Renewable shift slows in Australia, ‘attractive’ funds at risk

The Albanese government has been cautioned by industry super funds that Australia’s energy transformation runs the risk of slipping behind as large funds pursue more enticing investment prospects in the United States of America, the United Kingdom, and Europe of Europe.

Co-authors of a new research with the Australian fund IFM Investors include AustralianSuper, cbus, HostPlus, CareSuper, HESTA, and UniSuper. The report calls for more favorable investment conditions that are funded by taxpayers in order to unlock private capital for the domestic transition to net zero emissions.

In advance of a roundtable discussion on climate finance that will take place on Monday with the treasurer, Jim Chalmers, the funds argue that a transition to renewable energy in Australia will require an average of $12 billion per year between now and 2050. Additionally, according to the funds, an additional $40 billion per year will be required to construct new export industries and decarbonize the rest of the economy.

This week, the independent Climate Change Authority issued a warning that Australia runs the risk of falling short of its climate objective for the year 2030, and that time is running out for the country to undertake a successful transition to net zero emissions on its own terms.

The new research from industry super said that “capital is flowing to places with more attractive investment opportunities, strong climate and energy policies, and growing demand for clean energy and low-carbon goods and services.” This is according to the report.

The funds highlight that the Inflation Reduction Act, which was passed by the Biden administration, has resulted in the United States receiving investments in clean energy that are worth more than US$270 billion (A$406 billion) over the course of eight years. The new research states that “Australia cannot afford to be left behind,” and it is right.

As part of a new memorandum of understanding with the Sunak administration, IFM Investors has revealed earlier this week that it will invest a total of thirteen billion pounds (or nineteen billion Australian dollars) in energy transition and infrastructure projects in the United Kingdom by the year 2027.

Both the Clean Energy Council and the Australian Energy Market Operator have echoed the warning that was issued by the funds. The warning was intended at both the states and the government.

It is anticipated that by the year 2030, industry super funds would have more than doubled in size, as they will handle approximately $1.2 trillion. It is the goal of these funds to encourage the government to expedite the planning approval process for transmission infrastructure while simultaneously increasing the competitiveness of domestic investment opportunities in order to assist in maintaining clean energy capital within the country.

The newly published research makes the argument that distribution network service providers, who are the organizations that operate grid hardware such as power poles, cables, and substations, should be permitted to conduct greenfield transmission projects if they have the “right delivery, safety, and workforce record.” At the moment, transmission network providers are the only ones who can gain access to potential greenfield projects.

It is a requirement that a national plan be developed for the implementation of transmission infrastructure. Streamlined approvals, early consultation with communities that will be affected, equitable compensation for landholders, new possibilities for local communities to profit from the infrastructure, and a skills development program should all be included in the elements.

The funds state that concessional financing or “availability payments” – a kind of public-private partnership – can be used to lessen the impact of new projects. This is in reference to the fact that the cost of constructing new lines is ultimately passed on to energy customers.

The funds are pleased with the recent decision made by the Albanese government to significantly expand a program that is funded by taxpayers in order to back the development of new renewable electricity generating and storage capacity. However, they argue that power purchase agreements should be used to finish the process of extending the capacity investment scheme in order “to provide long-term stable revenue streams for renewable electricity.”

Since aviation is a sector that produces a significant amount of pollutants and the cost of lowering those emissions is considerable, it is regarded to be a sector that is difficult to regulate. According to the funding, the government could speed up the process of developing a sustainable aviation fuel business in Australia by implementing a production tax credit, a new certification scheme, and a market that allows credits to be recognized and exchanged.

According to the funds, the national roadmap for net zero emissions, which is now in the process of being produced, necessitates the development of plans for emission reduction objectives for certain industry sectors. These plans must be supported by a policy framework that was specifically designed in collaboration with the investment community.

In the paper, it is said that “efforts made by governments to make Australia a renewable energy superpower should be ambitious about the scale of opportunity and proportionate to the imperative to ensure that Australia can lead in the global competition for capital.”

“Policy and investment support for new and emerging net zero industries, including advanced manufacturing of generation and storage technologies, refining and processing critical minerals, renewable hydrogen and green metals like green iron, steel and aluminium will help grow a pipeline of investment opportunities and grow demand for low-carbon good and services.”

Additionally, this week, the government has resolved the investment mission of the National Reconstruction Fund. This comes after the government has expanded the capacity mechanism in order to assist in meeting the target of Australia operating on 82% renewable energy by the year 2030. In his description of this fund, Prime Minister Anthony Albanese referred to it as “money in the bank, ready to invest in new jobs, new skills, new technologies, and new industries.”

As part of a specific reaction to the issues given by Joe Biden’s Inflation Reduction Act, the minister of climate change, Chris Bowen, has expressed his desire to broaden the scope of the government’s $2 billion Hydrogen Headstart program and apply the same approach to other industries.

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