Could Australia become a clean energy superpower?

13 October 2021

Transgrid’s recently announced Energy Vision suggests Australia has a unique opportunity to harness its renewable energy resources to become a global, clean energy leader. What will that mean for Australian industry and jobs?

One of the Energy Vision’s six future energy scenarios, developed with independent experts, CSIRO, ClimateWorks Australia and The Brattle Group, is a plausible blueprint for Australia becoming a global, clean energy superpower. In this future, Australia harnesses its abundant renewable energy resources, large landmass, significant mineral ores and access to Asian markets to revitalise our industries, grow our economy and create new jobs.

We also achieve a net zero emissions economy by 2050.

Hydrogen and green steel become leading exports

The Energy Vision looks at the role Australia could play on the global stage if hydrogen is used to decarbonise hard-to-abate sectors of the global economy, such as heavy transport, as a fuel and feedstock for industrial processes, such as steel making, and for electricity peaking generation.

BloombergNEF suggests that renewable hydrogen will be cheapest to produce in countries with the lowest-cost electricity, such as India, Brazil, Australia and Scandinavia. Australia’s hydrogen exports could supply countries that don’t have enough suitable land or renewable resources to meet their own domestic hydrogen needs.

Our modelling shows that the levelised cost of green hydrogen in Clean energy superpower is projected to fall below $2/kg in the early 2030s, reaching $1/kg by 2050 at major hydrogen producing locations on the south and east coast of Australia. By 2050, zero emission electricity is the dominant energy source for hydrogen production, with green hydrogen representing 94% of total hydrogen production.

If this is the case, broadly in line with the Federal Government’s National Hydrogen Strategy high scenario, our analysis assumes that Australia produces 1.1MT of hydrogen by 2030 and 19.2MT by 2050. Of that, 61% is exported to our trading partners, 22% is used to produce green steel for export and 17% is for other domestic purposes.

Did you know that Australia exports 67% of the world’s iron ore, yet only exports 0.3% of the world’s steel?

In this ‘clean energy superpower’ future, by 2050, Australia retains 18% of its iron ore output for conversion to steel via a hydrogen Direct Reduction, electric arc furnace and hot rolling production route to produce 100MT per year of green steel – taking Australian steel production from 0.3% to 5% of global steel output.

Which states benefit?

Modelling suggests QLD could be first to benefit from these new export industries, followed by NSW and WA in the 2040s, with smaller contributions from VIC, SA and Tasmania. The lowest cost areas for production will be:

  • QLD, which dominates in the 2030s due to its abundance of low-cost renewable energy resources, large skilled workforce, and available port capacity
  • NSW’s hydrogen and green steel production grows in the 2040s, particularly in the Hunter Valley, where the local workforce will have transitioned out of coal jobs

By 2050, North Queensland and Hunter Valley in NSW are projected to produce and export the largest quantities of hydrogen and green steel in Australia. WA is projected to have a smaller share of hydrogen and green steel production by 2050, primarily due to higher labour and construction costs and a smaller available workforce.

Additional export opportunities

In our Clean energy superpower scenario, Australia significantly increases domestic green-aluminium production – a five-fold growth to 10MT/year – requiring eight additional large aluminium smelters in the NEM by 2050.

We also take advantage of the surge in demand for minerals as the global economy decarbonises. The International Energy Agency suggests that, by 2040, demand for lithium could grow 42 times, 25 times for graphite, 21 times for cobalt, 19 times for nickel and 7 times for rare earth metals.

Yet again, the Australian economy flourishes through exporting our natural resources. Only, instead of iron ore, coal and gas, this time the focus will be on some of the world’s largest recoverable sources of lithium (currently we are the world’s largest producer), titanium and cobalt, and the world’s sixth largest rare-earth resource base.

Jobs and export revenue

Modelling suggests becoming a clean energy superpower would be extremely positive for job creation, supporting 57,000 electricity sector jobs on average over the next 30 years, more than today’s levels (34,000 jobs) and twice the level of jobs projected in Current trends.

In fact, actual job creation in this scenario would be significantly greater because our modelling only considers jobs in the electricity sector. Other analysis suggests significant additional GDP and job growth in downstream industries:

  • Beyond Zero Emissions estimates that Australia has the potential to grow a new green export mix worth $333 billion per annum, almost triple the value of existing fossil fuel exports.
  • Under a similar hydrogen growth trajectory, Deloitte’s analysis for the National Hydrogen Strategy suggests 19,600 additional jobs could be created and an extra $26 billion could be added to Australia’s GDP by 2050.
  • Modelling by the Grattan Institute found that the export of green steel modelled could create 25,000 ongoing jobs and an annual export value of $65 billion by 2050.
  • The Energy Transition Hub’s analysis of Australia’s opportunity to grow our zero emissions aluminium production found that GDP could be increased by $15 billion and 15,000 ongoing jobs could be created.

At Transgrid, our vision is for Australia to become a global clean energy leader, benefitting communities, the economy and the environment. In this future, the energy sector is a major exporter and job creator – and Australians have access to some of the lowest cost, low emissions electricity in the world.

However, to achieve this clean energy future, the pace of change needs to rapidly accelerate. Our analysis indicates that the transition towards a clean energy future can create immense opportunity for Australia – if we set ourselves on the optimal course now.

Our Energy Vision maps out what a clean energy future would mean for Australia’s electricity system. The NEM’s electricity demand would grow to six times its current capacity, requiring 420GW of largescale solar PV and wind and rooftop solar. Electricity transmission would grow proportionally. Interestingly, storage requirements only marginally increase, and these leads to lower electricity costs for the system as a whole.

Find out more in our Energy Vision.