Address to the Policy Exchange, London: A durable pathway to net zero
Thank you Alexander for that introduction, and to you and Lord Godson for the opportunity to address the Policy Exchange this morning.
It’s been great to be in the United Kingdom, and Rome before that, for the last week, not because it’s the first time I’ve been overseas since the start of the pandemic –
…though quarantine-free travel is now back in some parts of Australia, and I must admit I really wasn’t thrilled at the prospect of being locked away for fourteen days –
…but because of the optimism that I feel when I see more and more of my ministerial colleagues talking about the practical, technology solutions that will deliver outcomes in my policy area.
Our Australian way, the very practical approach we are taking to reducing emissions while strengthening our economy and creating jobs, has incredible relevance to the conversation that’s taking place in Glasgow and around the world.
As many of you know, the politics of climate have been far more tortuous in Australia than in the UK.
And there are many reasons for that, but chief among those are our very different economic circumstances.
In fact, Australia is almost unique among developed countries – Canada and New Zealand are exceptions to the rule – as an economy that has specialised in the production of energy and emissions-intensive commodities.
Australia is the world’s fourth largest energy exporter, after Saudi Arabia, Russia and the United States, and a global top three or higher provider of many resources and agricultural commodities.
These sectors are obviously much more technically challenging to decarbonise than services, for example.
And the consequences of getting policy wrong are far more dramatic, for peoples lives and livelihoods.
But our circumstances present opportunities, too.
Australia’s natural resources – coal, gas, uranium, iron ore, critical minerals, water and wind, as well as sun of course – are abundant and in combination, almost unrivalled.
We have built some of the world’s largest and most successful energy and resources supply chains into Asia – that have powered our region’s rapid rise to be the global centre of economic growth.
To give a very recent example, in the space of the last decade, we’ve built the largest liquefied natural gas export industry in the world – tied with Qatar and the United States for export volumes this year.
And those LNG exports are not only creating the products imported by many European countries, but also reducing emissions in our customer countries.
Under the plan the Australian Government has very recently set out to achieve net zero emissions by 2050, we want to replicate that success across other supply chains that we have an important role in, including steel, aluminium and agriculture.
Our plan for net zero has been in the making for more than two years. We have had to grapple with these issues and find a way forward that is politically and economically durable.
An approach that is principled, and one that is consistent with our values.
When I gave Australia’s national statement at COP25 in Madrid in December 2019, I used the opportunity to provide the first details of our plan to embrace technology to reduce emissions while keeping our economy strong, and protecting the regions, industries and blue collar workers that have seen Australia prosper.
I said at the time: "Strong messages and targets alone won’t address climate change, no matter how ambitious. The world needs action to reduce emissions and Australia believes technology is central to achieving this."
I’m still saying the same thing today, but more voices are joining in!
Because if we can get the cost of clean energy sources down to a point where they out-compete existing energy sources and technologies, then net zero emissions will be practically achievable for all countries.
But make no mistake – that approach isn’t yet universal wisdom.
Our longest-serving prime minister, Robert Menzies, once asked whether we are for the subordination of the individual to the officialdom of government, or believe that government is the servant of the people.
That question is very real in this context.
The Left’s approach to climate change is revolution, not evolution.
A short, sharp shock, often disguised in Orwellian newspeak as “a transition” – when that is anything but what is envisaged.
It’s an approach that relies on redistribution, taking from one to give to another through ever greater taxation – until all that is left is the hollow shell of a once vibrant, thriving society.
In its place, a monolithic modern state.
While this may work in some other countries, for Australia, that approach would mean sacrificing industries, jobs and regions.
That is not acceptable to us as a government, nor would it be acceptable to the communities we have been elected to represent.
And nor is it palatable to the large developing economies in our region.
That much is clear in the meetings Prime Minister Morrison and I have had with our Indo-Pacific partners over the course of the last week, and it’s been made abundantly clear through the public statements of India, Indonesia, Vietnam and many more in recent weeks and months.
The thing is, without them, there is no solution. China alone now accounts for more emissions than the entire OECD.
Unless we can decarbonise our steel and aluminium supply chains, heavy industry, cement and agriculture, we’ll fail to achieve the Paris goals, let alone limit warming to 1.5 degrees.
But there is an alternative approach to that being offered by the Left.
One that was espoused by your Prime Minister in Rome last weekend, where he thanked each leader, by their first name, for the specific new commitments and initiatives each had brought to the G20 Leaders’ Summit.
An approach that recognises that bringing down emissions, without imposing an unfair economic burden on those who can least afford it, is the right way to go.
Without needlessly destroying jobs in our traditional industries, or denying a prosperous, secure and happy life to people around the world, particularly in developing countries.
It’s an approach that’s consistent with the values espoused by centre-right governments in Australia and the UK, and indeed around the world.
It means reducing emissions, not reducing jobs, industries or customer choice.
Because while we know the world wants action on climate change…
…they don’t want their lights or heating to go off, or for their livelihoods to be put at risk.
The truth is, it is the entrepreneurs and innovators who will solve this problem.
Not the activists, bureaucrats and politicians at COP26 – or the twenty-five conferences that preceded it.
That’s why the plan we have set out to achieve net zero emissions by 2050 has five core principles, with an enabling role for government.
- Technology not taxes – no new costs for households or businesses,
- Expand choices, not mandates – Australia will work to expand consumer choice, both domestically and with our trading partners,
- Drive down the cost of a range of new energy technologies – bringing a portfolio of technologies to cost competitiveness is the objective of Australia’s Technology Investment Roadmap, which I’ll talk about in a moment,
- Keep energy prices down with affordable and reliable power – our Plan will consolidate our advantage in affordable and reliable energy, protecting the competitiveness of our industries and the jobs they support, and
- Be accountable for progress – transparency is essential to converting ambition into achievement, and we’re pushing for all major economies to be held to the same standard at COP26.
Under the Technology Investment Roadmap we launched last year, the Australian Government will invest more than $20 billion in the next generation of low emissions technologies, to drive at least $80 billion of total public and private investment by 2030.
The Roadmap has a framework for prioritising technologies based on their global abatement potential, but also Australia’s comparative advantage and the scale of the potential economic benefit.
We’re targeting areas where we can make a difference and have global impacts.
And we’ve set specific economic stretch goals – at price parity – for our priority areas:
- Hydrogen at less than $2 per kilogram,
- Ultra low cost solar, at less than $15 per megawatt hour (MWh),
- Energy storage at less than $100/MWh, to firm wind and solar at today’s wholesale electricity prices or lower,
- Green steel and aluminium, at the cost of today’s production,
- Sequestration from carbon capture and storage at less than $20 per tonne, and
- Soil carbon measurement which has the potential to unlock enormous productivity at less than $3 per hectare, a 90 per cent reduction on historical costs.
We’ve looked at the cost drivers and the pathways to achieve those goals – and put dates on when they can be achieved.
As a part of our commitment to accountability and transparency, we’ve put these cost targets into our NDC [Nationally Determined Contribution] and will report on them regularly.
Getting low emissions technologies to cost competitiveness is essential to unlocking widespread, global deployment.
This is a really under-appreciated but important point – there is a non-linear relationship between falling technology costs and deployment.
Take solar, for example. It took until 2002 for the world to deploy its first gigawatt (billion watts) of solar capacity.
This was despite the cost of solar falling by roughly 12% every year since the 1970s.
By 2012, the world deployed 100 gigawatts. And sometime next year, we’ll hit 1000 gigawatts.
And 90 per cent of those solar cells have Australian intellectual property in them.
Our goal is to replicate that success across other areas, including batteries and hydrogen.
We estimate that getting these priority technologies to parity will deliver around half of the reductions Australia still needs to realise to achieve net zero by 2050.
Importantly, we recognise we cannot achieve this alone and that international collaboration is essential to accelerate our efforts.
In fact, a step up in global collaboration on practical solutions is the most meaningful and lasting impact this COP could have.
That’s why, in the lead up to COP26, we’ve been working hard to secure partnerships with our allies and partners over the last 12 months, including with the UK.
I’d like to acknowledge the particular focus and commitment that Kwasi Kwarteng brought to concluding that partnership – it really has been a pleasure working with you, Kwasi and I know George Brandis, our High Commissioner in London, has also been a very strong and effective advocate.
We’re backing those partnerships, with $565 million committed in our most recent Federal Budget, and I look forward to announcing a joint industry challenge with Kwasi in the not too distant future.
Countries working together on real research, pilot and demonstration projects – with clear goals – will make a difference.
We’ve seen this with vaccines for COVID-19. Not only were they developed faster than many expected, competition drove the development of multiple vaccine options.
In that vein, I was pleased to see the Glasgow Breakthroughs announced by Prime Minister Johnson, which align so well with our approach and which we have been privately advocating for for some time.
It was Margaret Thatcher who declared that it is: “prosperity which creates the technology that can keep the earth healthy.”
This continues to resonate today because it is true.
A number of reports this year have pointed out the yawning gap between ambition and rhetoric, and what’s really happening on the ground.
That’s why a real plan to deliver on commitments is so important.
The alternative is to ask those who can least afford it to continue to make ever greater sacrifices through loss of jobs and increases in the cost of living.
Unlike our response to the pandemic, our response to this challenge cannot be temporary.
It needs to be sustainable – politically and economically – for many years.
And I believe that our values as conservatives are as relevant to the role of government today, as at any time in our history.
Those values are particularly important in a portfolio like mine, where left wing values have often dominated.
And focusing on what works for all people – whether they’re in cities, suburbs or regions – is more important than ever.
Under our long term plan, Australia will continue to deliver on our ambitious goals.
As our Prime Minister put it last week, it’s no longer about the ‘if, but the ‘how’.