Welcome everyone to 100 Climate Conversations. Thank you so much for joining us. Today is number 13 of 100 conversations happening every Friday and this series presents 100 visionary Australians that are taking positive action to respond to the most critical issue of our time, climate change. We are broadcasting today in the Boiler Hall of the Powerhouse museum. 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 tram system into the 1960s.

Yiradhumarang mudyi, Rae Johnston youwin nahdee, Wiradjuri yinhaa baladoo. Hello, friends, my name is Rae Johnston, I’m a Wiradjuri woman. I was born on Darug land and I was raised on Gundungurra Country where I have responsibilities to community and Country. And it is an honour to be working here today on the unceded land of the Gadigal, and I wish to pay my deepest respects to their Elders past and present, and I wish to extend that respect to any of my aunties or uncles, brothers and sisters that might be here with us today. Now, as we begin this conversation, it is important to remember and acknowledge and respect that the world’s first scientists, technologists, engineers, mathematicians are the sovereign First Nations peoples of this continent, from the world’s oldest continuing cultures, despite all attempts to erase them.

Mike Cannon-Brookes is the Co-Founder and Chief Executive of Atlassian Software Systems. Thanks for JIRA. A longstanding and outspoken advocate for renewable energy, he’s been instrumental in large-scale energy works in Australia. Mike is also an angel investor and venture capitalist and a key investor in Sun Cable, the world’s largest solar energy infrastructure project with a $20 billion plan to deliver Australian solar power to Singapore. Now he’s currently in the headlines by acquiring a significant stake in AGL, Australia’s largest electricity generator, with the aim to accelerate its transition to renewable power. So, we’re so thrilled to have him join us today. Welcome, Mike.

Thanks for having me. It is quite unique to be having this conversation in a coal power plant, or former coal power plant, literally sitting on top of the rail tracks. There’s something poignant about that. I hope it’s directionally helpful.

Absolutely. Now, I can’t wait, we do have to start with this. You have just secured, last time I checked, an 11.3 per cent stake in AGL. Have I still got that number right?

Close enough.

Close enough. Now, a lot of the discussion around taking action on climate is about divesting from fossil fuel industries. Even individuals are choosing their superannuation investments to be in renewables instead, for instance. So, what made you take the opposite approach here and kind of try to change things from the inside?

Divestment has its place, right for sure. I don’t think divestment is the only option. In fact, in some cases, as in AGL’s, I think it’s harmful for the transition and for harnessing the opportunities ahead. For a lot of other companies, I can understand why divestment makes sense, so it’s not exactly a binary one or the other is better or worse. In AGL’s case, look, it’s pretty simple. We, a year, year and a half ago, looked around for the opportunities, we’re big believers in the – that decarbonisation is the largest economic opportunity facing Australia. And so, then you look at what’s going to change in the next ten or 20 years and who’s going to benefit the most and you find companies like AGL where you think, okay, with a change in direction, leadership, vision, it is best placed to actually harness that opportunity and therefore becomes a very good investment and therefore you can do good and make that investment sort of pay off at the same time, which also catalyses everybody else to hopefully copy that in other places and get a multiplicative effect that’s the end goal.

And obviously you believe that that’s possible to make that change from the inside?

Oh, it’s entirely possible. There’s no, I mean, engineering-wise, finance-wise, technologically, scientifically, there’s – nobody can tell you that it is not possible with any credibility. It’s just a question of are we going to take the choice to embark on that action and are we going to be courageous enough to say that’s the direction we’re going to go in and then we’re going to prove it correct.

So it’s changing the minds of the people?

I think it’s changing the, certainly the direction of the leadership and the vision. There’s a little bit of a sensation of like, Yeah, this stuff’s all possible in the future, right? Like one day it’ll be possible. And I’m like, ‘No, that’s today. Actually, that’s today and you know, we’re talking about a ten-to-fifteen-year time frame, which is entirely reasonable.’ A hell of a lot of things happen and if you look back ten years, people don’t quite imagine ten years ago you can go and find all these archives from the 2010 era of conversations people are having about how much solar would be or is it possible to do this and that and would batteries arrive and all these things have happened. And they’ve probably happened faster than most people predicted. I guess if you zoom back, fundamentally this is a technology disruption.

The entire process we’re embarking on when we talk about decarbonisation, we adjust changes, changing our sources of motion, heat, light, all the things we’ve gotten used to in the world from being hydrocarbon, fossil fuel-based energy sources that drove that motion of car or lights in the ceiling or heat in your house, whatever it is, to being electrically-based, electron-based sources of motion, heat, light, etc, all the machinery we use at the broadest sense. That is a technological change. We have to change a whole lot of pieces of machinery and technology. We have the machinery and technology we need to make that change now. We have it at an affordable price and it continues to get cheaper and it continues to get cheaper more and more rapidly.

Because it’s a technology transition, all of those technologies in the broad renewables and energy and even household appliance spaces are prone to economies of scale rather than supply and demand economies, which is a big difference to the old world of fossil fuel-based technologies. So, will solar panels be cheaper ten years from now? I would bet any amount of money that that is the case. Can you prove it with the law of science or physics? No. You can prove it with the last 30 or 40 years that roughly every 18 months you have a doubling in production and you have 18 per cent, 19 per cent reduction in cost. And that has held for 30 years and I believe it will hold for the next ten years, 20 years, probably beyond that. So, you can either choose to bet on those curves or you can choose to bet against them. I think the company is trying to bet against them and I’m betting on them, and that’s the fundamental difference yet.

What’s the significance of the upcoming vote with the board to demerge AGL into two separate entities? What are they trying to achieve here?

It’s a long and complicated answer. The fundamental significance is, again, you talked about divestment. Do you endeavour to make the transition yourself or do you make it someone else’s problem? We’re not going to solve climate change, we’re not going to change our economy, we’re not going to harness the opportunities of decarbonisation by making it someone else’s problem. And we spent a long time doing that and it’s a very easy thing to do. The fundamental principle behind the demerger is to separate all the fossil fuel assets into a different company, which will be a smaller, weaker entity that will manage itself. I believe that is very damaging for shareholders and it will entrench those assets for a long time and ultimately shareholders will lose a significant amount of value. It’ll be very bad for the employees in terms of how that transition is managed proactively and sensibly, rather than wrenchingly and probably bad for the taxpayers. Because at the end of the day, if those things go south in a smaller company that can’t afford to handle its liabilities and everything else, it’s a very bad outcome.

What people don’t understand, and this is an ironic place that we’re sitting right now, most of these large-scale coal plants are very borderline in profitability, they’re incredibly unreliable. And so, this is where you can harness the opportunity to proactively transition them or you can pretend like they’re going to be running for 20 years. There’s no economic model outside of the companies I can find that shows these things are running in 20 years, both reliability-wise, they break down more and more frequently because they were invented, they were sort of built before we had computers. They are more and more unreliable, as we see with continual large-scale breakdowns, breakdowns last longer, they’re very expensive to fix, they cannot be insured anymore. So that trend is going to continue and if that trend continues, they then become less and less profitable. So, the problem with the coal plant is you can’t turn it on and off very easily.

As our grid, our source of energy in general, gets smarter and faster, we have many more rapid response technologies to inject energy, to manage energy with batteries or things that turn on and off frequently. And that is very hard for those assets that were designed to run continually. What that means is if the utilisation falls from 80 per cent to 60 per cent, you go from making $100 million a year to losing hundreds of millions of dollars a year very, very quickly. And to do that in a smaller company, there’s no ability then to recover from that. And so, you want to lean into that and manage that rather than pretend it’s going to be running in 20 plus years’ time, it’s not going to be doing it.

Let’s go back in time a little. Of the millions of tweets that people make every day. Very few of them actually end up doing something that changes the world, even just a little. But you tweeted to Elon Musk in 2017. Can you tell me the story of that tweet?

Look, I had my third kid at the time, I guess, was very young and I was up, it was late at night, I remember I was like, I don’t know, 1am in the morning or something, taking care of Tiger. And I think it was Lyndon Rive, so the head of – he was the founder of SolarCity, and when Tesla bought SolarCity in terms of batteries and things, it became one, Tesla Energy effectively. South Australia had just had a series of blackouts. They were being blamed on renewables because politically South Australia has lent very heavily into renewables, which has been a very good thing. Again, it has the cheapest price of energy in the NEM because it has the most renewables, right now, today, so it’s paid off for them in South Australia very well. They were being blamed on the renewables, which turned out to be not true. It was largely due to interconnectors failing in the grid between Victoria and South Australia.

But fundamentally, Lyndon was there launching the Powerwall, so the household battery for your home and someone asked him could battery solve the South Australian blackout problem? And he said sure, of course they could. Like, I honestly can’t remember if it was just a moment of frustration or whatever else. Anyway, I just tweeted to Elon, was he serious? Did he think that this was the case? Like, one of his lieutenants is saying that this is possible to save South Australia’s problems and prevent the blackouts and he didn’t really think anything of it. I think I went to bed and then he came back and said he would and we went back and forth negotiating and then sort of all hell broke loose. Suddenly Malcolm Turnbull was on the phone and it was like it went a bit nuts for a couple of weeks there.

But you know, credit to him, he hit the bid on the pricing really aggressively. He said he’d do it in 100 days or it would be free and delivered on that. And sure enough, the South Australian batteries are now called the Hornsdale Power Reserve was a lighthouse project for the Australian energy landscape because it was the first large-scale battery. When it was built, it was three times larger than any battery that humankind had built. So very, very large-scale piece of equipment and he took a big risk on that.

And the most important part is economically it turned out to be a very profitable project. So, all the people that panned it, it effectively removed a whole lot of profits from the gas generators, most of its profits are made in frequency control. So again, one of the things people think is that batteries are only about storage. Generally, when the frequency starts diving, then we fire up gas generators, they have about a five-minute period to turn on and then they inject power and fix the frequency and you can get paid for the services of fixing frequency.

The battery responds in like milliseconds and so instead of sort of going like this, the frequency is basically the movements now are so small in cell strength that you don’t notice it. So, it has saved the grid multiple times and it has saved blackouts in various places, saved blackouts in Queensland. And it’s proven to be a profitable project. For the owners of it making money, that’s the most important thing, because not only is it doing a good thing for the grid, it’s helping more renewables exist in the grid, it’s stabilising the grid for everybody, so everybody’s prices are more stable, lower prices in general. When one was done, suddenly everyone’s like, Oh, it’s possible. And then you have all the capital in the world flooding in to make more and more and more batteries. And now we have gigawatt batteries and in Sun Cable, we’re looking at 20 gigawatt hours of storage, so 150 times the size of what Hornsdale started as and that’ll be, ten years later, but still, that shows the pace of that technological change and price coming down and everything else.

When that tweet went out, you went to bed, you woke up in the morning, you were suddenly hounded by press to be put forward as one of Australia’s foremost experts on climate change and to be able to speak on this topic. What did you do to make sure that you were getting the information right and putting the right messages out there?

I certainly worked really hard, there was a crazy, odd week or two there. I don’t think, I mean, foremost experts, that’s not true. I needed the surface level detail at the time. I would be very honest, I’d seen Inconvenient Truth a decade ago and kind of knew the concepts, but had no amount of detail at the time. As a result of that, I had to dive really, really deep, really fast and developed a really good network of advisors and other people around me and just got more and more motivated to understanding what it was, how, the fundamental building blocks of what it would take to change this, so electrifying everything, switching our source of generation to renewable sources, agriculture, all the bits and pieces that have come after that have been sort of a fundamental frustration of mine that we have most of these technologies.

I think that was the thing that the battery proved to me, we didn’t invent any technology for that. It was built, deployed and profitable within 18 months with existing technologies. It required a whole lot of popular movement, it required political will, it required bravery and courage on behalf of Elon and Tesla to say that it’s possible and then a bunch of really smart South Australians to actually build the thing and put it together. But it was done and it worked and we didn’t invent anything. And so, then you think, Oh, well, I’ve sort of been living in this world where I thought this technology will need to be invented. We need to invent some things to solve the problem in the future. And you realise, No, what we need to do is just large-scale deployment of technologies we have today. We’ll solve 90 per cent of today’s problem over the next decade and then we can deal with the harder 10 per cent that’s at the end. But actually, solving the bulk of the problem is with technologies we already have, which was, became very frustrating to me and has become a source of kind of a crusade to explain and to try to catalyse some part of that, that frustration into action.

Solving Australia’s energy crisis. Is not your day job, though.

No

And you founded the software giant Atlassian with Scott Farquhar in 2002 as fresh uni grads. And since then, it has grown into one of the most influential tech companies with over $1 million in annual revenue. As CEO, your problem solving would figure into your everyday work, I’d hazard a guess there. Is there a relationship between what you do at Atlassian and how you approach climate change? Can that entrepreneurial mindset contribute to solving the climate crisis?

I think there’s a huge relationship. I think look, my day job’s, my degree is half computer science technology and half economics and finance. There’s a fair amount of technology disruption and change in our world. Again, when we started with Atlassian, the internet was sort of just starting off. We made the choice not to distribute software on CDs and to put up for people to download on the web, which was this revolutionary thing. And then we’ve sort of moved through the mobile era and moved, through the SAS era, everything’s in the cloud now. So, all of these changes, these are large-scale technology changes that we’ve had to adapt to by building new technology, migrating technologies, migrating customers, managing the movement, financing the whole thing, and working out how we’re going to continue to make enough money to build tomorrow, which is what we always sort of talk about.

So, solving this problem is going to take technology, it’s going to take finance, it’s going to take a good dash of kind of courage and productivity, like, we can go do this, let’s attempt to do something that hasn’t been done before and then others will follow. Finance, economics, technology, science is all, actually what I do as a day job, so it’s not that far away. It’s just with the climate change stuff, we tend to be playing with physical objects and electrons, which is a little different but the forces of technology change are no different. And I think that’s why so many people in the technology industry are very frustrated by this problem, because we are very used to the pace of change, we’re very used to the pace of scale of technology curves. So, I do think there’s a lot of parallels between what I do.

And of course, you take your concerns about climate into your own business. You do plan to make Atlassian carbon neutral by 2040. Why not sooner?

A few reasons. So, we’ve well, I mean, we will run entirely on renewable energy and we achieved that five years early, I think we reduced our emissions by 87 per cent in the last couple of years, so we’re making huge strides towards that. We’ve taken the position that we are going to have firstly a science-based target. So, the SBTi is Science Based Targets initiative is the strictest initiative, so it took us a year and a half to write a plan that they would accept. Not that they were being objectionable, the plan has to be thorough enough for them to come back and say, right, they are actually science-based. It’s very easy to commit to net zero and then say, ‘Oh yeah, we’re going to do that, do some very surface level maths.’ The plan has to say, what are you going to do, in what periods of time, how are they going to do it, how have you measured these emissions? How are you thinking about employees and commuting and everything else?

Our plan also includes all scope three emissions, so all the emissions from our customers using our products, our suppliers, transportation, commuting to the office, everything. And fundamentally, our longest pole is our suppliers. So, we’ll be a long way towards our net zero goal because of all our internal consumption that we can control. We’re also trying very hard not to just credit our way out of it. You can get to net zero by just shelling out money and buying credits and kind of claim the accounting. Credits have a variety of spectrum of high quality to pretty sketchy, but you’re not really, it’s again, it’s a way of avoiding solving a problem often. They’re very necessary for again, that last five to ten per cent of the problem. And fundamentally our biggest challenge is our cloud provider, which is Amazon AWS. So, they have a date of 2040 at the moment for their services to be entirely net zero, so all their data centres, all their sources of energy and creation at Amazon. It’s very hard for us to get rid of that without just crediting a way out of it, so instead we are choosing engagement, so what was Andy Jassy and now the new CEO, every meeting I have with AWS, we’re a very large customer of theirs, starts with how are you going in your plan to get to 2040 and you’re going to pull it forward, right? So, I really hope they bring it forward and that’ll be the fundamental thing that brings our date forward.

There is that old saying that there’s no such thing as an ethical billionaire, but it does seem like you are doing your best. You made a pledge to give $1.5 billion by 2030. How do you decide which ventures or organisations to invest in?

So just to be clear, we made a pledge to invest and donate $1.5 billion by 2030. The goal of that pledge is really important for a few reasons. One, it’s $1 billion in investments and half a billion dollars in philanthropy. Coincidentally, not coincidentally, it’s one and a half, one and a half degrees, 2030, that’s what we need to hit, basically that’s the most important thing. And the most important part about it is to deploy it by 2030. there’s a lot of climate change groups that say, I’m going to do this over the next 30 years, the next eight years is the really critical period of time, because fundamentally emissions is an area under the curve. We can’t get to 2049 and be like, ‘Oh, we’re going to solve it now.’ The momentum of it is going to run away from us if we don’t do significant things in the next eight years. My wife and I, trying to commit to actually doing it in the next eight years and focusing on that particular goal. Secondly, this is going to take not just philanthropy but investment as well. So, we’re trying to be very clear and create a bit of a model and we’ve had a handful people copy us around the world and please free anyone else, copy it. It can be 100 grand or 50 grand, can be a million, half a million, it can be any amount of money but like the point is it’s going to take investments to move the world forward and choice of investments, proactive transition investments, new technologies, scale technologies for financing everything else to move the deployment of technologies forward. And it’s also going to take philanthropy to show leadership, storytelling, standard setting, politics, there’s a whole bunch of things that need to be changed on the philanthropic side. I don’t believe we can solve this problem with just one or just the other, so I think the combination is actually what’s really, really important. And so that’s what we tried to put into a package. I think we’ll probably far exceeded, but something that’s a pledge at the moment.

Tell me about one of the things you’ve invested in or plan to invest in that you’re really excited by.

There’s too many. There’s high productivity things and then there’s people who are really out there in their thinking. High productivity things, I mean, Brighte is a great example. So, this is a lady called Katherine who is fantastic, ex-Macquarie I think, who got climate infected and decided she wanted to do something and realised that finance is actually a huge piece of this problem. So. If you look at almost any renewable technology, it’s all CapEx, no OpEx.

So, what that means is if you put panels on your house, cost you ten grand, you pay the ten grand cash up front and then there’s zero fuel costs, so they’ll sit for 20 years and generate energy for a 20-odd year period and once you put them on the roof, you just wait for it to rain to kind of clean them and that’s it. There’s no maintenance, there’s no fuel, there’s no buying of input costs. Almost all renewable technologies work largely that way, the money is all in the CapEx, so what you need to do is finance them. If you think about a mortgage, a house is the same thing its CapEx. Buying a house is expensive and then running it much cheaper over a long period time, so we invented mortgages and so financing is a huge part of the deployment of renewable technologies. And what Brighte does is come up with some very low cost and aggressive ways of financing home solar and now financing all sorts of home energy efficiency improvements.

We know that electrifying a standard dwelling in Australia will save about $4,000 a year, which is a huge amount of money. And so, if you think, okay, well, if I electrify everything, so my stovetop, my water heater, my car, my panels on the roof, batteries, all this sort of stuff. Electrifying all the sources of energy in my house will save me $4,000 a year, I think, well, will someone give me the money to pay for all that technology, cost about 100 grand per house, and then I’ll take some of that four grand a year and give it back as the loan interest effectively and that’s what Brighte does with panels. And the rate of acceleration of home solar deployment has been amazing because of financing technologies and it’s now a highly competitive space, so the cost of financing is going down, thus the rate of deployment is going up. So those are the things that are actually making a huge difference in terms of the rollout of technologies. And it’s a highly competitive business and it’s taking Australian business brains and financial brains and everything to say, well, how can we solve this problem in a way that’s not playing with the actual molecules of a panel and trying to make better panels. So, what they’re doing is really exciting. On the crazy side, I always love hanging out with the Goterra folk. So, they’re building a, it’s a maggot robot.

A what now?

A maggot robot.

I thought I heard you right.

So, food waste is a bad problem, it often goes into landfill, it decays, it creates a lot of bad gases. And so, they’ve invented a robot with a lot of artificial intelligence, it’s kind of a cyborg, a lot of smarts and robotics and AI combined with these black soldier flies. That you effectively think of a shipping container that you put by a facility, so you get rid transportation of waste, you shovel food waste in to the one end of the shipping containers, bit oversimplified, the fly larva eat and eat and eat.

They eat the food waste and consume it to create, think of the body of the fly, which is incredibly dense source of protein, and you can then use for all sorts of other things. So, you’re sort of turning food waste into usable protein for human consumption, for animal consumption, for anything you need, and saving huge amounts of transportation emissions, saving cost for the person who’s donating it, creating a profitable economic business out of this waste with an out-product that is useful and obviously getting rid of all the gases and stuff that comes from the decomposition of that waste in landfill and everything else.

Now one of the projects that you have been involved with is the Sun Cable project. I would love for you to just give me a quick overview of what the project is and what its goal is?

Sun Cable is a company that is building a platform with a deep belief that high voltage DC cables are the most efficient way to transport energy over long distances. That then comes to a series of projects, so a series of cables. The first cable of which is the Australian-ASEAN Power Link, AAPL, which is a cable that’s going to go from the Northern Territory up to Darwin and then a couple thousand kilometres across the ocean floor to Singapore to provide power to Singapore. So, it’s a very, very large-scale infrastructure project that is incredibly efficient and is a new export industry for Australia. So, from an Australian point of view, it’s kind of the equivalent of a giant extension cord, that you buy from Bunnings, it’s just a very, very, very, very fat one, very, very long distance. But we’re taking Australian sunshine, storing it in a battery for a couple of hours, and then sending it out to Darwin and then under the ocean. Oceans are good, they cool the cable, losses are very low and it will mean a 20 per cent change of Singapore’s power will come from renewable Australian sunshine.

Singapore has very expensive power being a wealthy but island nation, currently it’s all imported LNG that’s burned, it’s a very expensive energy source, so it’s a cheaper energy source for Singapore as well as a renewable energy source as well as an export industry for Australia. So, if you think about Australia, we have vast amount of land mass, one of the most irradiated countries in the world, we call it our windswept plains and sun-drenched land and all this sort of thing, they didn’t realise when they wrote those that they were pretty, pretty forward thinking. We just want to export that sunshine to other people and it’s a sub-20 per cent losses, so a super-efficient way of getting power to Asia. We have no shortage of land and so this is the first cable that we hope much like the battery is a lighthouse project.

Sun Cable is itself planning to build a whole series of other cables and creating a whole new industry and export potential for Australia, which would dwarf our current fossil fuel exports if we’re exporting energy in the right ways. Again, we have a lot of land, we have a lot of sun, a lot of wind, and we have 3 billion consumers to the north that don’t have that luxury of space and everything else that we have. So, you can see a world where there’d be tens or hundreds of cables going north from Australia to Indonesia, 270 million people, obviously to Singapore and up into Southeast Asia and then onwards to other countries, hopefully down to New Zealand so we can harness some of their resources in balance.

I’ve long believed in the long-term world view, this is more in the tens of years. If you think about the world, it’s always sunny on half the world. So, if you could build a cable that was 50 per cent of the world length economically, then you wouldn’t need no batteries at all because it would always be sunny on the other side of the planet and you would always be able to send that. That’s, I think the world’s grids will continue to connect intercontinentally and this is just the first step of what you will see many, many times over. And it’s, again, modular technology, it’s super scalable and it’s a viable economic project, I believe.

To begin with. How big would the solar farm be on the Australian side?

I think it’s about 30 gigawatts. So, it’s about 15 per cent of Australia’s power generation.

Oh wow.

So it’s far more then we’d need to replace all of AGL’s power stations, put it that way, that we’re already building. So again, building a large solar farm, there’s some engineering technicalities to it. So, the engineers will be like, ‘Oh, this is really hard.’ It is kind of hard, but it’s kind of very modular, it’s just how quickly can you roll out? I mean we’re in the Barkly near Tennant Creek, it’s not the most hospitable environment for building large-scale pieces of infrastructure, so you’ve got to be very clever about how you build it. But fundamentally, today it would be the world’s largest solar farm, I suspect by 2028 it’s probably not, if you look at what’s happening in the Middle East, in parts of India, in North Africa, there’s plenty of very, very large solar farms going on. There are other people doing similar projects, there’s a project from Morocco that’s very similar in concept in terms of balance. It’s a solar farm in Morocco that’s going up to England via cable, so out through the Atlantic and up. There’s a large network of cables going from India to the Middle East because they have the time zone advantage. It’s an incredibly viable method of huge renewable generation and distribution.

So, we all can’t build massive solar farms, but we could put solar on our own homes. What kind of impact would that have? Do you have solar on your home?

I have a bit of a wacky system at home. I live on a farm, so we actually don’t have it on the roof, we have it out in the field and a whole series of batteries and we trade power on a regular daily basis. I would not recommend this to anybody else unless you’re a true energy nerd. So, we buy effectively wholesale power and balance our equation by selling and buying. It’s a mini trading equation with amateur written things, but otherwise it’s very simple. Put panels on your roof, you put a battery in your garage, you work out when your appliances are going to go there. We’re slowly going down the more home automation route to change our charges, for example, for the electric vehicles to be controlled centrally, so when the price of power is cheap, it will turn on the charger and fill your car.

If the price of power spikes, turns off the and stop filling your car so you can do a lot of demand management in your home as the home get smarter, which I think every year over the next ten years it’s going to get better and better, less hand-rolled stuff and more, there are more boxes coming out that do a lot of this equipment for you. Again, you put on, what will end up happening is you’ll plug in your car at night when you get home and you’ll say, I need it to be full by 7am in the morning and the system will work out based on the price of power, based on how much is in your house battery, how much you’re going to need for your air conditioning overnight or whatever, when it should pull from the grid. What’s the most economic opportunity for you? What’s the cheapest way to fill your car? And that in itself is helping balance the grid. So, with, we’re sort of living a little bit in the future there, that will be every household in Australia in five to ten years’ time.

You’ve spoken a little bit here today about the unique opportunity that we actually have in Australia. Why is it in your view that Australia is uniquely placed for renewables? Is it just that sunshine and vast land? Is there something more to it?

Look, there’s a lot of ingredients that Australia has in our favour. There are some ingredients we have that are going against us as well. Going against us is probably easiest to start. climate change will affect Australia as we’re already seeing fires, floods, more frequent, the number of times in the recent floods we said this is a one in 100 years and you’re like when the last time was like two years ago and the one before that was like three before that like, they’re going to get more frequent, storms, floods, fires, all that sort of scary Al Gore stuff is going to happen.

Where Australia is in the global weather systems and the ecology we have, our position in the globe, part of what makes us have an opportunity from renewables is exactly what also makes us vulnerable to climate change more than a lot of other nations. I think that’s not often known. And there’s the sort of emotional examples, the Barrier Reef disappearing and tourism and all that, that’s totally true. There’s the actual physical cost examples for us of the flood bills and the fire bills and all the things that we’re going to have to pay and the insurance prices that therefore go up and all of this sort of stuff. So we are, as a nation, quite uniquely vulnerable because of our connection to the land, to climate change. But at the same time, because of our, few things, our geography, so we happened to be in a very, very sunny part of the world. We have a lot of open space and a lot of land, we have a very good wind resource because of the Roaring Forties and Indian Ocean, the wind sort of goes across and slams into Australia and lots of different places, as very stable source of wind, so the physical resources are quite good.

Secondly, I’ve long been, like most of our population is on the eastern seaboard, it’s good. One of the things you really want to have more and more renewables in your grid is you want to not fight time. So again, it’s sunny in Perth when it’s peak power usage in Sydney, so the more we can connect west and east, that actually helps us quite a lot, that’s why more and more cables are going to help. We also have a very interesting energy market. So, the fact that the NEM operates democratically, relatively, the fact that it operates with a relatively real time power pricing supply demand equation, is when they put it together, it’s very future thinking. So, the grid of the future is going to need to be highly adaptive to responses in price, if the price of power in the next five minutes goes from $10 a megawatt hour to $1,000 a megawatt hour, you want your air conditioner to turn off for a few minutes and turn on and so this helps balance the grid because what happens is it reduces demand and price comes down, everything is going to get a lot smarter

For countries that have very fixed grids, with fixed pricing, fixed sales into their grid its much harder. We actually have a very, we’re very lucky in the NEM that we have quite a dynamic environment which creates some challenges again, if you’re running the wrong thing, it’s a $1,000 an hour problem. But we have a huge amount of opportunity to profit from this. We have a lot of financial resources, so we talk about physical resources a lot, sun, wind, etc. Again, we’ve talked about the 3 billion consumers we have to the north, export directly over wire, hydrogen, higher value manufactured goods, instead of shipping iron ore, why don’t we ship them steel? Major cost of steel is energy. Well, if we have very cheap energy, we can ship steel and that is a higher value manufactured good, we’re effectively exporting energy.

You can even make green steel.

Well, green steel is exporting energy from Australia, that’s exactly what it is doing. We also have a huge amount of financial resources, so I mean the fifth largest capital market in the world, superannuation savings, etc. As we talked about the decarbonisation transition is going to take a financing equation in a huge way. Having a huge capital market locally helps us a huge amount. And then lastly, we have talent, we have not just the financial talent – folk up and down, Macquarie Street – we have engineering talent, we have technological talent, we have a huge technology industry now. All the parts of the talent that we need in manufacturing, large-scale industrial, very big sort of tradie culture, that is all the talent that is necessary to make this transition and we have it in the country and we can pull all the pieces together to actually handle that. So not only do we have the opportunity, we have the ability to execute on the opportunity and be a huge exporter and be a, as they call it, a renewable energy superpower and honestly, I think that’s exactly where we should end up.

Talk to me a bit about decarbonising the Australian economy. What does that mean?

So fundamentally it means, simply put, removing fossil fuels. You can dance around any which way you want, getting rid of fossil fuels. Those are hydrocarbon-based sources of energy, light, motion, movement, heat, we are trying to electrify all of those things. Fundamental big building blocks of how do you decarbonise the economy, you need to electrify everything, so your car, your house, manufacturing, industry. So, once you electrify everything, then you’ve just got to change your sources of electricity to be renewable and that can happen in parallel. As our grid is about, as we speak today, it’s about 32 per cent renewable over the last 12 months. That’s up significantly already, so our grid is going to continue to go up 40, 50, 60 per cent. My electric vehicle, if I charge it off the grid, not off my rooftop, but off the grid then it’s today, 30 per cent of that is renewable. Next year it’ll be 40 per cent and next year will be 50 per cent. So, my car is getting greener just by the grid improving, so if we electrify everything and we improve the grid, those are the two fundamentally big blocks that gets rid of about 80 per cent plus of the problem, and then you get down to some agriculture and land-use type things which are also important and you’ve basically solved the problem for Australia at that point.

Tell me about how decarbonisation will help create jobs.

So this is a huge transition. So, if you look at it, the household example is the easiest for people to understand, but it can be applied from, think of a household, to a community, to industrial manufacturing, the same thing largely applies up and down. If I’m going to decarbonise my household, I’m going to take all of the gas appliances and switch into electric. My stovetop, my water heater, my, if I have gas heating, for example, for the house, switch to a heat pump or a reverse cycle air conditioner. Each of those is going to take someone coming out and helping me make that, some sort of a tradie job, electricians, plumbers, etc, changing my water heater or changing my heating system, or changing my stovetop. Secondly, I probably want to make my house more efficient. One of the things you notice when people put solar panels on the roof, and why solar panels is such an instrumental device in people understanding their energy consumption, is they start caring about how much energy they produce. And as soon as they do that, they go like, ‘Wow, where did I spend all this energy?’ And then like, man, I should close the door or I should fix my insulation or I should fix the draught or whatever.

Or get rid of the old fridge on the back veranda with all the beer in it in the sun.

That’s right. We have horrible – or turn the pool heater off in winter because ain’t no one goes swimming anyway, kind of thing. We have pretty terrible building standards in Australia because we’ve been pretty lucky in climate, it’s not so important. But having building standards and other things for new buildings, there’s a lot of standard stuff that need to be done in the household level. But obviously the tradie jobs, electricians and plumbers in that case, for actually coming out and fixing changing that source of equipment. You have a lot of finance jobs, as I said, to do the financing of that and balancing credit risk and all the things that financial companies need to do. And that’s before you get to panels, which you would then put on your roof, because you’d be like, ‘Oh, you know what? If I put my own panel on, I’m making money in about year seven in Australia. If I finance it entirely, I’m making money in year nine on a 20-year asset.’

It’s an incredibly good deal for any homeowner, which is why we have more Australians sleeping under a solar panel than any country on Earth per capita. We have a lot of sun and it’s very cheap to do here, so it’s a very economic prospect. So, putting panels on roof, again, there’s more jobs to go out and actually install them and create them and then there’s all the downstream industries of panel distribution, panel creation, final assembly, all those things that can be done more and more in Australia as the model picks up, similar with batteries, then you get to electric vehicles, which obviously, vehicle transition, vehicle sales. So, if you look at the downstream effects of that, it’s roughly estimated as 1.7 million jobs. Some of, it’s definitely north of a million, various studies, 1.2, 1.5, 1.7, 1.9, different studies have come out, but it’s north of a million jobs created for the next probably 20 years plus. So actually, I think we’ll have the problem of we don’t have enough people to fulfil all of these jobs, not the other way around and that’s before you get to any of the manufacturing of those, could we make batteries here? Could we make final assembly of electric vehicles?

Electric vehicles are very simple to create compared to traditional combustion vehicles, not simple, but easy to manufacture. And if you start talking about manufacturing and industrial, electric buses and communities, the switching of all of those resources, if we can solve the CapEx/OpEx equation, so finance it all at a community governmental level down to a household level and then start on that decarbonisation transition. That creates a huge amount of jobs in that transition for many, many years, decades.

Lots of jobs.

Yeah. No shortage. It’s a positive, this is where we talk about the decarbonisation opportunity. In a decarbonised world, Australia is a winner, like on a global stage, all these other nations are looking around and thinking, ‘Man, we wish we had those opportunities that they have to do this.’ We can do it all inside our country, we don’t have to rely on many other people in order to do this. It’s entirely within our control and if we decarbonise the entire economy of Australia, our balance of trade would be better, household living costs would be better and we would have a more vibrant economy exporting to billions of people, energy or higher value manufactured goods. It will be the largest export industry in the country by certainly two decades from now.

What kind of time frame do you think is reasonable for decarbonising the economy completely?

Net zero by 2050, if you’re doing it properly, is a really important milestone. And when I say doing it properly, it’s not just pledging it. You’ve got to actually have a plan and you’ve got to break the back of it in the next eight years. That’s a real challenge, right? Is you’ve got to, it’s sort of a long-tail problem that the first 50 per cent is relatively easily and entirely doable with today’s technologies. If you zoom forward sort of eight years, you get to about 80, 90 per cent possibility curve, economically, price-wise, technology-wise, etc. Then you’ve got kind of the last 20 years to get rid of that last 10 per cent.

From an emissions perspective, you have to do it in that order, it doesn’t actually get any easier to start in 2040. In fact, it gets harder. The price of starting in 2040 is ludicrously higher than today, so you’re fighting against finance in the wrong direction to wait. But it’s important that we don’t think of it as a straight line between now and 2050. We have to knock the bulk of the problem off, which we can do, this decade and then focus on the harder to work out sectors, areas of the economy in that last 20 years. But that should be the final sort of 10 per cent of the problem. And again, some part of that will be solved with forestry and agriculture and seaweed and all sorts of other things that we’re managing the carbon cycle in a different way when we get to those parts of the problem.

Do you believe it will actually happen?

Yes, it has to.

No question.

It has to. No, it has to. It’s just a question of how quickly we choose to do it, at cheap cost today or do we do it at expensive cost tomorrow or next decade, whatever, it will get more and more expensive for us to do as a nation. And secondly, we will lose our opportunity. Someone else will service those customers, someone else will get that economy of learning and speed, faster than we will. I’m a big believer we should, in Australia, have the cheapest power in the world. If you have the cheap power, the price of electricity is one of the fundamental input costs to our entire global economy, whether you’re talking about green steel like earlier, or when you’re talking about how much it costs me to run my house. Therefore, I can buy other goods or I can consume other things or whatever, or the cost of my lifestyle running my car.

Data centres move to where cheap power is, like there’s a lot of things if you have cheap power, industry, manufacturing, etc, moves towards you not away from you. We should have the cheapest power in the world. If we don’t get there before everybody else those industries, those jobs, those economic opportunities will go to the places that have that cheap power and it will be really hard for us to get it back. So, this is where we have this opportunity in Australia if we lean into it in the next decade, to not only decarbonise and do good things from a planetary emissions and climate sense, but also from an economic sense, that is the opportunity that we’re seizing ahead of other nations that will then keep us ahead for hopefully decades afterwards.

Mike Cannon-Brookes, it’s been fantastic to be speaking with you today. Thank you so much for your time.

Thank you.

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