ANGUS TAYLOR: Thank you for this opportunity to speak to you all today about our approach to net zero, and what that means for Australian industry and manufacturing.

Australians want to play their part in global efforts to reduce emissions.

But not at the cost of increasing electricity bills or putting livelihoods at risk.

That’s why our approach seeks to lower the cost of new energy sources, not raise the cost of traditional incumbents.

An approach that recognises the power of innovation, enterprise and technology to solve problems.

Our plan

The truth is, it is the entrepreneurs and innovators who will solve this problem.

Not activists, bureaucrats and politicians who have attended the last 26 global climate change conferences. 

That’s why our plan for Australia to achieve net zero emissions has such a strong emphasis on technology, with an enabling role for government.

Those principles are:

1. Technology not taxes – no new costs for households or businesses, 
2. Expand choices, not mandates – Australia will work to expand consumer choice, both domestically and with our trading partners,
3. Drive down the cost of a range of new energy technologies – bringing a portfolio of technologies to cost competitiveness is the objective of Australia’s Technology Investment Roadmap, which I’ll talk about in a moment,
4. Keep energy prices down with affordable and reliable power – our Plan will consolidate our advantage in affordable and reliable energy, protecting the competitiveness of large-energy using businesses and the jobs they support, and 
5. Be accountable for progress – transparency is essential to converting ambition into achievement, and that is as true of the corporate sector as it is of national governments.

Under the Technology Investment Roadmap we launched last year, the Australian Government will invest more than $21 billion in the next generation of low emissions technologies, to drive up to $120 billion of total public and private investment by 2030. 

The Roadmap has a framework for prioritising technologies based on their global abatement potential, but also Australia’s comparative advantage and the scale of the potential economic benefit.

We’re targeting areas where we can make a difference and have global impacts. 

And we’ve set specific economic stretch goals – at price parity – for our priority areas:

• Hydrogen at less than $2 per kilogram,
• Ultra-low cost solar, at less than $15 per megawatt hour (MWh),
• Energy storage at less than $100/MWh, to firm wind and solar at today’s wholesale electricity prices or lower,
• Green steel and aluminium, at the cost of today’s production,
• Sequestration from carbon capture and storage at less than $20 per tonne, and
• Soil carbon measurement, which has the potential to unlock enormous productivity at less than $3 per hectare, a 90 per cent reduction on historical costs.

We’ve looked at the cost drivers and the pathways to achieve those goals – and in the latest annual update under the Roadmap, the 2021 Low Emissions Technology Statement, we have put dates on when we expect those goals will be achieved.

As a part of our commitment to accountability and transparency, we’ve put these cost targets into our Nationally Determined Contribution and will report on them regularly. 

Getting low emissions technologies to cost competitiveness is essential to unlocking widespread, global deployment.

This is a really under-appreciated but important point – there is a non-linear relationship between falling technology costs and deployment.

Take solar, for example. It took until 2002 for the world to deploy its first gigawatt (billion watts) of solar capacity.

This was despite the cost of solar falling by roughly 12% every year since the 1970s.

By 2012, the world deployed 100 gigawatts. And sometime next year, we’ll hit 1000 gigawatts.

And 90 per cent of those solar cells have Australian intellectual property in them. 

Our goal is to replicate that success across other areas, including batteries and hydrogen.

We estimate that getting these priority technologies to parity will deliver around half of the reductions Australia still needs to achieve net zero by 2050.

Our plan builds on the policies and initiatives that we have already put in place and that have proven to be successful.

Australia has always played its part in this area – one simply has to look at our track record.

We have reduced our emissions by 20.8% on 2005 levels – this is much higher than the OECD average.

Recent projections show we will meet and beat our 2030 target, with a forecast reduction of up to 35% by 2030.

We are already a world leader in renewable energy deployment. 

The share of generation from wind and solar in the National Electricity Market is 23%.

To put that into perspective, the OECD average is less than half of that – 11% – and the global average is 6.5%.

Since 2017 over $35 billion has been invested in the renewable energy sector. 

We lead the world in household solar per person and we have the most wind and solar generation capacity per person of any country outside of Europe.  

More than one in four Australian homes now have rooftop solar that generates electricity to power their household and export excess energy to the grid.

All up, 13,300 megawatts of new renewables were added to the grid in the last two years.

Electricity

We’ve managed to absorb this influx of renewables while reducing the cost of electricity.

We had 19 months in a row of falling wholesale power prices, and average prices across the NEM are currently well below our $70 per MWh target. 

For this to continue, alongside growing investment in renewables, the Australian Energy Market Operator forecasts we will need investment in up to 19,000 MW of dispatchable power. 

We have seen what happens if policy makers and industry take reliability and affordability for granted in the energy market. 

In the UK, reliance on gas imports, constrained gas supplies and a prolonged wind drought have plunged the country into an extraordinary energy crisis.

Default household energy prices have been increased by 12%.

Manufacturers have been forced to make a tough choice between bearing the cost of surging energy prices or suspending production.

Here in Australia, from late May through to mid-July we had a small glimpse of what happens to the energy market when reliable capacity exits early or without replacement.

Coal outages in NSW, coinciding with the incident at Callide in Queensland, drove prices across the NEM from $37 a megawatt hour in the first quarter of 2021 to $95.

But since this capacity has come back on line, prices have eased significantly.

This shows why it is critical that as more renewable enter the grid, we ensure departing dispatchable capacity is adequately replaced.

In the short term, the Government has stepped up where the private sector hasn’t. 

Through Snowy Hydro, we are on track to deliver the largest energy storage project in Australia through Snowy 2.0, and a new hydrogen-ready gas generator at Kurri Kurri in the Hunter Valley to replace the exiting Liddell power station. 

These strategic investments, along with support for projects like the Kidston Pumped Hydro Project, Tallawarra B, and Battery of the Nation, are designed to support reliability and develop a pipeline of dispatchable projects we will need in coming years.

However, we are a long, long way from seeing enough of the private sector investment in firm power that we need to keep the grid affordable and secure. 

While 13,300 megawatts of new renewables were added to the grid in the last two years, only 235 megawatts of new dispatchable projects came online.   A ratio of 56:1.

National Cabinet’s recent decision to implement major market reforms is a significant step forward to ensure we have adequate generation resources, with work underway on a detailed design of a capacity mechanism.

This is a technology neutral way to value reliability, incentivise missing private sector investment in new dispatchable generation and ensure existing generators don’t shut down early if they are still needed. 

This reform, which could deliver $1.3 billion in benefits for consumers, won’t come at the expense of getting more renewables into the grid – we are on track for 60% renewables by 2030.

But if we are going to reach the amount of on-demand, dispatchable power called for by AEMO to support these renewables when the sun doesn’t shine and the wind doesn’t blow, we have to get the market settings right.

Support for industry and manufacturing

Our manufacturing sector is going from strength to strength, with business conditions reaching record highs earlier this year, and strong confidence in the future of the sector.

We know that through manufacturing, Australia has a significant opportunity to grow a resilient, globally competitive and vibrant onshore capability.

That’s why this Government is more determined than ever to build an even stronger local manufacturing sector. By playing to our strengths, strategically investing and harnessing our world-class science and research, we can build a stronger economy, create more jobs and take more of our quality products to the world.

Delivering on the Government’s $1.5 billion Modern Manufacturing Strategy is one of my key priorities.

There are now 80,000 more jobs in manufacturing than at the start of the pandemic. 

This takes the sector to more than 1 million strong. These are the highest numbers we have seen since Labor introduced its carbon tax.

We need this momentum to continue.

That’s why our plan to reach net zero emissions will not close down existing industries. 

By setting out a plan to achieve net zero emissions by 2050, we can allow our existing industry and manufacturing sectors to adapt, so they remain viable and create jobs for now and future generations.  

Our plan, together with our Modern Manufacturing Strategy, will put in place the right settings to help industry diversify and take advantage of new opportunities that emerge through low emissions technologies.

Australia’s heavy industry and manufacturing sector depends on low energy prices. 

A secure supply of gas is one element to help the manufacturing sector continue to thrive. 

Through development of our National Gas Infrastructure Plans, Strategic Basin Plans, and significant gas market reforms to increase competition and transparency, we are working with industry to ensure Australian gas gets to where it is needed at an internationally competitive price.

This Government will continue to take action to help unlock new gas supplies and encourage further investment in critical gas infrastructure to ensure we do not experience the devastating impacts of a gas shortage like we have seen overseas.  

Support for new technologies

We’re also making it easier for large energy-using businesses to adopt new energy technologies where it makes sense for them to do so.

Supporting choices not mandates means businesses should be free to adopt renewable power, hydrogen and other technologies at their own pace.

That’s why the Government will continue to resist calls to lower the threshold for the Safeguard Mechanism, or to ratchet down baselines for existing facilities. 

This would impose new costs on more than 500 of Australia’s most energy-intensive businesses and facilities, many of whom are exposed to international competition.

Rather than free up business to get on with the job of supporting Australia’s economic recovery, it will tie them up in green tape. 

It would require businesses in sectors like agriculture and food production, mining and resources, waste management, trucking and railways to reduce or offset their emissions – regardless of whether the technological solutions for them to reduce their emissions exist.

The Safeguard Mechanism was never meant to be a tool to force businesses to reduce their emissions – which is a carbon tax by stealth.

It was set up to avoid growth in industrial emissions overwhelming reductions achieved through the Government’s voluntary incentive scheme, the Emissions Reduction Fund, which has now delivered more than 100 million tonnes of abatement.

Instead of imposing a sneaky carbon tax, we’ll incentivise the uptake of new low emissions technologies through the $280 million Safeguard Crediting Mechanism, which will support projects that reduce the emissions intensity of large industrial facilities.

In calling for the Safeguard Mechanism to be lowered, the Labor Party would have Australia become a nation of form fillers. 

Blue collar workers on the factory floor will be replaced by lawyers and consultants.

The can-do capitalism that has powered our country will be smothered by the hand of government bureaucracy.

Conclusion

Our plan goes hand in hand with our commitment to ensuring Australian energy users get a fair deal.

The challenges of the last two years have demonstrated how resilient and agile our manufacturing sector is.

As we prepare to go through the largest change in Australia’s energy history, our plan backs industry and manufacturing to continue to survive and thrive, as they take advantage of new growth opportunities presented by the global shift to a low carbon future.

While there is certainly more to be done, I have every confidence that, by working together, we can effectively deal with the global challenges of climate change, while ensuring critical sectors like manufacturing continue to flourish.  

Thank you again for this opportunity and I wish you all the best for the rest of the event.

ENDS