Fossil fuel tax needed to power shift to renewable energy: Rod Sims

Former ACCC head Rod Sims says Australia could supply 10 per cent of the world’s renewable energy but will need to impose a fossil fuel tax to fund the required investment.

Australia has plentiful supplies of renewable wind and solar energy.

Australia could supply up to 10 per cent of the world’s renewable energy but will need to impose a fossil fuel tax to meet those ambitions, says former ACCC head Rod Sims.

Mr Sims told the second annual CEDA Climate and Energy Forum in Brisbane that by turning iron ore into green metal Australia would reduce world emissions by over 3 per cent.

“Australia covers about 5 per cent of the earth’s land surface so supplying about 7-10 per cent of the world’s renewable energy is no stretch given our abundant solar, wind and land resources,” Mr Sims told the forum.

He said that in addition to just over 1 per cent of world emissions now occurring in Australia, we could remove another 6-9 per cent that other countries found difficult to abate by making green iron, aluminium, transport fuels, urea and silicon domestically.

Mr Sims, who now heads the Superpower Institute think tank, cautioned that Australia must maintain a strong budget position to ensure the low cost of capital required to fund intensive investments required to meet renewable targets.

He said this would involve the introduction of a carbon solutions levy (CSL) at all fossil fuel extraction sites in Australia and on all fossil fuel imports by 2030-31 at the latest.

“We have suggested that the CSL be imposed on all emissions from Australian fossil carbon extraction wherever they occur in the world,” said Mr Sims.

“Increasing taxes is very difficult to impossible in Australia, but I believe the logic for taxing fossil fuels is the strongest, and so provides our best chance of seeing the higher tax levels Australia needs.”

Rod Sims has called for greater investment in renewables. Picture: NCA NewsWire / Martin Ollman

He said Australia’s renewable energy sector could achieve additional export revenue of $250bn to $300bn per annum, greater than the $120bn to $220bn revenue received from coal and gas exports that are likely to decline over time.

“Coal and gas prices are volatile and while current prices are high they are expected to normalise over the next year or two,” he said.

“We will also see higher productivity as more resources are employed in sectors that will see continuing change and learning. There will be higher paying, sustainable jobs as our scarce labour is directed to sectors that can compete internationally, rather than in ones that cannot and are constantly under threat.”

There would be a need for the public sector to play a large role in providing “natural monopoly” services such as hydrogen storage and transport, and electricity transmission, given that supply needed to be built ahead of demand. “There is a large role for government, as befits the huge transition and this opportunity. The government’s role is to unlock private sector investment.”

Mr Sims told the forum that the world needed Australia to make many green products because the country has massively more renewable energy resources than we need. “We can be an exporter of energy intensive green products.” Countries such as Japan, Korea, China, and most of Europe do not have renewable resources to make all the electricity they need domestically. “They will need to import many goods with the green energy intensity embedded in them to meet their climate targets,” Mr Sims said.

Originally published as Fossil fuel tax needed to power shift to renewable energy: Rod Sims