing and agricultural sectors but to new export-oriented sectors. This is the crux of the government's Future Made in Australia initiative.
In short, the race to renewables has three components: to replace fossil fuels, to enable the electrification of everything, and to empower new, competitive export industries. The budget is an important step forward for each of these. The budget confirms funding for Bowen's Capacity Investment Scheme, which guarantees commercial prices for private investment in renewables and in battery and pumped-hydro back-ups. The scheme underpins $67 billion of investments in generation and back-up by 2027 as we race to the target of 82 per cent renewables by 2030.
Then, the budget commits $21 billion for the Future Made in Australia program. Of this, $14 billion will fund tax credits to encourage investment in downstream processing of critical minerals and the production of green hydrogen. The rationale is that while we can't export our sunshine and wind, we can export products made from cheap renewable energy.
The Herald's Michael Parris (Federal budget 2024: What's in it for Newcastle and the Hunter, NH 14/5) and Beyond Zero Emission's Samantha Mella (Federal budget sets clear direction for Hunter's industrial diversification, NH 16/5) have detailed the opportunities for the Hunter stemming jointly from the Capacity Investment Scheme and Future Made in Australia. A proposed hydrogen manufacturing hub on Kooragang Island seems well-placed to attract investors. Opportunities for green steel and aluminium could follow.
For the Hunter, the new federal schemes offer the chance to switch the lever from renewables lackey to long-term player.
To date, enduring benefit for the Hunter from renewable energy schemes has not been obvious. Much of the new generation capacity in NSW is planned for elsewhere, with the good old Hunter providing the corridor for giant transmission towers and sub-stations, plus sites for batteries on old power station lands and a gas-fired firming plant on an old smelter site near Kurri Kurri.
Certainly, all this Hunter-embedded infrastructure is critical to Bowen's national economic reconstruction. But the number of long-term jobs from these projects is miserly.
With this budget, however, comes the opportunity for the Hunter to be more than a compliant host, a corridor for cables and towers, a bargain basement supplier of vacant industrial sites already wired to the grid. Value-adding investments with the prospect of delivering long-term prosperity and jobs are up for grabs.
