Australia has the potential to become a renewable energy superpower by exporting green energy-intensive products such as green iron, green aluminium, green transport fuels and green fertilisers, according to Rod Sims, chair of the Superpower Institute. Writing in a new series ahead of Treasurer Jim Chalmers' economic roundtable, Sims argues that Australia's world-class solar and wind resources make it an ideal location for producing these goods.
Sims explains that in a net-zero world, it becomes economically logical to process resources like iron ore domestically rather than shipping them overseas. While transporting fossil fuels to northeast Asia for steelmaking is cheap, exporting renewable energy and hydrogen is extremely costly. Therefore, green iron should be made where renewable resources are abundant—in Australia.
The benefits for both Australia and the world are substantial. Sims notes that such exports could reduce global emissions by up to 10%, while boosting Australian productivity and creating skilled jobs outside major cities. However, he warns that other countries are already starting projects and gaining valuable experience, urging the Australian government to support early initiatives with innovation capital grants of 15% to 30%.
Sims also suggests that a carbon price could fund these grants and accelerate decarbonisation more efficiently than current policies. He acknowledges the political risk of funding but stresses that the required investment is small relative to the potential gains. With Europe's Carbon Border Adjustment Mechanism and similar measures emerging globally, Australian green exports could benefit from overseas carbon pricing.
Concluding, Sims emphasises that the time for action is now: 'Continually talking about the superpower opportunity without projects emerging encourages scepticism and sees other countries gain an advantage over us that they should not have.'
