Australia: a global green energy “superpower”? Really? Actually, yes really.

At SXSW Sydney recently, I hosted a conversation discussing how and why the energy transition is Australia’s environmental and economic opportunity of a century with industry experts: prominent energy commentator, Tim Buckley of Climate Energy Finance , leading climate technology investor, Kristin Vaughan of Virescent Ventures and Chief Renewable Officer Steve Nethery at green metals pioneer, Element Zero .

Here’s the summary:

• Although today we here it most from our politicians, Tim reminded us renowned economist Ross Garnaut was the first to coin the concept of Australia becoming a ‘renewable energy superpower’ (check out his work here)
• It is worth remembering Australia is actually already a global energy superpower, as Steve puts it:

1. “We are a coal superpower” [We are the second biggest exporter of thermal coal behind Indonesia]

2. “We are an iron ore superpower” [We are the world’s largest producer of iron ore]

3. “We are a gas superpower…” [We are the biggest exporter of LNG along with Qatar and the US]

So he emphasises we already have the DNA: “We can do big things. We can be big.”

• We also have the ingredients to use the energy transition to switch from being a dirty energy superpower to a renewable energy superpower. Tim reminds us “we have all the land, we have all the wind, all the solar, and we have all of the relations with our northern Asian customers…”

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So if not coal and gas, what should focus on produce and export? 

As part of a company pioneering a new way of producing green metals, Steve of course points to green iron, and there are good reasons why:

• Customer pull: “we're chasing it, partly because one of our (former) customers in Japan told us “if you take all the iron and and all of the renewable energy that you can build, and combine them together and bring me green iron, I can put it into my furnace today”
• A new lease on iron: We might have the largest reserves of iron ore in the world but Steve notes “we're mining out all the good stuff. So the purity of that iron ore is decreasing”. Hence, it's imperative we innovate to increase yield but also find ways to add value, like making sure the iron we do export is ‘green’
• The economic opportunity is compelling: as Tim & Matt Pollard 's new Green Iron report states “Repositioning Australia as a global leader in green iron exports has the potential to double the value of our iron exports to >$250bn pa, key to securing economic prosperity”

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Australia is not only endowed with plentiful natural resources that we can make ‘green’ but as the birthplace of the modern solar panel, we’re capable of developing world leading innovations. 

With ~45% of their first ~$270m invested in energy innovators, leading climate tech investment firm, Virescent Ventures, plays a big role in seeding such innovations that support the energy transition. That can be in two categories:

• Technology innovations in energy sectors that are already mature so involve taking “existing technology and expanding it more rapidly”: Their portfolio company Sunman Energy is an example. Solar panels might not be new anymore but they are still heavy, so Sunman is pioneering ultralight high-performance solar modules 
• Technology innovations in areas that still need help: E.g. their investment green hydrogen company, Hysata , helped the team manufacture electrolysers operating at an efficiency of ~95%. That is a world first!

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So if we have all the ingredients, what’s stopping us becoming this ‘renewable energy’ superpower? As Tim notes, “We're nowhere near there now, and the attitude that we’ll just leave it to the free market is effectively saying, Australia will fail. We will not do it, because no other country of substance that we're competing with is leaving it to a free market.” 

What are these other countries doing about it? Here’s a little world tour Tim took us on: 

• USA: “threw a US$1Tn dollars of capital and public subsidies on the table two years ago” with their Inflation Reduction Act and the Bipartisan Infrastructure Law
• EU: pledged €1Tn (~US$1+Tn) over a decade as part of the Green Deal to reduce the bloc’s remissions by 55% by 2030
• Japan: established the Green Transformation (GX) policy committing ¥150Tn (US$1Tn) over a decade to help the nation achieve carbon neutrality by 2030
• China: where do we start? 

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Beyond establishing our own emissions reduction target of 42% by 2030, the Safeguard Mechanism and committing to a AUD$22Bn Future Made in Australia policy package, Tim has a few suggestions of what more we could do:

• More investment, of course! Especially if public funding is used to crowd-in private finance which he believes could make up ~90% funding needed to support our goals 
• As a big fan of carbon pricing, Tim also advocated for an Asian ‘Carbon Border Adjustment Mechanism (CBAM)’ in response to Europe’s own CBAM. An Asian CBAM where “if Japan, China, Korea - our trade partners - want to put a price on carbon in international trade, our industry will supply green iron rather than traditional iron ore and coking coal. We'll do the decarbonisation before we export, because we'll be paid for it, because there's a price on carbon emissions”
• Partnerships, partnerships, partnerships - whether its public-private partnerships, Australia-international partnerships, science-industry partnerships. For example “Green iron…is a huge opportunity. Let's go to the world's leading technology companies, the world's leading steel companies, and partner with them….There is a lot of risk, there is a lot of uncertainty - there's policy uncertainty, there's technology uncertainty; we need to de-risk it.”

Kristin described a great example of establishing global partnerships: portfolio company SunDrive established a partnership with one of the world’s leading solar module manufacturers, Chinese company Trinasolar , to build a domestic manufacturing facility. This JV combines SunDrive’s unique tech with Chinese manufacturing prowess to build right here in Australia. SunDrive is also a beneficiary of both private funding including from Virescent Ventures and public funding via grants from Australian Renewable Energy Agency (ARENA) early in its life and is a contender for a share of the government’s $1b Solar Sunshot funding program. 

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We are often fed the narrative that the energy transition is a cost - a cost to change to new industries, a cost to people who may lose their jobs in traditional energy sectors, a cost to Australia’s biggest export markets today. However, we can choose to rewrite that narrative - the cost is really an investment in our renewable industries, an investment in retraining workers for a green economy and an investment into future export markets, which can be orders of magnitude larger than they are today.

However, as Tim puts it, changing superpowers from dirty energy to renewable energy “is just a potential. We're not there yet”