G’day everyone and welcome to 100 Climate Conversations. My name is Benjamin Law and today is number 35. We’re over the one third mark now of 100 conversations that happen here every Friday at the Powerhouse museum and online, which presents 100 visionary Australians taking positive action to respond to the most critical issue of our time, which is of course, climate change. Now we’re broadcasting this today in the Boiler Hall of the Powerhouse museum, and before it was home to the museum, it was the Ultimo Power Station. It was built in 1899 and it supplied coal powered electricity to Sydney’s extensive tram system in the 1960s. If you look around the hall right now, you’ll see that unique industrial features remain, including these coal cart tracks in front of me here that run underneath the stage. So, it’s in this context that we shift our focus to the innovations of the net zero revolution.

First Nations people on this continent have been sharing knowledge for tens of thousands of years, and together they constitute the oldest continuing civilisation this planet has ever known. First Nations people are the world’s first scientists, engineers, agriculturalists and mathematicians. So, we’re grateful to Elders, past and present, that we can continue sharing important knowledge here on what is and what will always be Aboriginal land. And I’d like to extend that acknowledgement and my respect to Aboriginal and Torres Strait Islander people joining us here in person or watching or listening to this digitally.

Our wonderful guest seated next to me is the chief executive of a non-profit climate work centre, which bridges the gap between climate research and action, by developing a framework for a low carbon economy. Climateworks takes an independent, non-partisan approach to analysing emissions reductions, opportunities and partners with both business and government. She’s a former investment banker turned green policy advisor and previously a founding director of the Clean Energy Finance Corporation and a director now of the Green Building Council of Australia and the Centre for New Energy Technologies. And we’re thrilled to have her join us today. Could you please join me in welcoming Anna Skarbek?

Anna, we’re so glad you’re here today. Let’s take a little bit of a trip down memory lane and track how you’ve ended up where you are now. Your career began in law and finance, and this was around the time that the Kyoto Protocol was being negotiated in the 1990s. And just a reminder of what happened there with Australia, we signed the Kyoto Protocol in 98, but we didn’t ratify it until 2007. So, a lot of conversations going on here at the time. What was it about that time and what was going on around that period that really hooked you into the climate change conversation?

I studied the Kyoto Protocol at uni as part of my law commerce degree. I was interested in environment right through my university studies, but I had chosen law and finance as my disciplines because I love projects and business and analysis and that sense of building things and getting things done. But I didn’t have the technical skills from an engineering or science perspective, but I was passionate about the environment, so I chose international environment law and other subjects that would give me some exposure to it.

And the Kyoto Protocol was on that curriculum and at its heart the Kyoto Protocol firstly recognised the climate change challenge and secondly created a trading mechanism to redirect investment towards solutions. Back then it was called the Clean Development Mechanism. It wasn’t as good as what we’ve got now, but it did create the first international recognition that we should try and move money towards the solutions and create financial incentives to do that. So, I thought, well, I’m studying markets and I’m interested in the environment, and this brings those two together and it gave me the direction to pursue that through my career. So, when I became a graduate banker and a graduate lawyer, I knew to put my hand up and say, I want to do work that’s in this field. And I knew that there would be solutions there.

You had a successful career abroad. You were working in London with the investment company Climate Change Capital. While you were in the EU, you worked to develop policy and investment strategy based on the Euro emissions system. What were you and what were they doing exactly?

When I worked in London, the first major emissions trading scheme got underway at the EU and that’s the EU ETS and the bank I worked in was the first bank dedicated to addressing climate change – indeed, they called themselves climate change capital. The play on the word their capital meaning to direct capital, financial capital and investment towards climate change solutions. And that’s exactly what I had imagined when I had initially been a student. I had imagined that this is the type of bank that could exist. And so, the EU ETS enabled that.

The EU ETS, the emissions trading scheme, created a cap on emissions by European companies that were major emitters of carbon dioxide, particularly electricity companies and other industrial companies, and created an obligation on them to reduce their emissions below that cap, either themselves or by investing in emissions reduction solutions elsewhere. Elsewhere could be anywhere in the world. And that was thanks to the Kyoto Protocol. And so, the EU ETS linked to the Clean Development Mechanism that was in the Kyoto Protocol. So British electricity companies or European electricity companies or industrial firms could invest in projects in Africa and Asia that would reduce emissions and create clean electricity and the certificates that proved that could be sold in the European market. And that’s where the financial incentive began.

And I watched and helped advise those companies, and I watched them develop strategies on firstly understanding their emissions and capping them and recognising where the opportunities were to invest in solutions. And then over time they realised, well, we’re investing in creation of clean electricity in Africa and Asia, but actually why are we paying other people to create the certificates for that when it’s what we do, we could get good at this. And you saw the entities themselves who were fossil fuel, electricity generators, mostly, realised that they could develop entire new business units and meet a new market demand.

Now, that took a while to grow, but we watched it in those pioneering days. We watched it grow and we watched the UK government put in early policies, renewable energy certificates and the first offshore wind auctioning regime led by the Crown Estate who owns the seabed in the UK and Australia has just adopted something similar to allow the development of offshore wind to happen safely in the seabed. In the UK that was happening in 2007 and 2008.

Anna as we hear this, I imagine some people would be listening to how we’re bringing together conversations about climate, finance and banking and maybe have almost an instinctive reaction of like banks? Oh, my gosh. Because for decades, banks have and still do many of them play a major role in engineering the climate crisis in which we find ourselves. They have poured billions, if not trillions of dollars into fossil fuels in the in the form of coal and oil they’ve financed companies responsible for deforestation. And so, there’s been a conversation for a long time about divestment, you know, the rejection of the banks that aren’t doing well. It sounds like a lot of the work that you’re doing is engaging with banks for reform. When do you know when to bridge the line between reform and rejection, you know? What are the criteria then? And how do you know that a financial organisation or a company is actually someone you can work with?

This is where the Paris Agreement comes in, and you might wonder, why am I referring to another UN treaty when you’ve asked me a question about banks? The key powerful shift that’s happened in the last half decade is to embed in the decision-making frameworks that banks use, the understanding that emissions must come down in line with the Paris Agreement and the net zero emissions goal is at the heart of the Paris Agreement. Once that became understood, many of us have worked with the banks in Australia and around the world to help not just governments make that commitment, but big banks make that commitment.

And the pension funds, the superannuation investment firms who are managing money for multiple decades, they’ve done the hardnosed financial analysis and the maths of climate change shows that we are much better off financially to invest now in new solutions and avoid the future cost of climate harm, increased climate harm. So once that maths became better understood, even the hardheads in financial institutions could do that economic analysis and understand that long term commitment and value proposition. So, then the investors and the shareholders started realising, well, we need to be investing in solutions. In addition to that, the Paris Agreement gave the framework for how to define what was good. When is something okay and when is it not okay? And this is where net zero pathways come in.

The Paris Agreement gives us the maths on how to limit temperature to 1.5 degrees or well under two degrees. They’re the two cornerstones of the Paris Agreement. Now the maths under that gives us what’s called the carbon budget. We, the scientific community, have calculated the volume of greenhouse gas emissions that are already in our atmosphere, that’s created the warming up to about 1.1 degrees already and can create and can calculate how much more emissions will it take until the temperatures have risen beyond 1.5. That is a mathematical known quantum and that is known as our carbon budget. It’s an absolute figure. The only thing that moves is the time.

So, if we slow the rate at which we are creating new emissions every year and by new, I mean the extra emissions we create through all the Industrial Revolution technologies that you talked about burning fossil fuels, transport, industrial production and agriculture. We’re currently doing that at a greater rate than what can be absorbed naturally by soils and trees and leaves and oceans. Until we bring that back to net zero, temperatures will continue to rise. That’s the basic maths, right? So, the question is, can we bring it back to zero before temperature risen beyond 1.5? And we are exponentially safer if we limit it to one and a half than two. These numbers might seem small, it is dramatic, really striking even to someone who understands the maths as well as me. Allowing warming to go closer to two than one and a half is the difference between ecosystems not surviving or having the ability to recover through long periods of drought or coral bleaching or agricultural damage.

So, 1.5 is the goal and indeed our Pacific Island nation friends will say it’s 1.5 to stay alive. Importantly, the newly established Glasgow Financial Alliance on Net Zero is a club of clubs of all the banks, insurance firms and pension funds that have made a commitment to ensure that what they lend to and invest in reaches net zero emissions. Within that 1.5 degree carbon budget. That’s huge. And that’s only occurred in the last couple of years, building on the previous five years of understanding of this carbon budget. So, when you’ve got your carbon budget, you work backwards from it and then you’ve got a calculation of maths and time. If we continue to increase our emissions, there’s less time before we hit that 1.5 limit and our budget runs out. If we can flatten the curve of our emissions to use another term we’ve learnt during the pandemic, if we flatten the curve of those emissions, then we can take a little longer to work out how to reduce the remainder before we’ve hit that 1.5 limit. But we must get emissions to net zero or temperatures will keep rising.

So that has been the most powerful tool actually to influence the activities of the banks. And they are now operating as governments are at looking at this sector by sector, which are the sectors that can move quickly. We’ve got to move them where we can. If some are going to take longer because the technologies are not as ready, then if that’s going to use more of a carbon budget, we’re going to have to use some somewhere else. And so, it becomes a zero-sum game, but a very mathematically knowable one. And then you have these net zero pathways which define to your question should a bank divest? Should a bank continue to invest? There are now the emergence of what’s called transition pathways for companies, and it will soon be able to be assessed which transition pathway a company has determined itself to be on. Is that aligned with the Paris Agreement? And if the banks have said that they will align with the Paris Agreement, then they need to ensure that their customers are aligning with and to deploy their capital to help that happen.

Let’s narrow the focus of the conversation a little to Climateworks and Australia, because after your work in the EU you were headhunted, recruited, I believe to lead Climateworks and you returned to Australia in 2009. What was it like coming back to Australia? What was happening here compared to what you saw was happening overseas?

Well, I’ve spent a few years working in the first few years of the European Emissions Trading Scheme, and by 2009 in Australia there’d been the change of government federally, and the then Rudd government had committed to do an emissions trading scheme in Australia and the Minister for Climate Change was in the process of setting up taskforces to establish that. So, there was a lot of policy activity. There was some awakening in the financial sector that this is likely to be something that people would need skills in, and the clean technology solutions were beginning to be invested in.

But as we’ve learnt in Europe, you really need to be able to create scale for the new technologies to take off. It’s expensive to do something differently to how you used to do it before – it can be. Usually, we know if it’s a climate change solution, ultimately it’s cheaper in the long run. But to get it into the marketplace, you need to have enough demand to be able to produce enough supply to do so at a cost-effective way. That’s where policy comes in. And really creating the market for climate change solutions becomes a policy question of market development, of how do we create enough demand, financial reward for the providers of new solutions to attract the investment from banks, to be able to repay the loans that they convince banks to lend them to attract shareholders to be able to deploy the new money into the solutions and redirect old money to new. That becomes a policy challenge as much as it’s an engineering one. And so that’s where the activity was really increasing in the 2009 and 2010 era. And within a couple of years it was July 2012, Australia did commence a whole of economy emissions trading scheme which operated successfully. Unfortunately, it was repealed two years later.

My team at Climateworks studied all the pathways for reducing emissions in Australia across the technologies in each of the sectors which we can talk about in more detail. And then we studied the progress in reducing emissions and we saw that in those years emissions reduced quickly when the carbon price applied. And in the year before that, as industry began to realise that there would be policy measures in place that included a cap but also included incentives. A price is not enough. A carbon price is always necessary and not sufficient. There are many technologies that aren’t price responsive. Energy efficiency is one of those. Being smarter with our energy actually saves money already, so making it more financially attractive wasn’t the thing that was going to unlock its uptake. For that, you need things like building codes, universal standards for more energy efficient equipment, for more energy efficient construction processes, which we now have in Australia. Instead of a six-star minimum housing code, we now have a seven star one. So, there are other policy measures that are needed in each of the different sectors. In transport, we know we need vehicle emission standards and different incentives for electric vehicles, for example. So, the carbon price provided an important role, but it was always going to need other policies as well, and many of those were created at that time and live on.

So Climateworks really started in an era where there wasn’t just optimism, but there was direct engagement and a priority agenda of putting this as something that the government wants to do. And of course, we’ve come out of a decade of, I guess, another government that has had very different kind of perspectives on climate change. In that period of Climateworks work and engagement with government, how does the conversation change with a federal government that might not be amenable to the conversation and depending on the Prime Minister of the day or whoever, the ministers are responsible, even outright hostile to the work that you do?

It created challenges, but we still made progress in at least three ways. We supported the Australian Government with analysis of Australia’s potential to reduce emissions, which helped reduce some of the fear that this was going to be bad for Australia. Our analysis working with CSIRO produced the first economy wide net zero emissions pathways for Australia the year before the Paris agreement was signed. It was the Abbott government that signed Australia up to the Paris Agreement. Our analysis, which we did with ANU and CSIRO, is part of the appendix. It was part of the government’s decision making to understand that Australia had far greater potential than its minimum commitment that it put forward. But also, we worked a lot with the state governments and in that time the Victorian Government updated its climate change legislation and we provided advice that it should mimic the Paris Agreement approach, set a net zero target and create sectoral pathways and plans. That is now in implementation in Victoria, and it adopted a net zero target. So did New South Wales and South Australia and Queensland. And then over the subsequent years, all state and territory governments have adopted net zero emissions targets before the federal government ultimately did. So, there was a lot of work to do to support that analysis at the sub jurisdictional level and we worked a lot with the financial sector.

Are there already examples of low emissions economies, low carbon economies rather that already exist? Are we creating them already?

Yes and yes. So, both are true actually, the goal is incredibly important because it really matters what you solve for. As we were talking about when you unleash economic competition and financing markets, businesses chase growth. So, it’s important that when they’re chasing that they are doing so with the other goals in mind. That it can optimise for many of the other things we’ve already got, you know, gender equality as well and removing modern slavery from supply chains. Businesses are getting much better at making sure you do business well. Therefore, the goal really matters and embedding that as a condition of business. There’s an emerging global practice around what companies should disclose around their achievements towards net zero emissions. So that will really help make that goal part of core business.

Then we find that there are solutions today for net zero emissions products and services in all of the sectors that we’ve studied in buildings – carbon neutral buildings, net zero emissions materials, as well as the operations of buildings. In transport, the same. In industry – industry has often been called the hard to abate sectors. For a while we thought there wasn’t good data on how you could make steel or cement, for example, without creating greenhouse gases through either burning fossil fuels or in the case of steel, we’re using coal at the moment, metallurgical coal, not for the energy part, but for converting the iron ore into steel. It’s the chemical reaction that’s the same in fertilisers. The chemical reaction causes the greenhouse gas emissions. So even if you used renewable electricity, you would still create the greenhouse gases.

But new science has shown that we can replace the coal that we use for making steel – metallurgical coal – with hydrogen. It has the same chemical reaction power for converting iron into steel, but it doesn’t create the chemical reaction that produces the carbon dioxide. If you make the hydrogen with renewable electricity, which we can do through electrolysis, then you can have zero emissions steel. So, this is another area where engineering and science are merging now with policy. So, the technological solution has been invented. Policy now plays a role in bringing it to market. To say to those who are buying steel, who are making steel, we now know what good can look like. And so, we want to insist that you use it. And if business says, well, it’s a lot more expensive today because it’s brand new, then we have this concept of blended finance, a sharing of risk between public sources of money and private sources of money that spans the first years of the program to bring the risk down from new and early-stage venture to mainstream. And policy has always played that role. It did it in solar, did it in wind. We’re now going to see doing it in hydrogen.

It really sounds like what you’re saying dovetails and complements the stuff that Mike Cannon-Brookes was saying when he was here in May. He’s the entrepreneur, businessperson and investor shareholder activist as well. And his argument is that we aren’t actually waiting for emerging new pipe dream technologies to come onto the market, that they actually already exist. The solutions are already here and what we need to be doing is implementing them and investing in them. It’s kind of similar to the argument that Saul Griffiths makes as well, which is you just need to electrify everything. Is that as simple as it is? Because that sounds almost seductively, borderline, naively simple, but is it that simple?

It is at the fundamental level. There are always implementation challenges to overcome. But when you asked earlier about how Climateworks approaches this big challenge, I referenced focusing on the opportunity and on the implementation. So Climateworks’ big report in 2020 called Decarbonisation Futures was the update of the first ever net zero pathways for Australia six years prior. We updated it to show that Australia can in fact go faster than the previous analysis had shown. And we mapped all the technologies that are available to get Australia to net zero emissions in line with not just a two degrees goal but the faster 1.5 degree goal. That report showed two columns of technologies; mature, the ones that are already developed to the point you were making earlier and the emerging. And in every single sector, so we study buildings, industry, transport, energy and agriculture. That’s the way we look at the economy. They are the sectors where emissions are produced and where the solutions are available and are necessary.

We then look at what are the fundamental actions really, as you say, is it really as simple? When we describe them in four pillars and three of them relate to energy and they are firstly energy efficiency. So, whenever we’re using energy, being smarter about it, don’t waste it. And that’s really a digitisation play and a modernisation play. Upgrade the equipment at every opportunity. Technology moves really fast. Look at how many phone models you’ve had, but consumers aren’t necessarily updating themselves about their heating system or refrigeration system has improved as quickly as their phone has, but it has. So, policy can play a role there in in not requiring every consumer to inform themselves, but to set standards that rise as technology improves. So, it’s important not to forget energy efficiency, because so much of the climate challenge rests around energy. And we’ve got to make sure that as we’re modernising our energy system, we can be smarter with how much energy we’re using.

Our research shows on average in buildings, we can halve the volume, the amount of energy we need per square metre to heat, cool and light the building just with existing technologies. But you’ve got to implement them. So, should there be a rule that every renovation needs an upgrade? How do you then think about the implementation challenge of that? The challenge is not that the technology exists, it’s how do you roll it out everywhere? That’s really the new challenge. The reason that gives me optimism is that’s not that’s not an ‘if’ question anymore. It’s a ‘how’ question. And so, there’s a lot less fear of the destination when you’re solving for how to do something. So that’s the first pillar. The second pillar is renewable electricity. Electricity can be zero emissions and must be and this is again Mark’s point. We have proven we can run electricity systems on renewables. We have plenty of it. Deployment is the key and making sure that as we deploy, we manage the bringing in of storage as the coal fire retires. It’s not impossible. It’s just got to be done and you’ve got to solve for it. Which comes back to the goal.

Previously, our electricity market operators weren’t given a goal of solving for removing emissions from our electricity system. They were given a goal of solving for electricity prices staying cheap and poles and wires continuing to be built. Now governments are recognising that that should be part of the mandate of electricity grid managers, and it will be. And then the third is fuel switch. So, electricity, when it’s zero emissions should be then switched for other fuels that are creating emissions, particularly liquid and gas fuel. So that’s where transport comes in and manufacturing. Where you can electrify, you want to move off fossil fuels where it’s liquid and gas and move on to electricity. You can also switch to greener gases. So, there’s biogas and there’s now renewable hydrogen. So, the switch isn’t always to electricity, but in many cases it is. The important thing is to switch away from any emissions intensity energy into a zero emissions version.

And the final pillar is sequester, sequester the rest, and that means absorb or capture residual emissions. So, nature does a fantastic job of that. But we need to plant more vegetation and trees and also mangroves in the oceans can do fantastic sequestration and you need to plant deeper rooted crops on farms, for example. There is good science around this, but it means you’ve got to pay attention. You can’t necessarily just do it like we always did it before. We have to make new choices, but we can still have a thriving farming community provided we support the funds to plant crops that can sequester carbon in the soils, for example. So, there’s your four pillars on one hand. Energy efficiency, renewables, fuel switch and sequestration. And you can do that in all the five sectors that we talked about buildings, industry, transport, energy and agriculture. And that is, you could say, as simple as it is, the challenge then is making the rollout universal.

So can we take a case study that might be able to illustrate this in an interesting way? So, a few years ago, before the pandemic, my partner and I were on a trip to New Zealand and we had the option of hiring an electric car, which I’d never done before. And I just on a whim said, I don’t know what the infrastructure’s like to support this kind of road trip, but let’s just do it. And we were really surprised at not only the infrastructure that was available in New Zealand, but also how much of it was renewable to the point where when we came back to Australia, we were like, we wonder whether we could replicate something like that here. And it just really seemed impossible to get that infrastructure, to find it. Where do you even find a car company that lends out electric cars? All of these points weren’t available here like they were there. So, what are the conversations that are needed with stakeholders? What’s the infrastructure that needs to be built? Essentially, what’s in our way of having something that’s available just across the ditch?

Yes, great question. Climateworks has just written a report on the six steps for a national framework for electric vehicle policies. This is why the goal really matters. In those years that you were describing, Australia didn’t have a national goal to achieve net zero emissions. So, the transport sector and the companies in it and the regulators of it didn’t have a mandate to say we’re all solving for removing the emissions from our transport infrastructure. It’s so powerful when that goal is agreed. So, we didn’t have that. Now we are beginning to have that. So, then the question turns to you, alright, we want to solve it. So, what do we need? We need all of that. And so, the six things that we know we need combined, focusing on the supply of the vehicles and the support for the demand because it’s a chicken and egg challenge.

In Australia manufacturers were not sending electric vehicles into Australia because consumers weren’t choosing them. Consumers weren’t choosing them because they couldn’t see the infrastructure and we had a classic chicken and egg problem. There is good advice from around the world, particularly in Europe and in New Zealand where this has gone well. The steps include set emission standards for your vehicles, actually start to insist that the cars that we import into this country meet the high standards, just as we do for other equipment now. That’s arriving belatedly, we expect that policy shift to come soon in Australia and you need the infrastructure investment which governments are beginning to do.

There’s other important things as well and this includes linking it to the electricity market, making sure that when people want to charge cars at home, that the batteries that they install have two way software in them so the grid manager can know when you’re wanting to charge. It’s an exciting future potential actually, that electric vehicles become part of the electricity network. As someone once described them, one of the experts said, we will think of our cars as batteries with wheels rather than a car that happens to have a battery.

So just to clarify that the vehicle is not just something that uses energy but becomes a source of energy in and of itself.

It can power your house. In the US, the latest models of electric vehicles, which include the big utes, you know what the US equivalent of a big ute is. You can tow a massive camper van to a caravan park and power an electric jacuzzi, with your car battery.

That’s incredible.

Technology is amazing. We haven’t demanded it. And so, this is the key thing. Once we’ve made the commitment to net zero – this is why I keep going back to this – such a fundamental moment last year Australia and the rest of the world, and the big banks around the world made the commitment to say we will align with net zero. You then unleash this innovation, and it turns out batteries are really powerful. So, then you start solving for the implementation wrinkles. But what we find helps is this concept of back casting, which means fast forward to the future state that we know we’re aiming for.

In a net zero world, all cars are electric, campervans and utes are all electric and it’s humming. It’s working smoothly. What does that look like? And you solve for that. So, you ask your regulators and your policy frameworks to work backwards from the future state to say, well, we want people to be able to charge whenever they want or to at least know that if they do charge, it won’t send the lights out somewhere else, what do we need for that? We haven’t yet insisted, as you know, with mobile phones, that you have the same plug-in cord to charge one type of phone and another. We’re at risk of making that mistake in EV batteries. And think about the petrol stations of the future, in Norway, where they have 90 per cent electric vehicles already, the petrol station of the future is a bit like an airport lounge. You turn up, you sit and have a cup of coffee while your car recharges. If you’re in a hurry, you can do the swap and go service. If you want to do a swap and go service, you drive your car into a little garage pod thing and a robot can lift the battery out from under your car. Put a new one in. It can only do that at the moment in Norway if your battery is the same brand as the one in the pod.

I see. So, there are conversations that are needed to be had about universal standards of charging and chargers as well. Okay, right.

All of this stuff is solvable, and that’s what keeps me motivated. Some feel exhausted because every step of the way, there’s a new set of challenges. Oh, we haven’t written the standards for interoperability between brands. No, we haven’t yet. But we can do that. It’s a lot easier to solve than some of the other challenges in the world that haven’t yet got an answer.

So it’s solvable, but it just can’t be on an ad hoc basis or improvised as you go along.

And we can’t kick the can down the road.

You’re talking about shared goals and the importance of having an agreed upon target. Is this what the Australian Industry Energy Transition Initiative is about? I mean, a lot of words together, but what is that? And is that about sharing things too?

Thanks for asking about the Australian Industry Energy Transitions Initiative. It is a lot of words and so we call it the ETI, Energy Transitions Initiative. The industry word’s really important though, because we are focusing on Australia’s mining industries mostly. What we have done here is bring together 20 of Australia’s biggest resources and engineering companies and banks, together they’re about a third of the stock exchange value.

You’re talking about companies like BHP, BP, Rio Tinto, Westpac, NAB, National Bank. I mean interestingly, traditionally seen as the villains of climate change. Why would you engage with them?

Because to get to net zero all emissions have to reach net zero. And these sectors were considered the hard to abate. You’re absolutely right. They’re the companies we’re working with plus Orica that makes the chemicals and fertilisers and Wesfarmers chemicals arm and Fortescue. They have all understood that the world is changing and that we’re only safe when there are zero emissions versions of the products and the commodities that they sell. And so, we were supported by IRENA and philanthropists to convene this group and share the modelling that CSIRO and Rocky Mountain Institute and an international collaboration called the Energy Transitions Commission have all been working on to show what are the technologies in the future that we will need to bring even those sectors to net zero.

So, we picked five supply chains that matter to Australia: iron and steel, metals, chemicals, LNG and aluminium. And we’ve convened the big companies that are the big players in this country in those supply chains. And we have said, let’s spend two years studying, how can your sectors get to net zero? And we knew that industry was behind electricity, for example, and they weren’t already making commitments to achieve net zero. So, we didn’t set that as the entry bar, but we did set the goal that we were solving for the supply chain to be net zero. So, we said, if you come here, you can learn with us. You can trust this data because you will have seen it in its development. You know, every modelling exercise requires a review of the assumptions using the latest data.

The companies have familiarised themselves with that so that they understand it. They themselves didn’t necessarily have net zero targets at that time, but they could see what would it look like if our sector had to get to net zero. In the time, it’s now been two or three years, many of them do have climate targets that they didn’t have at the beginning. And we have published the first report and a second one is coming. And what we have found is that all five of those sectors can achieve net zero emissions in Australia because the technologies now are visible. But what we’ve shown is that it won’t happen by itself. It’s going to need coordinated action; it’s going to need more action than any of those individual companies can do alone because it has a huge impact on the electricity system actually.

A lot of those sectors do follow the simple framework we talked about earlier that electrifying the equipment is a big part of it and producing alternatives to the fossil fuel gases with renewable hydrogen. Making renewable hydrogen needs huge amounts of electricity. We can produce that in the places where these companies operate, Pilbara, Kwinana, Gladstone, Hunter, Illawarra. We have the ability to produce it, but we don’t yet have the infrastructure, we don’t have the transmission lines, we have existing pipelines that carry fossil fuel gas, can they carry hydrogen gas? So, this initiative has helped do the maths on all of those sorts of questions. Pleasingly what it has helped do is bring to life, what do those five regions look like in a net zero emissions world? When our export customers say to us, we want to buy energy from you, but we want it to be zero emissions. We want to buy chemicals, but zero emissions chemicals, could we service that market? And the answer is yes. But we’ve looked at – if we want to do it in pace with the Paris Agreement, we’re going to have to move so much faster than we are already. And that’s where policy and industry would need to work together along with financial commitments as well.

So, it’s been a really constructive initiative and it is mapping pathways that are aligned to the Paris Agreement, showing the technologies and showing all the companies what the stretch goals are. If we’re going to, if you want to survive in a Paris Agreement world, you want to get good at these technologies. And they knew that, but now we’ve got the data to show what scale. We’ve also been able to show what an exciting opportunity to modernise those regions. It’s tens of billions of dollars of investment in new equipment and more renewable energy, but that’s revitalisation for those regions. What – it doesn’t say shut them down. It says modernise them and enable them to operate in a zero emissions world and Australia has the strength to do that. But we really have to lean into it because it won’t happen on its own.

It really sounds like we’re at a juncture where Australia has an opportunity to start changing the narratives we tell about ourselves and the narrative that we’re exporting to the world as well. Because for a long time it seems that the narrative is jobs versus climate change action. For a long time the narrative has been, we don’t really emit much, so it doesn’t matter. The narrative has been, well, we don’t need a goal because the goal is elsewhere. And it makes me think that recently Ross Garnaut has put out a new book. It’s called Superpower Transformation: Making Australia’s Zero Carbon Future, and he argues that even though Australia is responsible for only – ‘only’ 1 per cent of global emissions, it actually can eliminate 8 per cent potentially, of global emissions by becoming a major world supplier of zero carbon goods and services. So as an extension of that, I wonder, do you think Australia is particularly and uniquely placed to prosper from a decarbonisation process?

Absolutely. That is the narrative for Australia now. The other narratives that you referred to are really old now, completely outdated. They’re very visible and many memories of those who followed the politics and the news of the last decade. But in my field, in the climate solutions sector, the narrative has absolutely shifted to Australia as a renewable energy superpower. We’re not uniquely placed, but we are amongst the top five or six and in our industry ETI project, we’re partnering with an international organisation called the Energy Transitions Commission. They published a seminal report in 2018 which identified half a dozen places around the world where there was excellent solar and wind, renewable electricity resources, so sunny-ness and windy-ness, together on stable geographic lands. Australia was one of the top six. There are others Middle East, Canada, to name a few.

So, we will miss the boat if we don’t move quickly. But it also means we can completely flip the narrative where a decade ago there were many who thought a zero emissions world was a threat to Australia because we export so much fossil fuel-based commodities. Now the narrative can flip. The whole world has signed the Paris Agreement. They will not want to buy fossil fuel commodities if it’s going to harm the planet. So, the race is on to produce the alternative. And now the data shows Australia is again blessed with an endowment of natural resources which can produce the alternative. And that’s the new narrative.

The race is on, and it makes me wonder, as you imply, like, are we going to be fast enough? Because as technology gets better, as we have access to those opportunities, the impacts continue. When it comes to climate change, do you think Australia is moving fast enough?

Not yet, but the pace is accelerating. We are behind because of the last decade that slowed things down nationally. The states did continue to move. But if you look particularly even just at these heavy industry sectors where Climateworks is spending a lot of attention at the moment, Europe and America and the UK are doing far more as governments and industries to develop net zero industrial hubs. Tens of billions of dollars have recently been announced in the US. The UK has for years had policy support for what were coal fired powered regions that are now at regions such as the net zero Humber in the EU. The Netherlands has had many industrial ports that were focussed on the oil and gas sectors that have had years of European R&D investment and I know Australian companies have been out competed by European ones who’ve already had practise with these new technologies.

So, it is a race. But Australia is well-placed, and the narrative has changed a lot in the last few months, even in Australia. So, I remain hopeful but equally I remain worried and it’s two sides of the same coin and it’s how we keep motivated to keep working really hard. And each step, as you mentioned, there’s opportunity and then there are implementation challenges. And if we let the implementation challenges get the better of us, we really will slip behind, but also risk a very damaging climate future as well as an economic one, because we won’t have developed the new technologies. So, I’m hopeful now that more people do see that new narrative that you’ve talked about, that they do see that the world wants zero carbon solutions and Australia can provide them. So, let’s get on board and be the winner there. And I do see new venture capital firms investing in new solutions. There are new policies at state level. We’ve got a bit of a way to go to scale it up federally. But the ingredients are there in place now. We’ve all got to lean in and help them do the best that they can.

Well, Anna Skarbek, thank you so much for investing the time today and through your work in Climateworks. Thank you for changing minds and changing the story too, could you please join me in thanking our guest today, Anna Skarbek. Now to follow the program online, you can subscribe wherever you get your podcasts. You can also visit the 100 Climate Conversations exhibition or join us for a live recording like this one. You can go to 100climateconversations.com and just search for 100 Climate Conversations in your pod catcher of choice.

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