As the world economy decarbonises, the Albanese Labor Government is focused on backing a revitalised manufacturing sector in a more productive, more resilient, and more diversified Australian economy, consistent with a Future Made in Australia.
Australia has all the critical and strategic mineral resources that the future global industrial economy requires, vast wind and solar resources, the advantages of our geography and a skilled and resilient workforce. The challenges of a changing geostrategic landscape and the global shift to lower emissions require an ambitious plan to back Australian industry.
The Industry Sector Plan sets a path to net zero emissions for Australia’s industrial and waste sectors in a way that leverages Australia’s advantages, recognises the challenges, and drives international competitiveness.
Some parts of existing industry will reduce emissions by using less carbon-intensive energy sources. For some sectors electrification will be key, allowing them to take advantage of cheap electricity from wind and solar backed by batteries. Hard-to-abate sectors, like those requiring high heat or chemicals manufacturing firms, will continue to use natural gas where production processes require. For some of these sectors a move to green hydrogen, when it is affordable, will be possible. Investments to improve energy efficiency and change production processes will also drive emissions down. There is also significant opportunity to kickstart new industries like green iron, which take advantage of Australia’s resources and energy endowments.
A decade of underinvestment in the energy grid has left Australia’s industrial sector vulnerable. Despite being a leading global exporter of LNG, Australia’s energy system, and in turn industry, is exposed to international gas price shocks. A lack of energy policy certainty through 22 discarded energy policies prior to 2022 has seen corporate underinvestment in new and emerging technologies, including renewable energy infrastructure and new production processes. While it is an imperative to reduce carbon emissions to ensure we mitigate the worst impacts of climate change, it does not mean the pathway will be linear or without challenges.
This plan recognises the significant challenges Australian industry faces and will continue to face as it decarbonises. For some sectors, abatement technology either does not exist or is too expensive, and all industry is dealing with pressures on the cost of energy. Effective policy and joint effort between governments, industry and unions will be vital to ensuring we meet these challenges in the national interest.
The government is undertaking major structural reform to address the energy market pressures. The Gas Market Review, led by Minister Bowen and Minister King, which builds on the Future Gas Strategy, is examining long-term policy settings for Australia’s gas markets to drive affordable and secure gas and investment. The National Electricity Market wholesale market settings review, led by Minister Bowen, will unlock long term investment in Australia’s national energy grid to ensure affordability and reliability. Minister Watt has committed to reforming environmental approvals, which will help renewable generation and transmission projects get built sooner, while protecting Australia’s unique and invaluable environment.
In tandem, the Albanese Labor Government is making the most significant pro-manufacturing investment in Australian industry in the nation’s history. This includes the Net Zero Fund, a new $5 billion sub-fund of the National Reconstruction Fund (NRF), that will draw from and refocus existing NRF capital. It will support major investments by large industrial facilities in decarbonisation and energy efficiency, and scale up manufacturing low emissions technologies. The remaining $10 billion of the NRF’s capital will continue to drive investment in Australian firms to diversify and transform the nation’s industrial base. In addition, the $22.7 billion Future Made in Australia agenda is further supported by the $1 billion in the new Green Iron Investment Fund to help Whyalla and other local manufacturers make iron using low or zero emissions energy.
In a changing global environment, we have the collective responsibility to ensure Australian industry remains competitive and is a critical contributor to Australia’s economic future. A vibrant industrial and manufacturing sector is critical to creating and protecting good jobs in our regions and outer suburbs. The Albanese Labor Government is seized of this opportunity – backing Australian industry as a critical contributor to communities, workers, our economy and sense of national pride.