Another round of climate wars? "Oh God no!" | Insiders On Background

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Is everyone ready for another round of the climate wars?

Just when it looked like Labor's big election win had settled the path Australia is on when it comes to the rollout of renewables backed by storage and gas, the coalition, it seems, has other ideas.

It's responded to the verdict of voters by putting all of its policies up for review.

That includes the plan it took to the election to have seven taxpayer-funded nuclear power plants and even its commitment to net zero emissions by 2050.

The commitment that Australia signed up to under the Morrison government is also now up for review.

Of course, the coalition is in a weakened political position.

It may not be back in government to have a chance to do anything much for quite some time.

Still, it does raise the question, does Australia need another debate over net zero?

And where does this leave industry, those with skin in the game, who have to make big investment decisions?

That's what I'm keen to explore.

I'm David Spears on Ngunnawal Country at Parliament House in Canberra.

Welcome to Insiders on Background.

Innes Willocks is the Chief Executive of the Australian Industry Group, which represents big and small businesses right across the economy.

And he joins me now.

Innes Willocks, welcome.

Thanks, David.

Good to talk to you.

So what do you think?

Does Australia need another debate over net zero?

Oh, God, no.

No, anything but, please.

We've been there before many times over the past 20 years or so.

And to reopen the climate wars, as you aptly described them, is like reopening an old wound.

And for many in business, there would be a lot of...

quite frankly, eye-rolling about this simply because business had hoped that the broad fundamentals were settled.

That doesn't mean that there can't be debate and discussion around a whole range of aspects of climate policy, but sort of going back to fundamentals around virtually questions of

is climate change real?

Do we need an emissions reduction strategy?

Is net zero real?

It's probably the last thing that Australian industry needs at this time.

It's really because of this, David.

Industry is looking to make long-term investment decisions, as you alluded to.

These are 30, 40 year more investments that businesses are having to look at now.

And one thing Peter Dutton said during the election campaign that was right on the money was that energy is the economy.

And if we don't have energy right, and the subset of energy is climate change policy right and settled, then we're really going to to hobble ourselves as an economy because business won't have the room, the scope, the capability, the information to make enough of those long-term investment decisions that we need to build the economy of the future.

The last thing I'd say is business has sort of been locked in to net zero now for a long time.

Business sort of led government over the years on this discussion

and

business has already made some investment decisions predicated on emissions reduction heading towards net zero by 2050.

To reopen that now would put a lot of potential investment decisions on hold.

Well, Ines, that was a very blunt answer there.

I just want to be absolutely clear here to those in the coalition who are saying, should we, shouldn't we stick with the net zero target?

I'll come to the debates about nuclear in a tick, but should we or shouldn't we stick with the net zero target?

Because, you know, Donald Trump's left the Paris Agreement and Conservatives in the UK have also gone wobbly on net zero.

You're saying from an industry perspective to the Coalition, at least stick with net zero?

David, the short answer is this.

We have an agreed position that both political sides had settled on and have settled on for some time.

And that's given business and industry some certainty around investment.

To go back on that now would make things very difficult for industry to make clear investment decisions right across the economy because energy is so important to a range of businesses, not just energy-intensive industry or

generators or utilities.

There's a whole range of things that are at stake here and have been decisions that have been based on some policy settlement.

Everyone knows there is going to be debate around the edges, if you want that, want to put it that way.

That's fine.

But the fundamental is net zero by 2050 we'd agreed on it let's not back away and walk away from it it would be putting business in a very difficult situation when it came to investing in our future and would it cost our economy money and would it cost australia if we were to back away from it

well it would cost us opportunities um look the whole point around net zero by 2050 is that in some ways it's 25 years away in some senses that's a long way in other senses it's really close.

But just because others have for now walked away doesn't mean that we should.

The United States walked away and came back and walked away again.

We can't predict the future what a future American administration, either Republican or Democrat, would do.

We don't know how the British political landscape will work out.

While they are making their decisions, you're seeing a lot of movement movement towards net zero among other economies.

And if we were to walk away now, it would represent lost opportunities for the Australian economy.

That's not saying we have to do everything overnight, everything now and everything in a linear fashion, but to have that

North Star, as it were, is very important for business when it comes to investment.

So getting to that North Star, getting to that net zero target, we know is a bumpy road.

The government acknowledges as much, the journey that we're on, which does involve a big rollout of renewables, transmission lines, storage,

some gas, hopes for hydrogen seem to be looking a bit shaky, but that's the path we're on.

The coalition we know took an alternative path to the election to have nuclear power plants replacing, string out the coal-fired power as long as you could and then have nuclear come into the mix over the years, the decades ahead.

They're also now weighing up what to do with that.

Does the option of nuclear become more difficult with an inevitable delay in when you could get started, be it another three years or even six years?

Well nuclear was always more a 2035 option than a 2025 option and Peter Dutton said as much during the election campaign, that it was something that would need to be planned for.

It would take a long time to build a nuclear power plant and it would take a particularly long time in the Australian context.

I always sort of make a joking line about imagine the CFMEU building a nuclear power plant.

How would that go and how long would that take?

But the fact is that it is a longer-term option.

Now that didn't diminish it as an option that should be up for discussion and debate.

And in many ways, we're pleased that that debate has been held.

There are still aspects of nuclear to work through.

Should we get rid of the nuclear moratorium

that's in place at the moment?

We should get rid of that ban on nuclear power.

Well, it's a question again, I think it's the next phase that we have to work through, David, because simply because we're going down the AUKUS path, the AUKUS submarine path, and that sort of makes it

almost nonsensical in the longer term if we're going to have a ban on nuclear when we have nuclear submarines coming in and out of the country.

We need an industry to support that.

So I think that's the next phase of the argument.

But your question around, well, taking nuclear out, I would just say, well, it wasn't there anyhow.

It may have made things easier towards the end it may well have but as of now it's not there so we have to plan without it and you mentioned some of the technologies that are in place we've got energy storage we have to do more on gas as a bridge between fossils and renewables and we have to look at what's plausible with renewables.

You've seen in recent years the cost of wind generation go up, solar come down.

That's probably where we're going to see more investment in the short term.

So there are a lot of moving parts within this and that's why it's not fixed.

That's why I talk about the North Star.

But there are many ways to skin the cat and we need to be open to that.

Yeah, and you're a veteran of these climate and energy wars, Innes, Willocks.

Would your preference and hearing what you're saying about the need for certainty, the need for industry to have some certainty, would your preference be for both sides now,

and given Labor's in the commanding position, I suppose, for the coalition to agree to what Labor's got on the table in terms of its pathway to net zero?

Well that, look, let's be blunt here, democracy has spoken and that's where people seem to want to go.

The question then is around, well, how do we achieve it?

It's a focus on renewables for sure, but I think evidence everywhere and we had in the last week of the election campaign David, Spain and Portugal blacking out

after two or three days after they had gone 100% renewable.

So you always have to have backup systems and that's where we say gas is important.

We'll have a phase down of coal in time because coal is becoming largely uninvestable in the Australian domestic context.

That's where the backups become really important.

The other point here is that to do this, we need to plan, we need to have prioritisation, we need to have productivity all built into the equation to get built what needs to get built.

And we think that's really important.

That's where the energy should lie is sort of fixing up up our systems to get stuff done.

That's an interesting point.

Just tease that out for us when you say that you need that productivity and the build out of this new energy system.

What are you talking about there?

Well, the government's, you know, through its last term, had a whole range of objectives around renewable build.

And, you know, we just haven't achieved that as a country.

We haven't built the...

the solar farms, we haven't built the wind that was expected, we've talked up hydrogen that hasn't come to fruition

and we haven't sort of got the technology for storage in place either.

So

we've got to look at a whole range of things around planning, around permitting, around construction, construction time, construction cost.

Does this include some of the so-called green tape that can stop big renewable projects going ahead?

Well, absolutely, and that's where we're really interested in sort of what some of the government is saying it will do under Murray-Watt in the environment portfolio to see how we can unshackle some of that

to allow the build to occur.

It sort of did sort of put a, give me a wry smile during the last term, David, when proponents of, you know, like staunch proponents of renewables sort of looked askance and shocked that people would oppose the building of renewable facilities on their farmland or in their backyard.

I mean, that's what we have to work through.

We have to get the social licence in place, we have to get the approvals in place, the permitting in place, and we've got to build it.

And I think that's got to be the priority for us over the time ahead, or else we're not going to achieve our targets.

We're not going to achieve a 2030 target, let alone a 2035 target or a 2050 target.

Just coming back to nuclear, remove the ban you're suggesting, but what about taxpayer-funded nuclear power plants?

That obviously creates some uncertainty for those wanting to invest in the energy system right now.

The prospect that there could be government-owned power providers coming along.

Would you say dump that idea as well?

Well, what I kept hearing from the private sector was that in the Australian context, nuclear, in the timeframe that was being talked about,

basically wasn't going to stack up.

It wasn't going to stack up economically and the technology wasn't there.

It wasn't there in 2025, so that's not to say it wouldn't be in 2035.

But going back to how we started this conversation, business needs a long time to

needs to know that projects will be viable for a long time to make the investments

they need to make.

And at the moment, it doesn't add up for nuclear, for the private sector.

That's not to say it won't in the future, but we're dealing in the here and now.

That's why why I think the coalition went down the path of government funding to try to speed that up.

You can have debates until you're blue in the face around how much that would cost

and how it would operate and lease backs and sales and all those sort of things.

But the thing about government funding in anything, no matter what you do, any activity, it crowds out private sector funding.

It changes the ballgame when it comes to level playing fields around investment.

So government funding is not without its difficulties for the private sector.

So a pretty clear view from you on the energy debate.

Just let's get cracking with the path that we're on.

In terms of what the government needs to be focused on beyond that energy challenge, with its second term and the big mandate that it's received and the political capital that it now has after this big election win, what would you say should be its top priorities?

Well, I come back to getting the build right.

So it's about getting rid of,

you know, in a constructive way, getting rid of the obstacles that are in the way of the build.

That's one.

And I think, you know, we're on the renewables pathway, but we're not on a renewables only pathway.

Point two is we have to find ways to utilise our gas resources and our gas reserves.

We've just had Betaloo now sort of really coming onto line.

We've still got Santos's

Narabri gas project being held up.

It's been decades in the making.

So it's around trying to get these things moving, action.

And that's what we've lacked so far.

Despite a lot of the talk

in this space, we haven't really seen a lot done.

And that's why our energy system is creaking.

We're seeing

fears of market failure occurring.

you're seeing uh energy uh regulators talk about you know the potential for blackouts in you know three four years 2028 2029 that's that provides a sense of urgency being required to get the build going to get the systems in place we talk a lot in business about needing reliable and affordable energy and that's what we're talking about

to make it both reliable and affordable and and we're heading to a point where

we're definitely not affordable.

We talk about households being in energy poverty.

Well, we have businesses that are in energy poverty at the moment trying to work out what bills to pay and foregoing opportunities because of the cost of energy.

That's a significant issue for us at the moment.

So that's why we need to get some urgency into this.

That doesn't mean damn the torpedoes full speed ahead on renewables only.

It means integrating the system to make sure it operates to the benefit of everybody, understanding that we still have huge industrial needs within this country.

And we talk on the one hand about energy, and the other hand we talk about building economic resilience.

So you look at industries like cement, brick making, steel, glass manufacturing, all of which are key to broader economic resilience and which are energy intensive.

You can't forego those,

but we risk those every day.

As time goes on, you've seen in recent days Dino Nobel worried about their facilities up in Queensland, their fertiliser facilities because of energy cost.

You have seen plants close, glass manufacturing plants close over the past year.

So we're losing capability because of our lack of energy resilience.

Yeah, so it's about getting that rollout, speeding up that rollout, also tapping more gas in your view where we can to get more energy into the system for all of those industries.

Beyond all of that, you've got a couple of new ministers to deal with, a new industry minister in Tim Ayres, a new minister for employment and workplace relations in Amanda Rishworth.

Have you had much contact with these new faces and what's your message to the new look Albanese ministry?

We have had some and we'll have more over the coming days and weeks as we get settled.

There's a lot of continuity within the government.

Look, we were really pleased on day one on Insiders actually, I believe it was Jim Chalmers came out and said we need to really focus, we the government really need to focus on productivity.

We think that's a very core message that the government has

has heeded, that we've been pushing for some time.

Productivity means prosperity within the economy.

It means prosperity for households and for business and for the national economy.

We want to make sure that what business talks about as productivity is the same as what the government's talking about as productivity.

Productivity means a more efficient use of the resources that you have to enable you to do more.

That's what it means to business.

We don't want it to become a code word for growth and growth at all costs.

So we want that focus on productivity.

Really pleased the government through Treasurer Chalmers late last year in December

tasked the Productivity Commission Commission with doing five key reports, five pillars as it's known into productivity, and then some more work that was announced last week.

Then we've got to get on to the bigger issues around tax, deregulation, broader competitiveness to make us a competitive economy.

And that's where energy fits into that broader competitiveness equation.

It used to be a

huge economic advantage to Australia.

Now it's not.

And for many within business, it's a bit of a millstone.

Well, productivity, tax reform, many issues to be tackled over the coming term.

We look forward to talking to you throughout the coming few years.

Innes Willocks, thanks so much for joining us today.

Thanks, David.

Take care.

And thanks for your company as well.

If you have any thoughts on this conversation or ideas for the podcast, do drop us a line, insiders at abc.net.au.

We'll have more on all of this and the political landscape as it looks a couple of weeks on from the election on Sunday morning.

Hope you can join us for Insiders at 9am from the couch.

We'll see you then.

You're making us all feel very excited about being here.

Nearly two years ago, Erin Patterson served beef wellington to her family at that now infamous mushroom lunch, and her murder trial has finally begun.

I'm Stephen Stockwell.

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