09/05/2024
It's great to be here, as Clint mentioned, I’m a CEDA Senior Economist based here in Brisbane and it's great when the conference comes to you, so great to see so many people here today.
I'm going to be talking about our research into clean energy precincts, seizing the green export opportunity.
This is hot off the press, it was just released last week, and it's also relevant to the upcoming Federal Budget and of course, the government’s Future Made in Australia strategy.
We worked closely with our members in doing this work through consultations and a workshop in March, and it's good to see some familiar faces around the room who were involved in that consultation.
What we found was that consistent with the Climateworks Centre’s earlier work, Australia has great opportunities in the development of clean energy precincts and Australian governments have recognised this with over $8 billion of funding around hydrogen alone, much of which will occur in precincts.
At the same time, when we spoke with precinct proponents, they find they're hitting big barriers through cumbersome planning and permitting, through a lack of clean energy skills and through a lack of coordination and these are the aspects where we argue that governments should now focus their attention.
What do we mean by clean energy precincts?
We're talking about industrial-scale collections of businesses, research institutions and education providers, that work together to deliver innovation, skill development and clean energy exports.
We have some case studies in our report, one of them is from the Port of Newcastle, where they're working to develop a Clean Energy Precinct on 220 hectares of industrial-zoned land.
They're looking to enable the production, storage and export of clean energy, including through hydrogen and ammonia and potentially in the future through green iron and green aluminium.
We've got the CEO, Craig Carmody here today, who's going to be participating in the breakout session this afternoon on bringing community on the journey.
Here in Queensland, of course, there are developing clean energy precincts at Gladstone and at Townsville and we talk in the report about TAFE Queensland's new hydrogen and renewable energy training facility, which importantly will be co-located with the manufacturing hub there, enabling skilled development and spillovers to the local industry.
There are a number of aspects where we think clean energy precincts can play an important role, and first among them is to enable Australia's potential in clean energy exports.
Of course, Rod Sims will be talking more about Australia's superpower potential in green exports shortly, so I won't steal his thunder.
Suffice to say, we also see real potential for Australia to have a sustainable comparative advantage in clean energy exports through either exporting clean energy directly or embedded in metals.
Through co-location, clean energy precincts can also enable shared and therefore more efficient use of existing or new infrastructure.
They can also enable skill development and skill use across research and industry, and also the use and reuse of byproducts.
The Kwinana hub in Western Australia is a really good example of what's not a clean energy precinct yet, but it's heading in that direction, where there are hundreds of byproducts reused across more than 50 businesses located in that hub.
The list here is a list from the international literature on what are the success factors in innovation precincts.
Innovation precincts are more general, they don't have to be clean energy, but clean energy precincts are a special example of this.
The really important thing to take from this is that these success factors map very well to the opportunities we have in clean energy precincts in Australia.
We need to have clear objectives, of course, about whether it's about exports, whether it's about protecting adversely affected communities in the transition, whether it's about creating new clean energy jobs and be clear about the trade-offs where we're trying to look at various objectives.
There is a large and growing demand for clean energy globally and that creates a real opportunity for Australia.
With our comparative advantage in renewables and clean energy and potentially exports, this creates a barrier to other countries competing with us where they don't have the same solar, wind or land resources that we do have.
There are large pools of capital available through ESG investment as long as those investments are of course commercially viable.
Accommodative regulation and zoning, the last one here is really the odd one out on this list.
It's been really important in the success of innovation precincts in the United States and in Europe, but as mentioned, when we spoke to our members and project proponents, this is where they're really hitting barriers.
Some key aspects of that are that even where land is already zoned, industrial regulators have expressed a preference for incremental approvals rather than a bigger picture looking at the overall proposal that enables taking into account cumulative effects better and provides greater certainty for the project proponents.
Having many different agencies involved in planning and permitting slows progress and makes it very hard for the project proponents to know who's responsible for what.
And also, we heard that regulations haven't kept up with new technologies around clean energy, particularly around the safety of that.
We clearly need to protect environmental and social values, so we're not advocating a free-for-all here, but equally cumbersome and fragmented planning systems don't help with the environmental or social goals either, and in fact they create a barrier to new clean energy developments and that can have a negative environmental effect as well.
With multiple parties involved in clean energy precincts, all parties need to really play to their strengths.
Businesses need to collaborate, also assess and invest in commercial opportunities.
And governments also have an important role in enabling fit-for-purpose planning and permitting.
We recommend single points of contact or lead agencies to make that process simpler for precinct proponents in the provision of shared infrastructure like roads or pipelines, and also through coordination generally across levels of government, but also coordination of skilling and community consultation.
Community consultation is obviously really important here, as in all clean energy projects, we need early, deep and active consultation to make sure the community is on board and also to make sure that projects play to the strengths of the community – that we really will have a sustainable comparative advantage and local comparative advantage there.
That early consultation gives communities, including First Nations groups, the tools and opportunities to participate and shape clean energy precincts.
We propose a framework for prioritising government support for clean energy precincts, which has a continuum of support that can start by enabling precinct development through enabling the right conditions for private investment.
It can also guide towards certain technologies or developments in certain locations, for example, through the provision of infrastructure there.
And then finally governments can go further and actually invest in these specific projects or in specific firms.
The important point to make here is that as we move down that continuum and have greater government involvement, especially through investment, that's shifting risks from private investors to taxpayers, so we're not getting rid of risks.
But what's really important, where risks are being shifted, is making sure those risks are going to the party that's best placed to manage them.
Governments are perhaps a much better place to manage improving the planning system, but in terms of commercial investments then private parties are better placed to manage those risks there.
That framework takes us to our conclusions from the report where we find that all levels of government have important roles to play in enabling and guiding clean energy precinct development through coordination, through reforms to planning and also through providing shared infrastructure.
Where governments go further and invest in clean energy projects, as is happening in Australia and internationally already, we argue that consistent with recent OECD and IMF analysis on industrial policy, it's really important for governments to have clear objectives on what they're trying to do and investing in projects and just have deeper and more transparent analysis to make sure we really do have a sustainable comparative advantage in these areas.
That doesn't mean putting a lot of money into the same things that other countries are, because that makes it very difficult to compete.
Rather, it means trying to find where we can best supply into global supply chains and be open to trade rather than cutting ourselves off and trying to be self-sufficient.
Second, there needs to be a focus on innovation and emerging technologies, because that creates far bigger spillovers to the rest of the economy, from research and development.
And third, we need regular evaluation and updating to make sure we don't keep funding unsuccessful projects.
We need to be ready for the possibility of failure and to cut losses.
One of the failures of industrial policy in the past has been continuing to support firms or industries that did not have a comparative advantage internationally.
As I mentioned earlier, we see really big opportunities for Australia in the development of clean energy precincts to enable exports and we really need well-thought-out and targeted government policy that will give our precincts the best chance of the global success that they promise.
I'm of course happy to discuss further throughout the day, just find me if you've got any questions or comments.
But right now, I have the great privilege of introducing Rod Sims AO, chair of the Superpower Institute to give the keynote presentation.
Thank you.