20 July 2009

1. 20 July 2009 Brad Crofts Economic Advisor Australian Workers Union Presented to ACTU Jobs Summit 20 July 2009. Views within are those of the author and not necessarily those of the ACTU. 

2. Industry policy and the green economy 20 July 2009 Brad Crofts (AWU)

3. The clean energy economy – policies, programs and procurement opportunities Part of a broader project on behalf of the ACTU divided into 3 main parts: stock take and brief summary of major initiatives and programs focused on fostering clean energy and renewables through investment, energy efficiency, and innovation); Assessment of the additional jobs potential from the RET, clean energy projects, including waste and recycling, bio-manufacturing, and from re-afforestation offsets; C. Putting projects in a local procurement / industry policy framework.

4. Our Proposition • Our basic proposition is clean energy initiatives are industry policy and as such need to have an accompanying industry policy focus and plan to maximise outcomes. • This is currently a vital ‘missing link’ in policy terms. • We need a strategy to lift up the jobs benefits from the policy and promotion of national interest considerations in sourcing locally; speeding up the transition to a job creating lower carbon economy and with it, the contribution to national income.

5. A. Clean energy policies and programs • The Rudd Government is to be commended on the development of the CPRS and the RET. However, a range of supporting policies are required to make progress in moving to a lower carbon economy. • And as we shall see there is no shortage of policies! • This section lists some of the multiple clean and renewable energy initiatives and new bodies and how greater coherence can lead to better effectiveness. • These are divided between 1) initiatives to accelerate investment in clean energy; 2) measures to accelerate investment in energy efficiency; and 3) measures to accelerate investment in innovation and R&D.

6. Investing in clean energy • In addition to the Australian Carbon Trust and Energy Efficiency Savings Trust Fund, the big ticket item encouraging investment is the Clean Energy Initiative • That, according to the Government “will help give investors the confidence they require to back low emissions technologies and industries to assist Australia’s transition to a lower emissions path”.

7. Clean Energy Initiative • This initiative has two arms; the first arm is a $2.4 billion investment in low emissions coal technologies, including new funding of $2 billion in industrial-scale CCS projects under the Carbon Capture and Storage Flagships program. • The second arm is centred on a $1.6 billion investment in solar technologies, including the $1.5 billion Solar Flagships Program which “will help position Australia as a world leader in this vital energy technology for the future”.

8. The Flagships • CCS and solar projects are each aiming to generate 1000 MW of electricity. • The CCS Flagships program is likely to comprise 3 installations comprising various CCS options including coal gasification, post-combustion capture and oxy-firing to reduce emissions from coal fired power stations. • The CCS Flagships Program will complement the Government’s National Low Emissions Coal Initiative and the Global Carbon Capture and Storage Institute (GCCSI) supporting the demonstration of two to four large industrial scale projects in Australia. • The solar program is likely to comprise 4 installations: 2 in photovoltaic and the other 2 in solar thermal and energy storage. • Projects are expected to be chosen next year for construction beginning in 2012 for commissioning by 2015. • Note: The Australian Government has announced no targets, timetables or market mechanisms (eg guaranteed feed-in tariffs) for deployment of CCS in the Australian electricity industry.

9. Accelerating Energy Efficiency • The Government has a range of measures to improve energy efficiency and energy performance throughout the community including; • the $2.75 billion Climate Change Action Fund (CCAF) to help business, industry and community organisations prepare for the impacts of a carbon price by providing information and capital grants to reduce energy use. • An energy efficiency trust to promote energy efficiency in the business sector. • And Government in co-operation with the States and Territories has worked through COAG to make significant progress on developing a National Strategy on Energy Efficiency. • COAG agreed at its 30 April 2009 meeting to five key measures to improve the energy efficiency of residential and commercial buildings and to consider signing an Intergovernmental Agreement on energy efficiency at its next meeting.

10. Investment driven by the RET • In addition to this direct support, a far greater investment in clean energy infrastructure is likely from the RET. • The target of 20% renewable energy by 2020 is expected to generate more than $20 billion worth of renewable energy infrastructure. • Much of this in the early years is expected to come from wind energy which is more mature and can be quickly rolled out. • However both geothermal and ocean energy technologies are expected to build large facilities by 2020 with geothermal expecting $2 billion in investment and ocean energy producers around $1 billion.

11. RET spending gives a big boost to investment

12. Accelerating R&D and innovation Renewables Australia • As part of the Government’s $4.5 billion Clean Energy Initiative the Government has provided $465 million for a new body, Renewables Australia, to support research, development, and commercialisation of leading edge renewable energy technologies.

13. B. Wilkins’ Review has started something!-- Rationalise and streamline the suite of government policies! -- • With the planned introduction of the CPRS and RET, there is an opportunity to streamline and better target Government policies and measures. • The Government has considered the Wilkins Review recommendations on the 62 programs (of which 58 were active) assessed as a key input into a number of relevant policy reviews and development processes. • These program recommendations were considered as part of the 2009-10 Budget process and details can be found in the Climate Change Ministerial Budget Statement.  

14. Clean Energy Policy is Industry Policy • Focussing on investment, efficiency and innovation makes environmental policy good industry policy. • The green revolution is estimated to create 5 million green collar jobs valued at $150 billion. The jobs and value added multiplier is impressive . Eg, 17 jobs per $1 million spend and $1.8 million valued added. But how do we make the link right now? • Australian governments between them are estimated to have outlined spending of $250 billion in budgets this year. • But only part of the stimulus will find its way into renewable projects directly (eg home insulation), but as we have seen a range of clean energy policies have the potential - if properly harnessed - to complement the stimulus measures in ways which will assist both the environment and economy. This would be contributing to a 4th round of stimulus spending without additional outlays! • There is scope to complement or blend a range of the supportive policies outlined in the previous section with both stimulus and nation-building infrastructure which maximises opportunities for investment and efficiencies which promote sustainability.

15. Energy efficiency does a lot of the heavy lifting • The focus on energy efficiency is right in doing the bulk of the heavy lifting in achieving emissions savings targets. • For example, it is reported that 40-50 per cent of emissions come from our buildings and improving energy efficiency in existing and new building stock offers huge savings. • It is critical we make progress in efficiency improvements and secure our manufacturing base or face tougher targets later that will need to be met by vital industries supplying the renewables sector such as aluminium, steel, plastic and glass. • So the question is how best to focus the myriad of initiatives which are focused on achieving environmental outcomes to at the same time achieve stronger economic outcomes?

16. New industries and investment Coal and gas • In the short term under a CPRS, new gas-fired Combined Cycle Gas Turbine (CCGT) power stations may be adopted. • In the long term, new fossil fuel technologies with low or no emissions are likely to be adopted. This includes Integrated Gasification Combined Cycle (IGCC) technology using coal as a fuel and more efficient natural gas fired combined cycle plant. • Plus commercial CCS

17. New industries and investment Bio-manufacturing • Take part in the growing advanced bio-manufacturing industry that underpins developments in biotechnology, food processing and pharmaceuticals. • Develop processes for manufacturing existing and new products from renewable raw material sources, such as plastics from starches, and cellulose.

18. New industries and investment Recycling POLICIES leading to the recycling sector investing over $2 billion in new infrastructure, increasing recycling by nearly 2 million tonnes p.a. and increasing overall employment by some 6,000 people. They are: A stimulus to attract infrastructure investment including: 50% accelerated depreciation on infrastructure investments & The development of a government Green Bonds facility Incentives for new infrastructure investments and value adding to the recycling process and production of valuable compost, mulch and biofuels from organic waste.

19. New industries and investment Forest Offsets • Forest carbon projects mitigate the effects of climate change by preventing greenhouse gas emissions associated with forest loss and by increasing carbon sequestration (storage) through growing forests. • The ability to earn credits under the CPRS for reafforestation is a good start, but more can be done. • Big opportunities in agriculture and land management too.

20. C. The “new” industry policy • The Rudd Government is in the process of making up for a decade of neglect of industry policy. • Accessible, smart and responsive local manufacturing will be a key driver of local investment in the green economy. • Access to local supply chains will allow us to extract and supply our LNG, build our windfarms, solar installations, geothermal facilities and carbon capture and storage facilities. • Our manufacturing capability is therefore an essential national asset.

21. Coordination and advocacy • Given the benefits of green policies to local activity, it is possible to cut through the range of initiatives and sharpen their focus by targeting local industry strategies. • This will serve to complement rather than replace the market by filling a vital information gap and serve to match up the need for goods and services with suppliers through local supply chains. • Clean energy policies therefore extend the range of industry policies and should be considered in the same way.

22. Filling the gaps – need for capital and access to essential infrastructure • Access to capital and transmission networks are two of the main impediments to bringing forward new projects in the renewables sector. • Addressing these gaps joins up the range of renewables initiatives outlined in this paper with nation-building infrastructure projects announced by the Government and the work of Infrastructure Australia.

23. “Clean Energy Ministerial Taskforces” • Rather than dividing responsibility for clean energy policies between portfolios, it makes sense to target the clean energy themes covered in this paper: • a) investment; • b) energy efficiency; and • c) innovation and R&D • As a way of harnessing the full range of policy initiatives and mainstreaming renewable energy with other parts of government and “joined up” with assistance and stimulus measures and infrastructure spending. • Each taskforce would be responsible for maximising outcomes for the environment and economy through policy initiatives under their respective themes – that is, through the application of a Clean Energy National Interest Test.