1 00:00:03,120 --> 00:00:05,640 Sean Aylmer : Welcome to the Fear and Greed daily interviewer. I'm Sean 2 00:00:05,880 --> 00:00:09,929 Sean Aylmer : Aylmer. As the world shifts towards net zero, Australia has 3 00:00:09,929 --> 00:00:14,250 Sean Aylmer : a tremendous opportunity on its hands. According to Blair Comley, 4 00:00:14,280 --> 00:00:17,160 Sean Aylmer : leader of EY's Net Zero Centre and the former head 5 00:00:17,160 --> 00:00:20,459 Sean Aylmer : of the Federal Department of Climate Change and Energy Efficiency, 6 00:00:20,910 --> 00:00:23,640 Sean Aylmer : we have a once in a generation opportunity to become 7 00:00:23,640 --> 00:00:26,639 Sean Aylmer : an energy superpower. But to do it, we'll need greater 8 00:00:26,639 --> 00:00:31,920 Sean Aylmer : pace and scale of renewable energy deployment, greater innovation, coordination 9 00:00:31,920 --> 00:00:35,848 Sean Aylmer : between public and private sector policy, and a significant amount 10 00:00:35,879 --> 00:00:40,229 Sean Aylmer : of courage. Sounds easy? Not so sure about that. Blair 11 00:00:40,229 --> 00:00:41,760 Sean Aylmer : Comley, welcome to Fear and Greed. 12 00:00:42,210 --> 00:00:43,470 Blair Comley: Thanks, Sean. Lovely to be here. 13 00:00:43,860 --> 00:00:47,010 Sean Aylmer : Before we get to the challenges, let's understand the opportunity. 14 00:00:47,010 --> 00:00:50,790 Sean Aylmer : When we say Australia could become an energy superpower, what 15 00:00:50,790 --> 00:00:51,629 Sean Aylmer : are we talking about? 16 00:00:51,960 --> 00:00:54,780 Blair Comley: The basic idea here has been around for a while. 17 00:00:54,780 --> 00:00:57,420 Blair Comley: Ross Garnaut has put it forward a number of times. 18 00:00:57,960 --> 00:01:00,960 Blair Comley: It's as we move to a world with renewables powering 19 00:01:01,050 --> 00:01:04,770 Blair Comley: the globe, Australia's going to become the lowest cost producer 20 00:01:04,770 --> 00:01:09,209 Blair Comley: of renewable energy. We effectively have great reserves of wind 21 00:01:09,330 --> 00:01:12,959 Blair Comley: and solar. We have a very stable political environment and 22 00:01:12,959 --> 00:01:15,509 Blair Comley: so it's highly likely that we are going to have the lowest 23 00:01:15,510 --> 00:01:18,780 Blair Comley: cost energy in the world. So to become an energy 24 00:01:18,780 --> 00:01:21,869 Blair Comley: superpower, what we want to do is combine that really low- 25 00:01:21,870 --> 00:01:26,580 Blair Comley: cost energy with things like access to our natural resources 26 00:01:26,759 --> 00:01:30,060 Blair Comley: to be able to do industrial processes that will become 27 00:01:30,510 --> 00:01:32,940 Blair Comley: world competitive on a very large scale. 28 00:01:34,110 --> 00:01:39,959 Sean Aylmer : Okay. I understand what you are saying. What's that mean 29 00:01:39,959 --> 00:01:42,630 Sean Aylmer : in terms of an economic benefit for Australia potentially? 30 00:01:43,080 --> 00:01:45,958 Blair Comley: Yeah. When we are looking at a macro level, we 31 00:01:45,959 --> 00:01:51,030 Blair Comley: think by 2050, this will increase GDP by about $ 65 32 00:01:51,030 --> 00:01:56,040 Blair Comley: billion a year or around 2.3% of GDP. Now to put that 33 00:01:56,040 --> 00:01:59,790 Blair Comley: into context, when people used to model reforms like the 34 00:01:59,790 --> 00:02:03,030 Blair Comley: National Competition Policy or tariff reform over a number of 35 00:02:03,030 --> 00:02:06,119 Blair Comley: decades, they very rarely got numbers that are larger than 36 00:02:06,119 --> 00:02:09,540 Blair Comley: that. We actually think that number is conservative because the 37 00:02:09,900 --> 00:02:12,780 Blair Comley: modeling we do tends not to have some of the 38 00:02:12,780 --> 00:02:16,319 Blair Comley: innovation dynamics in it. But even on that conservative modeling, 39 00:02:16,320 --> 00:02:19,649 Blair Comley: we see $ 65 billion a year in GDP, 2. 3% 40 00:02:20,309 --> 00:02:24,809 Blair Comley: uplift, and about a 1. 5% increase in wages and that's 41 00:02:24,869 --> 00:02:28,918 Blair Comley: equivalent to about $1,800 per person per year in 2050. 42 00:02:29,639 --> 00:02:32,099 Sean Aylmer : Okay. Is there some way we can compare this to 43 00:02:32,099 --> 00:02:36,238 Sean Aylmer : other resource industries? Because I always think of clean energy 44 00:02:36,240 --> 00:02:37,979 Sean Aylmer : as a resource industry. That might not be the right 45 00:02:37,980 --> 00:02:39,299 Sean Aylmer : way to think of it now that I'm saying it 46 00:02:39,299 --> 00:02:43,860 Sean Aylmer : out loud, but we talk about iron ore and coal 47 00:02:43,860 --> 00:02:48,000 Sean Aylmer : in Australia. Now, coal has certainly passed its peak and 48 00:02:48,000 --> 00:02:50,820 Sean Aylmer : over time will diminish. Gas probably has a way to 49 00:02:50,820 --> 00:02:52,889 Sean Aylmer : run, but it will diminish as well. Is there some 50 00:02:52,889 --> 00:02:54,840 Sean Aylmer : way we can compare them, I suppose? 51 00:02:55,559 --> 00:02:58,228 Blair Comley: Yeah. There's similar orders of magnitude that have been driven 52 00:02:58,230 --> 00:03:03,180 Blair Comley: from these new industries and these new industries are green 53 00:03:03,180 --> 00:03:08,820 Blair Comley: steel, mainly lithium, nickel, cobalt expanding, and hydrogen. Put all 54 00:03:08,820 --> 00:03:11,459 Blair Comley: those together and we're looking at similar orders of magnitude 55 00:03:11,460 --> 00:03:12,960 Blair Comley: as those existing industries. 56 00:03:13,080 --> 00:03:15,750 Sean Aylmer : Okay. So that gets my head around what we're talking 57 00:03:15,750 --> 00:03:18,900 Sean Aylmer : about. Now you've identified or your reports have identified three 58 00:03:18,900 --> 00:03:24,899 Sean Aylmer : highly prospective opportunities for Australia, so clean, low- carbon heavy 59 00:03:24,900 --> 00:03:26,940 Sean Aylmer : industry. That's green steel. Is that what that is? 60 00:03:27,000 --> 00:03:30,540 Blair Comley: Largely green steel. Basically, as the world is going to 61 00:03:30,540 --> 00:03:32,880 Blair Comley: grow over the next 30 years, and we think this 62 00:03:32,880 --> 00:03:34,649 Blair Comley: is a high- income world that we're going to have 63 00:03:34,650 --> 00:03:37,500 Blair Comley: with the transition to net zero, there's going to be need 64 00:03:37,500 --> 00:03:40,020 Blair Comley: for a lot of steel because that steel is still 65 00:03:40,020 --> 00:03:41,850 Blair Comley: going to be required to build the things that people 66 00:03:41,850 --> 00:03:44,970 Blair Comley: want around the globe. We think that a lot of 67 00:03:44,970 --> 00:03:48,809 Blair Comley: that will be increasing the ratio from steel produced from 68 00:03:48,809 --> 00:03:53,219 Blair Comley: blast furnaces into steel produced from electric arc furnaces. If 69 00:03:53,219 --> 00:03:55,620 Blair Comley: you can produce green iron, which becomes an input to 70 00:03:55,620 --> 00:03:58,620 Blair Comley: the electric arc furnace, you can significantly increase the amount 71 00:03:58,620 --> 00:04:02,220 Blair Comley: of steel that's made without the current emissions that come 72 00:04:02,220 --> 00:04:04,050 Blair Comley: from current blast furnace steel. 73 00:04:04,770 --> 00:04:07,020 Sean Aylmer : Where are we up to in that process in terms of 74 00:04:07,020 --> 00:04:09,389 Sean Aylmer : emissions though? Are we able to do that yet? 75 00:04:09,809 --> 00:04:14,610 Blair Comley: The technology exists. There's two limiting factors. At the moment, 76 00:04:14,760 --> 00:04:18,210 Blair Comley: without the broad- based policies that we would otherwise have, 77 00:04:18,450 --> 00:04:21,299 Blair Comley: it's more economic at the moment to produce steel from 78 00:04:21,300 --> 00:04:25,619 Blair Comley: blast furnaces. That's the first thing. So at the moment, blast 79 00:04:25,620 --> 00:04:31,320 Blair Comley: furnaces with coal as the chemical reactant. The technology is 80 00:04:31,320 --> 00:04:33,600 Blair Comley: there to do it first with gas and then with 81 00:04:33,600 --> 00:04:36,719 Blair Comley: hydrogen, but the economics are not there until the policies 82 00:04:36,720 --> 00:04:39,299 Blair Comley: are put in place. The second thing that's limiting our 83 00:04:39,300 --> 00:04:41,819 Blair Comley: use of electric arc furnaces at the moment is there's 84 00:04:41,820 --> 00:04:45,690 Blair Comley: simply not enough scrap metal in the world to crank 85 00:04:45,690 --> 00:04:48,508 Blair Comley: up those electric arc furnaces, and that's why you need 86 00:04:48,510 --> 00:04:52,620 Blair Comley: to have the technology deployed for green iron and that 87 00:04:52,620 --> 00:04:55,140 Blair Comley: done in such a way that it's economic, which will 88 00:04:55,140 --> 00:04:59,759 Blair Comley: require policy incentives both of the domestic governments and internationally. 89 00:05:00,360 --> 00:05:03,240 Sean Aylmer : Okay. We'll come back to the new economy minerals, lithium, 90 00:05:03,240 --> 00:05:05,610 Sean Aylmer : copper in a moment, but you did mention hydrogen in 91 00:05:05,820 --> 00:05:08,760 Sean Aylmer : there. You hear a lot about hydrogen because we have 92 00:05:08,760 --> 00:05:11,130 Sean Aylmer : some very rich people in Australia putting a lot of 93 00:05:11,130 --> 00:05:13,409 Sean Aylmer : money into hydrogen. Where are we up to? 94 00:05:14,220 --> 00:05:18,720 Blair Comley: Well, in hydrogen, it's very early days, but over time, 95 00:05:18,839 --> 00:05:21,209 Blair Comley: we see that there's going to be three uses for 96 00:05:21,210 --> 00:05:24,900 Blair Comley: hydrogen. The first use is going to be where it's 97 00:05:24,900 --> 00:05:27,360 Blair Comley: used in a chemical process and the example I just 98 00:05:27,360 --> 00:05:30,360 Blair Comley: gave of the blast furnace is the best example of 99 00:05:30,360 --> 00:05:33,539 Blair Comley: that. I said that can be done, it's just not 100 00:05:33,540 --> 00:05:37,289 Blair Comley: commercially viable at the moment because of the economics. The 101 00:05:37,290 --> 00:05:39,630 Blair Comley: second thing is when hydrogen is used as an input 102 00:05:39,630 --> 00:05:44,669 Blair Comley: to things like fertilizers, chemicals, explosives, and that is highly 103 00:05:44,670 --> 00:05:49,650 Blair Comley: perspective. The third approach is where hydrogen may be used 104 00:05:49,650 --> 00:05:54,389 Blair Comley: for energy. We think that that will have quite a 105 00:05:54,389 --> 00:05:58,830 Blair Comley: future domestically, where for example, you have a truck that 106 00:05:58,830 --> 00:06:01,589 Blair Comley: needs a very high energy density and so it may 107 00:06:01,589 --> 00:06:04,860 Blair Comley: not be able to run an electric product and therefore 108 00:06:04,860 --> 00:06:08,070 Blair Comley: you might have domestic electricity. We are less hopeful that 109 00:06:08,070 --> 00:06:13,169 Blair Comley: hydrogen will be exported for reconversion to energy because we 110 00:06:13,170 --> 00:06:15,599 Blair Comley: just think that the energy losses in that whole end- to- 111 00:06:15,599 --> 00:06:19,650 Blair Comley: end process are quite large and they're unlikely to outcompete 112 00:06:19,920 --> 00:06:25,800 Blair Comley: either electrification in the destination market or pipeline hydrogen in 113 00:06:25,800 --> 00:06:26,460 Blair Comley: that market. 114 00:06:26,820 --> 00:06:28,889 Sean Aylmer : Stay with me Blair, we'll be back in a minute. 115 00:06:34,889 --> 00:06:38,010 Sean Aylmer : My guest this morning is Blair Comley, EY's Net Zero Centre 116 00:06:38,010 --> 00:06:40,529 Sean Aylmer : leader. Let's get on to the third one, which is 117 00:06:40,529 --> 00:06:45,359 Sean Aylmer : lithium, copper, nickel, new economy minerals, metals, rare earths, those 118 00:06:45,360 --> 00:06:48,869 Sean Aylmer : sorts of things. Where are the opportunity? We talk a 119 00:06:48,870 --> 00:06:51,959 Sean Aylmer : lot about these things. Can we be a major player 120 00:06:51,960 --> 00:06:52,289 Sean Aylmer : in them? 121 00:06:52,589 --> 00:06:56,130 Blair Comley: Yeah, we definitely can and there's a number of reasons. The first 122 00:06:56,130 --> 00:06:59,640 Blair Comley: is if you look at, for example, lithium, our report 123 00:06:59,640 --> 00:07:03,960 Blair Comley: projects an increase in the demand for lithium of 40 times 124 00:07:03,960 --> 00:07:08,099 Blair Comley: by 2050. If you look at cobalt and nickel, it's 125 00:07:08,099 --> 00:07:11,520 Blair Comley: about 20 times by 2050. So there's a massive increase 126 00:07:11,520 --> 00:07:14,850 Blair Comley: in demand for these minerals. In the case of lithium, 127 00:07:15,150 --> 00:07:17,429 Blair Comley: we have about a quarter of the known reserves in 128 00:07:17,430 --> 00:07:21,210 Blair Comley: the world are in Australia and nickel and cobalt about 129 00:07:21,210 --> 00:07:26,580 Blair Comley: 20%. So if you can take that resource endowment and 130 00:07:26,580 --> 00:07:29,850 Blair Comley: have low- cost energy, then you can have a significant 131 00:07:30,209 --> 00:07:33,570 Blair Comley: impact on exporting to the world. The last thing I 132 00:07:33,570 --> 00:07:35,430 Blair Comley: should say, and what the report talks about a lot, 133 00:07:35,940 --> 00:07:40,679 Blair Comley: is that Australia will have a massive comparative advantage in low- 134 00:07:40,679 --> 00:07:44,759 Blair Comley: cost renewable energy, but we don't have a particular comparative 135 00:07:44,759 --> 00:07:49,530 Blair Comley: advantage in storage of energy. That's basically because we are 136 00:07:49,530 --> 00:07:52,440 Blair Comley: dry and flat. Because we are dry and flat, we 137 00:07:52,440 --> 00:07:55,380 Blair Comley: don't have the same resource of hydropower that you have 138 00:07:55,380 --> 00:07:57,809 Blair Comley: in other places around the world. So we need industrial 139 00:07:57,809 --> 00:08:02,040 Blair Comley: processes that can survive with intermittent power and those mineral 140 00:08:02,040 --> 00:08:05,699 Blair Comley: processing areas can do that. We can contrast something like aluminium's 141 00:08:05,699 --> 00:08:09,030 Blair Comley: much harder unless you have fully formed power. So that's 142 00:08:09,030 --> 00:08:13,890 Blair Comley: the conclusion of the report. Massive resource endowments combined with low- 143 00:08:13,890 --> 00:08:17,250 Blair Comley: cost electricity that doesn't have to be continuous gives you 144 00:08:17,250 --> 00:08:19,410 Blair Comley: a significant comparative advantage in the world. 145 00:08:20,009 --> 00:08:23,729 Sean Aylmer : Blair Comley, leader of EY's Net Zero Centre, how do we get there? 146 00:08:24,480 --> 00:08:27,480 Blair Comley: Well, we need three things. Well, we talk in the 147 00:08:27,480 --> 00:08:29,970 Blair Comley: report in different types, three things. One is we need 148 00:08:30,150 --> 00:08:35,160 Blair Comley: coordination. Lots of private sector, public sector, state and commonwealth 149 00:08:35,160 --> 00:08:38,160 Blair Comley: may have to work together. We're very clear about we 150 00:08:38,160 --> 00:08:40,049 Blair Comley: are trying to do this and we need the courage 151 00:08:40,049 --> 00:08:42,660 Blair Comley: to put some money down. And for the government, there's 152 00:08:42,660 --> 00:08:45,360 Blair Comley: probably three things. First of all, we do have to 153 00:08:45,360 --> 00:08:49,080 Blair Comley: rapidly decarbonize the electricity sector so that you do have 154 00:08:49,080 --> 00:08:52,830 Blair Comley: that low- cost renewable power. The second thing you're going 155 00:08:52,830 --> 00:08:56,250 Blair Comley: to have to do is really coordinate on major project 156 00:08:56,250 --> 00:08:59,639 Blair Comley: developments between all levels of government and the private sector. 157 00:09:00,420 --> 00:09:02,429 Blair Comley: Then the third thing you're going to have to do 158 00:09:02,730 --> 00:09:07,559 Blair Comley: is potentially invest in innovation policy in a more substantial 159 00:09:07,559 --> 00:09:11,639 Blair Comley: way than Australia traditionally has. Traditionally, governments have been happy 160 00:09:11,639 --> 00:09:14,880 Blair Comley: to invest in R& D, but they get nervous about 161 00:09:14,880 --> 00:09:18,809 Blair Comley: investing in the commercialization stage, which may be necessary to 162 00:09:18,809 --> 00:09:22,200 Blair Comley: kickstart that investment. Now the government has made some announcements 163 00:09:22,200 --> 00:09:25,738 Blair Comley: in the budget. They announced $ 2 billion for development of 164 00:09:25,740 --> 00:09:28,950 Blair Comley: hydrogen. That's a good start, but the scale of the 165 00:09:28,950 --> 00:09:32,219 Blair Comley: challenge means that might be a down payment rather than 166 00:09:32,219 --> 00:09:37,740 Blair Comley: the final contribution to supporting that innovation and commercialization of hydrogen. 167 00:09:39,090 --> 00:09:41,340 Sean Aylmer : It seems to me that the government is on the 168 00:09:41,340 --> 00:09:45,029 Sean Aylmer : way in all three areas that you just mentioned, but 169 00:09:45,030 --> 00:09:48,989 Sean Aylmer : almost that baby steps, whereas we need to be an adolescent, perhaps 170 00:09:48,990 --> 00:09:50,369 Sean Aylmer : turning into a mature adult. 171 00:09:51,030 --> 00:09:54,270 Blair Comley: Look, Sean, I take maybe a slightly longer view. As 172 00:09:54,270 --> 00:09:55,949 Blair Comley: you said, I was the head of the climate change 173 00:09:55,950 --> 00:10:02,001 Blair Comley: department more than a decade ago, and we took (inaudible) 174 00:10:02,001 --> 00:10:05,189 Blair Comley: not doing as much, and then it's only a 175 00:10:05,190 --> 00:10:08,338 Blair Comley: couple of years ago that the coalition committed to net zero 176 00:10:08,340 --> 00:10:12,870 Blair Comley: as a destination. That bipartisan commitment kick- started things with 177 00:10:12,870 --> 00:10:16,080 Blair Comley: the election of the new government in particular, but also 178 00:10:16,140 --> 00:10:19,228 Blair Comley: the sense of community support, including (inaudible) composition of 179 00:10:19,230 --> 00:10:22,230 Blair Comley: the parliament. I think if you ask anyone, they would 180 00:10:22,230 --> 00:10:24,208 Blair Comley: say things have moved very fast over the last two 181 00:10:24,210 --> 00:10:27,450 Blair Comley: years. In the electricity sector, only a couple of years 182 00:10:27,450 --> 00:10:32,580 Blair Comley: ago, the Australian Energy Market Operator's step change scenario was 183 00:10:32,580 --> 00:10:34,500 Blair Comley: seen as a little bit radical. That was a plan 184 00:10:34,500 --> 00:10:37,890 Blair Comley: for the transition of the electricity sector. Now it's seen 185 00:10:37,890 --> 00:10:40,019 Blair Comley: as the norm, the benchmark in which people may go 186 00:10:40,020 --> 00:10:42,780 Blair Comley: faster than that. So I think things are moving very 187 00:10:42,780 --> 00:10:45,630 Blair Comley: fast and they'll continue to have to move fast if 188 00:10:45,630 --> 00:10:47,430 Blair Comley: you're going to get to net zero by 2050. 189 00:10:48,359 --> 00:10:51,929 Sean Aylmer : Do you think the momentum is enough to keep accelerating? 190 00:10:52,590 --> 00:10:56,429 Blair Comley: Look, I hope so, but I think the rubber will 191 00:10:56,429 --> 00:10:59,280 Blair Comley: hit the road as you get to these trickier decisions 192 00:10:59,280 --> 00:11:02,009 Blair Comley: that come up over the next few years. There has 193 00:11:02,009 --> 00:11:05,098 Blair Comley: been an upswing in commitment in many countries around the 194 00:11:05,100 --> 00:11:09,030 Blair Comley: world and Australia to accelerating the transition, but we're still 195 00:11:09,030 --> 00:11:12,000 Blair Comley: not on track to be 1. 5 degrees of warming. 196 00:11:12,390 --> 00:11:14,040 Blair Comley: We're probably not even on track to be on two 197 00:11:14,040 --> 00:11:17,309 Blair Comley: degree warming. So there will need to be an acceleration. 198 00:11:18,330 --> 00:11:20,579 Blair Comley: I'm hopeful, but it's not guaranteed. 199 00:11:21,360 --> 00:11:23,910 Sean Aylmer : What happens if we don't do it? Obviously, climate change 200 00:11:23,969 --> 00:11:27,390 Sean Aylmer : is the ultimate thing we want to prevent and we 201 00:11:27,390 --> 00:11:31,679 Sean Aylmer : want to reduce heating of the Earth's atmosphere, but bringing 202 00:11:31,679 --> 00:11:33,960 Sean Aylmer : it down to a more country by country level, I 203 00:11:33,960 --> 00:11:37,230 Sean Aylmer : suppose. We've seen the Inflation Reduction Act in the US, 204 00:11:37,620 --> 00:11:39,719 Sean Aylmer : hundreds of billions of dollars being spent there. We have 205 00:11:39,719 --> 00:11:44,250 Sean Aylmer : Indonesia wanting to become electric battery powerhouse. We're in a 206 00:11:44,250 --> 00:11:45,838 Sean Aylmer : competitive market in this, aren't we? 207 00:11:46,380 --> 00:11:49,110 Blair Comley: Yes. If the rest of the world moves on at 208 00:11:49,110 --> 00:11:52,559 Blair Comley: pace and we lag behind, we will miss the opportunity 209 00:11:53,010 --> 00:11:56,999 Blair Comley: to transform the industrial base in Australia and we'll miss 210 00:11:57,000 --> 00:12:01,890 Blair Comley: out on that $ 65 billion GDP opportunity in 2050. That's 211 00:12:01,890 --> 00:12:05,610 Blair Comley: essentially what our report models. It models a world in 212 00:12:05,610 --> 00:12:08,939 Blair Comley: which Australia leans in and the government leans in to 213 00:12:08,940 --> 00:12:11,610 Blair Comley: help the private sector and it compares it with a 214 00:12:11,610 --> 00:12:13,410 Blair Comley: world where we don't do that, where we take less 215 00:12:13,410 --> 00:12:17,639 Blair Comley: action and we forego that $ 65 billion dividend each and 216 00:12:17,639 --> 00:12:18,059 Blair Comley: every year. 217 00:12:19,078 --> 00:12:20,819 Sean Aylmer : Blair, thank you for talking to Fear and Greed. 218 00:12:21,179 --> 00:12:21,779 Blair Comley: Thanks so much, Sean. 219 00:12:22,679 --> 00:12:26,730 Sean Aylmer : That was Blair Comley, EY's Net Zero Centre leader. This is the Fear 220 00:12:26,730 --> 00:12:28,889 Sean Aylmer : and Greed daily interview. Join us every morning for the 221 00:12:28,889 --> 00:12:31,978 Sean Aylmer : full episode of Fear and Greed, Australia's most popular business 222 00:12:31,980 --> 00:12:34,469 Sean Aylmer : podcast. I'm Sean Aylmer. Enjoy your day.