Kate Hartness, Director ESG at BG&E Resources (BGER) says, “While progress has been made to transition to renewables and decarbonise heavy-emitting industries – urgent action is needed to bring the critical mass of projects that are in development to their final investment decision (FID) within the next two years and to bring them online by 2030 – otherwise we will not limit warming of the planet to 1.5 degrees.”
Heavy-Emitting Sectors
From commercial shipping to steel making, from low-carbon smelting and refinery plants to commercial-scale carbon capture, utilisation and storage plants (CCUS), and beyond – heavy-emitting sectors require a wide range of technologies to be commercialised in order to slash emissions at scale. And that cannot be done without an increased level of investment, more globally competitive policy settings and an ecosystem of collaboration.
Kate adds, “In Australia, the Federal Government introduced the Capacity Investment Scheme (CIS) which quadrupled the size of the original scheme to underwrite projects that increase renewable and dispatchable energy for the domestic market.”
The expanded CIS is targeting a total of 32 gigawatts (GW) of new capacity nationally, that is:
- 23 GW of renewable capacity, which represents $52 billion in investment; and
- Nine GW of clean dispatchable capacity, representing $15 billion in investment (an additional 7.9 GW to the 1.1 GW already in progress through the first stage of the CIS).
Starting this month, regular competitive tendering will be conducted every six months to access the CIS, and that will continue through to 2027.
The CIS is one of the many government-led schemes which aims to:
- generate employment and investment, in particular in regional centres;
- strengthen industries to support a sustainable future for First Nations peoples, which in turn will help to preserve their cultural heritage and connection to Country; and
- provide reliable, affordable and low-emission energy systems for all Australians.
Encouraging Two-Way Trade
Kate says, “Consideration of our trading partners down under is key – for today and the decades that follow. From our top 15 export markets, 12 are located within the Asia and Oceania region, and they attract exports of more than $470 billion and represent almost 80 per cent of Australia’s total exports.
“China continues to be our largest trading partner, accounting for the lion’s share of two-way trade. Closely following are Japan, Korea, India, Taiwan, Singapore and the United States (USA). The remaining exports go to the Association of Southeast Asian Nations (ASEAN) and subsequently, the European Union (EU) and the United Kingdom.
“Earlier this month, the Federal Government unveiled Australia’s Southeast Asia Economic Strategy, which included following initiatives to supercharge two-way trade.”
- Two billion dollars to further support exports and business engagement with the ASEAN. The Southeast Asia Investment Financing Facility (SEAIFF) is being managed by Export Finance Australia and will provide loans, guarantees, equity and insurance for projects that will boost Australian trade and investment in Southeast Asia, particularly in support of the region’s clean energy transition and infrastructure development.
- $140 million over four years will be extended to the Partnerships for Infrastructure Program. This improves regional infrastructure development, attracts more diverse, quality infrastructure finance and accelerates transport connectivity, the transition to clean energy and telecommunications reforms.
- 10 Business Champions will be appointed to facilitate greater commercial links between Australia and the economies of ASEAN.
- Regional technology ‘Landing Pads’ in Jakarta and Ho Chi Minh City, to provide better support for Australian businesses to boost technology services exports to Southeast Asian markets.
- Improved access to visas for Southeast Asia, that is, Business Visitor Visas will be extended from three to five years, and the ten-year Frequent Traveller Stream will be extended to eligible ASEAN Member States and Timor-Leste.
Being More Globally Competitive
While the above-mentioned interventions will stimulate the development of renewables and industry decarbonisation – for Australia to truly capitalise on future opportunities and become more globally competitive – we need to revitalise our policy settings.
The USA’s Inflation Reduction Act will provide trillions of dollars in stimulus and investment subsidies for the deployment of zero-emission alternatives.
In the EU, progress is being made to expedite the push to net zero, including with their emissions trading schemes and addressing the heavily reported ‘carbon leakage’ issues.
In October 2023, the Australian Government began reviewing the validity of introducing a Carbon Border Adjustment Mechanism (CBAM). A CBAM would build on the Safeguard Mechanism reforms which were implemented last year and would provide a more equitable environment for domestic producers that are subject to carbon pricing and the Safeguard Mechanism, and also compete with foreign producers of imported products that are not subject to the same rules. A CBAM could see a carbon tariff (or sorts) be applied at the border, to imports of some commodities (i.e. steel and cement), from countries with emissions reduction policies that are not as robust as they are down under.
The EU’s recent policy review provides valuable learnings for Australia, in particular, around:
- determining the products and industries that may be impacted by a carbon tariff and calculating the impact on their operations;
- deploying further emission tracking and reporting to verify the carbon emissions associated with their products;
- accelerating emission reduction and diversification strategies to reduce reliance on heavy-emission products;
- increasing collaboration and transparency across industry associations, business, government and financiers, to help create a harmonised approach to carbon pricing and trade; and
- improving existing trade relationships.
Unite, Act and Deliver
Kate suggests, “If Australia, aspires to be a world leader in green steel making, hydrogen, ammonia, sustainable fuels, CCUS and long-duration energy storage – now is the time to unite, act and deliver (theme from COP28) – our people, planet and future prosperity are depending on it.”
Sources: Department of Foreign Affairs and Trade, Trade Statistics 2023, Austrade; and Australian Government Prime Minister’s Media Release 5 March 2024.
