On August 16, 2022, US President Joe Biden signed into law the Inflation Reduction Act – the global ramifications of that act are still being understood in the renewables world.
What outwardly presented as domestic relief for an overly inflated cost-of-living index… was actually the largest effort into addressing climate change in the history of the United States, busting inflation and using local clean energy investment to do it.
With aims of reducing greenhouse gas emissions by 40% in 2030, the race to net zero is on, and the US is scouting the globe for first-round picks – including Australia.
While Australia remains utterly outmatched by Joe Biden’s economic titan, Down Under does stand at a pivotal crossroads in securing a firm foothold in critical minerals and renewable energy exports.
With competitors in the US, China and the EU with their Green Deal – the window for Australia to become a Renewable Energy and Critical Minerals Export Superpower is shrinking, but not unreachable.
“We can’t compete in deploying capital in Australia if it isn’t a free market and there are other incentives that attract capital elsewhere,” said Matt Dusci, at the WA Renewables and Critical Minerals Summit in Perth.
The acting chief executive of IGO Limited said that for Australia to remain competitive, miners need support in lowering the cost of transitioning to higher-value processing for critical minerals to benefit from lucrative processed minerals exports.
“Western Australia is responsible for 50% of the world’s lithium – powering electric vehicles and home solar batteries, cornerstones of the net zero economy,” said Smart Energy Council CEO John Grimes.
“With so many other critical minerals and a world-leading mining industry, Western Australia is so well-placed to reap the benefits of the rush to net zero.
The race for critical minerals has been spurred by the growing demand for clean energy technologies and the urgent need to move away from fossil fuels. Lithium, manganese, and graphite, among others, have become essential components in the production of batteries for electric vehicles, grid storage, and renewable energy systems.
The United States offers substantial subsidies and investments to drive the growth of its clean energy and critical minerals industries. This approach is attracting substantial sums of capital, but experts like Tim Buckley from Clean Energy Finance argue that it might not be enough to catch up to China, which is outspending the US four to one in the clean energy race.
Australia’s best chance lies in transitioning from the traditional “dig and ship” model for coal and iron ore to a value-adding approach, by processing critical minerals domestically. This shift would enable Australia to create highly refined chemicals near the mining sites and produce batteries close to electric vehicle plants, fostering a more sustainable and integrated supply chain.
The nation’s geological advantage is undeniable, but requires more ambitious thinking for that superpower potential to become reality.