It's time for a clean energy stimulus package in Australia
Good economic benefits can come out of the COVID-19 crisis - a well designed stimulus package targeted at the clean energy sector has the potential to accelerate Australia's necessary transition to clean energy, while providing well-needed jobs and economic development along the way.
I've looked at how other countries have recently framed their response to the wreckage that COVID-19 is laying on economies across the world. Many are talking about the need for government-led stimulus packages to support economic recovery after such a crisis. Some, such as New York State, are already taking action.
The International Energy Agency sets the scene
The International Energy Agency set the scene brilliantly a couple of weeks ago. They argue that countries need to maintain their focus on the energy transition - it’s a long-term issue that's not going away.
Their recommendations focus on government-led investment in:
development, deployment and integration of clean energy technologies, with the additional benefits of jobs and a faster transition;
high-cost technologies so they reach the scale where they become increasingly competitive (e.g. batteries, hydrogen, carbon capture);
improving the energy efficiency of buildings;
building state-of-the-art electricity systems to strengthen grids and integrate smart digital technologies in their operation; and
targeted R&D and energy venture capital funds.
Governments can also embed effective incentives into financial and taxation tools:
by lowering or removing fossil fuel subsidies;
by avoiding designing subsidies that are inefficiently targeted and that disproportionally benefit wealthier segments of population; and
by using the current low interest rate environment to make clean energy even more attractive to private investors by providing guarantees and contracts that reduce financial risks.
The Green New Deals of South Korea and Europe
The planks of the South Korean Green New Deal - which are up for debate ahead of the April elections - are a net zero carbon emissions by 2050 and a Green New Deal Act.
In its Deal proposal, South Korea considers the introduction of a revenue-neutral carbon tax, the expansion of investment in clean technologies and a hydrogen strategy that focuses on updating the country's infrastructure power-to-gas system.
Europe has put in place its European Climate Law, with a net zero emissions target by 2050 for the continent. This will provide a framework to shape policy in all industries, all countries.
Alongside legislation, there is also €1 trillion of investment to be used for:
a Just Transition Fund for vulnerable sectors and regions;
a financing plan to unlock an additional €260 billion required for the transition;
an offshore wind plan to add 450GW of capacity by 2050; and
support to progress the commercialisation of technologies such as carbon capture, hydrogen and energy storage.
The State of New York, USA comes up with practical measures
Despite the fact that it's dealing with an unprecedented health crisis, the State of New York has also managed to put forward a future-focused stimulus package.
The NY Plan includes measures that Australia could get inspiration from:
new legislation to create what is a ‘Planning Office’ specifically for renewable energy projects. This government agency will help remove red tape and simplify and consolidate rules and regulations. This nicely complements the State's existing 70% renewable energy target;
a Clean Energy Resources Development and Incentives Program that prioritises the development of existing or abandoned commercial sites, landfills, former industrial sites and other under-utilised sites; and
a new government agency that will process all regulatory requirements and auction ‘build-ready’ sites to renewable energy developers (with an attached government power purchase agreement for the energy generated).
The right time for a clean energy stimulus package in Australia
An economic stimulus could accelerate investment in new renewable energy capacity (at both the small and large-scale levels) and set Australia to capitalise on its abundant renewable energy resources for the post COVID-19 world.
Ross Garnaut was interviewed at the Wheeler Centre last month. I'll leave you with his words - as always, he makes a compelling argument (edited for clarity).
"COVID-19 has a powerful recessionary influence, at a time when governments are required to increase public expenditure and to provide incentives for increased private expenditure. This is a great time for big investment in the zero emission economy, a time when you get the additional benefit of acceleration of economic activity [...]
It's a time when it could be a theme of economic stimulus. It would be really good economic policy, a good response to COVID-19 impact on the economy as well as accelerating the transition we have to make [...]
Private sector investment will come behind the transition if it's profitable. This is a time when the government focusing on the right incentives ... can get a very strong response."
This article was originally published on my LinkedIn profile.
References
Put clean energy at the heart of stimulus plans to counter the coronavirus crisis
How on Earth: Christiana Figueres and Ross Garnaut on Climate Solutions Now
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