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South Australia's Climate Change Challenge and Opportunity

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South Australia's Climate Change Challenge and Opportunity South Australia’s Climate Change Challenge and Opportunity Ross Garnaut September 2020 PB South Australia’s Climate Change Challenge and Opportunity Ross Garnaut September 2020 1 Summary of key points South Australia has a compelling interest in the success of the global effort to reduce damage from climate change. It can prosper exceptionally in success. Low renewable electricity Manufacturing and mining prices are the foundation for emissions are high and have not global competitiveness in fallen since 2009. These industries new manufacturing, including can move towards zero net the processing of South emissions over the next decade and Australian raw materials. during this time expand greatly. • South Australia has led a transition to • The largest miners and metal manufacturers a more reliable and secure low-carbon are committed to zero net emissions. power supply and now has lower wholesale There are advantages for trading zero- electricity prices than the most populous carbon metals within European markets states and is a net electricity exporter. now and other markets thereafter. • Renewable energy and storage investment • Green steel holds great opportunity in South can quickly lift employment and incomes in Australia from magnetite deposits, low South Australia’s post-pandemic recovery cost renewable energy for hydrogen, and as well as support electrification of transport bolstered by Whyalla human skills, education and expansion of energy-intensive industry. and training facilities. South Australia has the required physical infrastructure in place for • The biggest constraint on renewables expanding zero emission manufacturing. expansion is in planning and regulating the transmission and distribution network. Priority: Provide fiscal support for innovation to accelerate low-emission industrial inputs such as Priority: Facilitate investment in new energy hydrogen in heavy industry, iron-processing and transmission to enable increased energy other minerals processing. generation, use and export, including reforming the regulatory framework. 2 South Australia’s Climate Change Challenge and Opportunity Transport is South Australia’s South Australia and other largest source of emissions, Mediterranean climates are mostly from road transport. experiencing the most significant warming and drying of any regions, • Electrification of road transport is the biggest opportunity to reduce domestic requiring rapid adaptation. emissions. This will be helped by the low cost of renewable electricity. • Excellent climate change information and public education are the main instruments. Priority: Support investment in charging • South Australia’s agricultural future infrastructure and time-of-use electricity pricing depends on adapting better than other to encourage greater uptake of electric vehicles. countries with similar climates. • Opportunities in more efficient water use include desalination with low-cost, low-emission energy. South Australia has large • Infrastructure and buildings will have to opportunities to increase the withstand more extreme weather events. amount of carbon stored in sea, soils and plants, and to use Priority: Continue the South Australia biomass for industrial processes. Government’s excellent climate risk and adaptation science publications; support • A large per capita endowment of innovation in water management; and improve woodlands and rangelands offsets the building codes to embody climate resilience. disadvantage of low precipitation. • Advantages are in plants adapted to a hot, dry and variable climate; human capital strengths in the applied land sciences and in resource project development. • New biomass can replace fossil carbon in all uses and provides economic opportunities but will be reserved by price for processes in which there are no low-cost zero-emission alternatives. • South Australia’s coasts and gulfs provide rich opportunities for sequestering carbon. Priority: Drive and develop comprehensive landscape carbon accounting that will reward landowners for increases in carbon sequestration; fiscal support for innovation in blue and green carbon technologies. 2 South Australia’s Climate Change Challenge and Opportunity Ross Garnaut September 2020 3 Introduction South Australia is the driest state in the world’s The South Australian private sector has a rich driest inhabited continent. Its rich agricultural endowment of human skills and experience for areas share the Mediterranean climates that understanding, mitigating and adapting to climate have been the first to experience disruptive change and utilising low-emission technologies warming and drying all over the world. It is for economic development. The Government of damaged by the shrinkage of water flows South Australia has always been at the forefront through the Murray–Darling river system. South of innovation for the transition that the world must Australians’ health and wellbeing have recently make soon to zero net emissions. been disrupted by the most severe bushfires on record and are affected by more and more South Australia has a compelling interest in frequent extreme heat. South Australia stands the success of the global effort to avoid the out in a vulnerable world for its vulnerability to worst effects of climate change. It would be climate change. damaged immensely by failure. It can prosper exceptionally in success. At the same time, South Australia is better equipped to respond to the challenges and opportunities of climate change than any other Now is the right time for Australian state and nearly all of the world’s high levels of investment in sub-national jurisdictions. It used to have more expensive and less reliable wholesale the low-carbon future electricity than the more populous states. With more electricity coming from solar and wind The international scene is right. While traditional and investment in balancing technologies, that trade and investment will remain weak in a has been reversed. Low electricity prices can depressed global economy, there will be be the foundation for global competitiveness opportunities in building the low-carbon global in new manufacturing, including the processing economy. For the time being, uncertainties exist in of South Australian raw materials into zero- the United States (US), but the world now seems emission products experiencing strong likely to emerge from the pandemic recession international demand now and increasingly in with strengthened commitment to meeting the future. South Australia has large opportunities objectives agreed in Paris in December 2015. The for producing biomass on land and in the sea, international economy is ready for deepening trade which will become increasingly valuable as the and investment with Australia if we embrace the world moves to zero net emissions. It has rich low-emissions transition. opportunities for sequestering carbon in its landscape, sea and geology. COVID-19 has tipped us into by far the deepest Australian recession since the Great Depression. The Government of South Australia, under South Australia has thus far fared better than both major political parties, has implemented the most populous states in containing the virus productive responses to climate change. It has but shares the nation’s need for large business led transition to a lower cost and more secure investment to restore incomes and employment. and reliable low-carbon power supply, and is Business is ready to commit large amounts of leading transformation elsewhere in the economy. investment in the low carbon economy in South It is providing sound and clear information about Australia. Regional South Australia in particular future climate change to which we must adapt. can prosper exceptionally by embracing the zero 4 South Australia’s Climate Change Challenge and Opportunity emissions opportunities. Few South Australians are aware of how tall their state stands in innovation in the low-carbon economy. Drive by electric car or bus from Adelaide, around the coast through Port Augusta and Whyalla to Port Lincoln, with a short detour through Jamestown, and you will see in operation or under development many of the leading zero- emission energy technologies. These include a solar-thermal-powered arid-zone greenhouse; the world’s largest battery; innovative virtual power plants; floating solar; many large solar and wind farms; innovative use of algae; synchronous condensers; and development sites for pumped hydro and renewable hydrogen. No drive of similar length in the world would expose you so intensively to the energy systems of the future. Start in Mt Gambier on a longer journey and you will see even more, including the use of pyrolysis to convert wood waste into char and energy, and biomass heating systems for a greenhouse and aquatic centre. Along the journey, you pass centres of world-class research and innovation related to constraining the increase in temperatures and adapting to climate change. South Australia’s high standing on climate change and the energy transition can attract interest, visitors, innovative new citizens and investment. 4 South Australia’s Climate Change Challenge and Opportunity Ross Garnaut September 2020 5 South Australian emissions and the mitigation challenge South Australia, like all Australian states and A 50 per cent reduction by 2030 is within reach, with territories, aims to achieve zero net emissions by major contributions from low-emission manufacturing 2050. This objective is broadly in line with the Paris and mining,
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