Rush to renewables ‘puts industry at risk’
Major manufacturers will be under threat unless gas is recognised as an important transition fuel, Alumina chairman Peter Day says.
The rapid move to renewable energy will put Australia’s major manufacturing industries at risk, according to Alumina chairman Peter Day, unless gas remains an important part of Australia’s energy mix.
Alumina owns 40 per cent of the Alcoa World Alumina and Chemicals, one of Australia’s biggest miners and manufacturing businesses, which runs one of only four remaining aluminium smelters in the country, at Portland in Victoria, and has a major bauxite mining and alumina refining business in WA.
Speaking at the company’s annual shareholder meeting on Monday, Mr Day said current plans to remove fossil fuels from the Australian grid would put Australian manufacturers at risk, and underplay the need for gas to remain within the Australian electricity system.
“The country is now taking steps that will challenge many of its established industries, including alumina and aluminium, that are dependent on coal or gas,” he said.
“Many of these industries are products of previous state and Commonwealth policies that favoured adding value to Australia’s resources so that jobs and wealth could be created here, diversifying our economic activity from exporting raw commodities only.”
Mr Day said Alcoa’s business in WA had been built off the back of access to long-term and reliable supplies of “cost competitive” natural gas, with the company having paid more than $2.8bn worth of company tax and royalties over the last five years, and $3.5bn in wages and benefits to its Australian staff.
“Transition plans in Australia are currently not addressing the issue of back-up capacity adequately, given battery technologies do not currently provide a viable long duration back-up solution. For example, the largest battery currently in Australia could power half of the Portland smelter for a maximum of an hour,” he said.
“Gas peaking, which involves gas fired electricity plants which can be quickly brought on, appears to be one of the solutions to properly support the transition. Gas peaking can provide the back-up firming capacity during this energy transition. Greater government and business effort is needed to ensure gas can properly provide the necessary back-up capacity.”
Speaking against the backdrop of a growing push by environmentalists to ban the development of new Australian gas fields and new fossil-fuelled power stations, Mr Day said moving too fast to a renewable-powered grid could threaten the future of Australia’s remaining manufacturing sector.
“Actions to reduce carbon emissions that threaten Australia’s value adding industries, which are already in the world’s lowest emissions quartile, are counter-productive, and risk carbon leakage occurring in our global industry,” he said.
“Our concern is that the plans for Australia’s energy transition threaten to create immense uncertainty on the availability and cost of future energy supply.”
While reiterating Alumina’s support for the federal government’s safeguard legislation, chief executive Mike Ferraro told shareholders Australia’s energy transition plans still fail to recognise the complexity of manufacturing businesses.
“It needs to acknowledge the timeline for development of technology solutions and availability of sufficient, suitable and cost-effective renewable energy resources,” he said.
“Alumina refineries and aluminium smelters are complex industrial manufacturing activities which cannot switch quickly to renewable energy. The technology is not yet fully proven or developed and it will take a lengthy period with much investment to prove it up.”