We’re perfectly positioned to out-compete other economies in a net-zero world if we seize the moment. Hiding behind China’s emissions will turn us into a hot and dry backwater instead.
“What about China?!” is a scoff you still hear a lot these day from Coalition politicians and business leaders who want to delay Australia’s net-zero transition.
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“What about China?!” suggests that Australia is too small to have any influence on global emissions and that our “self-flagellating” net-zero 2050 target (against China’s 2060 commitments) is ceding precious competitive advantage to China, threatening Western power and influence.
But peeling the onion a little exposes these claims as baseless. Not only is Australia an important contributor to China’s emissions profile, but hiding behind Chinese GHG emissions to avoid decarbonisation would be an epic own-goal for the Australian economy.
There’s no excuse for hiding behind China
China emits between a quarter and a third of the world’s greenhouse gases, dwarfing Australia’s contribution of about 1 per cent.
But as the old adage goes, “China is the factory of the world”.
This means that not only does most of our “stuff” get made in China, but also that the greenhouse gas emissions embodied in products that we use and enjoy in Australia also get labelled as Chinese.
Of course, trade goes both ways, but China’s exports are generally more emissions-intensive than Australia’s, resulting in China wearing most of the emissions embodied in bilateral trade.
Peel the next layer and you’ll also find that China sources significant quantities of the energy required to manufacture the world’s goods from Australia.
We are the leading supplier of LNG to China, and before the trade war, China was Australia’s second largest export destination for thermal and metallurgical coal.
So, the big picture is that we export fossil fuels to China to help them make stuff, lots of which get boomeranged back to Australia for our use and enjoyment. And with the average Australian having much higher living standards, so too are our individual GHG footprints significantly larger than the average Chinese.
Put into context, it makes no sense to argue that China’s emissions are an offence to Australia and a reason to go slow on domestic decarbonisation. But more importantly, this argument is also economically reckless. Accelerating advancements in renewable technologies fundamentally change the global economic landscape, creating compelling reasons for Australia to outpace China in decarbonisation, not hide behind it.
Accelerating towards renewables: more a blessing than a curse for Australia
It’s becoming clear that the Chinese economy is now accelerating towards decarbonisation, investing more in clean energy than any other country in the world.
Faster-than-anticipated decarbonisation in China is increasingly likely, driven by continued renewable energy technology breakthroughs.
There are obvious downside risks, with the Reserve Bank of Australia scenario analysis suggesting that fast-paced Asian decarbonisation could spell serious trouble for Australia’s fossil fuel exports, creating stranded asset risks, especially for thermal coal exports.
And yet renewables have the potential to put a rocket under Australia’s economy by reviving domestic manufacturing industries, more than compensating for any downside from reduced fossil fuel export revenues.
Australia is the world’s most sun-blessed continent, receiving 10,000 times more energy from the sun than what we currently consume, not to mention an abundance of other renewable sources.
Our increasing energy advantage puts us in plum position to create more value-added products here in Australia.
Why export iron ore to China so that the Chinese can export steel back to us if we can do it all here as part of an Australian green steel manufacturing industry?
This in turn has the potential to lead to a revived vehicle manufacturing industry in Australia, with our own home-grown EVs rolling off now moth-balled production lines.
There’s just one big catch in that most of Australia’s iron ore isn’t green-steel compatible, so there’s a technology gulf that must be overcome quickly with serious planning, collaboration, and investment dollars to turn the vision into a reality.
The hurdles facing green steel is just one example demonstrating that a bag of flour, a glass of milk and an egg isn’t a cake, and having all of these strategic assets falling on our laps doesn’t guarantee we’ll come out on top. Drawing these various elements together to make the net-zero transition work for our economy, society, and environment will require scrupulous planning and immaculate execution.
What’s needed actually is a Renewable Energy Superpower Masterplan to create a coherent economy-wide transition picture. We then need proper federal government policy settings and funding to attract private capital, skills, and expertise to allow Renewable Energy Industrial Precincts to pop up across the country.
That’s the idea anyway, and the current trickle of new renewable energy project approvals is a warning that Australia could just as easily squander these competitive advantages and pull off a reverse “Steven Bradbury”.
Can the Government contain the scare campaigns to sell the vision?
This week, Prime Minister Albanese is poised to make significant new funding and policy announcements in Washington to support the renewable energy vision.
Whatever is announced, Labor’s delivery must focus on the economics. In the midst of a cost-of-living crisis, voters will be easy prey to another Coalition scare campaign and will need assurances that a bold renewables vision will lead to more money in their back pockets.
The government should also sharpen its messaging on nuclear energy to kill off the current conjecture in business and political circles. Like the China emissions excuse, the Coalition is busy leveraging nuclear as another smoke-screen to obfuscate and undermine the renewables vision.
This will require Labor to highlight the vested interests sitting behind the Coalition’s nuclear campaign. Because, sure, “all options need to be on the table,” as the Coalition’s Ted O’Brien asserts.
But if nuclear keeps rolling off the table because costs and risks are too high, why does the Coalition keep stooping down to pick it up again?
