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Australia's emergence as a global green transition powerhouse

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2023-07-10

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Australia is poised to become a key player in the global green transition.

With its abundant natural resources and strategic position in the mining sector, Australia has the potential to drive the shift towards a sustainable future.

As the world's leading producer of lithium, nickel, cobalt, and rare earth metals, essential components for electric vehicle batteries and renewable energy technologies, Australia holds the key to unlocking the climate battle to come.

"It's a baby step in the right direction," says Robin Griffin, vice president of metals and mining research at consultant Wood Mackenzie, referring to the Australian government's allocation of 600 million Australian dollars ($402 million) in new spending for the green transition strategy. This modest financial commitment highlights the need for more significant investments to fully exploit Australia's green potential.

"We need to stop being a dig-and-ship country and take advantage of this once-in-a-century opportunity," emphasises Kirk McDonald, project manager at start-up incubator Supercharge Australia, highlighting the urgency to shift away from raw material exports and maximise Australia's role in the green transition.

Addressing the challenge of a qualified workforce, Rick Valenta, director of the University of Queensland's Sustainable Minerals Institute, acknowledges, "We are chronically short of the specialty skills we need."

This shortage underscores the importance of investing in education and training programs to equip Australians with the expertise required for the green sector.

Prime Minister Anthony Albanese's recent meeting with US President Joe Biden signals hope for Australia's green ambitions. The pledge to "address the climate crisis as a critical component of the bilateral relationship" raises expectations that Australia's metals may be considered as domestic content for the generous green subsidies earmarked in the US Inflation Reduction Act. However, the extent to which this hope materialises remains uncertain.

Australia's advantages extend beyond its distinction from China. The nation already derives 12% of its power from solar energy, surpassing the proportions of the US and China fourfold. This places Australia at the forefront of the race to power its mining industries with renewable energy, offering both a moral and economic advantage in the future.

"Fast forward 10 years when there's a global price on carbon emissions, and Australia could be exporting decarbonisation," suggests Tim Buckley, director of Australian think tank Climate Energy Finance, envisioning a future where Australia becomes a global exporter of decarbonisation efforts.

Furthermore, Australia's ability to absorb skilled immigrants enhances its potential to bridge the manpower gaps in the green transition. With close to A$4 trillion in regulated pension pools known as superannuation funds, there is an opportunity to redirect a portion of these funds, around A$100 billion, into critical minerals investment.

However, the government remains cautious in its approach, signalling the need for further dialogue and collaboration.

While progress is being made, there is still a long way to go for Australia to fully realise its potential as a global green transition powerhouse. Noteworthy strides have been taken by companies such as Albemarle and Iluka Resources, with their multi-billion dollar investments in domestic metals processing facilities.

These developments reflect a shift in mindset and a growing recognition of the economic and environmental benefits of embracing the green transition.

Australia's journey towards becoming a leader in the global green transition has come a long way since the days when a lump of coal was brought into parliament as a symbol of economic importance.

Today, Australia stands on the cusp of a new era, driven by its rich endowments, renewable energy potential, and a growing determination to embrace a sustainable future.

With the right investments, policy support, and collaborative efforts, Australia has the potential to emerge as a transformative force in the fight against climate change.

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