tijaco

a vision not to be wasted

Australia has the potential to become a superpower of the 21st century. There is going to be an inevitable change happening over the next decades as the whole world starts to address climate change. Whether or not we will do enough to keep the warming below 2 degrees above preindustrial levels is debatable and is a very valid debate to have. This is clearly a problem that we need to solve and addressing it as such hasn’t seemed to have produced enough action. Ross Garnaut’s vision of Australia taking the opportunity of climate action is a different framing and an incredibly powerful one in my opinion.

Australia has some of the the best renewable energy resources on Earth. It doesn’t take long to understand this. We are known as one of the sunniest countries in the world and in Northern Australia, we have incredible expanses of land which are the among the best in the world for producing solar energy. Even in the worst parts of Australia in terms of solar capability, it is still entirely feasible to run whole communities with solar power with plenty of surplus. In terms of wind power to be converted to renewable energy with wind turbines, parts of Southern Australia are some of the best in the world. Similarly with solar, even some of the least windy parts of Australia would be feasible to run communities on wind power. To summarise – the north has world-leading solar resources and decent wind resources, while the south has world-leading wind resources and decent solar resources. This means that Australia could not only power our own increasing needs with renewables, but we could easily power 200% or even 700% of our needs with renewables.

Now, to talk about the costs. There is a difference between the payment models for fossil fuel and renewables-based energy. Fossil fuel energy needs less upfront costs, but it has lots of ongoing costs. Renewables, on the other hand, require substantial upfront costs, but the ongoing costs are incredibly minimal. It doesn’t cost so much to start digging a mine and burning it off to spin a turbine, but you have to keep paying for new trucks, more employees and lots of maintenance costs ongoing for the life of the fossil fuel power station. For renewable energy, it requires a fair amount of capital to buy a bunch of wind turbines and/or a bunch of solar panels. The ongoing costs, however, are incredibly minimal. There is very little maintenance needed because the system just powers itself. Once those initial costs are paid off, the electricity becomes incredibly cheap.

So, if Australia has massive renewable energy resources and renewable energy can create cheaper energy in the long-term, then what could we do with all of our incredibly cheap, surplus energy? This could facilitate a manufacturing boom in Australia, and this manufacturing boom will be encouraged by global markets. There are many industrial processes to create the materials that we use every day which are either emissions-intensive or energy-intensive which, if you are running on a fossil fuel-dominated grid, is emissions-intensive. The processes which are emissions intensive like steel production need technological changes in order to improve those processes and create steel in a way which doesn’t produce emissions directly. In the case of steel production, the emissions-free production requires far more energy. Where do we have a lot of cheap energy? If we act right, Australia. The processes which are energy-intensive but not quite so (directly) emissions-intensive could also find their home in Australia simply due to our very low electricity prices.

A key part to this puzzle is a chemical called hydrogen. Hydrogen has many uses, especially in a decarbonised economy. It can be made several ways. One involves gas and emits carbon monoxide and is the likely method that many politicians who are paid by gas companies will be speaking about in the months to come. It is very important that we define how the hydrogen is being made for this reason. The second method of creating hydrogen is by electrolysis of water which takes the H2O and separates the hydrogen from the oxygen. This requires a lot of electricity which, should we be powering our grid with renewables, will mean that we have emissions-free “green” hydrogen.

One reason why this is so important is that hydrogen is quite difficult to transport. There are two ways to transport it. You can transport it as hydrogen itself, but because hydrogen is one of the smallest molecules known to us, we need to first liquify it. To liquify hydrogen, you have to reduce its temperature to close to absolute zero which is around -273 degrees Celsius. This is incredibly difficult. Especially if you are in a country with lots of very cheap electricity, you are better off creating it close to the point at which you need to use it. Another method of transporting hydrogen is to turn it into ammonia, which we will talk about later, and transporting it that way. This will likely be preferable to transporting liquified hydrogen but it will likely still be better to create it at the utilisation point. But what is hydrogen actually going to be used for? One use for it is to make green steel, which I will get to. Another is to make ammonia, which I will also get to. The third use is as a transport fuel, especially for long-distance and freight travel like cargo ships and trucks where batteries are not yet feasible.

Let’s start with ammonia. Ammonia is used mainly for explosives in mines and for fertiliser in the agricultural sector. The way we create ammonia is through the Haber-Bosch process which takes hydrogen and nitrogen to create ammonia [N2+〖3H〗2=〖2NH〗_3]. This process doesn’t itself produce emissions, but the way in which the hydrogen is created often produces emissions, as noted in the paragraph above. If Australia becomes the home of green hydrogen production due to our low energy costs, and since it is quite difficult to transport hydrogen, Australia would have a strong competitive advantage to producing the cheapest, greenest ammonia on Earth.

Moving now to steel production. There are three main ways to make steel that I will explore here. The first, older method is by using coking coal. This produces CO2 emissions in high volumes and in a decarbonised world economy is not ideal. The latter, and more modern, two methods of steel production are by direct reduction of either gas or hydrogen. Producing steel by direct reduction of gas emits much less than does the older method, but there are still plenty of emissions which won’t be tolerated in the decarbonised economy. The final method, direct-reduced steel using hydrogen, is the path to “green steel”. So long as the hydrogen is produced using electrolysis with renewable energy, the only emissions produced in the steelmaking process is water. Given the stated advantages of green hydrogen production in Australia given our competitive advantage when it comes to renewable energy, we have yet another competitive advantage.

Australia is the biggest exporter of iron ore in the world, sending large amounts to low-wage countries like China for steelmaking. In the early 21st century, this supply chain made sense as we might not have been able to compete with these low wages. In a world where high-emissions steelmaking is made infeasible by government policy or market forces, Australia sees a huge competitive advantage in making our own steel. The biggest iron ore mines, the best hydrogen capabilities, and the fact that hydrogen is so difficult to transport all combine to make Australia the only reasonable place to base the world’s steel production. To do so anywhere else would be inefficient.

The process why which we create aluminium is another which becomes important in a decarbonised economy. Aluminium is known for how energy-intensive its manufacturing process is. Aluminium smelters are often set up near to power stations so that the supply of energy is strong and consistent. There are emissions produced in the process itself, but much of the emissions can be sourced to the grid from which it draws its energy. If the electricity grid in Australia is green and cheap on a global scale, market forces even without carbon pricing will make Australia the home of yet another key commodity in the 21st century economy.

This is only the start. Not mentioned here, there is also massive potential in carbon sequestration in the vast expanses of Australia, with a carbon economy already established in Europe. There is potential, and already plans, to run undersea cables from the Northern Territory to Singapore, paving the way for direct export of surplus energy from Australia to South East Asia. Producing hydrogen and exporting it as ammonia, especially for freight ships, is another potential area for research. The lithium, nickel and cobalt produced in Australian mines as well as a now-faded car manufacturing industry and workforce shows the potential for Australia as an electric vehicle manufacturing hub. The rise of automated factories and their need for cheap energy rather than a cheap workforce could even move the consumer-side manufacturing from Asia to Australia. At this point, we would be capturing all of the value-added from mine to consumer product. We would be a real force to be reckoned with.

Should these companies be structured properly, the right taxes be paid and the right social programs implemented, we could do some much needed healing to some of the marginalised communities of our nation. Solar projects, especially throughout the North of Australia should be purposed with channelling funding into better social programs for remote indigenous communities in a long overdue effort to close the gap. First and foremost, there should be sensitive communication and collaboration with the indigenous communities about cooperating to take better care of the land and heal some of the scars that past policies have created.

There are plenty of reasons for optimism in Australia to make the most of the inevitable transition to a decarbonised world economy. All we now need to do is to communicate this vision and vote in leaders who are willing to take these bold steps toward a new and fairer Australia.