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The smart money is on clean energy – but Australia must play to win

We can’t assume the renewable energy boom will simply continue. Only clear, coordinated policy will ensure it does.

When Donald Horne coined the phrase 'the lucky country', he did not mean it as a compliment to Australians. What he was saying was that we hadn’t created wealth like other countries – we exploited what was already here and borrowed from our ancestry.

And Australia has been lucky, because despite a sometimes unforgiving climate, our natural resources are formidable. Over the years we have done well by riding on our gold rush, our sheep and, more recently, through another resources boom.

Globally the next resources boom is already on. For all the noise about the Adani coalmine, the smart money is now in clean energy. And here Australia’s luck is in again. We have a lot of sunshine, along with extraordinary wind and water resources. In time we can genuinely run our economy on cheap, clean energy that will reduce power prices for everyone – renters, homeowners, small businesses, manufacturers and other big energy users.

But in order to tap in to this opportunity, we need smarts rather than just dumb luck. We need a clear vision and strategy for managing this transition that will encourage investors to put tens of billions of dollars into new renewable energy and energy storage projects over the next few decades.

This week the Guardian reported on analysis by the Australian National University, which says all the wind and solar projects built over the past few years are reducing emissions. This is but one of the many benefits of the $26 billion worth of investment committed in new wind, solar and battery projects in the past two years. But the researchers make the mistake of assuming the unprecedented boom in renewable energy we have seen will simply continue.

Unfortunately, investment in large wind and solar projects has already slowed dramatically over the past six months. Almost the entire business and energy sector is calling for essentially the same thing – an overarching policy that combines action on climate change with a change in the way Australia generates and uses electricity. A range of states have decided to go it alone, because clear and strong national energy policy remains evasive.

The other challenges relate to the grid and the energy market – they were designed for last century and are now creating major barriers to new investment. Reform and change has been slow in contrast to the rapid acceleration of clean energy. Thankfully the key institutions and governments now have their foot on the accelerator. There is a lot to do to create a level playing field and leverage the extraordinary sophistication of new clean energy technology, but change must be carefully considered and well coordinated. This must be a clear focus for this year’s long overdue COAG Energy Council meeting in November. A little less bickering and a little more action would be appreciated, after a decade of game-playing and sitting on our hands.

Clean energy can now do everything that coal can do – but cleaner, cheaper and more reliably. We should be agile enough to recognise new opportunities and move to take advantage of them, both technologically and economically. And if we get this right, we can then shift quickly to take advantage of our extraordinary clean energy resources, and begin exporting it to Asia and the world. On this front, the federal government is to be congratulated for its willingness to explore hydrogen as a vehicle for exporting renewable energy. It is a fuel with extraordinary potential to create jobs and growth.

But we have no time to waste. Across the world, the race to become the next clean energy superpower is truly under way. Australia seems to be sitting back and hoping that good fortune will shine upon us again, without the need for smart policy and clever reform to navigate a rapidly-changing investment environment.

The politics of energy and climate has been toxic, with short-term political hits trumping long-term policy to build investment confidence. Unfortunately it is this kind of short-term thinking that Horne was attacking when he first wrote about us as the lucky country. We are still so very, very lucky. But our continued prosperity hinges on us being a bit smarter than we have been in the recent past.

This article was originally published in the Guardian Australia.