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National Press Club address - "Energising the economy: The case for a technology-led approach"

Canberra

22 September 2020

ANGUS TAYLOR: Thank you, Sabra, and it's a great pleasure to have the opportunity to speak here.

As you said, my first time speaking to the National Press Club, not my first time speaking in the Press Club, but it is a great pleasure and thank you very much for having me.

Today is an important day in the advancement of our emissions reduction agenda that will strengthen the economy and create jobs.

It's the culmination of a process that kicked off shortly after we won the last election, leading to the development of the Technology Investment Roadmap, and the first Low Emissions Technology Statement.

Now we're making good progress in tackling these issue, but across the globe, bringing down emissions whilst maintaining strong economies is a major challenge.

Bringing down emissions while strengthening economies isn't the first challenge that humans have had to overcome.

We've dealt with many of those over the course of our evolution, be they economic, engineering or environmental challenges - we've overcome these time and time again.

We've done this by investing in technology development, by using human's innate ingenuity and enterprise to solve hard problems.

It's actually, a remarkably consistent part of history.

We see a challenge and we overcome it with a better way, a faster way, and a more cost-effective way.

Thomas Newcomen's steam engine opened up previously inaccessible coalmines across Europe, powering the industrial revolution and opening up a pathway to unprecedented and unimaginable prosperity.

The Haber-Bosch process to produce nitrogen fertiliser in large volumes and at low costs led to the agricultural revolution and a quadrupling of crop yields. Without this and other advances, feeding the world would require double the land we currently use for agriculture.

Closer to home, the Snowy Mountains Scheme is another example of local technology innovation, which we're building on with Snowy 2.0.

Now, we're all living through a year like no other. We must follow the lessons of history and develop and then adopt new technologies to solve our hardest problems.

With COVID, it's the race for better prevention, treatment and ultimately, a vaccine. This is the only way to avoid economy sapping shutdowns.

In emissions reduction, it's the race for cost-effective, low and negative emissions technologies that will strengthen our economy, not weaken it.

And that's why the Government has undertaken to develop, fund and drive a Low Emissions Technology Roadmap.

History has also shown us that you don't tax your way out of a challenge like this.

Let's be clear: there are only two ways to reduce emissions.

You either supress emissions-intensive economic activities through some version of taxation, or you improve those activities.

There is no third way.

Australia can't and shouldn't damage its economy to reduce emissions.

We shouldn't forget that when developing countries have been asked to sacrifice prosperity for the environment, they've typically prioritised prosperity.

That was the lesson of Copenhagen.

We can't ask them to make the trade-off.

We should also remember that global emissions reduction is the ultimate goal here, with the Paris Agreement seeking to achieve net zero in the second half of this century for the globe, or preferably sooner.

Now, the only pathway to global emissions reduction while strengthening prosperity is through developing low emissions technologies at lower cost than higher emitting alternatives.

To that end, we have four core principles behind our work.

The first: a relentless focus on outcomes.

Second: the deployment of technology not taxes.

Third: respect for consumer choice.

And fourth: a goal to maintain a balance of fuel and technology sources - we need more horses in the race, not less.

In terms of outcomes, Australia has done remarkably well in emissions reductions in recent years.

We are a world leader in renewable energy investment, deploying wind and solar at ten times the global per capita average.

Remarkably, the pandemic hasn't slowed this down. The Clean Energy Regulator forecasts that investment in new renewable energy generation in 2020 will match the 6.3 gigawatts or $9 billion of investment, the record set in 2019.

As a result of this and other actions by Australians, we've beaten our Kyoto targets by up to 430 million tonnes, which is almost a year's worth of emissions.

Compare our track record with similar emissions intensive export-orientated countries, developed nations like Canada and New Zealand, and the results are stark.

Pre-COVID, Australia's emissions were down 13 per cent on 2005 levels, the baseline year for the Paris Agreement dates.

Canada's emissions over that time frame haven't fallen, while New Zealand's have only fallen 1 per cent versus our 13 per cent, and New Zealand's are projected to increase sharply in future years on their own projections.

But we've also learnt from the last decade, particularly with respect to unintended consequences and the need to maintain balance in our energy system.

The early retirement of Hazelwood in Victoria caused a major shock in our electricity market. A shock that we can't repeat.

And why was it a shock? Because the analysis was flawed. And I still hear much of that analysis today.

For decades, our energy system was getting two services for free. And other than hardcore engineers, we didn't think much about it.

We received frequency control so critical to grid stability, for free.

We had an oversupply of big thermal generators and it was easy to make sure that the grid was stable.

And second, we received energy storage for free.

So when we compared the cost of generation between wind and solar and traditional generators, we forgot about the services we were getting for free.

Coal had built in storage. It was a stockpile next to the generator.

Whereas storage and back-up are not automatically part of the solar and wind farm.

We effectively compared a block of land with a house and land deal and assumed they were the same.

Now, that's just the reality of the modern grid. It's neither good nor bad.

But there was a clear failure.

We haven't had a dispatchable generator built in New South Wales for over ten years, and that's why we've established the $1 billion Grid Reliability Fund alongside the Retailer Reliability Obligation to ensure that Australia's world-leading deployment of renewables is integrated and backed up.

We saw the problem and we're stepping in to address it in a practical way.

So why is this important for the Tech Roadmap? The Roadmap is about managing the future without ignoring the lessons of the past.

We were successful in meeting and beating our targets because we had lots of horses in the race.

But there were challenges, and those included underestimating the pace of change, and particularly the unintended consequences of those changes.

If we get this wrong, if we suppress the economy to achieve our emissions reduction goals, then we've gone down the wrong path.

The timely development and application of technologies can lower prices for energy, achieve our goals and protect our way of life if we learn the lessons from the past.

Now, throughout history, we've seen some of the best technology advancements made through a combination of private and public sectors.

The public sector has been making interventions and investments in research and development for as long as there has been a public sector. This isn't new.

History tells us that we get the best results when the public sector supports R&D, particularly at the high-risk early stages and then the private sector drives deployment, commercialisation and scale.

The Roadmap also recognises that our investments should drive towards our natural advantages here in Australia, such as our abundant natural resources.

Put simply, we should pursue opportunities that play to Australia's strengths, recognising that we can play a global leadership role where we have real advantage.

I've been greatly heartened by the engagement we've received in the development of this work - my reference panel have received over 500 submissions.

Alan, Drew, Shemara, Grant, Alison, Ben and Jo - some of whom I know are here today and some of whom I know couldn't be here because of restrictions - have met regularly on the development of the Roadmap.

Over 400 people and 150 businesses, researchers and peak bodies, attended events during the Roadmap's development.

This engagement has been absolutely critical to the development and this is why the Government has decided to formalise our ongoing Advisory Council, chaired by Dr Alan Finkel.

The Ministerial Reference Panel will be converted into an enduring institution, the Technology Investment Advisory Council, to advise on future Low Emissions Technology Statements, like the one today.

Now, joining the Council will be the Chairs of ARENA, CEFC and the Clean Energy Regulator.

The Council will be tasked with annually reviewing technologies in the Roadmap, and making recommendations on their place within the framework.

Now, our framework has four technology categories - each with different opportunities and initiatives attached to them.

They are priority low emissions technologies, emerging and enabling technologies, watching brief technologies, and mature technologies.

Priority technologies are those expected to have transformational impacts here and globally that are not yet mature.

These technologies have high abatement and economic potential in areas of comparative advantage for Australia.

They're priorities where Government investments can make a difference in reducing costs and improving technology readiness - technologies where we, as a Government, will not only prioritise our investments, but where we'll streamline regulation and legislation to encourage investment.

Investors will have confidence that identified priority technologies are of a long-term strategic importance to the government.

Those identified in the first Statement are clean hydrogen, electricity from storage for firming, low carbon steel and aluminium, carbon capture and storage, and soil carbon.

This Statement sets economic stretch goals for each of these technologies, stretch goals which are competitive with higher emitting alternatives.

Now, we've already announced the first of these goals - hydrogen production under $2 per kilogram, ‘H2 under 2’.

And today we announce four new stretch goals.

Long duration energy storage dispatched at under $100 per megawatt hour, which would enable firmed wind and solar to be delivered at prices around or below today's average wholesale price.

CO2 compression, transport and storage at under $20 per tonne.

Low emissions steel production at under $900 per tonne, and aluminium under $2700 per tonne.

And fourth, soil carbon measurement for less than $3 per hectare, per year.

We know what we're aiming for and we know why.

Getting the technologies right will strengthen our economy and create jobs.

But they will significantly reduce global emissions across sectors across the world that emit 45 billion tonnes annually.

Australia alone will avoid 250 million tonnes of emissions through these technologies if we reach the stretch goals by 2040.

Having these goals will enable us to measure our progress through the future.

Over the last decade there's been enormous focus on electricity, makes up only 32 per cent of our total emissions.

These technologies we've outlined today will broaden the focus to include the other 68 per cent of emissions outside of the grid - in industry, manufacturing, agriculture and transport.

We'll be able to adjust our course based on data we have.

Are we seeing the improvement in the technology that we need?

Is the private sector following the Government's investment? If not, why not?

Priority technologies and stretch goals will not be adjusted or cancelled lightly.

Changes will be the result of rigorous impact evaluation, stakeholder consultation and advice from the Technology Investment Advisory Council.

Now, while the priority technologies are important, they're not the only technologies that our agencies invest in.

Emerging and enabling technologies will be included in the mandates of our technology investment agencies. We expect them to identify and invest in opportunities in these areas that meet their investment mandates.

However, these technologies will not have the same detailed reporting and investment focus as the priorities.

Over time, they may become priorities or they may drop off all together - that's the point of having as many horses in the race as possible and having a pathway for priorities to evolve.

Ten years ago, there were many technologies that were promising and many that seemed far off, we can all think of examples - some delivered, some didn't.

Watching brief technologies like small modular reactors are also in the Roadmap. They could play an important role over the long-term.

We don't expect our agencies to directly invest in these technology, but the Government may consider R&D support where appropriate.

We'll closely watch the international development of those technologies.

And finally, there are mature technologies.

Now, I know that there's been a lot of talk about coal and gas in the Roadmap. And there's no doubt that existing proven technologies like coal, gas, solar and wind, will all play an important role in Australia's energy future.

The Government will continue to invest in mature technologies where there's a clear market failure, like a shortage of dispatchable capacity.

But this is a new Technology Investment Roadmap - a roadmap that seeks to drive investment in emerging technologies.

It recognises that widespread deployment is primarily driven by the private sector.

Australia's competitive advantage has always been on cheap energy - gas will be essential to our ongoing recovery while coal continues to play an enormously important role in our energy system.

And I've already referred to our record investments in solar and wind.

But solar, wind, gas, coal and hydro are all mature technologies, they're already cost competitive sources of energy and don't require significant public R&D investment.

If there are major new breakthroughs emerging in the technologies we'll consider them, but that's not the focus at this point.

Now, the Tech Roadmap arms the Government with four levers to enact change.

First - investment and incentives.

Following each annual Roadmap, I'll direct my agencies to focus on investments in priority technologies.

The Roadmap will guide the deployment of the $18 billion that will be invested by the Federal Government, including through the CEFC, ARENA, the Climate Solutions Fund and the Clean Energy Regulator.

Our plan is to increase that to at least $50 billion through the private sector, state governments, research institutions and other publicly funded research agencies.

That will drive around 130,000 jobs through to 2030.

Importantly, these are jobs with a strong focus in the regions and in traditional industries like agriculture, manufacturing and resources.

Last week you saw our R&D investment framework in action with $1.9 billion of new funding including guaranteed baseline funding for ARENA.

The Technology Investment Fund that will support green steel, green aluminium and carbon.

The Future Fuels Fund that supports EVs, hydrogen cells and biofuels in a technology neutral approach to transport.

Our first hydrogen export hub.

Investment to scale carbon capture and storage.

And, investment in energy efficiency technology and outcomes.

Now, second, alongside investment, we have a legislative lever that is about flexibility and accountability.

We've already announced legislative reforms to the mandates of ARENA and CEFC.

These reforms will give their boards the flexibility to respond to our technology priorities.

We don't currently have that.

Our agencies are restricted by legislation and regulation to invest in the new technologies of 2010, not the emerging technologies of 2020.

These reforms will enable them to support the technologies that reduce emissions across all sectors of our economy.

On an annual basis, we'll review legislation that's a barrier to achieving our stretch goals.

We'll table the Low Emissions Technology Statement in Parliament each year.

Future statements will highlight the impact our investments are having, our progress against stretch goals and offer a frank assessment of legislative and regulatory barriers.

Now, third - we have a regulatory lever that's about enablement.

We'll provide just over $40 million to the Clean Energy Regulator to take responsibility for developing and streamlining Emissions Reductions Fund methods.

The Regulator already has a target of halving the time it takes to develop new methods and we'll work closely with industry in doing so.

We won't mandate the deployment of technologies.

We've seen the unintended consequences of mandated volume targets for specific technologies and we won't repeat that.

But our regulatory changes will be focused on removing barriers to deployment of these priority technologies.

And the final lever is international engagement and collaboration.

Australia is a world leader in many emissions reduction technologies like household solar and soil carbon, carbon farming more generally.

We are also one of the great energy exporters of the world.

Our ability to reduce global emissions through technology is clear.

That's why the Prime Minister will write to all of our key partner countries - Canada, Europe, New Zealand and our north Asian trading partners, to invite them to join our efforts.

This will build on the work we're already doing in forums like the IEA's Clean Energy Ministerial. And we have strong bilateral collaboration in areas such as hydrogen with Germany, Japan and Korea.

Australians should be proud of our achievements.

We're reducing emissions through hard work and diligence.

And that's why we want to work with key partners the US, UK, China, Japan, Korea and India, among others.

Australia has always been an outcomes focused nation.

We, as a people, don't always go on to the world stage and crow about our achievements, but we should be proud of them.

Our track record is one of quiet achievement.

And our plan is based on balance and outcomes - not ideology.

We've always been clear on how we will achieve our international obligations.

We told you how we would get to our 2020 target - many didn't believe that we'd get there - but we did, and with strong jobs growth and a strong economy.

We told you how we will get to our 2030 target, and we will do it with strong jobs growth and a strong economy.

We know what we must do, and we know how to do it.

This is a plan which is about outcomes.

A plan that will bring the world with us.

A plan that drives the good jobs and the strong economy Australians want and deserve.

Thank you.

Media contact:

Minister Taylor's office: 02 6277 7120