Australia has big plans for renewable energies. Its diplomacy has symbolised to the world that it is open to change, but further investment in grid and energy capabilities is still lacking. 

At the annual United Nations climate meeting in the United Arab Emirates, Australia was one of the 118 countries to make a commitment to treble renewable energy capacity and double energy efficiency by 2030. Ahead of the COP 28 Summit, Australia’s climate change minister, Chris Bowen, asserted that the country is capable of becoming a global leader in renewable energy.

There is no denying the fact that Australia is well positioned to make a major contribution to the global transition towards renewable energy. However, there are many challenges to attaining this goal and it’s worth exploring what it will take for Australia to achieve its potential as a renewable energy super power.

Australia’s renewable energy push

Given its abundance of natural resources—sun, wind, and the essential minerals required for clean energy technologies ranging from batteries to wind turbines—Australia has the potential to play a significant role in global renewable energy creation.

Additionally, Australia can be a major supplier of emerging technologies as well as critical minerals for the global transition to clean energy. It is the world’s leading producer of lithium, rare-earth elements, and cobalt. The world’s first shipment of liquefied hydrogen was made in 2022 when Australia’s Hydrogen Energy Supply Chain (HESC) project produced and shipped the gas to Japan. Australia also has a wide range of pilot projects in the works for carbon capture and storage, and low-emission hydrogen technology, both of which are desirable for the de-carbonization of industrial sectors where it is most difficult to cut emissions.

Meanwhile, according to Bowen, Australia has the greatest rooftop solar penetration rate in the world. In short, plans are in the works to reach 82 percent renewable energy by 2030.

Cost effectiveness, higher tariffs, and supply disruptions

Renewable energy is the most affordable and environmentally friendly energy source, and energy efficiency can lower costs and emissions too. The average cost of energy from solar and wind power is half that of energy from gas and coal. As technology advances, renewable energy will become more and more affordable.

Australians can be shielded from foreign energy price shocks by renewable energy just as they were shielded by the OPEC oil price rises of the 1970s by their reserves of coal and uranium. But to reach the commitment at COP28, significant investment is required. The transmission to clean energy requires infrastructure upgrades and grid stabilisation measures. Australia frequently experiences extreme weather conditions and its energy industry is faced with the challenge to become more resilient which will extend from output to logistics and distribution.

Australia’s government intends to spend AUD$20 billion to upgrade the grid’s reliability to meet the rising output of green energy. This will allow Canberra to achieve a 43 percent reduction in emissions by 2030. The government also plans to increase the share of clean energy to as much as 82 percent of the total electricity supply by 2030, up from roughly a third currently.

Australia’s climate action 

Australia still remains a major exporter of both fossil fuels and the critical minerals used in many clean energy technologies. A successful clean energy transition would support the country’s economic diversification and industrial growth while providing long-term resilience against global energy market shocks. Important advancements towards renewable energy are noticeable as one in three Australian homes, or three million homes, have solar PV installations totalling 17 gigawatt of capacity.

Since the International Energy Agency’s ’s last review in 2018, Australia has passed the Climate Change Act (2022), which doubles the target for emissions reductions by 2030 and sets the goal of reaching net zero emissions by 2050. The Australian government also signed up to the Global Methane Pledge in 2022, joining 130 governments who are collectively targeting a reduction in methane emissions of at least 30 percent by 2030.

In recent months, the government has presented a host of policy strategies to fast-track the country’s energy transition. These include  the Rewiring the Nation Plan, the National Energy Transformation Partnership, and National Energy Performance Strategy.

Even with the stated objectives and the political will, significant investment is required. Planning delays, growing costs, and transmission bottlenecks are impeding the transition. For instance, in the National Electricity Market, just four renewable energy projects achieved financial close in the June quarter this year, whereas in the March quarter, no wind or solar projects received construction approval. This reinforces the pressure on federal and state governments to prolong the life of coal power plants until alternatives materialise. The current expansion of clean energy generation is well short of the four gigawatts annually estimated to meet 2030 targets.

Considering the COVID-19 outbreak, supply chain interruptions, the Ukraine crisis, and the Israel-Hamas conflict, the challenges to energy security are manifold. The main focus for Australia to successfully transition its fuel supply should be on grid adaptation, renewable energy infrastructure, and spending. Although Australia’s recent policy changes will strengthen the resilience of its energy system and encourage industrial growth and economic diversification, a comprehensive strategy is required to reduce the nation’s heavy reliance on fossil fuels and to reach the goal of net zero emissions reduction by 2050. Australia’s efforts to drive progress on low-emissions hydrogen and supplies of critical minerals, and its leadership on working with partners and international organisations to strengthen the diversity and resilience of clean energy supply chains will be crucial in the coming days to address this pressing challenge of the 21^st century.

Associate Professor David Lee, UNSW Canberra at the Australian Defence Force Academy. 

Dr. Ashok Sharma, Visiting Fellow, UNSW Canberra at the Australian Defence Force Academy . Dr Sharma is also an Adjunct Associate Professor at the Faculty of  Business, Governance and Law, University of Canberra, and an Academic Fellow at t Australia -India Institute, the University of Melbourne.