Capitalising on WA’s Energy Transition Opportunity

A key platform for transforming WA is the transition of the State’s energy sector. FundWA has a vision toward a sustainable energy future for WA by building on the momentum emerging globally for an energy transition, and the strategies that have already been initiated by the State. The aim is to create an ambitious strategic vision for WA to become a global sustainable energy leader.

Changing societal attitudes and economic imperatives pose a potential threat to WA’s current export-driven economy, particularly the sustainability of LNG and mining exports (and linked jobs and Government royalties). It is estimated the resource sector employs some 56,000 FTE and contributes (directly and indirectly) some $46b to the WA economy annually (WA Chamber of Minerals and Energy). The building pressure to decarbonise is reflected in consumer and investor behaviour. The green energy trend has accelerated enormously over the last 12 months and has become even more significant with the Biden administration in the USA. Nations are developing new energy strategies and embracing new technologies, such as hydrogen and other renewables, to create the demand side driver of change. Japan, South Korea, and China have all announced up to 25% of their energy imports will be hydrogen by 2035.

This has also become true closer to home. Most major miners and oil & gas companies operating in the State have already announced net zero-carbon strategies, as has every State Government, including WA. This has been driven, in part, by investor and customer pressure for clean, green extraction and processing.

Much as WA developed the resource sector 50-60 years ago to leverage its natural endowments under the ground. There is now a compelling case for the State to use its natural endowments in renewable energy to further grow and diversify the economy. This will provide long-term security and prosperity for all citizens of this State.

Considerable good work has already been done in both the public and private sectors to progress low emissions initiatives:

• Several projects are being advanced which embrace renewable energy and hydrogen (Asian Renewables Hub, ATCO, Denham)

• Funding has been made available to initiate these projects (WA green hydrogen fund) and a Whole of System Plan for the South West Interconnected System (SWIS) has been developed

• A Hydrogen Roadmap and a Future Batteries Strategy have been released

• A Climate Change strategy has also been prepared

There is a significant opportunity for further ambitious initiatives by placing these and other investments in the context of a long-term, integrated strategic vision. Decisions taken now will set a transformative trajectory for the State for decades to come. This will deliver sustainable growth for the State with energy, much like the investments made over 5 decades ago created one of the world’s best resource hubs. It is essential that a clear, cohesive narrative linking all the threads that encompass this unique opportunity is presented locally, nationally, and internationally. A visionary narrative that builds on current strengths and initiatives will provide a clear indication of the State’s direction. This clarity is crucial in giving confidence to private and foreign investors and gaining support from the general public, both of which are essential to long-term success.

FundWA has a vision for transforming the energy sector in WA by 2050 – one in which the State thrives and becomes a world-class player in the new energy economy. This will be achieved by maximising its unique opportunities of location, natural resources, renewable endowment, skills and experience, infrastructure, and capability for innovation. The government, the private sector, academia, and the community must all play a pivotal role in the development of this transformational energy sector.

WA is strikingly well placed to undertake an orderly transition to a low carbon energy future. With aging coal-fired stations being phased out, there is an opportunity for renewable energy sources to replace coal. The State has massive solar, wind, and geothermal capacity. The northwest is particularly suited to solar energy generation, while the southwest has the best wind conditions in the country. The midwest is a sweet spot that has strong solar and wind potential combined. In addition, WA is blessed with very large quantities of natural gas which will support the transition phase to renewables, while storage capacity and other supporting technologies are developed.

Off-take arrangements are critical to any new export market (especially so in energy). WA already has the existing trade relationships in place – with Japan, South Korea, and China. Other nations including Germany and the Netherlands also see Australia as a potential source of alternate green energy (in lithium and hydrogen).

From a resources point of view, WA is the only place on the planet that has all the elements for the various Lithium-ion or Vanadium batteries (including Lithium, Vanadium, Cobalt, Nickel, Manganese, Aluminium, Zinc, Iron, as well as untapped graphite deposits). The State has the potential to produce Lithium-ion batteries which would complement its renewable energy capacity ideally. The opportunity to export renewable power in products such as the development of a once fanciful green steel industry is gaining real traction (and investment). Moreover, the State has considerable Rare Earth elements deposits that could be used in numerous areas, such as manufacturing wind turbines.

However, Australia is not the only nation with ambition. Unlike iron ore, there are multiple nations that can demonstrate strong renewable capability. We also suffer from a limited domestic industry to support and seed development of the required energy generation, transportation infrastructure, and domestic off-take to support. If WA is to protect and grow its energy exports, strong collaboration between industry and government will be required.

We envisage that by 2029, WA is a leading global green sustainable energy hub. By 2029, WA will produce significant quantities of green energy, which results in WA being:

• On a path to net zero-carbon;

• An exporter for surplus green energy to Asian markets;

• A manufacturing hub for value-added low-carbon products (e.g. “green steel and alumina”)

• A world-leader for expertise in small-scale clean energy grids (micro-grids, grid-scale battery storage);

• A major intermediary in the clean carbon market (via carbon capture and abatement, regenerative agriculture, blue carbon and carbon capture, utilisation, and sequestration).

These developments would result in critical resource security for the State as a result of reliable green energy for jobs, as well as in water desalination and food production.

While WA has leveraged its abundant geological resources to create one of the world’s leading mining and LNG hubs, the State should increase leveraging its abundant renewable energy resources. Global carbon trends, LNG prices, and COVID-linked supply chain fragility have created a ‘perfect storm’ – this is WA’s moment in time to redefine itself. If done correctly, this is the opportunity to create another pillar for the economy that can support a prosperous and growing State for the next 50-100 years. This will require linking the State’s comparative advantages with emerging opportunities to create an ambitious vision, then systematically implementing it over the next 5-10 years.