Solarpark in einer Wüste in Australien

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Australia seeks to ignite afterburners to drive energy transition
Australian government aims to leverage mammoth renewable resources with billions in investments

Up to 15 hours of daily sunshine, nearly 26,000 kilometres of coastline including numerous bodies of water with high wind speeds – Australia has the ideal prerequisites for producing electricity using solar as well as onshore and offshore wind technologies. However, the country is also home to ten percent of the world’s coal reserves. This explains why Australia has often banked heavily on this fuel. Until just recently, nearly 90 percent of primary energy consumption Down Under was covered by fossil fuel, with coal, gas and oil accounting for a combined share of 70 percent of the electricity mix. But this is set to change now. Australia’s new government, which was elected in May, has announced its intention to drive the energy transition with resolve and to invest heavily in expanding wind power, solar energy and other clean generation techniques.

In June, the governing coalition headed by Prime Minister Anthony Albanese updated the nationally determined contribution (NDC). NDCs are an integral component of the Paris Climate Agreement and are established by the signatory states. In its NDC, Australia has committed to lowering greenhouse gas emissions by 43 percent relative to the baseline year, 2005. This is a significant increase over the previous target of 15 percent. Furthermore, the government is reaffirming its pledge to become net zero by 2050. Albanese announced several legislative initiatives to this end:

When Parliament resumes, we will move quickly to enshrine Australia’s 2030 and 2050 targets in legislation, providing the certainty industry and investors have been seeking. Our Powering Australia plan will support the transition to renewable energy, including investing in the transmission and storage needed to balance the grid. Anthony Norman Albanese, Australian Prime Minister

Government plans major investments in power grid expansion

To achieve this goal, the government wants to put together a multi-billion-dollar subsidy package. This will include 20 billion Australian dollars (approximately 13.5 billion euros) earmarked for the decarbonisation of the power grid, 3 billion dedicated to the National Reconstruction Fund designed to promote new industry, 300 million to provide community batteries and solar banks, and 100 million to jump-start the renewable energy apprentice market.

Besides a massive expansion of renewable energy, the country plants to take further action. This includes to strengthen the safeguard mechanism to determine declining emission baselines for the biggest carbon dioxide emitters as well as a National Electric Vehicle Strategy including the construction of hydrogen refuelling infrastructure. Moreover, Australia’s Climate Change Authority is to reclaim a more important advisory role.

Energy transition to create numerous jobs

In addition to boosting the energy transition Down Under, the plans aim to revitalise the economy as well. All told, Anthony Albanese and his Cabinet want to create more than 600,000 jobs, a large share of which will be in the regions. “With the right ambition, action and cooperation, Australia can seize the once-in-a-generation opportunity ahead of us and thrive in a net zero world,” said Jenny McAllister Assistant Minister for Climate Change and Energy, upon the announcement of the new NDC.

Fossil fuels still dominate the energy mix

However, the country and its population of 26 million are still a far cry from the net zero target. According to the Our World in Data platform, in 2021 some 70 percent of Australia’s electricity stemmed from fossil sources. Solar energy accounted for just under 12 percent of total generation, followed by wind energy at ten percent and hydrogen at 6.7 percent.

Australia’s fuel mix in 2021

in percent, source: Our World in Data

Primary energy usage was even more characterised by fossil fuel. Here, the dominating sources were oil (34%), coal (29%) and gas (3%), with renewables good for a mere 12 percent. Whereas regenerative energy sources have steadily gained significance in the electricity sector since 2000, with their share rising from below ten to nearly 30 percent, they continue to play a subordinate role in covering total demand for energy.

Share of fossil fuel in primary energy consumption and electricity generation

in percent, source: Our World in Data/BP Statistical Review of World Energy 2021

Share of renewables in primary energy consumption and electricity generation

in percent, source: Our World in Data/BP Statistical Review of World Energy 2021

First large-scale wind and solar projects launched

Actually, the country could easily meet its demand for electricity with solar and wind energy. The world’s sixth-largest nation is sparsely populated, with its sunny weather and high degree of solar radiation promising strong yields from solar farms. The first major projects such as Limondale Solar Farm with an installed capacity of 349 megawatts, which is operated by RWE in the southwest of New South Wales, are already up and running. There are also some pilot projects for distributed community solar power (as reported by the en:former).

The administration also has plans to tap into offshore wind resources. At least 12 projects are currently in the early stages of development, with Star of the South taking the lead. The wind farm is envisaged to include up to 200 turbines located between seven and 25 kilometres off the southern coast of Gippsland. According to the project managers they could supply electricity to 1.2 million homes.

Another project, the Asian Renewable Energy Hub (AREH) near Pilbara in western Australia, will sport even bigger dimensions. According to BP, which owns the biggest share of a venture of several companies, the plan is to build onshore wind and solar farms with an aggregate capacity of 26 gigawatts. This would be enough to produce about 90 terawatt hours of electric power every year, equalling a third of Australia’s total generation in 2020. This output is to be used to produce 1.6 million metric tons of green hydrogen or nine million metric tons of green ammonia per annum.

Australia could export large volumes of green electricity and hydrogen

Some of it could be exported. Concepts for taking electricity and hydrogen from sustainable production methods abroad were being developed before the government adopted more ambitious climate targets. Thanks to the extremely favourable conditions, renewable energy produced domestically can exceed primary energy consumption substantially. Albanese and McAllister thus believe that Australia stands a good chance of becoming a “clean energy superpower”.

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