Sustainability Business LIVE speech
The Hon. Matt Kean
Chair - Climate Change Authority
Check against delivery.
May I begin by acknowledging the Wurundjeri Woi-wurrung and Bunurong peoples as the traditional owners of the lands we meet.
I'd like to pay my respects to their elders, past, present and emerging, and extend that respect to any First Nations people here with us today.
Can I thank the organisers of Sustainability Business LIVE for inviting me to this remarkable event.
Thanks, too, to Matt Bell for the kind introduction.
I'm really looking forward to hearing Matt's keynote speech and afterwards, joining him and fellow panellists. So, let's dive in!
Most of us here don't need a refresher course on climate change:
- We know the heat-trapping gases in our atmosphere are rising by the year.
- We know that means the Earth's heat imbalance is at record levels.
- We know our planet warmed at about a third of a degree in the years since 2014. That's about twice the pace of previous decades.
- And weather agencies are bracing for an El Nino event forming in the Pacific in coming months and it might be a "super" one but not in a good way.
- Indeed, our neighbours and friends in the Pacific will be on the frontlines, too, of El Nino extremes. Quite possibly around the time of the pre-COP gathering in Fiji and Tuvalu.
Australia, with our variable rainfall, and exposure to heatwaves, is particularly exposed among developed nations to a hotter world - although western Europeans in recent days might have argued the toss on that one.
Still, we have much cause for optimism, after all, Australia has amazing renewable energy resources above, and a proverbial periodic table of minerals beneath our feet.
We owe it to our entrepreneurial spirits - and our survival ones - that we triumph in this transition off fossil fuels.
It's a transition that's very much in our national and international interests.
The compulsion to act was powerful enough before the Iran War broke out three months ago AND it's even more compelling now.
The scramble for fossil fuels to replace those stuck on the other side of the Strait of Hormuz has reached almost all corners of the globe.
Nobody will forget this fossil energy crisis soon.
Not the farmers who've wondered if they'd have fuel and fertilisers for their next crop.
Not the motorists who've driven past empty service stations, or gasped at the price per litre, shown in glowering pink neon.
Not the holidaymakers forced to cancel travel plans or hunt for more costly alternative routes.
Some opportunists, of course, have sought to use these months of energy uncertainty to argue we should ditch our Net Zero emissions targets.
That's not just counter-intuitive, it's counter-productive.
The answer is not to expand our exposure to sources that undermine our energy - and climate - security.
After all, we can tap abundant clean energy. Resources that are here, now, and poised to become cheaper in the future.
I was recently in Singapore to represent the Climate Change Authority at the Ecosperity conference.
As you would guess, attendees were tracking developments in the Middle East, and discussing the security of vital fuel deliveries.
But they were also paying close attention to opportunities to minimise that exposure.
Home-sourced electrons look increasingly attractive compared with imported molecules and no wonder.
But don't just take it from me, ask the International Energy Agency.
Last week, the IEA released its World Energy Investment 2026 report, one that reinforced many of the signals I picked up in Southeast Asia.
In truth, the overall picture remains similar.
The ratio of investment supporting low-carbon energy versus the fossil variety, is broadly the same as previous years: two to one.
That's right, out of the $US 3.4 trillion - or $4.75 trillion in our money - the IEA predicts will be invested in energy in 2026, almost two-thirds will be going to low carbon-related investments.
The remaining sum, just over a third, will be invested in oil, gas or coal, the IEA says.
That ratio is holding up despite the US under President Trump favouring fossil fuels over clean ones.
His memo apparently didn't reach Texas, where spending on solar and storage has soared in recent years, despite it being a so-called red state.
Indeed, globally, when it comes to a share of power generation investment, renewables account for 70% of the total, the IEA says.
If the spending on renewables is down in absolute terms, that's partly because you get more solar PV and batteries for the same buck, rupee, euro or Aussie dollar, year into year.
The longer there's uncertainty about energy from the Middle East, the more the scales tip in favour of renewables.
For example, take the Philippines, which declared a national emergency in March.
This nation, with four times Australia's population and heavily reliant on fossil fuel imports, tripled its imports of solar panels in the first quarter of 2026, from a year ago.
It's now the largest destination among developing nations for Chinese-made solar PV, the IEA says.
But what about fossil fuels?
Yes, there are stirrings of extra investment, including some nations lifting spending on coal to counter the on-going risk of disrupted oil and gas supplies.
But the IEA reckons that investors have to hedge their fossil bets.
How long will the oil price spike last?
And can demand for fossil fuels return to previous levels if more and more consumers are turning to electric vehicles, heatpumps, and more?
Not helping fossils is a global backlog of gas turbine supplies, while an offshore oil rig can take five years to build.
And fossil fuels have the handicap of being finite.
Contrast with the sun that reliably returns each morning - even in Melbourne!
The wind will also remain renewable so long as we have an atmosphere, a sun, and an Earth that spins.
And yet, there are some who would argue the answer to a fossil fuel crisis is to double down and try to extract more oil and gas here in Australia.
That tale needs a reality check.
Sure, my own state, NSW, has lately slashed the cost of a gas exploration licence to just $1000, from $50,000.
But when I was a Coalition government there, we were actively buying back exploration licences, particularly for coal seam gas, but also for coal mining, such as on the Liverpool Plains.
The economics of these projects weren't great, nor were the environmental outcomes.
Fast forward to last week and you may have heard that Santos, the largest investor in gas in NSW, is anything but gung-ho about the prospects.
Santos said it was limiting new spending on a range of projects, including the Narrabri coal seam gas project in the state's north.
Narrabri has already cost Santos at least $1.5 billion since 2010 and who knows when or whether the project will ever produce gas in volume.
The company also said it would also limit spending on its prospects in the Taroom Basin, in Queensland.
Those with long memories - or a few minutes to search Trove - would note we have been around this block before.
Back in the 1980s, in the wake of the First Iran Energy shock, parts of the Taroom Basin were touted as a major source of crude oil.
Trove tells us that an oil plant in the Taroom would have cost a $4.3 billion back then - or more than $21 billion in today's dollars.
And developers said a plant would take possibly eight years to get to production.
As far as "drill, baby, drill" options go, this one looks like a long and expensive shot.
Elsewhere in Australia, the prospects don't look so great either.
The AFR just on Monday noted how US oil giant Chevron views developing Australian reserves as costly versus other locations.
How about a new coal-fired power station, as some fans of fossils call for?
Well, the last coal plant to secure an investment in the National electricity market commitment was way back in 2004, in Queensland.
Some argue new coal plants are handicapped by National Electricity Objectives that require developers consider sustainability along with reliability and affordability.
Trouble is, that emissions requirement was only formally included in the objectives in 2023, so you can't blame that addition for the decades-long drought in coal investments.
In any case, big commercial generators have shown no interest in new coal plants.
Perhaps they've read CSIRO's GenCost reports that routinely find solar and wind the cheapest new sources of electricity generation.
Or perhaps they accept the numbers run up by Bloomberg New Energy Finance (BNEF).
In January, the BNEF calculated the levelised cost of electricity from a new solar project was $A68 per megawatt-hour, and for wind, it was $A115 for the same hour of power.
For new coal, the cost was $297 per megawatt-hour and that Bloomberg estimate didn't account for any cost of carbon from burning the black stuff.
One final word on fossils, people hoping for the world to return to pre-February norms might be disappointed.
True, petrol prices have lately eased a bit, but diesel remains elevated.
But, at the end of June, the halving of the excise ends.
Unless there's an extension, the prices you see at the servo will have 32 cents a litre added back on.
It's little wonder consumers who might have been hesitant about buying an electric car are flocking to showrooms, here and elsewhere.
The sticker price of a new EV might be a year or two away from parity with a petrol or diesel model. As for the cost of operating an EV, well, that race is already won.
True, EV owners might still watch their apps for the cost of electricity.
But if you're one of 4.4 million households with solar panels, you have the means to do something about it.
Of course, it would be great if more of the remaining seven million or so Aussie homes could share some time in the sun particularly renters and those living in apartments.
Helping to make the advance of electro-tech unstoppable is the billions being spent on innovation and new products.
Take balcony solar panels, which are growing rapidly in popularity in Europe and the US.
There's no reason why this so-called "behind the plug" option can't take off in Australia too.
The consumer product that has gained lift-off here in the past year has been home batteries, thanks largely to the Government's Cheaper Home Battery scheme.
Originally set up as a $2.3 billion program, the eventual cost will likely reach $8.5 billion.
As we close out year one of this program at the end of June, almost half of million homes will have installed batteries, a per-capita rush unseen anywhere in the world, the Australian Financial Review reported last weekend.
There more than a few angles to this tale.
The average home battery bought before the program started was about 10 to 12 kilowatt-hours, the Australian Financial Review reported last weekend.
Under the scheme, the average battery going in has been about 28.5 kilowatt-hour, not far shy of a tripling.
And about a quarter of those homes installing a battery in the past year have upgraded their solar PV systems too.
Those installing solar along with storage have opted for bigger systems, propelling solar PV sales to record levels.
The Australian Energy Market Operator (AEMO) doesn't have the same visibility of how households are using all this storage, compared with the performance of utility-scale batteries.
So AEMO has been sampling behaviour and have identified some interesting early signs.
Of particular interest is how households responded to a day of record heat and record power demand in Victoria, back on 27 January, this year.
AEMO found households with batteries transitioned to exports later in that high-demand day than solar-only households.
Presumably they were charging up their storage.
By that evening, as the sun went down and power supplies became tighter, those households with batteries reduced peak net imports from the grid by 1.4 kilowatts on average, compared with solar-only homes.
That might not sound like a lot, but AEMO reckons such actions, writ-large, would have helped the grid at a critical time.
The episode also reminds us the budget cost of battery subsidies will be partly offset by grid operators not needing to invest as much on networks and other infrastructure.
That helps all our power bills.
Of course, many households adding batteries are doing so because they want to increase their independence from energy companies, which allows me to segue to my final point that I'd like to leave you with.
It's a subject we might pick up with the panel a bit later on, too.
The Cheaper Home Battery program will add at least 12 gigawatt-hours of storage capacity in its first year.
That's an enormous amount of electrons.
And when more EVs come with bi-directional charging, we will other source of storage, remember that a typical EV packs 60 kilowatt-hours or more.
What more can regulators, governments and companies do to encourage households to export their surplus electrons?
On a regular day, such exports would further reduce the need to burn expensive gas, lowering the wholesale power bills for everybody.
And on a day of extremely high demand for electricity, such orchestration could keep the lights on and the induction cookers cooking, for everybody.
Indeed, we glimpsed a little of that potential back in January, here in Victoria.
Those with solar and storage ended up delaying their demand on the grid, compared with homes hosting solar panels only.
That episode was voluntary but uncoordinated.
Imagine if well-designed agreements between households with ample storage and their retailers provided rewards for delaying demand on the grid, or even prompted exports?
The benefits to the grid - and to battery owners - would be amplified and we'd likely burn less gas and coal, and hence, cut emissions.
That's a win-win-squared outcome!
We often hear the future is what we make it well, let's get on with the making!
Thanks for listening!
