Transition to net zero gives Australia enormous economic opportunity

Australia’s transition to net zero could add $40bn to the national income and $65bn to economic activity by 2050, a new report says.

The Bald Hill lithium mine site. Australia is naturally endowed with lithium, copper, nickel and hydrogen. Picture: Carla Gottgens/Bloomberg

Australia’s transition to net zero could add $40bn to the national income and $65bn to economic activity by 2050, a new report says.

A report published by Ernst & Young says there is enormous economic opportunity for Australia to gain as the world transitions to net zero, but warned urgent effort was required to capture Australia’s competitive advantage. It found the nation’s competitive advantage in emerging industries is not “conditional not automatic or absolute” and Australia has “no room for complacency”.

The report highlights Australia’s opportunity to leverage highly competitive renewable energy and mineral resources, develop clean low-carbon industries, including iron processing for steel and invest in the nation’s natural endowment of lithium, copper, nickel and hydrogen.

EY Net Zero leader Blair Comley.

“We find the economic opportunity is enormous, particularly for green iron and steel, and new energy minerals, and could add $40bn to national income and $65bn to Australian economic activity by 2050,” the report says.

“Australia has a potential advantage for new heavy industry, leveraging highly competitive ­renewable energy and mineral ­resources. Australia’s distinctive advantage is the ability to combine world-class renewable energy resources with abundant raw materials … However, this advantage is conditional, not automatic or absolute … Australia has no room for complacency.”

EY Net Zero leader Blair Comley said Australia needed to build its skills and capabilities in domestic clean energy industries to ­ensure it was not left behind.

“Our report observes that while there is a strong case for an underlying competitive advantage, there is no certainty that we will get there. We can let others develop the technology and try to be a fast follower; however, the risk of this approach is that we don’t build the skills and capabilities and we never catch up,” Mr Comley said.

”While the economic benefits of Australia’s opportunity could be enormous, dollars are only part of what is at stake. The opportunity is real and substantial, will not benefit all sectors equally, and will require a concerted effort from government to realise this potential.”

EY Oceania chief executive David Larocca said the global transition presented Australia with an opportunity to “re-energise” the economy and domestic heavy industries.

“At the heart of this report lies an urgent call to action for our nation,” Mr Larocca said. “Net zero offers an opportunity to re-energise the Australian economy and the heavy industry underpinning it.

“It has been some decades since Australia last invested in heavy industry at scale – net zero provides a conditional advantage for new heavy industry, leveraging our highly competitive renewable energy and mineral resources.”