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Members of the Technology Investment Advisory Council held a webinar to introduce consultation on the Low Emissions Technology Statement 2022.

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This video is a recording of the webinar from 6 December 2021.

Sarah McNamara

Hello, and welcome to the first public webinar on home soil since the Glasgow Climate Conference, where of course the second update to the Technology Investment Roadmap was released, and what a great event that must have been to be at. My name is Sarah McNamara. I am the chief executive of the Australian Energy Council where the Peak industry association for all of the generators and retailers of electricity and gas across Australia. Now, before we get underway, I'd like to acknowledge the traditional custodians of the various lands that we are meeting on. And of course, they are various lands because we are meeting online. I myself find, myself in Sydney and I am standing on Gadigal land. I pay my respects to elders past, present and emerging, and recognise Aboriginal and Torres Strait Islander peoples and their ongoing cultures and connections to the lands and waters of Australia.

I particularly extend that respect to any Aboriginal or Torres Strait Islander peoples who are in this meeting today. So this event is the next step in the Australian government's Technology Investment Roadmap. And as we know, the roadmap is Australia's strategy for a technology led approach to reducing our national emissions. And it's a really important driver of Australia's pathway to achieving the recently announced goal of net zero emissions by 2050. Now, our focus today is on the low emissions technology statement, which as we know is a rolling assessment of the challenges, the opportunities and the priorities that sit underneath the government's roadmap. What we would like to do today is have a discussion about the low emissions priorities and pathways that are set out in the current LETS and also inform the department and the panel looking ahead to the third LETS which will of course be released to around this time in 2022.

So without further ado, I'd like to introduce our panel members to you today who frankly need very little introduction as they are all very eminent people in the energy industry. But they are also members of the technology investment advisory council, which has advised on the development of this year's LETS. Now, the council is chaired by Dr Alan Finkel, who is also the special advisor to the government on Low Emission Technology. We also have with us today, Grant King, who is also a member of the council and a very well known figure in the energy industry. And Grant is currently chair of the Climate Change Authority board. And last but not least, we have Jo Evans, who is the third council member and panellist with us here today. Jo is deputy secretary in the Department of Industry, Science, Energy and Resources, and she is responsible there for both climate change and energy innovation.

So welcome to our panellists and thank you very much for joining us. Now, in terms of our agenda today, we'll first throw it to Dr. Finkel for about 10 minutes to do a scene setting presentation for us. And once Dr. Finkel has concluded his presentation, I will be moderating a Q&A session with the panellists. So thank you again for joining us today. I'm really looking forward to a stimulating discussion. And Dr. Finkel, I'll now pass to you for your presentation, setting the scene for our few future questions. Thank you.

Dr Alan Finkel

Oh, thank you, Sarah, for opening up and for chairing today. It's an important session. You wouldn't realise if you just looked at what's been happening for the last six weeks that we've been working hard for two years because there's been a lot of activity in the last six weeks. Most important, October 26, Australia got a target, a net zero 2050 target to achieve zero emissions by 2050. And I think this represents a huge economic opportunity for Australia and with potential benefit for all Australians. The policy challenge for us is to take advantage of the amazing work undertaken by our researchers, businesses, investors like those of you in the audience today and to leverage this capability so that we in Australia could be leaders and early adopters in this space. As Sarah alluded, the cornerstone of the Australian government's plan to get to net zero is the Technology Investment Roadmap, which is what we are here to discuss today.

The basic approach of the roadmap is very straightforward. It is to accelerate the development and commercialization of new and emerging low emissions technologies, to use government investment alongside early investors and adopters to build the early scale that will drive prices down. The roadmap I'm very pleased to say is an enduring process with the government committed to producing an update advised by the council and supported by the department to producing an update every year. I guess you could say that what we have here is an adaptive process, which is allowing us to review, refine and evaluate our progress to make sure that we are on the right track to achieving net zero by 2050. Inaugural roadmap was released last year and it introduced five priority low emissions technologies. I'm sure you know what they are. They were clean hydrogen, electricity storage, low emissions materials, in particular steel and aluminum, carbon capture and storage and the measurement of soil carbon.

Now we chose those technologies from a much larger list of technologies and we made our choices by applying a set of four filters. We looked for technologies with large emissions reduction potential, with large economic benefits, building on an Australian comparative advantage. And finally, we looked for technologies where the government investment or action can make the biggest impact. We also, for each of those five priority technologies set economic stretch goals, and these are ambitious, but realistic goals to bring the priority low emissions technologies to cost parity with existing high emissions technologies. If I could put it differently, the goal is to eliminate the green premium. Cost parity, which is what you get when you eliminate that green premium represents a tipping point where the low emissions newcomer outguns the high emissions incumbent in the market without further government support. With cost parity, we can be confident that we will achieve sustainable markets.

So the government released the first update to the roadmap, as Sarah said, at COP26 in Glasgow on the 2nd of November. The existing priority technologies continue to be supported. It's important for me to say that because the intention with these annual updates is never to do a U-turn, but to fine tune the direction that we are travelling. So the existing priority technologies continue to be supported. And in addition, we have introduced ultra low cost solar as a priority technology. And that has a stretch goal for solar electricity at the farm gate, if you like. So that's un-integrated, but the core production cost down to $15 per megawatt hour, which is about a third of the best prices you would be seeing in Australia at the moment. So it's pretty aggressive, but we believe it's achievable. In addition to adding that new priority technology, we added a whole new category called enabling infrastructure, and that started off with two entries.

And the first is battery charging and hydrogen refuelling stations to support electric vehicle mobility. Really important and it's new on the agenda. And the second is recognising as an enabling infrastructure the importance of enhancing the digital control systems in the electricity grid. We call it for short, the digital grid. To enhance it with management systems and capabilities to support rapid deployment growth of solar and wind electricity. The update also introduces a number of policy actions the government will take. One is called Solar 30 30 30. That's an initiative that is being led by ARENA, an initiative to drive down the cost of solar to achieve 30% efficiency at 30 cents per installed watt by 2030, hence Solar 30 30 30. The government is assessing the infrastructure needs by building on the national hydrogen infrastructure assessment, which has been ongoing for a couple of years now. And the expanded assessment will include looking at ways to reduce costs by co-locating hydrogen and energy storage and CCS infrastructure near the manufacturers such as steel and aluminium companies.

Another policy initiative is to invest in seven hydrogen industrial hubs to concentrate demand for hydrogen in geographic regions so to reduce costs. So bring maybe one or two producers together with several users, and that's supported by more than $460 million of Australian government investment. There's a commitment to develop. It's not developed yet, but a commitment to develop a voluntary zero emissions gas market, which we believe will increase the early demand for clean hydrogen into the distribution grid, the gas distribution grid. Not just clean hydrogen, but also other zero emission gases, for example, methane from waste. And finally, let me mention that there's an impact evaluation framework that has been sketched out for the Technology Investment Roadmap itself. And we've identified the metrics that we will use to track progress every year because it's really not adequate just to talk about what we're going to do, we need to measurably prove what we've been doing.

So the purpose of today's webinar is to kick off a major consultation process for the update next year in the Low Emission Technology roadmap. Speaking as the chair of the advisory council for Minister Angus Taylor, but for the government in general, we want to learn your ideas as the experts who are representing industry and investment and technology development and community values. We want your help to identify the government actions and investments that will support innovation and reduce costs as we drive our growing economy to net zero. So this event is a kickoff and today we're opening up the formal submission period through the website, a government website to provide the opportunity for everyone to provide a written submission. Sarah, I'm now delighted to hand back over to you to facilitate what I'm sure will be an insightful and entertaining discussion. Over to you.

Sarah McNamara

Thank you so much, Alan. That was a great scene setter for our Q&A session, which will start now. Question came in from Mick Buffier at Glencore. Under the technology roadmap, is there a true technology neutral approach being adopted, i.e., blue hydrogen from gas or coal coupled with CCUS or GHG abated electricity being given an equal footing. And Dr. Finkel, I might put that question to you in the first instance.

Dr Alan Finkel

Sarah, I would say that it truly is technology neutral in the way it's written and presented. It's certainly my belief and I know it's Minister Angus Taylor's belief and it's shared by my colleagues. The challenge here is to reduce emissions into the atmosphere of greenhouse gases. The challenge isn't to punish this technology or favour a different technology. So taking a couple of those examples, green hydrogen versus blue hydrogen, there's a raging debate out there. To me, it's based on colours and technologies rather than the only thing that counts, which is atmospheric emissions. So instead of focusing on, I don't like this technology and I do like this technology or vice versa, what's important is everybody should be supporting the government's intention, which was declared through the National Hydrogen Strategy to develop a guarantee of origin scheme so that a purchaser of hydrogen knows what they are getting.

The reality is you cannot. There is no feasible test, physical or chemical test of hydrogen that will tell you anything about its history. So the only way you know that you are getting hydrogen that was made with zero or very few emissions of carbon dioxide or methane in production is through a well to gate system to track what went on. And that's being developed collaboratively with, I don't know, 15 or 20 other countries through the IPHE, The International Partnership for the Hydrogen Economy. That's what really counts. Let me give you one other example and I'll wrap up. Most of us believe that the future of green steel is to replace metallurgical coal with the combination of renewable electricity and hydrogen, and that's where all the effort is going at the moment. But there are a few scientists who are talking about a molten oxide electrolysis system that completely replaces all chemicals and just like aluminum smelting, uses electricity to convert the iron oxide into pure elemental iron.

Well, of course we would be open to that if through research and development and translational research, it starts to get legs.

Sarah McNamara

Fantastic. Thank you. The next question, Jo, this next question for you to you, it's from Paul Baker at Agile Innovations. And Paul's asked, is the principle of technology, not taxes, a false mantra and what about reducing existing taxes? I.e., have we thought about reducing the tax on imported vehicles to increase choice for consumers?

Jo Evans

Thanks, Sarah. And good to be here. Look, let me tackle that in two parts. So firstly, we would absolutely be interested in looking at reductions in taxes or barriers, other barriers to the uptake of technology. I think that is fair game for what we are looking at generally to look for ways to stimulate technology take up. But for the first part of the question about, which I think really goes to what does this catchphrase, technology not taxes, that the government is using mean? And we've had quite a lot of discussions in the panel about this to date and no doubt we will continue to debate it. But the position of the current government has been very clear and they laid it out very much so in the plan that was published for the long term emissions reduction plan and the commitment plan, which included the commitment to get to net zero by 2050.

But the clarity that they have in there is that they are really not interested in policy mechanisms that impose additional costs on existing technologies. So that's where the tax concepts comes in, but they're also talking there about policies that would force in technologies in a way that doesn't rely on them being effectively simply cost effective. So the technology not taxes mantra, as you've called it, is really about saying we are really going to zero in on and focus on reducing the cost of the technology and we won't be using mandates or subsidies or other sort of punitive measures, that's what the government is saying, to drive those costs down or to drive the deployment of those. So hopefully that answers the question.

Sarah McNamara

I think so. Thanks very much, Jo. The next question, Grant, I think it might be your turn. Tania Urmee has written, in the roadmap, it was mentioned that the government follows an enduring process to invest in low emissions technologies if the technology has the biggest economic and emissions impact. From past experience, only big industry is able to receive this type of funding and the small and medium enterprises are always falling behind. How does this new investment initiative help to promote emerging technologies by SMEs?

Grant King

Well, thanks again, Sarah. It's great to be here and a great honour on a panel with Jo and Alan. And Tania, if you're on the audience, hopefully my comments will go at least in part to answer your question. I'll make three comments. Firstly, the roadmap process itself does not bias in any way awards big, small or anything. It's a process that's designed, as Alan indicating through his comments, to set priorities and targets for particular technologies. The second point I'd make is that in so doing, I think it's a benefit to smaller enterprises in many ways because the scanning and analysis and targets that are set provide information in many ways is possibly beyond the reach of many small organisations that do on their own. So I'd argue that the technology roadmap process plays a very, very important informational role in expanding the sense of opportunity to organisations of all sizes. Be they research organisations, commercial organisations, large organisations, or small organisations.

Having said that, the third point I'd make, which I think hopefully does respond to your question is that I understand that at the end of the day, getting the capital that's necessary to commercialise some of these opportunities can be very difficult and that process can seem to bias the big companies. And as Alan, again, indicated in his opening comments, we're quite clear about our criteria within the roadmap process and some of those criteria speak to big potential to impact on reducing emissions and big potential to contribute to the Australian economy, to GDP growth in the Australian economy. So these are about big opportunities at the end of the day. That's one of the lenses that we use to filter opportunities. The challenge for many small organisations, where we actually most of the creative work done in Australia and in my experience, a lot of the early stage innovation is done in our, I'll call it SMEs, but it could be small research organisations and start-up businesses.

The challenge is as you go through the research and into the early stage commercialisation phase, how do you then scale this up to have the impact that we really want to see these technologies have, and that does take big capital. And therefore it is often necessary that SMEs or any other smaller organisations that go on that journey often finds that the best way to do that is to ultimately partner with or participate with large organisations that can mobilise the capital. And my final comment would be that that shouldn't therefore be a challenge or an inhibitor or a frustration to having a go. In fact, it's an opportunity that just needs to be tapped because I can assure you from the work I do, that there are a lot of very large organisations looking for very large opportunities to deploy very large amounts of capital on very good ideas that are ready to be commercialised.

Dr Alan Finkel

Sarah, can I just add to that? I 100% agree with everything Grant said. I'll just point out that one of the recent announcements from the government is just for a billion dollar clean tech venture capital fund and that's clearly directed at small start-up companies. And then there's the funding that ARENA puts into small companies for demonstration projects as well. So there are mechanisms.

Sarah McNamara

Jo, I wonder from a government perspective, if you'd like to provide any insights into the process when government's considering SMEs and these initiatives.

Jo Evans

Thanks, Sarah. So not so much on the SMEs. What I wanted to just make a comment on though was this clip about the enduring process. What that is actually referring to is the constant coming back to review what our priorities are and how we're going on the roadmap itself. So this process of having the annual statements each year is all about setting up; that's what we call the enduring process. So that we keep this conversation going. We keep it going with industry, we keep it going with the research organisations and we keep it going with the financing organisations so that we can constantly come back and make sure that the way we're setting the priorities and the approach that we're taking is actually being impactful. Thanks.

Sarah McNamara

Thanks so much, Jo. Jo, I might come to you with the next question as well, which is from Sam Mella from Beyond Zero Emissions. And Sam has said that the identified CCS regions and projects don't actually necessarily align with the existing industrial hubs, those in the Hunter and Port Kembla, Gladstone, Whyalla, Kwinana, or cement plants in Gladstone, Adelaide, Railton or Berrima. Given that the distance to suitable CCS reservoirs is a key cost factor, won't this mean that CCS for existing heavy industry and cement production will not be very competitive?

Jo Evans

Thanks. And Sam, if you're out there, it's a great question and probably one of the ones that we are struggling with because you've put your finger right on the nail, if you like, or right on the button, which is that, yeah, these things are not always located in the same place. So what are we going to do when we have to try to find ways of tapping into these technologies to make it genuinely useful for all of the existing industries. And so I don't actually have an answer for you other than to say these are the conundrums that we are working with. The stretch goal that we have for storage at the moment doesn't take into account the transport part. So we are looking at making the storage part as low cost as we can so that that opens up the best opportunities. And maybe just to pick up, because there's been a couple of questions come coming in in the Q&A about carbon capture and storage and why would we focus on it for other reasons.

And I do want to make sure we get the point across that it's a little bit like the technology neutral conversation we had at the beginning. We have all of these technologies on the table and frankly, carbon capture and storage, even if right now it feels like it's going to be high cost or it looks like it might not be competitive, this is the kind of technology that we really need if we are going to be able to meet the Paris goals of two degrees and 1.5 degrees. All of the international modelling assumes high rates of use of carbon capture and storage. Australia is extremely well placed to be a really great global contributor to this particular technology. So even if there are still unanswered questions and still things we need to find out, it's got to be a priority for us to have a go at getting that technology off the ground and getting it to work.

Sarah McNamara

Thanks so much, Jo. John Beaver actually on that question of CCS asked if the inclusion of CCU was complementing CCS in the 2021 statement, and also the minister's references at Glasgow that CCUS is one of the 2021 priority technologies. Does this mean that CCUS is indeed a priority technology rather than carbon capture and storage? And if CCUS is now not a priority technology, then John wants to say that he thinks it definitely should be in 2022.

Dr Alan Finkel

Do you want me to take that, Sarah?

Sarah McNamara

Yes, please.

Dr Alan Finkel

So there's growing awareness of the importance of EU in CCUS, but at the scales that we're going to need eventually, according to the predictions of the United Nations IPCC and the IEA carbon capture and doing something with that carbon dioxide, we'll need a mix of both. Utilisation I don't think will ever give us the scale of permanent sequestration that we need, but it's really important. And I was really delighted to see that in the start-up pitch event in Glasgow, there were 2,500 companies that through a process of filtering started off with 2,500 companies and got to the final competition and it was won by an Australian start-up, and I'll get this wrong, I think, but it's Mineral Carbonisation International. They're based in Newcastle, and that's a CCUS company. They actually use carbon dioxide to make a form of plaster board and a lightweight cement. And it's got enormous potential and it was recognised by the COP26 pitch event as being such.

So look, we do recognise CCUS as being important. I'm not aware where it's been done at scale, where CCS has been done at scale. So it's very much a watch this space. We're extremely open to suggestions in that space.

Sarah McNamara

Fantastic. Thank you. Thank you, Alan. I might move on to some questions on another really hot button topic for this panel, which is hydrogen. And perhaps I'll ask you this question as well. Alan. How is the challenge of storing hydrogen being solved? And when will we be able to start exploring commercial hydrogen opportunities?

Dr Alan Finkel

So I think my answer to your first part of that question is basically so far, it's not. Storing hydrogen is a huge challenge. Whatever we're using hydrogen for, whether it's for refuelling vehicles or industrial production of ammonia and things like that, you really want to be able to turn and the electrolysers on and off when the sun's shining and the wind's blowing or when you've got some other grid based reason, but many processes need constant access, especially if we're using hydrogen for long duration electricity storage, often called seasonal storage where you are using perhaps excess, virtually free electricity off the grid to make hydrogen so that you can then produce electricity months later when you run into a period of days or weeks of low wind and happens to be in winter and so there's not much sunshine. So we are going to need massive quantities of storage. In some countries, in American and particular in Texas, they're fortunate that there's good co-location with their cities of underground salt caverns for storage of hydrogen.

We do have some salt caverns for storage, but they're not well located. So we have to develop storage technologies. So I've seen some really clever Australian proposals who are doing underground vertical shafts, cylindrical storage where the bedrock actually gives you the strength you need to contain the high pressure hydrogen, but there's a long way to go. And I would like to see... it's quite possible that as we go forward, the priority which currently is called energy storage or electrical energy storage focusing on firming and in the first statement that was very much daily cycling, the role of peaking open cycle gas being replaced with batteries, we are going to expand our investigation during the course of this next year to look at long duration storage and hydrogen storage, quite likely will be part of that. The second part of your question was on commercialisation. It's going to take time. We need a lot of focus on the demand side.

Australian companies are just poised, pent up excitement to produce, produce and produce, but globally, the development of demand takes longer. The low hanging fruit is to get companies to replace grey hydrogen, that's hydrogen produced for the last a hundred years from methane, natural gas or oil or coal without any carbon capture and storage, to replace that with clean hydrogen. But hydrogen for trucking and shipping and other processes and steel making will take time to develop. So we have to focus on the demand side, both domestically and through our international bilateral partnerships. We need to build the demand into which Australian companies will supply hydrogen.

Sarah McNamara

Thank you so much, Alan. Grant, this next question might be one for you. It's from Chun Hin Ng of BZE. He said that the assumptions for blue hydrogen rely on a gas price of around $5 a gigajoule, which doesn't seem realistic. And in addition, given that projections show renewable electrolysis to be competitive as early as 2028, which is only about six years from now, perhaps it would be more prudent to target investment on electrolysis and make sure Australia gets a head start on the skills and infrastructure and technology to go along with it rather than in invest in what might become stranded assets. Grant, do you have any thoughts on that?

Grant King

So firstly, from a tech roadmap process, we try very hard not to pick one technology and say that will be the winner. The technology is a competition like many other things, and so we'd be keen to see multiple winners come through in that respect, firstly. Secondly, $5 for gas, I think one of the interesting just pure commercial dynamics is that if we find we're using natural gas or methane and markets for that resource to decline, you'd expect the price to fall. So I don't think the $5 or $8 or any price is necessarily the right price to base that technology on. The third point is that to the extent that you said the implied price of natural gas today is somewhere around 8 or 9, $10 a gigajoule in the domestic market, that's not its cost of production. Its cost of production is much more like $3 or $4 or $5. So the net back price reflects supply and demand and the highest value used to natural gas, which is currently LNG. And if that demand fell away, other high value users might emerge.

So I think it is very sensible to continue to explore all avenues for hydrogen production and not at this stage of any technology journey pick one particular process and bless it and say that's the best way. Everything needs to be at the table. We need everything to work.

Sarah McNamara

Yes. I think it'd be very difficult to pick a winner and have confidence you'd get it right at this early stage, isn't it? Thanks so much, Grant. Jo, I might put this next question to you on the subject of procurement. Could you tell us how the Technology Investment Roadmap impacts procurement from a government perspective?

Jo Evans

So again, two ways of looking at that, we would hope that by setting out the priorities that are in the Low Emissions Technology statement, that sends a broad signal right throughout the government sector, but also for industry about where we're focusing on and how we would like to push the technologies forward, which might encourage all of us to take slightly different approaches to procurement as we go through. But nonetheless, the underlying philosophy of what we're doing here is to try to drive down the costs of the technologies, to the point where they actually are commercially attractive in their own right, where they would be in, I think the way that the minister often puts it is they would be the natural choice of an economic actor. And so in that sense, you don't need to have a formal procurement policy in order to move them along because that's the way that people should just make their decisions anyhow.

So that probably brings it then back to the second part, which would be, well, government procurement, it's often touted as a way to pull through different types of products or technologies. But again, that would fall into this sort of territory of if it actually genuinely makes sense, then you would see the government or Commonwealth procurement starting to work in that area. But it doesn't quite align with the technology not taxes approach, but the government has laid out to say we're really going to rely on things getting down to that cost competitive level first.

Sarah McNamara

Thank you. And can you tell us, Jo, how is the LET roadmap going to link to international collaborators and how would this be supported, do you think?

Jo Evans

Thanks, Sarah. It's another great question. We have a team of people in the department who've been working incredibly hard. I do want to acknowledge Rachel de Hosson here. She'll probably be squirming as I do that. But look, we've got a team of people who are working on international partnerships, supporting Dr. Finkel, who is the special advisor low emissions technologies to the Australian government and has been leading the work that we're doing with a whole range of countries. So we are absolutely going to be using the tech roadmap to inform the way that we engage on those partnerships to find practical technologies, practical projects that we can do either on the ground, in Australia or in those partner countries that help to move the priorities that are in the roadmap forward. So it's very much shaping the way that we will engage in a bilateral way. And similarly, we are using the roadmap to frame the way that we are going to engage with the multi lateral forums that exist.

And many of you will know of them. So there's the Mission Innovation framework and the Clean Energy Ministerial construct. Both of them are very present at the UNF. You'll see it at the conference of the parties and things like that. So we will definitely be using this roadmap and the statements to shape the way that we engage in those and prioritise our activities there too.

Sarah McNamara

Fantastic. Thanks, Jo. Grant, I might touch on now a question just relating to how we are going to drive down the costs of technology. And this is a question from Mike Straughton, who I hope is on the line as well. He wants to know who you think should own and operate grid-scale storage. Currently, there are a number of schemes where the proponent is a gen-tailor, but should Transmission Network operators be incentivised to develop storage and how would the AEMC, that is the Australian Energy Market Commission, need to facilitate this?

Grant King

So I suspect my answer won't surprise because again, I wouldn't argue that any one organisation be mandated with the task. I think what the roadmap process and government in particular occupy its with amongst other things is what processes and signals exist for people to invest. And that's one of the things that we should be focusing on. Having said that, I'm what you might think I was, an in front of the metre person. And I say that because we have to envisage a system which has a very, very high level of renewables, but as Alan indicated earlier, has a real challenge around what he referred to as seasonal storage or some refer to as deep storage. And therefore an investment in storage which may provide or require an amount of capital to provide somewhere not far off the system peak to actually firm it during those periods. And that's a staggering big amount of capital. Now, the reason I'm an in front of the metre person is that the system peak is less than the sum of all the individual peaks and that's the economically efficient way to fund that really large scale storage.

Now, the comment I would make is that if you do start to think about mandating a particular organisation, it begs the question about regulated or unregulated. There would be a tendency to associate transmission with the possibility that should be rolled into the system and the cost. And when I say smeared, applied across the system, if it was operated on a contestable basis, then it ought to be invested in by those organisations who can best manage the risk of making that investment. Look, my personal view at this stage is that we're in the early stages of that journey. We are seeing some fairly significant investments in large scale storage. It's at the shorter end, it's at the one, two, four, eight hour end. We've still got a big challenge to get to that deep or seasonal storage. But my view at the moment is it ought to be open to all parties to invest in it. And again, it's too early to pick one and say this particular group should be the one that's mandated with developing that particular, not technology, but that particular opportunity.

Sarah McNamara

Absolutely. Thanks so much, Grant. Now we've touched on the hot button issues of CCS and hydrogen. I might move on to another very topical question related to nuclear. And perhaps to the whole panel, I'll put this, not withstanding the current legal barriers to developing a nuclear industry here in Australia, why are, and I should say this question is from Martin Thomas Dulhunty Poles Pty Ltd, who I hope is also on the line. But Martin wants to know why are small modular reactors placed in the list of the low emissions roadmaps emerging technologies, but indeed, so near the end of that list of prospective technologies? Is not nuclear power generation, especially via SMRs amongst the most promising, clean and safe of all proven low emissions generation technologies we could exploit? It's a very loaded question there. I'll perhaps let each of you give an answer to it.

Dr Alan Finkel

Well, I'm willing to start if Grant and Jo are willing to back me up or correct me or whatever. It's just a very difficult space. There are many community and social licence issue around nuclear to start off with. And Australia, I think in the bipartisan fashion back in the 1990s, decided not to go down the nuclear route. And my sense is that public opinion is changing. It's more inclined towards nuclear now than has been in the past, but it's nowhere near there yet and it's just difficult to have that broad discussion. What's making a change is people's greater concern about carbon dioxide emissions than everything else. And if you look at it purely from an electrical and emissions point of view, nuclear electricity is just wonderful. It's got zero emissions in production, carbon dioxide and methane emissions. It's got a relatively small resource footprint per 100 megawatts or whatever it is that you're going to count it against.

And it's got all the electrical characteristics that you would desire in a big system, buzzword such as synchronous generation and inertia and system strengths, all the things that you want. But there are serious issues that could be lined up to argue against it. We don't know what the cost is. There's just no doubt that the old fashioned or the current generation of big nuclear power systems are too expensive to operate because of the overlay of environmental and safety requirements. But as the question that Martin said, there's a movement now towards SMR, small modular reactors, the idea being that the reactors are built on a production line and so you get the cost benefits and the quality benefits. You only have to go through the licencing costs once. They're not really small in the sense that you, Sarah, or I might think of small. I think 300 tonnes and 60 or 70 megawatts, but they're just small enough that you can get them from a factory onto a two-lane highway on 120 wheel flatbed truck and take them to where they're intended to be used.

And the indications are that the price per megawatt hour of these new generation of reactors will be not unreasonable. I say it carefully, they won't be cheap like solar, but they don't have integration costs and so it really depends on where the system has most need. And if it's a combination of firming and seasonal storage and everything else that is adding to your costs, well, then even if nuclear is 60, 70 or $80 per megawatt hour, compared to much less than that from solar, it's not out of the ballpark compared to what we're used to. And because it doesn't need all those extra integration costs, it might be reasonable. It's low down on the emerging list because, first of all, the list is not a prioritised list. It's just a list of emerging technologies. Think of it as a watch list, rather than an emerging technology list. It's a mixture of things that have legs and those that don't quite have legs yet.

I think the fact that it's in there and there's a box to give it some consideration is effectively opening the door for some conversation and that's a good thing to have at this time.

Sarah McNamara

Absolutely. And I think you are absolutely right, Alan, that we should be focused on the small modular reactors rather than the prospect of large scale plant having seen the cost blowouts. The Hinkley Point, I think it is in the UK, we certainly don't have the time or the money, I don't think, to spend on those sort of plants here. So SMRs might be the way to go if we can clear the legislative and the social licence barriers that are still here. Because of course in Australia, a lot of people, when they think nuclear, they think of Chernobyl and Fukushima and the Simpsons, and they're not necessarily very positive examples. We need to talk more about what a great clean source of energy nuclear can be in the right circumstances.

Grant King

Can I perhaps add just a couple quick observations to it? Just to step back from Australia and look at it globally, I think people are increasing understanding that the global fleet nuclear as is today does need to be kept operating. If it operates safely, it would hugely increase the challenge of decarbonising power generation if the world was to walk away from that fleet. I think you can see in countries like Japan, which have had issues that they're managing discussion and they will bring, I think, a substantial amount of that nuclear fleet back over time. And so the world will continue its work with nuclear. I think the third point is, and as Alan indicated earlier, again, one of the criteria we use is what Australia will bring to the table, whether we'll be technology shapers rather than technology takers. And I think nuclear and SMR is very clear example where will be a taker of technology, we are not going to drive that technology.

So with that world desire or need for nuclear and the role it can play for all of the reasons that Alan indicated continues to grow, then I think there may well be technology choices available for us in the future. But right now, we would not be developing that technology within Australia. We would not a maker of that technology. As to the Australian system, the prohibition is a complete disincentive to economic activity, as Alan's indicated, or activity by the private sector. And so the key debate is a public debate and my personal view is it's not just combined to SMRs, but it really should expanded to a whole nuclear fuel cycle because from a resource point of view, we have resource and from a technology point of view, it might surprise people to know that organisations like CSIRO and some of our universities have world leading technologies in some areas of that field cycle and we shouldn't in my view resolve from climbing that technology leadership in areas where we haven't.

Dr Alan Finkel

And Grant, you'll recall there was an excellent review done on the fuel cycle, a royal commission in South Australia about three or four years ago. And as clear as the case was, it still didn't pass the social acceptability test. So this will take time. It's really a question of are the greenhouse gas benefits, which have manifested clear sufficient to sway people to give open consideration to nuclear?

Sarah McNamara

Fascinating. Thank you all. Look, I might actually move now to the live section of our Q&A because we've got almost 200 people on the line and there's lots of people who have been plugging in some really great questions. Some of which I think we've been able to answer in real time, which is great in writing, but perhaps I'll put up the discussion in some of those questions that are coming in. The first one from Laura Simes, what scope is there in the next plan, I imagine the next iteration of the LETS, to step up real world deployment as part of the plan, noting that mass deployment is one way of getting costs down?

Jo Evans

I'll take it on and I think if I'm right, this is kind of getting at the same question that Peter Ashman is asking there about what he's called the chicken and egg of how do you get cost reductions down without mass deployment. So I think in a way, we could tackle both of those questions. And it goes, again, a little bit back to the explanation I gave earlier about where's the government's focus. And they very much said they want to focus on the research and development and the development of these technologies so that we can drive the costs down and not so much interested in mandates and subsidies and so on. So what is already have happening in that area is you've got ARENA and the Clean Energy Finance Corporation, and a lot of investment actually also from the states and territories into the first stages of deployment where you can de-risk projects and really bring those sort of first stage costs down.

And the anticipation is that with those learnings, it's actually the market that picks up from there and starts to drive it. So whether there's scope in the next plan to do anything to step up the real world deployment, I think, again, it comes down to what are we doing and have we got the costs down far enough yet? So it's a tricky question. There is a bit of chicken and egg there, but the intention is for us to focus on the R&D side of the fence and not so much on the deployment side because that's the part where we're really hoping that the market itself will just step in and take it on.

Sarah McNamara

Thanks, Jo. I might move to a question from Paul Baker who's asked, what is the government going to do in all the other high mission contribution areas not covered by this technology development roadmap, e.g., transport, which is around 20% of Australia's emissions.

Dr Alan Finkel

Go on, Jo.

Jo Evans

Do you want me to go again, Alan? Okay. I mean, I guess for a start, transport's actually covered by a number of different government programmes at the moment. It's covered by the Emissions Reduction Fund. It's also supported the recent release of the future fuel strategy, where the focus is, and it becomes a little repetitive in a way to talk about it, but the focus of the government is on providing the infrastructure that will enable the uptake of those vehicles without there being barriers to them. And to acknowledge that for the cost of the vehicles themselves, Australia is not likely to be the place where those big cost reductions happen. Those are probably going to happen overseas. And so the best thing we can do is to be ready. Have the infrastructure ready for that uptake, which will happen of its own accord once the costs come down to the levels that we anticipate. So there is already a strategy that's out there on the future fuels side of things to cover transport.

We've also got some programmes that look at the heavy vehicles. Hydrogen has a role for the heavy vehicles and transport as well. So there's actually quite a lot of activity happening on transport, but in the context of the Low Emission Technology roadmap, I guess our focus is on the things where the effort and the investment in the technology itself, if we can do that in Australia, those are the ones where we want to focus on where the impact will be in Australia and globally. But we are choosing things where when we invest the effort, we've actually got a real role to play in driving those technology costs down.

Sarah McNamara

Fantastic. Thanks Jo.

Dr Alan Finkel

Sarah, can I add a little bit to that? Jo outlined the things that we've already got in mind around transport, but this is an opportunity for people to make suggestions. We don't need the suggestions right now, but please write in, give us suggestions in areas of transport and some of the big ones we haven't thought yet about, but some we have. So for example, aviation, really big challenge. And for that, there's a lot of interest. Qantas has expressed deep interest in this in sustainable aviation fuel, SAF. It's also sometimes SAF, standing for synthetic aviation fuel. But basically the world has to do something and long distance aviation is of particular interest to Australia because of our geographical position and our propensity to travel. And whether that will come from clever utilise of biofuels, or it's a CCUS application where we're taking carbon oxide, hydrogen, and making hydrocarbons that can support long distance travel, or whether it's directly using hydrogen, which most pundits predict will be fine up until a few thousand kilometres travel, but not for those long distance planes carrying 400 passengers that take off in Melbourne or Sydney and land in London.

So a lot of work to be done on that. In the maritime field, the big merchant fleet of 60 or 70,000 ships that are ploughing the oceans, lot of interest in using ammonia that is derived from hydrogen to power those ships, and the bilateral partnership we have with Singapore is a single topic. It's exclusively about decarbonising maritime operations. That's still on transport, but finally, in other areas of the economy, agriculture is a huge one. And we've already flagged in the existing Low Emission Technology roadmap that we're going to give deep consideration to feed stock supplements in other ways to reduce the enteric fermentation, which is literally the belching of cows and sheep that leads to methane being emitted. And people's feedback on what we can do to promote or to ensure that that kind of technology is practical because it's got a lot of challenges would be very valuable as we are trying to develop our thinking around the next Low Emission Technology roadmap.

Sarah McNamara

Fantastic. Thank you, Alan. I might move now to a question from Brian Spak who says that Dr. Finkel mentioned the roadmap, including the use of hydrogen or renewable gas in the gas distribution system. While there may be a role for hydrogen or renewable gas in the existing gas transmission network, all of AEMOs, thats the market operators scenarios for achieving two or 1.5 degrees of warming include large scale building electrification. Why would we bet on a new technology to decarbonise buildings connected to the gas distribution network when there are existing low cost solutions available such as heat pumps?

Dr Alan Finkel

Grant, you're a gas expert. You want to have a go with that? Look, to me, I'm happy.

Grant King

So I'm just looking at the question again. I wasn't expecting that, Alan, but I think my quick answer is going to be scale. The renewable gas in the existing gas transmission, I presume you're referring to biomethane. Question refers to biomethane, for example, and as a separate responsibility, I'm involved with Sydney Water. And look, it's a very interesting and real opportunity, but it's not probably the scale that's going to make a vast difference. And the other comment I'd make is that, and I'm puzzling over this because there are many, what we might think of as renewable fuels, biofuels, biomethane, bio fuels, but they still have to be combusted so they're not entirely carbon free. And so there is a question of net zero getting to the end of that chain because of the combustion process as well. So I was waiting for you to answer that question Alan.

Dr Alan Finkel

You added perspectives that I wouldn't have, so that's good. Look, as Grant, the questioner. There's an incredible distribution network for our big cities for distributing natural gas and all those pipes at the distribution level are compatible with a hundred percent hydrogen. So a number of studies have argued that it's cheaper to build up our ability to inject hydrogen and replace natural gas in those networks rather than to put in the extra poles and wires to deliver the electricity to heat our buildings, especially during winter. And so it's a big energy load during winter where the houses will not have enough solar panel electricity during the day to do the building heating. So there's an economic argument that it could be cheaper to use hydrogen. As we said at the beginning of this discussion, our approach is technology neutral. So why would we rule out something that many engineering studies have shown could be the best, most economical approach to replacing the natural gas distribution network just because of a study that AEMO has done.

Or it's not even a study that AEMO has done, it's an approach that AEMO as the electricity operator has done. I think it's way too soon to rule one way out or the other.

Sarah McNamara

Thank you. Thank you, Alan. I might just pose one last question before we wrap up so we can finish on time, but Errol Smith has written to the panel, does the panel have a view on climate tipping points and should negative emissions energy technologies be supported?

Grant King

Short answer is yes.

Dr Alan Finkel

Yes. Jo, do you want to perhaps talk about the climate bit and I'll talk the negative emissions?

Jo Evans

Sure. So we don't have a particular view on a specific tipping point. We really work with the science as it comes through from the IPCC and from the CSIRO and from the Bureau of Meteorology. So the panel doesn't have a separate view to that on the climate tipping points. But look, any technology that can help keep emissions down because every reduced emission is a better emission, so any technology that we can use to get emissions down is definitely part of the things we want to be considering. So Alan, back to you...

Dr Alan Finkel

Thanks, Jo. So one of the ones that's on our watch list is DACR, direct air capture and removal, which really got a lot of headlines about three years ago when the United Nations report came out on the impact of increasing temperatures and said, hey, we really have to do something. Direct air capture is where you use electricity, solar and wind electricity. It's got to electricity because it's a big job to bring air to membranes of some kind to capture the carbon dioxide and then just bury it. You can utilise it to make synthetic aviation fuels or other building materials, but at the volumes that we are talking about, you would have to bury it. Huge opportunity for Australia because we have, as was already mentioned, a lot of carbon storage sites, not always perfectly located with industry and other sources of carbon dioxide, but air is everywhere. And so you can build direct air capture units right where you've got your optimal carbon storage sites, and all you've got to do then is get the electricity to them.

And in Australia, you can find carbon storage sites which are in high radiation, low utilisation land zones. So we think that there's potentially an enormous opportunity for Australia to be a player in the direct air capture and removal. And that would give us the opportunity of really marketing the most credible credits of all because it's just indisputable. If you take a tonne out of the air, you can measure that. And if you bury it, you are burying it essentially forever. So direct air capture and removal is a negative emissions technology, which is very early days because in the couple places where it's been tried around the world, it's extremely expensive, but it's a little bit like solar panels 20 years ago. I'm optimistic that the price will come down so that 15 or 20 years from now, it will be a mass utilised technology.

Sarah McNamara

Fantastic. Well, that might be about all we've got time for in terms of questions. I'd just like to thank the panel very sincerely and enthusiastically for what's been a really engaging discussion. And I think what's come through to me is how genuinely open-minded you all are in your approach to these technologies because of course, we don't want to be picking winners before we understand which technologies are really going to be able to do the heavy lifting for us in the future. And it's really refreshing to hear about the government's unrelenting focus on not imposing add costs or punitive measures in order to get to our net zero by 2050 goal. So thank you. This of course is not by any means the end of the process. It's a very long road ahead and consultation is a really key part of it. So as part of the development of the third update to the Technology Investment Roadmap, there is a written submissions process that will open by the end of this week and I believe possibly sooner, and participants will be notified when the process is open.

And we certainly encourage participants to put forward written submissions so we can have that richness of ideas and competing view as the panel is working on the next iteration of the LETS. So the government's very keen to hear your views on the way to improve and build on this current LETS, and we welcome your engagement. I should also say for those of you who have submitted questions today, both live and prior to the session, if your questions haven't already been answered online, they will be considered in the coming days and you will receive a response in writing from the department. So please don't think you are just being dismissed. We'll certainly make sure we come back to you. Thank you all for your time. It's been a really terrific engagement and I look forward to seeing you at the next to discuss low emissions technologies.

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