Labor’s laborious dream of a Great Green Society

Net Zero Economy Agency chair Greg Combet at the National Press Club on Tuesday. Picture: AAP

Anthony Albanese has embarked on creating the Great Green ­Society, where a renewable energy superpower is also “a nation that makes things”.

We’re in the early stages of Labor’s net-zero welfare state but the foundations are clear, with a bureaucracy taking shape to direct taxpayer funds to clean-energy projects and new industries.

The May budget will be the Prime Minister’s political showcase for the green monster-sized “investments” in industry heft he has been promising for the past couple of years, and which Jim Chalmers will skilfully nudge off the nation’s balance sheet.

In coming months, the Net Zero Economy Agency, established last July, will transform the last word in its title to the more permanent sounding Authority.

The coming authority – Labor introduced legislation last week – will be the beating heart of Australia’s net zero: helping workers and communities displaced by disruptions on the ground, while ensuring the moving policy parts of emissions reduction coalesce with picking winners in critical minerals, batteries, renewable hydrogen and green metals.

Julia Gillard’s former minister for climate change, Greg Combet, is the authority’s current chair, but will soon move to the less heady world of the Future Fund, which manages a mere $272bn.

Combet told the National Press Club on Tuesday that hundreds of billions of dollars of investment in clean-energy projects would be needed over coming decades to meet our emissions ­obligations and underpin a green economy.

He said the authority would make sure the multitude of federal, state and private projects were working to the same end, while also putting values at the heart of the enterprise.

The former trade union leader insisted the authority’s focus would be on workers and communities, with no one left behind.

The authority’s impact analysis, in support of the bill, estimated that more than 3000 coal-fired power station workers “will experience disruption to their employment due to announced closures over the next 12 years”.

Analysis of past closures of coal-fired power stations by the nonpartisan e61 Institute, where I am a paid adviser, shows earnings loss following redundancy is significantly higher for workers in coal-fired power stations than other sectors, with these relative losses persisting over time.

Of course, there are no guarantees in this vast transition; it’s a bet, with a safety net of retraining, welfare and the Fair Work Commission providing a forum.

Canberra’s new oversight structure is essentially bipartisan; the chair or board members will likely change with the political tides but the costly path we’re on demands this kind of hands-on governance.

Why? Because Australia’s political economy rejected the first-best approach of an economy-wide carbon pricing scheme to reduce greenhouse gas emissions, exactly like the one Combet brought into the world and that came into effect in 2012.

Rather than letting the market work its magic by pricing pollution properly, we now have a conga line of bureaucrats, spinners, chancers and rentseekers to provide the clumsy hand to (net) zero emissions in 2050 and ­beyond.

The messiness of our energy transformation is compounded by Joe Biden’s Inflation Reduction Act, the kind of harmless sounding law anyone would think was created by officials at the US ­Federal Reserve.

But, as Combet noted in his address, the IRA is a game-changer: mammoth industry subsidies to suck in global capital to fund America’s green energy dreams.

As a middle-sized power, we can’t just go with the flow, so to speak; you have to make sure some of the energy investment happens here and our companies and workers can cash in, although taxpayers bear the risk.

This is the ugly world we’re in. A change of government could see a slightly different emphasis on industries, locations and messaging, but Australia will still be paying the heavy, ongoing price for ­sub-optimal policy.