Labor pledges $5bn to develop clean energy and green metal industries
The new funding deepens Labor commitment to its vision to reshape the country’s $2.5 trillion economy away from its traditional roots as a major exporter of raw minerals and one of the world’s largest per capita emitters.
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Labor will spend more than $5bn to hasten the development of low emission technologies and the production of so-called green metals.
The new funding deepens Labor commitment to its vision to reshape the country’s $2.5 trillion economy, moving away from its roots as a major exporter of raw minerals and one of the world’s largest per capita emitters. Labor said it would provide the Clean Energy Finance Corporation with $2bn and it set aside $3bn to aid the maturation of the green metals industry – metals produced using renewable energy. The CEFC offers cheap finance to companies or projects that can advance the country’s renewable energy sector and lower carbon emissions.
Treasurer Jim Chalmers said the spending commitments underscored Labor’s commitment to reviving manufacturing.
“We’re building a future made in Australia – creating jobs and opportunity for generations of Australians as we continue the work of making our country an indispensable part of the global net zero transformation,” Mr Chalmers said.
Labor’s commitment to manufacturing is likely be well received in its traditional heartlands as seeks re-election at an election expected to be very close.
Reviving manufacturing echoes a similar push by US President Donald Trump, who has used sweeping tariffs to force international companies to move operations to North America. But without the clout of the US, Labor has sought to use its centrepiece energy policy. Labor has set the ambitious target of having renewable energy generate 82 per cent of the country’s electricity by 2030 and achieve net zero emissions by 2050.
Labor hopes that the influx of renewables will allow for the creation of a metals processing industry, which China currently dominates.
Australia is economically unable to compete for now but Labor expects the rise of renewable energy projects will substantially lower the costs of switching, especially when freight costs are cut.
The emergence of Australia as a processor of metals would be welcomed by allies, which are increasingly concerned about the dominance of China and its capacity to leverage its standing through economic coercion.
But for Labor to realise its vision, it will need a drastic rise in the volume of renewable energy. It is widely accepted that the 2030 energy plan will not be met, though Labor insists it remains confident.
To deliver its energy plan, it has said it will use taxpayer funding to underwrite 32GW of wind, solar and long-duration storage facilities, such as pumped hydro.
The government’s Capacity Investment Scheme guaranteed developers a minimum return on new solar and wind projects.
Under the scheme, if the wholesale electricity price falls below an agreed threshold, taxpayers will compensate the renewable energy project. Should the wholesale electricity price exceed a metric, developers pay the government – a design that proponents say removes revenue risk from developers and accelerates investment.
The government also said it would streamline planning approvals for new solar and wind projects, which can often take years to secure final permits.
The rollout of large-scale renewable energy projects has been slow – one reason electricity bills have jumped in recent years.
Labor insists its plan to use renewables is working and that bills would be much lower had there not have been a global energy crunch triggered by Russia’s invasion of Ukraine.
Whyalla may need further handout
Perry Williams, Colin Packham
The Albanese government may tip in extra funding to prop up South Australia’s failed Whyalla steelworks amid concern that a $2.4bn package could be extended to resuscitate the industrial plant.
Its owner, OneSteel, refuses to hand over documents that would reveal the full extent of the SA entity’s financial woes.
The state government seized control of the steelworks from former tycoon Sanjeev Gupta in February, forcing it into administration over unpaid debts, and pledging a joint $2.4bn rescue package with federal Labor.
As part of the package, $384m was earmarked to fund Whyalla during the administration period.
However, the government noted in the budget papers that “further funding to support an extension of the administration process could be considered if necessary”.
OneSteel owes more than $1.3bn to 68 secured creditors and 648 unsecured creditors, according to the affidavit. Of this, employees are owed nearly $200m.
The federal Labor government and its SA counterpart have vowed to revive Whyalla. Labor can ill-afford to alienate workers at Whyalla as it goes to the polls within weeks.
The SA government is owed $40m, linked to water and royalties. Both the state and federal governments have pledged hundreds of millions of dollars to support the business.
At a creditors meeting earlier this month, KordaMentha said OneSteel was on track to deliver annualised losses of nearly $550m this financial year, given it was losing $1.3m a day.
It has since raised this loss estimate to $1.5m a day.
One immediate challenge was the fact administrators “are yet to receive unfettered access” to the books and records of OneSteel, which are held by GFG Alliance.
Numerous requests had been made, they said. KordaMentha has warned if this is unsuccessful or takes too long, it may need to take steps “to compel those with access to OneSteel’s books and records to produce them”.
Ties between KordaMentha and Mr Gupta are fraying. The administrator accused Mr Gupta of stonewalling their probe, looking at the events surrounding Whyalla’s collapse, by preventing access to financial accounts held by his private empire.
In an explosive affidavit lodged with the Federal Court, KordaMentha warned that OneSteel had insufficient funds to meet its forecast operating expenses, meaning it could run out of cash by the middle of May.
Years of underinvestment in OneSteel had left the Whyalla mill “in a state of disrepair”, they concluded.
The Australian also revealed this week that Mr Gupta’s GFG Alliance was purchasing electricity and gas for its Whyalla steelworks on the volatile spot market rather than opt for the safety net of contracts, a strategy critics say illustrates the company’s approach to risk management.
GFG’s energy procurement strategy meant it was subject to the sometimes wild swings of spot market pricing for its electricity and gas needs, sources said, while also being forced to pre-pay for diesel supplies.
Large commercial customers are usually required to provide a bank guarantee, cash or form of credit to qualify for contracts offered by brokers or utilities offering large loads of power or gas.
Instead, GFG opted to pay market rates over its almost eight-year ownership of Whyalla, meaning it could both benefit from at-times super cheap prices in renewables-dominated SA while also paying over the odds during outages or low green generation events.
KordaMentha declined to comment although it’s understood the firm is negotiating electricity, gas and diesel contracts as part of the stabilisation of the Whyalla plant. The Whyalla facility could produce up to 40 megawatts of power from its own excess gas supplies, although more recently it was producing at only about half those levels.
Originally published as Labor pledges $5bn to develop clean energy and green metal industries
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