VIDEO: Can Australia become a renewable energy superpower?

ANTHONY ALBANESE, PRIME MINISTER:  We are home to every metal and critical mineral essential to net zero and we own a proven track record as a reliable producer and exporter of energy and resources. 

So much of the history of the Hunter speaks proudly to that but I don't want extraction to be the limit of our ambitions.

I talk about Australia as a renewable energy superpower because that's the truly global scale of the opportunity and government has to be a partner in this, not just an observer. 

LAURA TINGLE, CHIEF POLITICAL CORRESPONDENT:  Anthony Albanese went to Newcastle last week to deliver a message that should have resonated with a city whose history has been shaped by coal mining and, for a long time, by steel making.

Things changed dramatically for Newcastle in 1997 when BHP announced it was planning to close its massive steel works.

KIM BEAZLEY (1997):  Can you look the workers and families of Newcastle in the eye and tell them the truth, that your government is unable to deliver them hope or job security?

JOHN HOWARD (1997):  We don’t promise a capacity to reverse the decision that has been taken by BHP any more than if you had been in government, you would have acted any differently. 

LAURA TINGLE:  Fast forward almost 30 years and the current Prime Minister is talking about a renaissance for Newcastle and the Hunter Valley as part of Australia’s energy future.

ANTHONY ALBANESE:  Fifty years ago, the Liddell Power Station was brand new, and it was the most powerful generating station in Australia. Today, the future of that site lies in renewable energy.

LAURA TINGLE:  The growth in Australia’s renewable energy capacity in recent years has been staggering.

Renewables now supply around one-third of the nation’s electricity generation, but the debate is now not just about producing this cheaper and greener energy for the Australian economy, or even about reducing greenhouse gas emissions.

It’s not just about exporting energy but about manufacturing things here - the sort of heavy industry that has been so much a part of Newcastle and the Hunter’s history.

ROD SIMS, SUPERPOWER INSTITUTE:  The economics at the moment is that it probably makes sense to export the iron ore, the coal and the gas. 

But in the net zero world, the economics completely flip. The economic thing to do is to make the green iron in Australia. 

You need to make the green iron close to where the renewable energy and the hydrogen is. They're very hard to export, they’re very expensive to export.  

LAURA TINGLE:  Rod Sims is a former senior economic bureaucrat who advised governments on both sides of the political fence for decades. He went on to be the chair of the competition authority, where he took a particular interest in energy markets.

Professor Ross Garnaut was at the centre of the debate about an emissions trading scheme at the start of the century.

ROSS GARNAUT, SUPERPOWER INSTITUE:  The big thing that's changed since those early days was increased understanding that Australia has big advantages in the zero carbon economy from supplying zero carbon goods that other countries can't supply for themselves.

LAURA TINGLE:  Last year, the Albanese Government quadrupled the size of a scheme designed to underwrite projects which increase renewable and dispatchable energy for the domestic market - the so-called Capacity Investment Scheme.
 
But there is a second, much bigger international market for our renewable energy - though it is physically very difficult to export many of the forms of renewable energy we can produce.

That’s why Ross Garnaut and Rod Sims are leading a push which would see Australia ‘embed’ its renewable energy in products before they are shipped offshore. 

ROSS GARNAUT:  The big export markets at the moment, and over the next few years will be in Europe and Northeast Asia. 

Northeast Asia, Japan, Korea, China - these countries account for over 40 per cent of global emissions. They don't have the renewable energy resources themselves to get rid of their own emissions.

LAURA TINGLE:  A variety of market interventions elsewhere in the world is increasing the pressure on Australia to seize this opportunity.

China has been undertaking massive investment in renewables for some time. 

The United States, after eschewing an emissions trading scheme, has set up a regime under President Biden of enormous subsidies under what is known as the Inflation Reduction Act. 

TIM BUCKLEY, CLIMATE ENERGY FINANCE:  We're talking about a trillion dollars or more of government capital and budget stimulus to subsidize the investments and deployment of zero emissions alternatives. 

LAURA TINGLE:  And in two years’ time, 2026, Europe will also be introducing policies that further accelerate the push to net zero with a policy known as the Carbon Border Adjustment Mechanism, which would work in conjunction with the EU’s emissions trading scheme.

TIM BUCKLEY:  Quite understandably, the European Union heavy industry has said if they have to wear a carbon emissions tax, then any imports into Europe should have a similar imposte on them. 

ROD SIMS:  It's tremendously important. If we were to export, clean green iron into Europe, we would not pay taxes, whereas fossil-fuel made iron would pay taxes, and on current European prices, or current European taxing rates, green iron would be cheaper than fossil- fuel made iron.

ANTHONY ALBANESE:  We don’t have to go dollar-for-dollar in our spending but we can go toe-to-toe on the quality and impact of our policies.

LAURA TINGLE:  Ross Garnaut and Rod Sims argue there needs a ramp up investment scheme similar to the one taking place for domestic renewable energy and, controversially, are suggesting a levy on all fossil fuels to help fund both that investment and also buy a big reduction in average Australian's cost of living

ROD SIMS:  If it's imposed at the full European carbon price, it raises about $100 billion a year. That's more than enough money to pay for the infrastructure that we think the Government should provide and it will still have a lot of money leftover to fund a significant package to lower the cost of living.

LAURA TINGLE:  For now, Garnaut and Sims recognise there is little prospect of either side of politics taking up the idea of a new fossil fuel tax. 

The Government might be talking the same sort of language as Garnaut and Sims, but is a long way from endorsing their proposals but the two veteran economists at least want to start a debate about the opportunities that are out there.

ROSS GARNAUT:  In Australia, we're not used to being bold in grabbing opportunity, or at least today we're not used to it.