Funding Australia’s renewable transition isn’t ‘picking winners’ – it’s securing our future

Last week Anthony Albanese finally announced the government’s major plan for the transition to a renewable energy economy. The Future Made in Australia plan was quickly derided by critics as “picking winners”, in the misguided view that the market is better at deciding how to tackle the climate emergency and that the market is in any way free or lacking distortions.

It’s an article of faith among many economists and commentators that governments should not try to “pick winners”, despite the fact that Australia has a long and glorious tradition of doing so.

How about $141.1m on carbon capture and storage projects? Not enough? Try $1.5bn on the Middle Arm petrochemical hub in Darwin? Pfft. What about the inland rail to nowhere costing $31bn over 10 years? Now that’s real money!

This year the government also spent $17.4bn on private schools, because many decades ago someone decided to pick that as a winning way to provide education (and win elections).

So spare me your conniptions about government interventions now that they want to provide tax breaks for renewable energy projects. Climate change is the result of the market failing to price in the cost of climate change. Arguing that the market will now solve it is ignorant in the extreme.

And the playing field is not level. The US$1tn US government intervention of the absurdly named (but politically smart) Inflation Reduction Act has upended the renewable energy sector across the globe. It showed what government support can do for an industry:

That’s not the free market at work but a government finally getting somewhat serious about the level of investment needed to transition an economy to net zero.

It’s been a long time coming.

A bit over four years ago I wrote that politicians needed to admit tackling the climate crisis was hard and expensive. Heck, eight years ago I wondered if politicians had the guts to be honest about the problem (that’d be “no”).

In that 2016 article I noted that Nasa had just announced that April that year was the hottest April on record, and it was the seventh month in a row the monthly record had been broken.

Those were the good times.

Last Friday, the day after the prime minister announced the “Future Made in Australia” policy, Nasa announced that March was the hottest March on record and it had now been 10 months in a row of record monthly temperatures.

The past year has seen temperatures destroy what is considered “normal”, let alone what is “hot”.

I have now reached a stage where 1998 is the halfway point of my life thus far. I note this because highly paid climate-change denialists used to argue that was when “the world hasn’t warmed since ... ”

If only. The world hasn’t just warmed since 1998, it has warmed much faster.

The peak temperature in 1998 was 0.9C above the 1880-1899 average. Horrific, yes, but well below the 1.5C average of the past 12 months. It has now been more than 11 years since we had temperatures below that 1998 “peak”:

So sure, give me all your worries about picking winners – but when you’re trying to prevent a global catastrophe, business as usual won’t cut it.

My colleagues at the Centre for Future Work estimate that were Australia to match the US spend on the IRA, it would cost between $8.3bn and $13.8bn a year.

A lot? Yes, but roughly in line with the $11bn a year the government provides to the fossil fuel sector and also the annual amount Aukus costs to maybe one day get submarines the US Navy might let us use – if they don’t need them.

Australia has immense supplies of minerals needed for renewable projects and an abundance of sun and wind. We should not make the mistake of the last mining boom and just ship rocks overseas.

This time we need to be part of the manufacturing supply chain. Sure, we likely won’t be making electric vehicles, but there are many things we can make using renewable energy to ensure we are part of a green manufacturing global economy.

And those businesses will require huge government support.

But the problem is: that’s actually the easy part. Who doesn’t like seeing money come into your region and employ workers?

Remember this isn’t just about jobs; it’s about preventing climate change by reducing emissions – something we have not really done at all:

The only way to truly reduce emissions is to stop digging up and burning fossil fuels.

On Tuesday reports of the worst coral bleaching on record coincided with the environment minister, Tanya Plibersek, announcing she was delaying changes to the Environmental Protection and Biodiversity Conservation Act. These are the laws under which she can approve new coal and gas mines.

Right now, we’re approving coalmines using laws John Howard implemented and Tony Abbott added to. That’s not so much picking winners as continuing to allow companies with a losing product to mine fossil fuels according to laws devised by long-time climate-change deniers.

A generational sized investment in renewable energy is needed – if only to ensure efforts to reduce emissions are political saleable.

But if the government is not prepared to stop greenhouse gas emissions being released, then no matter how many renewable energy winners they pick, they’re setting the future up for a loss.