Ross Garnaut says Labor's historic victory could change global energy trade

Australia Broadcast Center

10-05-2025

Ross Garnaut says this moment is significant.
Four days after Labor's historic election victory last weekend, the leading economist delivered the opening address at the national conference of the Energy Users' Association of Australia (EUAA) in Melbourne.
It was Wednesday morning, and the room was full of representatives from Australia's electricity and gas retail markets, regulators and academia.
Garnaut told the audience that Labor's historic victory should toll the death knell for the political conflict and policy instability that had plagued Australia's energy "debate" for so many years.
He didn't mince his words.
"Companies represented here in this energy users' conference have contributed their fair shares to the dysfunctional political disputation that has disrupted and blocked good policy over the past dozen years," he told them.
"Few companies now would prefer the instability and dysfunction of the past dozen years to the carbon pricing that was working effectively from mid-2012 to mid-2014.
"But major energy companies contributed to the destruction of a sound, market-friendly approach to removing emissions.
"Somehow we have ended up subsidising coal-power generation, and with average prices for coal and gas power many times those for the renewable energy that we are meant to be encouraging.
"The decisive Albanese victory last Saturday creates an historic opportunity to change — for the government, and for business relations with the policy process," he argued.
And that wasn't all he said.
You can read his speech here.
Garnaut told the audience Prime Minister Anthony Albanese's historic victory was reminiscent of John Curtin's famous victory in 1943 that paved the way for policies that led to decades of full employment with rising incomes after World War II, which altered Australian history.
He said another epoch-making opportunity beckoned this time, but with energy and trade policy.
He said the scale and nature of this moment for Labor was set out in The Superpower Institute's paper, The New Energy Trade, which was published in November (Garnaut is a director of the Superpower Institute).
He said that paper explained how Australia could change the global energy trade, and drive domestic economic growth for decades to come, by leveraging its vast renewable energy capacity to become a leader in the so-called "superpower trade".
As the paper explained:
"This world-first analysis examines the potential for Australia to export green energy-intensive goods — such as green iron, steel, aluminium, silicon and ammonia — that embed clean energy into essential materials for the global economy.
"With world-leading solar and wind resources, abundant land, and a relatively small population, Australia has the capacity to produce renewable energy at scale and export it in the form of energy-intensive goods.
"This comparative advantage positions Australia as a natural leader in the global clean energy trade.
"The superpower trade offers economic opportunities that far exceed the scale of traditional fossil fuel exports. Revenue from green exports could surpass coal and gas earnings by 6 to 8 times, driving the creation of high-value jobs and new industries.
"At full scale, Australia's contributions to global decarbonisation could reduce global emissions by up to 9.6 per cent of 2021 levels by 2060."
Garnaut said it was understandable if most people still hadn't grasped how significant this could be for Australia.
But he said the new industries involved in the "superpower trade" would be large enough to drive the restoration of Australia's productivity growth and living standards that was so desperately needed after "the dozen years of stagnation that began in 2013".
Garnaut said Australia's diplomatic community had a crucial role to play now.
He said our future prosperity depended on international cooperation continuing in the climate space, and Australia's superpower transformation would require other countries to keep cutting emissions.
"Contemporary and emerging international conditions allow Australia to make a strong start in exporting zero-carbon goods," he said.
"Australian diplomacy and policy can help to preserve and expand those conditions."
He said that in a world in which many countries wanted to keep cutting emissions, the economics would favour Australia.
Why? Because Australia had unique resources to capture a valuable "green premium" in the global production process by using "green hydrogen" to produce zero-carbon products for export that were currently made overseas with Australian coal and gas.
Green hydrogen is hydrogen that's produced with renewable energy sources (such as solar and wind) without emitting greenhouse gases.
"We need other countries to be reducing emissions," he told the audience.
"We can make a good start in building profitable superpower export industries if other countries are making a good start with reducing the emissions-intensity of economic activity."
He said the Trump administration's rejection of scientific physics and its withdrawal from international climate agreements and trade co-operation had not yet reduced the prospects for "the Australian superpower" either.
But Australian diplomacy would have to ensure that that remained the case, he said.
"China, already having accelerated its own decarbonisation as the economy moved out of its COVID slump, has seen geopolitical as well as economic opportunity in strengthening commitment to international cooperation beyond the US on both trade and climate," he said.
As an aside, that adds another dimension to the comparison between Labor's historic election win last weekend and John Curtin's famous victory in 1943.
In the 1940s, Australian diplomatic effort was spent imploring other countries to adopt full-employment policies after World War II, on the logic that full employment in other countries would help Australia to maintain full employment at home (and lift incomes and living standards for everyone in the process).
This time around, a similar logic would apply to Australian green diplomacy.
What do we need for this economic transformation to happen?
Garnaut said the reason why we hadn't seen much investment in the industries of the future, despite Australia's advantages, was because the policy foundations hadn't been properly laid.
The last dozen years of political conflict and policy uncertainty haven't helped.
But he said that in the past three years the policy foundations had begun to be laid, and Australia's federal and state governments now had the opportunity to build on those foundations within a more predictable policy environment.
"Get the policy foundations right, and we will be surprised how rapidly and cheaply we move to zero net emissions in the energy sector," he told the conference.
"And we will be surprised how quickly growth in energy-intensive export industries drives productivity and output growth through a major transformation of the Australian economy.
"By mid-century, the electricity system driving Australian economic development can be 10 times and more as large as that which powers Australia today.
"Let's make sure that our thoughts about policy are big enough to allow that future to emerge," he said.
And he said the rumours of hydrogen's death were exaggerated.
"Several of the most important potential superpower industries use hydrogen made with renewable energy," he said.
"Recent announcements that many prominent hydrogen projects have been closed or shelved have generated talk that hydrogen is dead or too underdeveloped for independent life.
"Like Mark Twain's death, those rumours are exaggerated.
"Apply sound economic principles to policy and the first hydrogen-based investments in new export industries are ready to go now."
He said hydrogen-based iron-making was ready for investment now in the Upper Spencer Gulf of South Australia.
He said Whyalla would have a sustainable future in iron-making based on green hydrogen, or it would have no sustainable future at all.
"Once in place, no-one will ever again consider investment in extending the life of old, or building new, coal-based or gas-based iron-making in the five states covered by the National Electricity Market," he argued.
"The world steel industry's eyes will turn to Australia as the locus of much of the solution to decarbonisation of an industry accounting for 8 per cent of global emissions.
"We will have placed Australia on the escalator to the superpower," he said.