Dutton’s energy war spooks global investors

Major investors are already rethinking their plans to keep ploughing billions of dollars into Australian renewable energy after the opposition pledged to power the electricity grid with nuclear reactors, ditch Australia’s 2030 climate targets and extend the role of fossil fuels.

Opposition Leader Peter Dutton has reignited the nation’s long-running climate wars this week, pledging the Coalition would build seven nuclear generators and cut short the government’s emissions reduction target. The government’s target of cutting emissions by 43 per cent by 2030 is tied to increasing the share of renewables in the energy grid to 82 per cent, but Dutton said that would create an unacceptable risk of blackouts and power price spikes.

Peter Dutton’s proposed nuclear power plants would be built at seven sites around the country.Credit: Monique Westermann

The removal of bipartisan support for Australia’s climate targets has raised alarm among local and international investors who have poured billions of dollars into green energy projects.

They say the Coalition’s plan and calls from some in the Nationals to cap the rollout of renewable energy in favour of more coal and gas has introduced “unprecedented sovereign risks” for investment in the energy transition, and is already forcing them to reconsider long-term spending plans on renewables.

The Clean Energy Investor Group, a coalition of 18 global and local investors with a combined portfolio value of $38 billion across 76 Australian green energy assets, issued a warning on Thursday that the debate over renewable energy is prompting investors to “reassess their positions” and rethink future local investment decisions.

“A stable and predictable policy environment is essential for attracting and retaining the significant capital required to achieve our renewable energy targets,” said Marilyne Crestias, interim chief executive of the group, whose members include US investment behemoth BlackRock, France’s Neoen and Australia’s Macquarie and Tilt Renewables.

“Substantial changes of policy direction would risk derailing the momentum we have built for Australia’s decarbonisation journey.”

Unveiled earlier this week, Dutton’s controversial nuclear energy plan hinges on a future Coalition government unwinding federal laws established in 1999 that ban nuclear energy in Australia. It also requires reform to rescind the legally binding climate target, set by the Albanese government, to cut 43 per cent of emissions by 2030 from 2005 levels.

The increased reliance on fossil fuels under Dutton’s plan could generate an additional 2.3 billion tonnes of greenhouse emissions – more than five years’ worth of Australia’s annual emissions of 433 million tonnes in 2023 – compared to the government’s renewable energy strategy, according to analysis from Solutions for Climate Australia.

With the first of the Coalition’s proposed nuclear plants not scheduled to come online for more than a decade, senior opposition MPs are warning Australia’s renewable rollout should be scaled back and the role of coal expanded.

“The Coalition’s plan for nuclear reduces the need for large-scale renewable developments,” Nationals Leader David Littleproud said.

“Projects should be based on merit, rather than Labor’s ideology of 82 per cent renewables by 2030.”

Nationals MP Keith Pitt said it was inevitable that coal plants would need to be extended, as they have been by state Labor governments in Victoria and NSW.

“Coal needs to be extended otherwise the lights go out,” he said.

Another pro-nuclear Nationals MP, Matt Canavan, told colleagues the party should speak more about the need for coal as part of the Coalition’s energy plan.

At a party room meeting on Wednesday, Canavan said the opposition should be upfront about the fact that coal would help fill the energy gap created by slowing down renewables and waiting for nuclear to come online to reach net zero emissions by 2050. Several MPs, speaking anonymously to detail private conversations, confirmed Canavan’s remarks.

Australia has emerged as one of the most attractive destinations for private capital to invest in the green energy shift, as the nation’s ageing fleet of coal-fired power stations increasingly bring forward their retirement dates, while state and federal governments have provided regulatory certainty with strong renewable energy targets.

BlackRock, which oversees more than $US10 trillion ($15 trillion) of investor funds and ranks as the world’s biggest asset manager, has selected Australia to launch the rollout of its biggest investment in batteries globally through its acquisition of Melbourne-based Akaysha Energy in 2022. Canadian giant Brookfield, meanwhile, has previously attempted to acquire the nation’s top electric utilities, Origin Energy and AGL.

The threat of Australia’s near-term climate and renewable commitments being unwound if the Coalition returns to government would “dampen the global attractiveness of Australia” as a destination for clean energy investors, Crestias said.

“Imposing a cap on renewable energy investment at this critical juncture would be a regressive policy,” she said.

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