Australia has no room for complacency if it is to capture a once-in-a-generation opportunity to become an energy superpower – a view supported by growing momentum and consensus among energy experts and economists that the opportunity is real, substantial, and ours to lose.
The global shift towards net zero emissions opens a world of possibilities for Australia, which has a potential advantage for new heavy industry, leveraging highly competitive renewable energy and mineral resources, but urgent effort is required to seize this emerging competitive advantage.
This is the critical message in Seizing Australia’s energy superpower opportunities, the latest report from EY’s Net Zero Centre, which assesses the global shift to net zero and its implications for Australian materials and energy-intensive sectors.
EY Oceania launched the Net Zero Centre in 2022, designed to assist and accelerate the transition of Australian and New Zealand companies to net zero by 2050. Led by Blair Comley PSM, EY Net Zero Leader and formerly the Head of the Federal Department of Climate Change and Energy Efficiency, with the support EY Chief Sustainability Officer, Mat Nelson, the Centre brings together the most respected climate change leaders and strategists in the region.
The report finds that Australia is well positioned to capitalise on an enormous economic opportunity, particularly for green iron and steel, new energy minerals and hydrogen – one that could add $40 billion to national income and A$65 billion to Australian economic activity by 2050. Success will require public and private sector policy coordination, clarity, and courage to embrace the complexity and uncertainty associated with the global net zero transition and its implications for Australia.
“While the economic benefits could be enormous, dollars are only part of what is at stake,” according to Mr Comley.
“Our report observes that while there is a strong case for an underlying competitive advantage, there is no certainty that we will get there. We can let others develop the technology and try to be a fast follower; however, the risk of this approach is that we don’t build the skills and capabilities and we never catch up,” Mr Comley said.
“The US, in particular, is pouring enormous resources into the private sector to accelerate clean energy development. We can’t outbid the US, but our long-run natural advantages mean that with strategic investment, there is a real prospect of developing an expanded Australian industrial base built on renewable energy,” Mr Comley added.
The report’s granular analysis of specific technology and industry processes has identified three highly prospective opportunities for Australia; clean, low-carbon heavy industry, including first stage iron processing for use as an input to electric arc furnace (EAF) steel production; lithium, copper, nickel and other ‘new economy’ minerals, metals, or rare earths, including initial processing opportunities; and hydrogen for use within Australia, including as an input to energy-intensive exports.
Capturing these opportunities will require greater pace and scale of renewables deployment and low carbon innovation, according to EY Oceania Chief Sustainability Officer Mat Nelson.
“The global transition to net zero emissions will disrupt materials and energy-intensive industry in Australia and around the world, requiring every sector – and every facility – to change its production processes, energy inputs, and supply chains. Success will require large-scale investment, savvy business strategy, and government support, and a healthy national innovation ecosystem,” Mr Nelson said.
EY Oceania Chief Executive Officer and Regional Managing Partner David Larocca said: “At the heart of this report lies an urgent call to action for our nation. Net zero offers an opportunity to re-energise the Australian economy and the heavy industry underpinning it. It has been some decades since Australia last invested in heavy industry at scale – net zero provides a conditional advantage for new heavy industry, leveraging our highly competitive renewable energy and mineral resources.
“Importantly, Australia should feel confident as it looks to capitalise on this opportunity because it has done this in the infrastructure sector, where Australia has over many years become a global powerhouse, exporting human and financial capital, and attracting global investment across the infrastructure lifecycle,” Mr Larocca added.
“To date, there has been a lot of discussion on the transformation of our domestic electricity supply, the building out of an export hydrogen industry and the fact that we need to ramp up exporting energy within manufactured goods. However, this study demonstrates that as the world shifts to net zero emissions, we need to do more with what we have before we export it to leverage our multiple competitive advantages,” Mr Larocca said.
EY is a recognised leader in decarbonisation and sustainability, and the Net Zero Centre provides an end-to-end offering as well as cutting edge insight and thought leadership to demystify and build understanding on all topics relating to net zero.
