South Australia: the frontier state for transforming an industrial economy

• How can we thrive in a low carbon world?
• What could our future employment landscape look like?
• How do we respond to our current energy and industry transition?

These are the questions any place needs to be asking right now. In South Australia the industrial transformation and energy transition are at the pointy end.  Change can be hard.

The last of South Australia’s car makers is set to shut its doors in 2017. Holden’s name has been synonymous with transport in South Australia since 1856.

The Whyalla steelworks is struggling along with many of its contemporaries in other corners of the globe, under pressure from falling prices and the downturn in demand. It has been part of South Australia’s economic landscape since the 1940’s.

South Australia’s only coal fired power stations at Port Augusta – running since the 1960s on coal from Leigh Creek – will close imminently – the first major move away from coal-fired power in Australia.

One of the reasons South Australia has been able to move away from coal is its success with renewable energy. Some 40% of the state’s electricity now comes from wind and solar power. Wind capacity is at 1500MW and solar can provide over 600MW. This in a state that requires only 3000MW during its peak hot summer days.

So it is definitely a good time to ask ourselves about South Australia’s future. The transition away from an energy-intensive fossil-fuelled economy is incredibly painful for those who lose their jobs, so what needs to happen to provide good employment opportunities in a low carbon future?

Adelaide’s Lord Mayor, Martin Haese is upbeat. He took the city’s Carbon Neutral ambition to COP21 in Paris and talked up the ability of South Australians to collaborate. Haese believes state and local governments are already creating the right environment for entrepreneurs and innovation to bring both the sustainable solutions and the economic opportunities. Haese has just visited China on a trade mission and is enthusiastic about the ability of South Australian expertise to help Qindao with its own climate change challenges.

Some of the economic opportunities lie with the energy solutions that will be needed to transform our electricity systems. The uncertainty caused by Federal Government policy, particularly the threat to reduce the Renewable Energy Target, has caused a 27% decline in renewable energy jobs from 2011/12 to 2014/15. South Australia has been particularly hard hit with a 60% decline since the peak in 2011/12. This at a time when renewable energy jobs rose internationally by 18% to 7.7million people worldwide.

However a commitment to 100% renewable energy will ultimately mean all energy production employment will be in renewables and there are early signs that the sector is more job-rich than traditional fossil-fuelled approaches. This study from the US, for example, tracks the decline in oil, gas and coal at the same time as a boom in energy efficiency, renewables and electric vehicles and discovers that jobs could be net-positive from Day 1 of a substantial energy transition.

In Port Augusta the repower campaign has been building momentum for the past 5 years, lobbying for Concentrated Solar Thermal with storage. This technology would be a game changer. Not only would it provide significant dispatchable energy to South Australia’s grid, the mirrors could be made locally by former automotive firms. The town is already proving the suitability of its resource with a solar thermal design for Sundrop Farms about to be commissioned and a combined wind and solar development starting through the approvals process.

Such is the promise of changing the energy paradigm. The size of South Australia’s economy is almost $100bn per year and $2bn of that is the money spent on electricity. Add a further $4bn spent on gas, petrol and diesel and think about what it means to produce all transport and heating needs from renewable energy. If Elon Musk is to be believed, this is the decade of the electric car and charging the car batteries could bring a nice balancing item to electricity grid control. One step further and we can imagine the billions spent on housing and cars also being channelled into low carbon versions of these products. Moving to a low carbon economy will certainly change a sizeable chunk of the economy.

The next question we need to consider is whether South Australia will be the economy making the low carbon products and services or will it simply import this future? A look at the trends for advanced manufacturing might hold the clues. Professor John Spoehr from the Australian Industrial Transformation Institute says the leading manufacturers in South Australia have been working toward advanced manufacturing for nearly a decade. This means everything from modernising management systems to the focus on higher value markets and parts of the value chain.

The World Economic Forum has started to champion a circular economy, recognising that resources need to be used in sustainable cycles by recycling products completely and continuously if we are to ultimately prosper. The discussion has started about how many jobs, both blue collar and white collar, can be completely replaced by automation. The advent of 3D printing offers the promise of distributed manufacturing – the products might be invented somewhere else but they can all be manufactured at the touch of a button locally. These are all trends that will shape South Australia’s economic transition. The key message here is that a state can’t become a renewable energy superpower if it is not actively attracting the economic activities to take advantage of abundant, cheap clean energy.

And finally, what sort of interventions are warranted by Government? South Australia and the ACT have both taken steps to demand local economic benefits in the purchase of low carbon electricity. This is a promising start. The Conservation Council in South Australia has explored the challenges for industry that are already being experienced and concluded that a roadmap is needed. You can download the discussion paper here and we welcome your views.

Giles Parkinson and the Lord Mayor of Adelaide will join us for a conversation about New Jobs in a Transforming Economy – a free public forum to be held in Adelaide on May 2^nd. Register Here.

Heather Smith is a climate change and energy specialist, working with the Conservation Council SA and the Adelaide Festival of Ideas Inc to kick start this important conversation.