I’d like to begin by acknowledging the traditional owners of the land and pay my respects to owners past, present and emerging.
Can I thank the CEDA for the opportunity to speak to you today. I’d also like to acknowledge the other speakers today: Lily D’Ambrosio (Victoria’s Energy, Environment and Climate Change Minister) Ingrid Southworth (Acting British High Commissioner to Australia) and Nigel Topping (the UK’s High Level Climate Action Champion).
I’d like to particularly acknowledge and thank Nigel Topping for asking me to speak today. Nigel is leading the outstanding work of the UK Government to bring together nations at COP26 next year. COP26 will be one of the most important global summits in 2021 – and an opportunity for nations to showcase ideas on accelerating climate action and prospering in a low carbon world.
This year has been, literally, like no other in living memory. COVID-19 has completely upended our way of life. Some state borders have closed. Curfews, lockdowns, and social distancing have been imposed to contain the spread of the coronavirus. These are difficult policies, alien to our idea of a shared, inclusive society.
These drastic measures to contain the spread of the virus and keep the public safe have hurt our economy. Many companies have deferred investments and deals. Many have been forced to lay off staff. Others have closed their doors. It is the biggest economic shock in peace time since the 1930s.
The next, and even bigger, challenge will be how to rebound the economy from this deep recession; to get the country back to work.
Rebuilding the nation
Australians have faced challenges like this before and generation after generation of Australians have risen to the challenge of their time.
Our great grandparents – the ANZAC generation – forged a nation on the beachheads of Gallipoli and on the sodden fields of the Somme. They managed our country through the poverty of the Great Depression.
Our grandparents defended the country from foreign attack during the second world war. They endured the horrors of the battlefield, the deprivations of curfews and rationing, and then returned to rebuild the country in the post war period.
Our parents lived through the Cold War, starring down the tyranny of the Soviet Union for the freedoms we enjoy today and imagined a freer more liberal economy which laid the foundation for the longest period of uninterrupted economic growth of any developed country in the modern era.
Time and time again generations of Australians have guided the nation through the crisis of the time to a more prosperous future. And they have done that by building for the future.
After the First World War, the Anzac generation delivered Bradfield’s grand vision; they built the Harbour Bridge, a feet of engineering, steel and stone which has framed Sydney for nearly century.
After the Second World War, our grandparents pursued one of the country’s most iconic pieces of infrastructure – the Snowy Hydro Scheme. Even today, Snowy Hydro epitomises the value of nation building done right. It created jobs for 100,000 workers and has delivered reliable, clean electricity into our homes and businesses for decades.
It’s a project that took a quarter of a century to build but will pay back future generations for centuries. It was the type of visionary investment in our future and it is the model for how we should think about the economic challenges we currently face.
If we are going to borrow vast sums from future generations, we need to invest it in future generations. I don’t want to see our children paying the interest on our debt, I want to see our children earning a return on our investment.
If we want to repay future generations, then we have to start building for their future. We have to create jobs, pull the economy out of recession and leave an infrastructure legacy for our kids. One that they’re proud we had the foresight to build.
Climate and energy is an area where we can invest for the future
We also need to focus our reconstruction investment on areas that are going to play to our emerging competitive strengths. One of those areas is in low carbon emission industries.
The rest of the world is moving on climate change. More than half the wealth created in the world comes from jurisdictions that have signed up to reach net zero emissions by 2050.
At the same time, some of the biggest companies in the world like Volkswagen and BHP have committed to net zero emissions across their own businesses and all along their supply chains. Major fossil fuel companies like Shell and Woodside are also shifting their focus from oil and gas to renewable electricity and hydrogen.
Recent history shows that those who innovate and grasp this change – not resist it – can upend entire industries, capture markets and create value in a way that few of their peers can match. The best example of this is Tesla which has gone from a start-up pioneer of electric vehicles to the most valuable car company in the US.
There are also real risks of doing nothing. If we don’t move then Australia could find itself on the wrong side of megatrends like rising carbon-based protectionism while other economies steal our march in new, clean industries.
We should be using this recovery to build those industries here. Not just because it’s good for the environment but because it’s good for the economy, and it’s good for the prosperity of future generations of Australians.
The most exciting development in low carbon technology over the past decade has been the dramatic fall in the cost of renewable energy. Solar PV has evolved from being a high-cost, specialist technology to landing on one-in-four roofs in Australia. It is, literally, everywhere.
We also need renewables at a utility scale. Earlier this year I announced nearly $110 million to develop the country’s first co-ordinated renewable energy zones in the Central West and New England. Renewable energy zones are modern day power stations, and an efficient way to coordinate our natural energy resources.
But as we all know, renewables are only part of the solution. We use energy all the time, but renewables produce it only some of the time. During cold, dark and still weeks in the dead of winter, or in the early evenings of summer heatwaves, electricity supply is already tight.
Solar and wind alone cannot keep the lights on. They need help. We need to be able to store the electricity they create and use it later. Our modern grid will need layers of electricity storage: technologies like fast-start batteries that can move energy from daytime to evenings, or sunny days to cloudy days.
It will also need what experts call “deep” storage: vast reservoirs of energy that we can call on at any time of the day. The best technology to provide this deep storage is pumped hydro.
Pumped hydro uses water as a battery, reversing the flow of its turbines to push water uphill when renewable energy is abundant and releasing it when it is not.
Pumped hydro can keep the electricity system going because when the sun isn’t shining and the wind isn’t blowing, water can still run down the hill.
NSW is well placed to be the home of more pumped hydro. In fact, there are about 20,000 reservoirs across our State suited to build pumped hydro. That’s an enormous opportunity right on our doorstep and one that the Morrison Government has already recognised with its world leading plans for Snowy 2.0.
Pumped hydro fits the mould of what a nation re-build should look like.
Currently, the Snowy Mountains region is a hive of jobs, and growth. Towns are being revitalised and investment is flowing into the region in levels not seen since the original Snowy Hydro Scheme was built. Over the course of the project, Snowy 2.0 will create about 4,000 jobs over the life of the project and help drive regional NSW out of this recession.
I want to see that potential unleashed across more of NSW.
Even with the great work happening at Snowy, NSW is going to need at least another 2 gigawatts of deep storage like pumped hydro to modernise our grid. And if we built it, we could create another 1,100 construction jobs and attract over $5 billion of investment into our State.
Now, pumped hydro assets are difficult for the private sector to deliver alone. All of NSW’s existing pumped hydro stations were built by Government. These projects are capital intensive, and delivered over generations. Many of the best sites for pumped hydro in NSW are still owned by Government. Now is the time for Government and the private sector to partner together to deliver our pumped hydro potential.
We need to work harder and smarter to expand our best reservoirs into giant batteries. Experience here in Australia and overseas shows that developing pumped hydro on dams works – adding valuable megawatts to the grid without compromising long term water security.
We need to provide long term certainty for investors so they can make long term investments in these long term projects. More certainty for investors means less risk allowing private capital to invest at lower energy prices for consumers.
Other sectors of the economy
And of course energy is only one part of this story.
Earlier this week I released the NSW Chief Scientist’s report into the opportunities for NSW in a low carbon economy. In that report, the Chief Scientist found that considering decarbonisation and building climate resilience in COVID-19 stimulus is critical to maximise the economic benefits of that investment. He identified 65 economic opportunities across the key sectors of the state’s economy, including services, energy, industry, the built environment, land management and transport.
The Chief scientist’s report gives foundation to what sustainable stimulus could look like:
- borrowing to fast track new hydrogen projects, and new low emissions industrial precincts;
- removing the barriers to electrification of cars with a strategic roll out of EV chargers around the state;
- working with our major industries to help them transition manufacturing to low emissions processes;
- working with our regions to generate multi-billion-dollar incomes from carbon farming;
- to building the renewable energy zones to power the economy of the future.
Now, more than ever, Governments of all sizes and colours should look closely at this advice and find ways to rebuild our country into a smarter, cleaner and more resilient place: one that can make the most of its competitive advantages in a rapidly changing world.
We are entering a critical phase of our economic history and we need to be bold, decisive and focused on the future. That is the approach Australians have taken in the past when they have faced challenges like those we face today.
After the Second World War, our grandparents had to rebuild the nation. They embraced the future, opened the country to immigrants and markets and were rewarded with a post-war economic boom that created the modern Australia we live in today.
Theirs was a generation that rose to the challenge of the times.
Now is the time for our generation to do the same.