Australia’s major industrial energy users could cut their energy costs by almost a quarter by switching to renewable supplies and could be key to an Australian manufacturing revival, a new research report has shown.
The total savings that could be achieved by a wide-scale shift to supplies of wind and solar would amount to as much as $1.6 billion per year, representing a 23 per cent cut to energy expenses, the report by the Australia Institute’s Centre for Future Work finds.
According to the research, these savings grow over time, and by 2050, a shift to powering manufacturing with 100 per cent renewable could cut energy costs by as much as 33 per cent, saving large-users an estimated $2.2 billion annually by 2050.
The use of cheap and abundant renewables to process resources into high value end products could revive Australian manufacturing, the paper says, helping to reorient the Australian economy away from a dependence on low-value resource extraction and back towards value-added manufactured goods.
These opportunities also extend to materials that will be required in a modern global economy, such as lithium used in battery storage, with Australia having a chance to establish itself as a leading supplier of processes lithium, copper and nickel, rather than simply exporting raw materials.
The analysis has been published by the Australia Institute’s Centre for Future Work, launched on Friday by economist professor Ross Garnaut, and found that Australia has a huge competitive advantage in the production of energy intensive products like steel and aluminium using renewable sources.
“There is a great opportunity to change the structure of Australian industry in ways that reduce emissions while also lowering costs and increasing global competitiveness,” Garnaut said.
“Australia should have a much stronger comparative advantage in energy-intensive industry in a zero-emissions world than it had in the fossil-energy past.”
The research paper found that Australia sat in a relatively unique category of countries that had a very highly emissions intensive economy, despite also having an economy where manufacturing was almost non-existent.
“Most other industrial countries are outperforming Australia on both reducing emissions and supporting domestic manufacturing. Across the OECD, only tiny tax haven Luxembourg has more emissions and less manufacturing than Australia, on a proportional basis,” the Centre for Future Work paper says.
“The claim that continued fossil fuel consumption is essential to the future of manufacturing is decisively refuted by this international evidence.”
“Australia is in the worst of both worlds: it is an extremely high emitter per capita, with a hollowed-out manufacturing sector.”
The report findings highlight how Australia is lagging behind the rest of the world with regards to decarbonisation, and how other countries are successfully supporting a shift to cleaner energy sources, while also continuing to grow their manufacturing sectors.
“Renewable power is already suitable for most manufacturing purposes, with current technological developments plugging remaining gaps. Even heavy manufacturers such as metals producers can use, and in many cases are already using, renewables to power their industrial processes,” report author and researcher at the Centre for Future Work Dan Nahum said.
“Transitioning to renewables-powered manufacturing is win-win-win. It enhances the international competitiveness of Australian manufacturing, it creates more good manufacturing jobs in the Australian economy, and it is a win for the world trying to reduce emissions.
“In a world coming to terms with economic and ecological realities, Australian policymakers need to stop pushing Australia backwards by propping up fossil fuels and put in place the policy and institutional support necessary to accelerate this inevitable energy transition,” Nahum added.
Ross Garnaut told the Stimulus Summit organised by the Smart Energy Council in partnership with RenewEconomy that Australia risked loosing its competitive advantages in resources and manufacturing if it failed to embrace the opportunities presented by a shift to renewable energy.
“It’s quite clear now that supply of large industrial projects from 100% renewables projects firmed by whatever technology is our lowest cost in particular circumstances is the low cost path to global competitiveness in a wide range of energy using industries,” Garnaut told the Stimulus Summit on Wednesday.
“This is especially important in Australia because Australia is by far the world’s main source of many of the mineral minerals that require huge amounts of energy in their processing into metals.”
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