The immense opportunity of climate change

Dealing with climate change has always felt like a slog. Like we need to take our medicine in order to fight off calamity. In some respects this is correct, especially for countries without access to a lot of low-emissions power.

But reading Superpower by Ross Garnaut makes me realise that there is a huge opportunity. Especially for countries with access to large quantities of wind, solar, hydro and tidal power.

…Australia’s resource base placed it well for the energy transition: it had a wide range of high-quality renewable energy resources and economically favourable opportunities for geosequestration of emissions from traditional coal and gas generation… Australia’s hydro-electric resources and potential for pumped hydro-electric storage (PHS) in the Snowy Mountains and Tasmania, and perhaps its proximity to the immense hydro-electricity resources on the island of New Guinea, would play big roles in balancing solar and wind….

There’s already a company raising funds to supply a fifth of Singapore’s energy via an undersea cable from a solar farm in Australia.

But Garnaut goes further, pointing out that the more other countries put a price on carbon, the greater advantage there is for a country with Australia’s capacity to generate low-emissions electricity.

A price on embedded carbon would make imports from polluting industries and countries more expensive.

Australia is the largest exporter in the world of mineral ores requiring energy-intensive processing for conversion into metals. Australia in the post-carbon world could become the locus of energy-intensive processing of minerals for use in countries with inferior renewable energy resource endowments. Second, there are opportunities for export of hydrogen produced by electrolysis from renewable energy, through liquefaction or through ammonia as a hydrogen carrier. The natural markets are the renewable-energy-resource-poor countries of Asia, notably Japan and Korea.

Tackling climate change could move Australia up the industrial stack. It could rejuvenate manufacturing, countering some of the advantages of automation, geography and low cost labour. It should even benefit regional areas, as manufacturing is located near power generation.

But, most importantly, this isn’t just an argument for investment in renewable energy. Countries like Australia have a clear incentive to encourage everyone to cap, price and reduce emissions, to invest in moonshot technologies.

The more action on climate change the more competitive we become.