‘The race is on’: Australia’s urgent mission to tap global green markets

The head of Australia’s net zero emissions authority, Greg Combet, says governments should pump taxpayer money into big green energy projects needed in the transition from fossil fuels, as he predicts more spending on clean industries in the May Budget.

A former ACTU leader and Labor minister, Combet has spent the past nine months setting up the federal government’s Net Zero Economy Agency, which will provide advice on the transition to renewables. He will soon leave the post to take up a new role as chair of Australia’s sovereign wealth fund, the Future Fund.

Net Zero Economy Agency chairman Greg Combet at the National Press Club in Canberra on Tuesday. Credit: Alex Ellinghausen

“The race is on to secure the industries of the future,” Combet said at an address to the National Press Club on Tuesday. “Australia needs to respond, and we are.”

One of Australia’s pioneering climate change ministers, Combet helped design the Gillard government’s carbon price, which was introduced in 2012 before being repealed in 2014 by the Abbott government.

In his speech, Combet indicated more green initiatives would be funded in the May federal budget, after he took part in policy discussions over the past year.

The first step in the government’s energy strategy was unveiled last week when Prime Minister Anthony Albanese and Energy Minister Chris Bowen announced the $1 billion Solar Sunshot scheme to develop local manufacturing of solar panels and components.

“The government will lay out the next phase of its approach in the May budget, which will look to capitalise on Australia’s comparative advantage in minerals and renewable energy, aiming to encourage large-scale investment in green industrial production,” Combet said.

He said Australian governments had used public funds to build the nation’s current energy infrastructure, including investment in most of the nation’s coal-fired power plants. A comparable volume of new projects will be needed for the shift to future industries which could include green iron and alumina, processing critical minerals, hydrogen and clean energy exports.

“I can see occasions and projects in this particular transformation where government is going to need to play a role,” Combet said.

He said the United States had “changed the game” with its Inflation Reduction Act, which analysts have said could deliver up to $US1 trillion ($1.56 trillion) in production credits for green products such as solar technology. The European Union, Korea and Japan have followed the US’s lead and were “all making unprecedented investments in their industrial base”.

“With particularly large transformative projects, governments may need to consider being significant equity players, helping to de-risk projects, and adopting a long-term view before recovering capital,” Combet said.

The Net Zero Economy Agency has proposed several policy options to help workers at coal plants that are currently closing quicker than previously anticipated – with state and federal governments working to hasten the pace of wind and solar farm development.

The authority’s preferred option would create a “pooled redeployment” scheme that forces coal plant owners to fill vacancies with workers from other companies that have shut facilities. The government estimates it would spend $129 million on welfare support and retirement subsidies for some workers, while companies would spend $23 million on worker training.

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