With disruptions in international supply chains for essential products (like medical equipment and supplies) disrupted in the current COVID pandemic, Australians have a new appreciation for the importance of retaining a flexible, high-quality, domestic manufacturing capacity. And the ongoing transformation of Australia's energy industry, with rapid expansion of renewable energy sources, would add momentum to the renaissance of Australian manufacturing.
That is the conclusion of a new study written by Dan Nahum, Economist at the Centre for Future Work.
The report notes that power from renewable energy sources (both solar and wind) are now substantially less expensive than fossil fuel generation on a full lifecycle cost basis - and moreover, that cost advantage will grow in coming years. The report simulates the annual power cost savings to manufacturers if the sector's current use of fossil fuel-fired power was fully transferred to renewables (as existing generating facilities are retired and replaced). The sector's power bill would decline by an estimated $1.6 billion per year, or 23%, compared to the current fuel mix. The saving swells to $2.2 billion (in constant dollars) by 2050.
The paper also provides numerous examples of manufacturing industries which are already making use of renewable power to capture cost and reliability advantages, as well as various manufacturing industries which hold great potential to supply Australian-made manufactured inputs to renewable power systems (from lithium-ion batteries and electric vehicles, to public transportation rolling stock, to green hydrogen). The paper reports international evidence showing that companies which have reduced greenhouse gas emissions more successfully have attained greater success in manufacturing output and exports than Australia.
The paper also shows there is a strong majority overlap between Australians regarding the manufacturing sector as important, and those in favour of expanding the use of renewables, making this a viable dual public policy goal for governments.
Please see the full report, Powering Onwards: Australia’s Opportunity to Reinvigorate Manufacturing through Renewable Energy, by Dan Nahum.