Why do we need an Authority for the Zero Net Economy? And how can he fulfill his promise?

To support its climate agenda, the Albanian government is creating new institutions. One of the most important will be the Zero Net Economy Office. Bills creating this authority are currently before the Senate.

Such institutions may prove durable despite Australia’s contested climate policies. Although the carbon price introduced in 2012 was repealed, the climate and renewables institutions set up by the Rudd/Gillard Labor governments still operate today.

You may ask why we need another one. This is because achieving net zero emissions is a very big task, as new low-carbon industries come online and high-emission industries leave. This body would take a leading role in aligning policies across levels of government, facilitating investment, helping fossil fuel workers transition to new jobs, and communicating.

What should it look like? We reviewed international best practices in a newly published report for the authority’s predecessor, the Net Zero Economy Agency. Our recent submission suggests that Australian authorities should identify and coordinate green investment options, but should not invest alone. It should focus on finding and evaluating new green industrial options. It should focus not only on helping coal workers transition careers, but also on the surrounding communities.

Authorities should look for green investments, but not invest directly

We already have a rich landscape of support for green investment, including the Clean Energy Finance Corporation, the Australian Renewable Energy Agency, the National Recovery Fund and the Powering the Regions Fund, as well as the new Future Made in Australia program and direct government grants and tax credits.

There is no need to create another funding body.

This body can provide insights and a coordinating role by applying sound investment principles, such as cost-effectiveness, and assessing the likelihood of future financial and economic returns for governments and society.

It can help policymakers prioritize action across a complex set of policy goals, such as low-carbon systems, supply chain security, jobs, regional development, benefits for First Nations communities and social equity.

Find and analyze new industrial opportunities

Governments around the world are turning to green industrial policies to support jobs and economic growth, as well as decarbonization. The United States, the European Union and Japan are using green incentives in the race against China, which dominates many renewable industries.

As a mid-sized economy, Australia cannot compete in all sectors and segments of value chains that can thrive from the energy transition. We have to choose.

This is where the Office of the Net Zero Economy comes in. We need a lead agency to coordinate industry strategies, including identifying Australia’s competitive advantages in global value chains.

Green industry policy should be understood as a process of discovering and solving problems, not just handing out subsidies.

Focus on fossil fuel communities

Many communities have grown up around fossil fuel power stations and industries, including towns in Gippsland in Victoria, the Hunter Valley in New South Wales and the gas export center of Gladstone in Queensland.

For the government to do its job well, it should not limit itself to helping workers directly affected by the closure of coal-fired power plants, as the draft bill indicates.

Less than 20% of the coal mined in Australia is burned here to generate electricity. Almost 50% is exported to coal-fired power plants abroad, and the remainder is exported of metallurgical coal to the steel industry. With the global transition to net zero, demand for both thermal and metallurgical coal will decline, and with it Australian export earnings.

Currently, the Net Zero Economy Authority bill relies on planned closures of the nation’s power plants as a trigger to provide transition support for workers. Coverage is limited to workers at coal-fired power stations and coal-supplying mines – excluding the vast majority of Australian coal workers. It is difficult to see the justification for this state of affairs.

It would be better if the remit of this body included a strong emphasis on regional prosperity in the transition period. This is because the closure of a large mine has wider impacts, including on contractors and small regional businesses. The government has a sizeable budget allocation for its support functions, which can be used more broadly to ensure broader prosperity in the region.

Extending support beyond affected workers is something we should learn from the painful shutdown of the Australian car industry.

Learning, participating, monitoring and reporting

Many other countries have moved to create new institutions that have ushered in a new economy, such as the German Carbon Commission, Canada’s Ministry of Just Transition, and South Africa’s Presidential Climate Commission. We don’t have to reinvent the wheel – we can benefit from international experience.

For Australia’s government to be effective, it will need to excel in policy coordination. Often, state and federal policies may not be directly aligned – or may even be heading in different directions.

For example, he could play a key role in coordinating the efforts of the New South Wales authority overseeing renewable energy zones, EnergyCo, and the federal green manufacturing and mining program, Future Made in Australia. Let’s assume you want to produce green hydrogen. Locating federally supported hydrogen plants next to large state renewable energy zones makes sense.

Change can be controversial – especially when communities feel it has been forced upon them. To avoid this, authorities must make community participation a central part of their efforts, especially in regions where many new green industries and energy sources are expected to be located.

The final role of the Office of the Net Zero Economy could be to monitor, report and evaluate progress. This is important considering the size of the passage. It can help governments, businesses and communities understand whether policy interventions are working or whether it is time for a rethink.

Transparency about the successes and failures of the transformation will be essential to building and maintaining public trust at a time of fundamental change in parts of the Australian economy.