Jul 22, 2015 - 3:30pm
This article first appeared in ABC's The Drum on 22 July 2015.
CEO, The Climate Institute
Labor's proposal to make 50 per cent of Australia's energy renewable by 2030 is significant, but it needs to be seen as part of economic modernisation as well as climate outcomes, writes John Connor.
Global investments in renewable energy last year outpaced investments in fossil fuel generation. Yet in Australia, the political football that is our multibillion-dollar energy sector languishes in a morass of policy uncertainty.
Investors fled, and in the absence of any credible climate policy, electricity sector emissions jumped.
In this context, today's proposal by the ALP to make 50 per cent of Australia's energy renewable by 2030 is significant. But it needs to be seen as part of an economic modernisation as well as climate outcomes.
For too long we have focused on short-term 2020 emissions and renewable targets. Today's announcement could help focus Australia on the longer-term challenges our country faces. It can also help us keep a competitive edge.
Other major economies - particularly our major trading partners in China, the United States and the European Union - have made clean energy investments central to their future economic prosperity. They are building new industries, reducing air pollution and energy imports, and reducing carbon emissions all in one go.
To remain competitive with other countries, we must modernise and clean up our old, polluting and inefficient power sector.
A staggering $US310 billion was invested in renewable energy globally last year, according to Bloomberg New Energy Finance. China led the pack with more than $US89.5 billion, followed by the EU and the US with more than $US66 and $US51.8 billion respectively. In Australia, investment crashed to its lowest levels since 2009. Due to policy uncertainty created, in part, by the review of the 2020 renewable energy target, it fell by 35 per cent on 2013 levels to $US3.7 billion.
A strong and growing renewable energy industry is critical if we are to achieve the overall goal both major parties have signed up to - limiting global warming to less than 2C. Achieving this goal will require a near zero emissions power sector before 2050.
But what's needed for the renewable sector to grow is investment, which will only come with policy certainty and a credible plan to replace the old, inefficient and aging coal-fired generation fleet.
We need a toolbox of policy solutions. The Climate Institute is currently examining what policy levers will be needed to ensure a timely and managed transition. So too are independent Government agencies like the Climate Change Authority.
Fundamentally, the key barrier to modernising our power sector is retiring and replacing our outdated and polluting coal-fired generation infrastructure. It makes little sense to have half of our power generation renewables if the other half is dominated by the most polluting generation technology - brown coal.
Many of our coal plants are now approaching their 50th birthday. They are products of the technologies of the 1950s and '60s. They will have to be replaced at some point and this can be done in way that makes more room for a growing renewables sector while at the same time supporting the transition in affected communities.
Whatever pollution or clean energy goals the major parties announce, these will only be delivered and investment unlocked with a scalable, durable and effective toolbox of policies to achieve the targets. Without this, global capital and clean energy investors will continue to flee Australia to those countries like the US and China who have investor-friendly policies, from standards for new and existing power plants, to emissions trading schemes, to clean energy targets.
Let's hope that today's announcement helps put us on a path deliver this much needed outcome.
John Connor was CEO of The Climate Institute from 2007 to March 2017. Whilst qualified as a lawyer, John has spent over twenty years working in a variety of policy and advocacy roles with organisations including World Vision, Make Poverty History, the Australian Conservation Foundation and the NSW Nature Conservation Council. Since joining The Climate Institute in 2007 John has been a leading analyst and commentator on the rollercoaster that has been Australia’s domestic and international carbon policy and overseen the Institute’s additional focus on institutional investors and climate risk. John has also worked on numerous government and business advisory panels.