NAB calls for clean energy investment to avoid export cliff as coal and gas demand slumps

A report from NAB has found Australia faces a major economic upside if it invests early in clean generation and production technology.

Australia will face a productivity hangover if the country continues investing in gas and coal technology rather than clean energy ­systems, one of Australia’s largest banks has warned.

In a report published on Thursday, National Australia Bank has warned of a $270bn fall in total economy exports under a low and slow model of energy transition.

But the report, prepared by Deloitte Access Economics, says Australia faces a $435bn economic upside if investment is made now into new energy infrastructure and generation systems.

The report finds renewable energy, green hydrogen, critical minerals and enhanced metals manufacturing could be key to driving Australia’s economy.

But it warns this will require investment in more than 10,000km of new transmission capacity, 44 gigawatts of new renewable energy, along with 15 gigawatts of firming capacity and governments able to push projects past local opposition.

NAB chair Philip Chronican said Australia risked being in a situation exporting commodities the rest of the world did not want, if it did not move soon to invest in clean energy and commodities.

“We’ll be doing it in environments where we’ll have under invested in renewables and will continue to operate emissions-intensive industries longer after they’ve been the most efficient,” he said. “There will be an economic investment loss that comes from that.”

“So if the rest of the world moves towards the zero and we don’t, we’ll be sitting here trying to export coal, people who don’t want it and eventually gas to people who don’t want it.”

Mr Chronican said Australia had a lot of coal and gas, but also had plenty of land and wind and critical minerals and that this would lead to a “natural imbalance” into the future.

If Australia was slow to respond to the challenge of decarbonisation it would have a “negative impact on economic performance domestically” and weaken the country’s export performance. “The harsh reality is that if we only hit our targets without replacing exports, we will become a materially poorer nation,” he said.

The country had to reduce lead times for renewable projects, he said. Transgrid’s Humelink project, a 500-kilovolt transmission line connecting Wagga Wagga, Bannaby and Maragle, has faced repeated delays as local landowners oppose the transmission project that would supply power from the Snowy 2.0 pumped hydro project.

“We also need more work done to create a national framework for decision-making because all of these major transition projects run the risk of being held up on local political grounds,” Mr Chronican said. “If we let that happen, then that’s going to have an economic drain on the economy.”

NAB had a role to play in funding new energy and hydrogen or ammonia production projects.

“The optimal outcome for the Australian economy will come if these investments are made early and made rapidly, that’s going to require state and federal governments to collaborate,” he said.

“We are vitally interested in what happens with hydrogen.”

Mr Chronican said NAB was also working closely with its top 100 clients and helping them with lowering emissions.

NAB group chief executive Ross McEwan said Australia was making significant progress in its energy transition “however much more needs to be done”. “First and foremost, we need to build, build, build … we need investment and labour to drive the projects, shorter lead-times, as well as improved consultation and a consistent national framework that delivers major green infrastructure projects that have widespread community support,” he said.

Originally published as NAB calls for clean energy investment to avoid export cliff as coal and gas demand slumps