Election Watch: Dutton’s nuke and gas plan relies on the death of Australian industry, and its smelters

During Peter Dutton’s post-budget-reply interview on ABC News, he brought up heavy industry as a key issue.

“In Anthony Albanese and Chris Bowen’s world, we’re going to pretend that we don’t need aluminium in our society in construction and across the building sector? It’s nonsense. We are going to need it. And why would we export the jobs, increase the amount of emissions in production in Malaysia or somewhere else in the world? We should be supporting that industry. I want to revitalise that industry and we can do that if we’ve got secure 24/7 permanent baseload power which we can do”.

It is a truly remarkable thing to claim, primarily because the modelling the Coalition relies upon a scenario from the Australian Energy Market Operator (AEMO)’s Integrated System Plan (ISP) that assumes a massive, dramatic decline in Australian manufacturing and industry.

As UNSW’s Dylan McConnel pointed out on Bluesky, the Frontier modelling works off signficantly lower projections of future demand, which helps achieve the trick of presenting large-scale nuclear deployment as a ‘cheap’ option for Australia.

McConnell provided some comments by email, in which he pointed out that “the results highlighted by the Coalition are from the progressive change scenario, which has significantly lower projected consumption, in part driven by closure of industrial loads”. Frontier’s report very specifically says that:

“As part of discussions to help inform our comparative modelling exercise, the Federal Coalition confirmed that they consider the demand forecast embodied in the Progressive scenario is more consistent with their view of the most likely transition of the electricity market”

And:

“As explained above in Section 1.3.4, the Federal Coalition’s view about the energy transition is more consistent with the Progressive scenario including nuclear power, which is 44% cheaper at $331 billion compared to the Federal Labor Government’s AEMO’s Step Change scenario, which is estimated to cost $594 billion in the report modelling”

It is a dramatic decline, when you look at the projected energy consumption of large industrial loads in AEMO’s modelling:

The assumptions for closures of large power consuming facilities come from AEMO’s assumptions reporting, and Dylan tells Renew Economy that much of the closures assumed in this scenario relate to the aluminium sector.

AEMO’s document says that “to reflect the scenario’s description of challenging economic conditions and to explore overinvestment risks associated with electricity system investments, the Progressive Change scenario considers closure risks for major electricity consumers in the short to medium term”.

It’s not clear whether the Coalition were aware of this cliff-like plunge in industrial power loads in their modelling assumptions. If they had relied on the same scenario used mostly by labor – the ‘step change’ scenario – they would’ve had to reckon with the task of meeting growing industrial load.

Frontier’s modelling explicitly dismissives the ‘green exports’ scenario as verging on imposible, and Dutton also announced his party will slash Labor’s production tax credits for ‘green hydrogen’, as part of their ‘Future Made in Australia’ plan.

It is a shockingly muddled state of affairs. Dutton’s budget reply speech was largely about division, gripes and complaints.

The only times when they have offered up any substantial vision of the future – such as their nuclear plan – it wildly and comically contradicts their claims to want an Australia fuelled by industry and economic growth. On the eve of an election campaign announcement this sets the stage for a month of more of the same.