Australia Urged to Boost Clean Energy Spending over Claims ‘mammoth’ US Green Subsidies Bill a Threat

Australia urged to boost clean energy spending over claims 'mammoth' US green subsidies bill a threat

Renewable energy developers and operators are warning that Australia’s decarbonization efforts risk being derailed because of “mammoth” green spending plans by the United States.

Key Points:

  • The Clean Energy Council is pressing the federal government to boost renewable energy spending
  • Call comes following the passage of landmark US laws to turbocharge America’s energy transition
  • There are warnings the US gambit could threaten Australia’s own decarbonization efforts

The US Congress passed historic legislation last year that included significant clean energy subsidies and buy-America clauses, breaking years of climate and energy policy deadlock in Washington.

The Inflation Reduction Act, also known as the “Green Hydrogen Act,” contains $US369 billion ($529 billion) in taxpayer-funded incentives to accelerate investment in renewable energy, electrification, and the development of clean industries.

According to the Clean Energy Council, which speaks for Australia’s renewable energy sector, the IRA’s enormous scope completely altered the nature of the world’s move toward decarbonization.

America’s intervention, according to CEC CEO Kane Thornton, has given the transition a sharper edge and increased competition for the labor, resources, and funds required to restructure economies.

If governments under the Commonwealth’s leadership don’t step up their efforts to keep up with the US, Mr. Thornton warned that Australia risks losing the race.

He asserted that the competition was already so fierce that there were anecdotal accounts of workers from renewable energy companies being poached by the US before they could even travel to Australia.

Pointing to one example, he said a company that hired a grid expert learned hours after the engineer was due to land in Australia “that he wasn’t coming … he’d received an offer for twice the salary to head instead to the US”.

US ‘reshapes’ Energy Landscape

“The Inflation Reduction Act introduced in the United States is a massive game changer,” Mr. Thornton said.

“As a result, it greatly encourages the development of renewable energy and green hydrogen in the USA.

“Therefore, that acts as a magnet drawing people, money, investments, and other resources to the USA for things like clean energy.

“[It turns into a draw for those kinds of things into the United States while acting as a drain for those vital resources leaving Australia.”

The Clean Energy Council has requested that Australia’s support for renewable energy be significantly increased in order to prevent the nation from falling behind in a submission to the federal government ahead of May’s Budget.

In addition to increased efforts to electrify homes, businesses, and the transportation system, it is asking for an expansion of the renewable energy target.

Australia’s Plans ‘under Threat’

The CEC contends that Australia must move swiftly if it hopes to become a superpower in renewable energy and is calling on the government to offer tax breaks for clean industries like green hydrogen production.

“The opportunity for us to become a global clean energy superpower is now under threat,” he said.

“Global clean energy arms race is currently being led by the US.

“The Australian government has made some significant moves in the last six months to try and get Australia back in the global competition for clean energy.

“Although Australia might not have to exactly follow what the US is doing, we can’t afford to be lax.”

The calls come as other economies, such as the massive European Union bloc, consider how to react to American generosity.

This comes after reports that some European businesses were already choosing to invest in the United States over their home markets due to the financial incentives offered.

Ryan Carroll, a recruitment manager, noted that Australia was in competition not only to bring in foreign workers but also to keep those who were already living here.

The 41-year-old is the regional director for the global labor hire firm Airswift, which specializes in the energy sector.

Demand ‘greater Than Supply’

According to Mr. Carroll, Airswift’s own research had demonstrated that most energy workers were willing to relocate for employment, particularly to nations with welcoming policies.

With regard to longer-term career opportunities, he claimed that Australia was currently falling behind the US and Europe.

“The market is really strong,” Mr. Carroll said.

“The size of the opportunity in comparison to the talent pool is somewhat out of balance, and that is the first thing we really need to understand.”

According to Mr. Carroll, Australia had big advantages to offer prospective workers, including “a great lifestyle”, strong and stable laws, and a pipeline of renewable energy projects valued at $1 trillion.

He did point out that many of the proposed projects had not yet received approval from their financiers, indicating that investor confidence and government policies were still out of sync.

Regardless, he asserted that the demand for the skilled labor needed for the energy transition was only going to increase.

“Our forecasts tell us that the heat is here to stay,” Mr. Carroll said.

“The lack of a clear and obvious source from which we can currently source talent makes things difficult but also exciting.

“It’s the better problem to have, as I said.”

Australia ‘at Front of the Queue’

Federal Climate Change and Energy Minister Chris Bowen insisted the IRA was a “good thing for the planet, it’s a good thing for the United States … and it’s about as important for emissions reduction as the signing of the Paris Agreement all those years ago”.

Mr Bowen said the changes were “an opportunity as well as a challenge”, noting Contrary to many other nations, such as America’s allies in Europe, Australia stood to be a significant supplier to the US under the Act.

“Certainly in my discussions with the United States, they’ve made it clear to me that they know they can’t do it all alone,” Mr. Bowen said.

The Minister added that despite the fact that nations were undoubtedly competing with one another to reduce carbon emissions, Australia had already made significant progress.

He noted that since the federal election of last year, Australia had legislated a target of 43% carbon reduction by 2030, set a goal of producing 82% of the nation’s electricity from renewable sources by the end of the decade, and promised a program to finance new backup power sources like batteries.

“This is part of the mix that we’re always responding to,” Mr. Bowen said.

“Not just the Inflation Reduction Act.

“Things are moving quickly all over the world.

“For the first time, Australia is currently right in that race and closing the gap quickly.”

Natural Advantages ‘not Enough’

Australia, according to Mr. Thornton, cannot sit back and celebrate its success.

“Of course, Australia does have some of the best renewable energy resources in the world,” Mr. Thornton said.

“We have amazing water, solar, and wind resources. But regrettably, that won’t be sufficient.

“If we don’t, that investment and that renewable technology will simply leave the country, so we will need to take some serious steps to try and match what is offered in the US to some extent.”

Reference: https://www.abc.net.au/news/2023-02-13/australia-urged-to-respond-to-mammoth-us-green-subsidies/101942366

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