Remarks to the Bank of America Japan Conference
I want to thank Chairman Kevin Skelton and Vice Chairman Richard Alcock for inviting me to address this year’s Bank of America Japan Conference.
Australia places a very high value on our economic and strategic partnership with Japan, our second largest trading partner.
We take pride in our longstanding trade and investment ties with Japan – which have seen us supporting some of the world’s most important energy and minerals supply chains.
That partnership is the foundation for our growing cooperation on hydrogen and other low emissions technologies.
As many of you know, the Prime Minister Scott Morrison entered into a partnership to drive down the cost of low emissions technologies with Prime Minister Suga in the margins of the G7 earlier this year.
Through this partnership, and the others we are pursuing with countries like the UK, Singapore and Germany, Australia is taking its technology-led approach to bringing down our emissions, and helping to reduce global emissions.
We want to achieve net zero as soon as possible and preferably by 2050, and we are already on track to meet and beat our 2030 commitment – as we did with our Kyoto-era commitments.
Our focus is on getting new technologies to parity with existing approaches – or preferably even cheaper.
This is a practical approach with global application.
And it is the only way to maintain energy security and affordability and drive strong economic growth across our region while reducing global emissions.
The reality is that despite three major international treaties and the best efforts of governments and communities, entrepreneurs and investors, global emissions are higher now than they were before the pandemic, and higher than at any point in our history.
We are focussed on supporting regional partners by driving low emissions technologies to cost parity with alternatives, and providing practical, cost-effective solutions to meet our region’s growing energy demands.
This technology-focussed approach will mean we do not need to suppress and close energy-intensive sectors of our economy and the well paid, secure jobs they provide.
If that were to occur through regressive carbon taxes, it would be deliberately imposing costs on the industries that are the most-exposed to global competition.
Instead, we are reducing emissions through the power of technology to transform our industries.
Climate change is a global problem in need of a solution that works across the world, particularly in developing countries.
We need to make net zero practically achievable for all countries.
And we can do this by harnessing great innovators, engineers and enterprising organisations to bring low emissions solutions to the market at costs that are attractive to investors.
We know this model works because we have seen it firsthand with solar.
Australia leads the world in household solar per person and has the most wind and solar per person of any country outside of Europe.
Growth in renewable energy has been so rapid that by 2030 it is forecast it will supply more than half of our electricity.
And that has been driven, in large part, by Australian households and businesses investing in renewables because it makes sense for them and their needs.
We need to repeat that success, globally, with hydrogen, carbon capture technologies, green steel and aluminium and soil carbon.
These are all priorities in Australia’s Technology Investment Roadmap.
Removing the ‘green premium’ – the price difference between existing technologies and low or zero carbon alternatives – is the key to global adoption.
Getting these technologies to cost parity will mean countries don’t have to choose between growth and decarbonisation.
Through the Roadmap and $20 billion of Commonwealth investment, we aim to leverage at least $80 billion of total investment over the next decade.
And Australia is partnering with other technology leaders, like Japan, to accelerate the development of those priority technologies - clean hydrogen, batteries, carbon capture and recycling, low or zero carbon steel and aluminium and soil carbon measurement.
These technologies will be essential to slashing emissions around the world.
Together, they will help reduce or even eliminate emissions from sectors responsible for 90 per cent of world’s emissions.
Australia has already built some of the world’s largest and most successful energy supply chains into Asia and globally.
We are building on our energy partnerships with trading and strategic partners, obviously Japan, but also Germany, Korea, Singapore, and the UK.
That means deepening our trade relationships and building markets and supply chains for low-emissions technologies.
This year alone we have committed more than $565 million to back these international partnerships and initiatives by co-funding research and demonstration projects.
Japan and Australia have committed to jointly support initiatives that will help drive the transitions to net zero emissions.
We will look to increase our joint focus on:
- lower emissions LNG production, transport and use;
- clean fuel ammonia, clean hydrogen and derivatives produced from renewable energy or from fossil fuels with substantial carbon capture, utilisation and storage;
- carbon capture utilisation and storage as well as carbon recycling; and
- low emissions steel and iron ore.
This partnership builds on our already strong cooperation through initiatives such as the $496 million Hydrogen Energy Supply Chain (HESC) project, the Japan-Australia Energy and Resources Dialogue (JAERD) and the Australia-Japan Joint Statement of Cooperation on Hydrogen and Fuel Cells.
The HESC project is particularly exciting example of a practical project based on a strong international partnership.
This project will see the world’s first liquefied hydrogen supply chain established between Victoria here in Australia and Japan.
This project includes $50 million of support from the Australian Government, $50 million from the Victorian Government, with co-funding from the Japanese Government and an industry consortium.
The successful production of hydrogen from coal in the Latrobe Valley this year marks a significant milestone for the HESC pilot project. The first trial shipment of liquefied hydrogen to Japan is expected to occur between October this year and May next year.
As many of you will know, low-cost clean hydrogen holds significant promise for the world’s energy future.
This is a platform technology that has the potential to enable significant reductions in emissions across many sectors.
Australia has what it takes to be a world leader.
We’re making good progress in implementing our National Hydrogen Strategy. But we need to bring the cost of production down significantly if we are to unlock large-scale demand for clean hydrogen.
That means developing strong and efficient global supply chains, overcoming the challenges inherent in the manufacture, transport and storage of hydrogen.
If we can get to $2 per kilogram, hydrogen will become economically competitive with traditional alternatives. And that’s our goal.
As an aside, it’s great to see other countries, like the US, recognising the importance of getting the cost of producing hydrogen down to around this level.
For our part, we’re backing the Australian hydrogen industry to the tune of almost $1 billion.
Shortly we will announce several hundred million in support to develop regional clean hydrogen hubs.
Hubs are an efficient early-stage approach to building industry scale.
Co-locating hydrogen producers and users will create economies of scale and will be central to building an Australian industry and driving down costs.
Hubs will help our domestic industry to scale-up and cut infrastructure costs, encourage innovation, and enhance skills and training efforts.
Making sure new gas generation infrastructure is ready for an emerging hydrogen economy is a key focus for our Government.
Demonstration of hydrogen-ready gas turbines in Australia will prove their technical capability and enable their use internationally, helping to further reduce emissions in the electricity generation sector.
CCS and CCUS technologies are also priorities under Australia’s Technology Investment Roadmap.
By applying these technologies, we can reduce and offset emissions from resource and heavy industry activity such as fuel production, energy generation and raw materials production including metals, concrete, and chemicals.
Australia has a comparative advantage in CO₂ storage. A number of CO₂ sources in Australia are located close to suitable geological storage basins, with established pipeline easements between them.
We will seek to maximise these opportunities.
Australia has set an economic stretch goal of achieving CO2 compression, hub transport and storage under $20 per tonne of CO2 which is equivalent to just under 1600 Japanese Yen.
We are backing this goal with robust investments and practical initiatives. This year alone we have committed over $263 million to fund CCUS projects and hubs.
We will continue to grow our international collaboration on technology R&D to reduce the cost and increase the speed of technological development. And I’m pleased to see the private sector coming on board at a rapid date.
Take, for example, Transborders Energy. This Australian company is partnering with Tokyo Gas and Kyushu Electric Power on the deepC Store Project, an offshore CCS hub to decarbonise Australian and regional emitters in the Asia Pacific.
Let me turn to LNG. Australia and Japan have a longstanding and established LNG trade relationship. Indeed, we built the very early supply chains in LNG.
We agree that LNG remains crucial to the supply of reliable, affordable and clear energy globally. For many countries, LNG is the key to unlocking a prosperous and sustainable energy transition.
If we are to achieve the goals of the Paris Agreement we need to bring the rest of the world - particularly the fast-growing economies of the Indo-Pacific region - along with us.
To do this, we must ensure that all technologies are on the table. Particularly enabling technologies and fuels - and we can’t forget the important role that LNG will continue to play in our region.
A rising share of intermittent generation makes dispatchable, on-demand generation more important than ever before.
Gas provides the firmed generation that we need to balance the record levels of supply we are seeing in Australia from solar and wind.
The gas sector also provides an important foundation for the implementation of new technologies, such as gas pipelines being used to transport hydrogen or blended into our gas networks.
Australia will also secure a future gas market that is attractive for gas development and investment. This will allow us to continue our role as one of the top LNG exporters.
And we're absolutely committed to continuing to support the energy and emissions-reduction needs of our region through our role as a global LNG exporter.
When it comes to emissions reduction, our record is one of delivery and achievement.
Our focus is to achieve climate goals in lockstep with our regional partners – making pathways easier for all.
We look forward to continued work with Japan as an essential partner in our effort to advance cost effective low emissions technology solutions which drive growth and regional prosperity, at the same time as bringing down emissions.