The USA’s Inflation Reduction Act (IRA) and the European Green Deal have increased the urgency of fostering the local clean innovation ecosystem, as Australia looks to compete for investment in global capital markets.
The new in-depth global review, Driving Australian Climate Innovation, was commissioned by The Investor Group on Climate Change and delivered by global climate change investment and advisory firm, Pollination. It provides a clear picture of international best practice and recommends the specific policies and overall political approaches that Australian governments can and should adopt.
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Based on California, Denmark, Netherlands, South Korea, and Germany’s track records, Australia can build thriving climate industries. The whitepaper recommends the Government;
- Stimulates demand for low-carbon products by identifying high-priority climate sectors and setting sector transition plans for them.
- Updates the mandates of the Clean Energy Finance Corporation (CEFC) and the Australian Renewable Energy Agency’s (ARENA) to make investments with higher risk tolerance in the priority sectors.
- Significantly increases the goals of the Emissions Reduction Fund, which incentivises businesses, households, and landowners to proactively reduce their emissions.
To be effective and efficient, policies must be stable, have broad political support, and be centrally coordinated across portfolios and national, state and local governments.
Institutional investors, many of whom have set targets for ‘climate solutions’ investments, and collectively manage trillions of dollars, are not finding enough attractive opportunities to sufficiently invest in Australian transition industries. In the US alone, since the passage of the IRA, around $40 billion in new investment in electric vehicle, battery, and solar manufacturing sectors has been announced and over $2.5 trillion new investment has been projected to 2030.
Australia has made significant progress in renewable energy and climate policy but has not yet built an innovation ecosystem that properly supports the newer and more innovative climate-solutions businesses that will be needed to transition the entire economy to net zero.
Investor Group on Climate Change CEO, Rebecca Mikula-Wright said:
“Australian institutional investors stand ready to provide capital at scale to the businesses that will move climate action beyond renewables, but that innovation ecosystem can’t grow in a vacuum.
“The good news is that the Australian government has a fantastic opportunity to see what’s super- charged climate industries from California to South Korea, and apply those lessons here.”
“Australia can’t and should not attempt to match the scale of clean subsidies emerging globally. The nation can’t outspend the USA and others but we can outsmart them and use our unique resources to realise our competitive advantage.”
Pollination Managing Director & Head of Impact, Zoe Whitton said:
“With the right policy settings in place, Australian companies and investors could utilise the demand for clean solutions – created by the USA’s Inflation Reduction Act and Europe’s Green Deal – to create new growth industries in Australia.
“These policy settings will leverage Australia’s potential in clean industries and materials, helping to mobilise capital to reduce emissions, and will lay the foundations for Australia’s ongoing economic success.”
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