COVID may be the kick the Federal Government needs to invest in Renewable Energy
The views and opinions posted here are of the author and not the Monash Energy Club
BY EMILIO LANERA, student of Monash’s School of Journalism
When it comes to taking action on climate change the Australian Federal Government has often been hesitant. Due to their reliance on non-renewable energy sources as major export items, governments past and present have argued that transitioning from conventional to renewable energy sources would be an economic catastrophe. Even after the seven months of bushfires the nation endured between 2019 and 2020 Prime Minister Scott Morrison still downplays the impacts of climate change and continues to invest in coal and natural gas.
Australia’s 2020 bushfire season was a stark and horrifying reminder as to climate change’s impacts now, and in the future. Source: BBC News
However, the short term economical benefits fossil fuels provide to the Australian economy may no longer be a valid argument as the Reserve Bank of Australia warns that there will be long term economic consequences of climate change not being addressed (NGFS, 2020, p.3)
Alongside 60 other central banks, the Reserve Bank of Australia reported that global GDP could fall by 25% by 2100 if the world does not act to reduce global greenhouse gas emissions (Morton, 2020). The report also found a failure to address climate change will see an increase in unemployment and decrease in wages. An increase in the frequency and severity of natural disasters will also make it difficult for people to start or maintain their businesses as physical assets are at more risk of destruction and damage causing them to decline in value and become uninsurable.
With the future looking so grim from a financial perspective many economists, bankers and investors are encouraging governments around the world, including Australia to further address climate change and restructure the economy to be less reliant on conventional energy sources to avoid economic hardship later on. On June 8 the Network for Greening the Financial System released a statement saying;
“Under these challenging circumstances we should not lose sight of the fact that climate change and environmental issues remain as urgent and vital as ever. The systemic risk posed by climate change to our economies and the financial system has not reduced.” (NGFS, 2020).
Currently, the Australian government is making drastic changes to revitalise the economy due to the outbreak of COVID-19. So far they have announced plans to create more jobs by establishing industry-specific support packages for arts, entertainment, and tourism, investing more in infrastructure and Education Minister Dan Tehan has announced plans to restructure university courses to create “job-ready graduates” (Hutchens, 2020).
However, something else the Australian Government could consider is investing more in renewable energy sources. The University of NSW’s Centre for Energy and Environmental Markets found that Australia has extraordinary renewable energy potential especially in regards to wind and solar power ( Riesz et al., 2016, p.i). However, the report also acknowledged that the transition from fossil fuels to renewable energy will take many years, therefore it is best to start this transition sooner rather than later (Riesz et al., 2016, p.9).
So far 835,000 people have lost their jobs since the pandemic in March and the youth unemployment rate is currently 16.1%, more than double the national rate. While it is devastating so many Australians are out of work, it also provides the government with an opportunity to begin transitioning from a fossil fuel-based economy to a renewable energy source based economy.
The Australian National University identified 22,000 potential sites across Australia for pumped hydro energy storage with 100 percent renewable energy (Blakers et al., 2017, p.1), and according to the University of Technology of Sydney (Teske, Dominish, Ison, 2016, p.31) transitioning from petrol to electric vehicles could save Australians $400 billion. Based on these findings alone the Australian Government could invest in an electric vehicle manufacturing sector and invest in the creation of hydro energy storage sites which would create jobs for thousands of Australians. Furthermore, instead of cutting certain education programs or increasing the fees of certain degrees, the government could be creating more educational programs related to renewable energy so people can create new technologies or come up with new plans to help Australia develop a sustainable economy.
Although establishing a renewable energy source based economy is probably not at the forefront of the Government's agenda, it should be something they ought to consider as it may not only help us get out of the current economic deficit the country is facing, but may also prevent another from occurring later on.
Reference list
Blakers, A., Stocks, M., Lu, B., Anderson, K., and Nadolny, A., 2017, ‘An atlas of pumped hydro energy storage’, The Australian National University, p.1-27
Hutchens, G., 2020, ‘University fee changes announced by Dan Tehan combine market-based economics with social engineering’, ABC News, June 22, available at: https://www.abc.net.au/news/2020-06-22/university-fee-changes-dan-tehan-capitalist-economics-analysis/12377498
Morton, A., 2020, ‘Reserve Bank warns of 25% GDP loss by 2100 unless action taken on climate change’, The Guardian, June 26, available at: https://www.theguardian.com/australia-news/2020/jun/26/reserve-bank-warns-of-25-gdp-loss-by-2100-unless-action-taken-on-climate-change
NGFS Secretariat, 2020, ‘Climate Change and Monetary Policy Initial takeaways’, Network for Greening the Financial System, p.1-17
NGFS, 2020, ‘Statement on the need for a green recovery out of the Covid-19 crisis’, Network for Greening the Financial System, June 8, available at: https://www.ngfs.net/sites/default/files/medias/documents/green_recovery_statement_-_june_2020.pdf
Riesz, J., Elliston, B., Vithayasrichareon, P., MacGill, I., 2016, ‘100% Renewables in Australia: A Research Summary’, Centre for Energy and Environmental Markets University of NSW, p.1-35
Teske, S., Dominish, E., Ison, N. and Maras, K., 2016, ‘100% Renewable Energy for Australia – Decarbonising Australia’s Energy Sector within one Generation’. Report prepared by ISF for GetUp! and Solar Citizens, p.1-42