Gigantic onshore windfarms, massive offshore windfarms on floating pontoons. Australia needs huge amounts of steel, skilled labour and power in equal measure to even begin these projects. Paul Hellard reports from Canberra.
The Hon Tim Ayres, the Assistant Minister for Industry and Science appeared at Weld Australia’s National Manufacturing Summit, on an unnervingly mild mid-winter morning in Canberra.
He spoke of the challenges ahead for Australia. “We must move fast in this changing environment. And everything needs to work together,” he said. After a decade of inaction by the LNP governments, Minister Ayres said his government was ready to sign on to actionable plans. There are some positive moves in the Powering the Regions Fund, the National Reconstruction Fund, Rewiring the Nation, and the Capacity Investment Scheme which was the start of the transformation of industry policy in Australia.
What’s needed though, as stipulated by other speakers at the event was the biggest piece of economic policy since the post-WW2 Marshall Plan. The EU, Canada, and the US have all brought their programs into action, pushing manufacturing and construction in the States with their IRA and CHIPS Act.
According to the CEO of Weld Australia, Geoff Crittenden, host of the Canberra event, “We are now at the stage where even the most obtuse observer must realise that global warming is real and is coming at us much faster than we imagined it could. Last year, Australia experienced record floods, with countless people losing their homes. This year, we’re expecting a record bushfire season, with the Northern Hemisphere already experiencing some of its hottest temperatures on record. The climate crisis makes manufacturing the renewable energy revolution an imperative.”
“The United States, through the IRA, has shown tremendous leadership, enacting a plan to tackle the challenges of the renewable energy revolution; a plan with manufacturing at its heart; and a plan that is already delivering unprecedented growth in the sector. A combination of tax credits, loans, and subsidies, the IRA is an investment in—not a cost to—the US economy. An investment without which the US economy and society could suffer catastrophic and irreversible damage.”
“In Australia, the task of responding to the IRA seems to have created such an insurmountable challenge that we have ground to a halt. A policy of fiscal conservatism driven by the Treasury is obstructing any type of progress. We are defeated before the first shot is fired.”
Emily Scivetti is the Chief Operating Officer at Oceanex Energy. Offshore wind power generation is experiencing rapid growth globally and the opportunities for Australia are significant. She outlined her wish to build a massive workforce as soon as possible. Oceanex is developing a portfolio of offshore wind farms in waters deeper than 70 metres off New South Wales and New Zealand and in shallower waters off Western Australia. The scale of these ventures is eye-watering. Offshore wind farms will provide a new source of large-scale, clean, and reliable electricity that creates huge new investments, jobs, and innovation opportunities, especially in key regional centres. A single rotation of an offshore wind turbine can supply a day’s worth of energy for an average NSW household. Each NSW project is estimated to generate up to 2GW of electricity which is a similar scale to the power provided by a NSW coal-fired power station.
An Australian offshore wind industry will need more than 1,000 steel foundations in the next 10-20 years. New South Wales, particularly the Hunter and the Illawarra regions, are primed to take advantage of this growing sector and become a leader in the deployment of floating offshore wind farms. NSW provides an ideal home for offshore wind farms with existing transmission infrastructure, reliable wind resources and a workforce experienced in developing and delivering large energy projects. But the workforce needs to be much more significant.
Oceanex estimates that each NSW offshore wind farm will require at least 750,000 tonnes of steel. With larger components, offshore wind will require a sizeable skilled labour force and can provide a catalyst for the significant growth of local manufacturing and engineering capabilities. These manufacturing opportunities are real but Australia needs to act now to capitalise on these opportunities. Scivetti’s plea supported Weld Australia’s estimate that Australia needs 70,000 more trained work-ready welders before 2030. She wants to see Australia’s steel industry fabricate floating foundation substructures on shore, but securing suppliers and workforce is critical to success and timing is everything. A new offshore wind industry will need suction pile anchors, columns, pontoons, and braces – large-scale steel components that could be manufactured across the local fabrication ecosystem using BlueScope steel.
Dan McKinna, General Manager of Keppel Prince concurred on the massive challenges ahead. “Australia requires a nine-fold increase in grid-scale wind and solar to meet our 2050 targets under AEMO’s step change scenario. The opportunity for local manufacture of wind towers is massive. An onshore wind tower requires seven kilometres of weld in each unit, to manufacture the towers for 40GW of installed onshore wind capacity requires more than 22 million person-hours of manufacturing. Offshore wind expands this even further, we estimate that to manufacture the towers and foundations for 40GW of fixed foundation offshore wind will require over 53 million person-hours of manufacturing. All this manufacturing is going to be completed somewhere, Australia needs to ensure that we play a significant part in this opportunity.”
Adam Hersh is a Senior Economist from the Economic Policy Institute in Washington DC where he focuses on International Trade and US-China relations. Hersh was one of several international speakers at the National Manufacturing Summit recently in Canberra. “We have entered a dangerous and fragile inflection in the planet’s climate systems,” he said. He also cited the unprecedented Chinese economic rise as “the biggest economic rise in the history of human existence.”
“China can make, pretty much anything,” he added.
“We have a historic opportunity to rebuild Australia’s manufacturing industry through renewable energy,” said Charlie Joyce from the Carmichael Centre, Australia Institute, releasing a Centre of Future Work report on the day with Dr. Jim Stanford, which states Australia needs to respond much quicker to the powerful new incentives on offer in the US and several other industrialised countries. “The Albanese government needs to go big and go now on climate industrial policy to seize the full opportunities of the renewable energy revolution or risk missing out completely. Australia risks being cut out of lucrative new markets for manufactured products linked to renewable energy systems,” he said.
The Biden administration in the US reacted to China’s rise, with the Inflation Reduction Act (IRA) and the CHIPS Act. “In recent years, Chinese investment in clean tech manufacturing has been eight to ten times greater than the US and Europe combined,” Joyce added. “Cleantech manufacturing has become a national development priority in China. There is a global race for clean tech manufacturing, and Australia is barely on the track.”
Geoff Crittenden was tuned into the heavy consequences of not moving fast enough. “We need to train many more welders to cover the requirements of these projects, otherwise we will be left in the dust.”
Among the field of companies with skin in the game attending the Summit here in Canberra was Vestas. I spoke with Fredrik Andren-Sandberg, Head of PA in Asia-Pacific. He said the Danish wind turbine manufacturer could see Australia had a big job ahead of it. “We only install 20% of what we need globally to reach net zero and achieve energy security, for offshore wind we even need to ten-fold installations. In Australia, we only install 20-25% of what’s needed to reach the 2030 targets. Energy also reaches into each country’s important national security measures.” Vestas knows about having obstacles in the way of business. They used to have turbine construction projects in Russia. Now they don’t. They have also lately experienced the impact of COVID-related issues within a global supply chain. Vestas has so far supplied 40% of all the Australian wind farm capacity installed and are open to utilising Australian-made steel if the market allows for it.
ACTU President Michelle O’Neil made it clear that there shouldn’t be a single worker made redundant by the phase-out of fossil fuels. “Don’t leave behind those people who make everything you use every day,” she said. “There are so many manufacturing sectors hitting the new learning curve.”
AEMO expects the surge in renewable energy generation by 2050 will need to be connected using 10,000km of new transmission cables and 25,000 towers, each using 60 tonnes of steel. “But without a massive investment in local manufacturing this will not be achievable in Australia,” said Crittenden. “If Australia is to ever achieve net zero, we must have our own version of the IRA, tailored to our local conditions. Australia simply has no choice. The alternative is unthinkable. We have half the net debt as a percentage of GDP as the US, so why are we even hesitating? Adjusted for the scale of the Australian economy, the Australian Government must commit $300bn—approximately $12bn a year to 2050—to a program similar in size and scale to the IRA. This sum is equivalent to current carbon subsidies, inconsequential when compared with the anticipated mining royalties from rare earth minerals, and less than the $368bn we plan to spend on nuclear submarines.”
Tim Buckley, the Director of Climate Energy Finance Australasia, added that the installed cost of solar energy development globally will halve in price this decade. “We have all the critical minerals and the know-how, but it is now a global technology and investment race to the top. Indonesia isn’t ignoring it. Chile, Vietnam, and India aren’t either. Australia would be crazy not to grab the opportunity stemming from the US IRA with both hands, and to do it fast, and at an unprecedented scale,” he said. “BNEF’s Jenny Chase states it took the world 183 years to generate the first terawatt of energy through solar installs, and it’ll take only three years to generate the second terawatt. Then only 15 months to generate the third. Can we do it? Of course, we can do it. But we have to do it fast.”