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| Treasurer Jim Chalmers on ABC Insiders 5 November 2023 |
On 2 November Australian Treasurer Jim Chalmers outlined in a speech major direction and priorities for the Labor Government with regard to Climate Policy, Energy policy and Industry Policy.
Australia's abundance of cheap renewable energy sources gives a definite global advantage in refining and processing critical minerals, manufacturing of batteries and other storage technologies, producing green hydrogen for adding value in energy intensive metals production like green steel and green aluminium.
Here is what the Treasurer said:
To make it very clear, in making decisions about net zero industry policy we will now be guided by these tests:
- Whether Australia can be competitive in the industry, by leveraging and building up our comparative advantages.
- Whether it contributes to an efficient and orderly pathway to net zero.
- Whether it builds the capabilities and resilience of people and regions.
- Whether it improves Australia’s national security and economic resilience and supports the strategic objectives of our global partners.
- And whether it recognises the key role of the private sector and delivers genuine value for money for government.
Applying these five principles has led us to four initial priority areas. All underpinned by and dependant on abundant, cheap, reliable, renewable energy.
- Refining and processing critical minerals.
- Supporting manufacturing of generation and storage technologies, including batteries.
- Producing renewable hydrogen and its derivatives like ammonia.
- And forging green metals.
On the ABC Insiders program on Sunday 5 November Jim Chalmers explained further to Patricia Karvelas on priorities to meet the government's emission reduction of 43 percent by 2030 and net zero by 2050 targets:
KARVELAS: Treasurer, I just want to take you to a very significant speech you delivered this week, where you said we look like we might not be on track to meet our net zero ambitions and that we need more intervention and more investment from industry. You flagged more government interventions, what does that intervention look like? And might you look at altering the safeguard mechanism?
CHALMERS: What I tried to do during the week, Patricia, is to say that we've got these ambitious but achievable targets when it comes to the energy transformation, and we've got vast industrial and economic and employment opportunities, which flow from our goals to be a renewable energy superpower. And we are making good progress across both of those fronts. But from my perspective, as Treasurer, what I've tried to say is that what we need to do is not just to attract and commit more private and more public capital, but we need to be able to absorb and deploy that investment in the most efficient and effective way. And so some of the things that we need to consider as we work towards the next Budget, is to make sure we get the skills base, the technological base, the relationship with the states right, as well. And so I identified in that speech in conjunction with the relevant ministers, the big opportunities we've got in areas like critical minerals, green steel, hydrogen, battery manufacturing.
KARVELAS: But is it about picking winners, ultimately? Is that the way that works if a government chooses what to invest in rather than having a mechanism that makes those decisions?
CHALMERS: The mechanism is to apply what we would consider to be a new set of net zero industry policy tests around supply chains and national security and value for money, and what's best able to deliver our emissions reductions goals. And when you do that, some of these comparative advantages that Australia has become quite obvious, and I've just rattled through them. Now the incentives and the way that we work with the private sector, who will be the primary driver, the way that we work with the states that might be different for each of those four technologies that I’ve identified. But what I tried to do in that speech is to say that this will be a focus between now and the May Budget – attracting and committing capital is part of it, making sure we can deploy it is part of that as well. The energy transformation is absolutely central to our goals in this defining decade. We've got to get it right. We've made good progress and we've got a bit more to do.
Critical Minerals mining, processing and refinement
Prime Minister Albanese and Resources Minister Madeleine King announced the $2 billion expansion, surrounded by Australian and US industry leaders, after the inaugural meeting of the Australia-United States Taskforce on Critical Minerals. The investment is seen by the Australian Government as an important component in the alliance with the United States. A secure and sustainable supply of critical minerals is seen as integral to the manufacturing sectors in Australia and the United States.
"Australia is committed to building sustainable and secure critical minerals supply chains with the United States. This is central to building a clean energy future and delivering economic growth. The expansion of the Critical Minerals Facility will help to build supply chains with the United States and support our shared clean energy, manufacturing and defence ambitions." said Prime Minister Albanes.
The subtext to this is the geopolitical competition with China's critical minerals resources underpinning its renewables expansion and energy transition and role globally in renewable energy and clean technologies.
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| IEA 11 July 2023: Share of top three producing countries in mining of selected minerals, 2022 |
In the second chart you can clearly see China's dominance in refining and processing many key minerals used in the energy transition. In recent yearsAustralia has just seen how China is willing to wield power by restricting trade in an attempt to coerce or punish Australian Governments. This underlines the importance of a Critical Minerals strategy for refinement and processing using Australia's abundant potential in renewable energy.
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| IEA, 11 July 2023: Share of top three producing countries in processing of selected minerals, 2022 |
Like our iron ore, most of our critical minerals mined here are exported for processing.
Using Australia's cheap renewable energy to process and refine these ores in Australia is efficient, adds value, increases manufactuiring capacity and adds employment.
Renewable Energy Grid
Australia has abundant solar and wind resources, the potential for many pumped hydro storage projects. If we can't make the energy transition work, then what chance do most other nations.
Solar and wind is the cheapest energy generation for Australia as at July 2023 (CSIRO), and even once energy storage is included, it still cheaper than coal, gas or nuclear.
The largest issue is rolling out new high voltage electricity transmission cables to the renewable energy zones producing the power. There is some pushback against above ground high voltage transmission towers and cables. Underground cabling would add significant additional expense.
The government has established the $20 billion Rewiring the Nation program, as per election commitment, to upgrade Australia's electricity grid. (DCCEEW - Rewiring the Nation)
Community consultation is needed for reworking the grid transmission network, but environmental considerations will need to be considered, and compromises by land owners and to land owners will need to be made.
Nuclear option would increase cost of living
Yet we have the Opposition leader Peter Dutton and the Liberal National Party pushing that Nuclear Power will solve all our energy problems. For Australia this is a costly dead end that would substantially add to the Cost of Living through much higher electricity prices.
Just on opportunity cost, it would probably take 10-20 years to establish a nuclear power industry generating electricity. It would require tens to hundreds of billions of dollars to establish, given the cost of recent nuclear reactors.
Small Modular Nuclear Reactors do not exist at scale, so there is no way to judge their safety, cost and efficiency, and they would raise Australia’s energy costs and delay renewable uptake (Guardian)(ACF Report: Wrong reaction: Why ‘next-generation’ nuclear is not a credible energy solution, October 2022). The earliest SMR may become feasible for Australia is probably the 2040s.
A recent Guardian Essential poll highlighted that when Asked about Australia building nuclear power plants to generate electricity, 23% are strongly in favour, with a further 27% somewhat in favour. "The same proportion (50%) backed nuclear in September 2021, although the proportion of those strongly in favour has increased by three points since then. One in three voters (33%) oppose nuclear power today." stated the Guardian article
On November 3, Reuben Finighan, PhD candidate at the LSE and Research Fellow at the Superpower Institute, The University of Melbourne, outlined the strong economic arguments against development of an Australian nuclear industry. Is nuclear the answer to Australia’s climate crisis?
The other issues include the long term disposal of nuclear waste. This has still not be safely resolved.
Where would you site nuclear generation? Probably where present coal plants already are, as that is where the transmission infrastructure currently links to. Who wants to live near a nuclear power plant. There is no commercial insurance for house or property from any nuclear accident. The government is the last resort underwriter for any nuclear accident or contamination.
References:
Treasurer Jim Chalmers, speeches, 2 November 2023, Keynote address to the Economic and Social Outlook Conference, Melbourne on Energy, the economy, and this defining decade, https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/speeches/keynote-address-economic-and-social-outlook-conference
Prime Minister, Minister for Resources media release, 24 October 2023, $2 billion Critical Minerals Boost Crucial to Energy Transition https://www.pm.gov.au/media/2-billion-critical-minerals-boost-crucial-energy-transition
IEA (2023), Critical Minerals Market Review 2023, IEA, July 2023, Paris https://www.iea.org/reports/critical-minerals-market-review-2023, License: CC BY 4.0
Reuben Finighan, The Conversation, 3 November 2023, Is nuclear the answer to Australia’s climate crisis? https://theconversation.com/is-nuclear-the-answer-to-australias-climate-crisis-216891
Jim Chalmers 5 November, Transcript of Jim Chalmers interview with Patricia Karvelas on Insiders https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/transcripts/interview-patricia-karvelas-insiders-abc See also ABC Iview of Insiders 5 November https://iview.abc.net.au/video/NC2309V039S00
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