Climate Action and Manufacturing are not typically harmonious activities. Throughout the duration of the pandemic, we’ve talked at length about the importance of strengthening sovereign manufacturing capabilities in Australia. Bolstering our onshore production capacity and proficiency will pad the blow from major global supply disruptions, protect communities from economic decline and curtail our heavy reliance on extractive industries and exports for wealth.
Whilst the pandemic and the resulting lockdowns brought extensive damage to our economy and communities, it served to stimulate discussion around the importance of local manufacturing. When the established global supply lines that bring us the goods we rely on to uphold our quality of life were upended, Australians were struck with the realisation that we cannot produce enough of these products onshore and our dependence on Asian markets was unsustainable.
The effects of the pandemic, it can be argued, pale in comparison to the harm climate change has the potential to induce. Many are concerned that the relatively short-term experience of the pandemic pushed the climate change conversation out of the spotlight, just months after Australia experienced its worst ever bushfires. So as we emerge from the grips of the pandemic and begin to make moves towards revitalising manufacturing in Australia, the question begs; can climate action and a manufacturing revival coexist?
Manufacturing, in all its shapes and sizes, is typically an energy intensive business. There’s transport, high-powered machinery, computers, ventilation, and the rest, all running on a grid that predominantly operates on coal, oil and natural gas – major contributors to greenhouse gas emissions. Given this, it’s not unreasonable to assume that an intensification of onshore manufacturing would lead to an unwanted rise in emissions.
In order to achieve the net-zero emissions targets set out by the UN’s climate body by 2050, at the very least Australia would need to eliminate energy waste, move to near 100% renewable electricity, drastically shift away from fossil fuels, reduce the use of energy intensive resources like steel and offset emissions in areas such as agriculture. There’s not a lot of room in there for growing our manufacturing sector if we look at manufacturing in the traditional, industrial sense, however there’s a litany of ways that we can revive manufacturing capabilities whilst simultaneously achieving climate goals and it starts with changing our perceptions of what manufacturing is. Manufacturing in 2022 is highly advanced, remarkably concentrated and skilfully lean.
With a focus on some existing examples of manufacturing related progress in Australia, we can get a glimpse of how a manufacturing revival can coexist with effective climate action. It takes collaboration between government facilitation, industry incentives and innovation and a shift in thinking to design new ways of manufacturing, using products and creating energy.
Australia is home to numerous areas and communities that have grown and thrived under the wealth derived from the fossil fuel industry. There is concern from within such communities about what a transition away from fossil fuels looks like, understandably so. Simply ripping up these industries that provide work and wealth for so many people would be detrimental. A focus on replacing the established enterprises with new, equally supportive renewable energy facilities should be prioritised.
Western Australia’s Pilbara region, for example, is synonymous with iron ore and the mining of its vast mineral deposits. But more recently, it has become the new home of the 6,500 square kilometre Asian Renewable Energy Hub (AREH) project. Comprising 26GW of upstream wind and solar, capable of producing approximately 1.8 million tons per annum of green hydrogen and up to 10 million tons per annum of green ammonia, it is the most advanced green hydrogen project in the world. The Grattan Institute believes hydrogen is key to creating a new multi-billion dollar industry — manufacturing and exporting low emission or so-called “green” steel. In a new report it says the industry could create tens of thousands of jobs in areas currently reliant on coal like Central Queensland and the Hunter Valley, where local unease about the transition is underpinned by job losses and divesting.
We touched on emerging markets and the opportunities this could provide to bolster manufacturing in Australia in the coming years in last weeks’ article. One such industry mentioned was Electric Vehicle manufacturing. A report from the Carmichael Centre last month aptly details how the global transition to EV manufacturing is an enormous opportunity for Australia to rebuild its vehicle manufacturing industry. The establishment of which would significantly strengthen our economic complexity and better position us among global contributors to the green economy.
“Not only would the manufacture and assembly of EVs and EV components in Australia maximise job creation, but it would also create the broadest base for spin-off manufacturing and services industries, technological innovation processes, extensive export opportunities and a deepened knowledge and skills base in the Australian labour market.”
Laurie Carmichael Distinguished Research Fellow, Dr Mark Dean
Moves have already been made in this direction from industry players recognising the opportunities that exist in Australia. Polestar makes high-end electric performance cars under Volvo, and it’s latest mission is to build a truly climate-neutral car by 2030, without relying on low-carbon solutions or misleading offsetting schemes. Their aim is to eliminate all emissions from raw material extraction, material manufacture, product manufacture and end of life. To help them achieve this, they have invited Australian manufacturers, innovators, researchers or anyone with unique ideas to submit proposals to collaborate with the innovative car maker to secure a future CO2-free motoring solution. This represents a unique opportunity for Australia to get its foot in the door of the rapidly growing EV manufacturing industry.
Government Supported Projects
Government Investment into projects such as Snowy Hydro 2.0 are imperative to meeting emissions targets whilst supporting local manufacturing businesses and skills development. The Australian Government has made a $1.38 billion equity injection into the Snowy Hydro renewable energy scheme. Snowy Hydro 2.0 will provide an additional 2,000 megawatts of dispatchable, on-demand generating capacity and approximately 350,000 megawatt hours of large-scale storage to the National Electricity Market. Stipulations in the tender for the development have outlined that the steel for major elements such as the tunnel liners would be sourced from Australian manufacturers.
It will also create significant training and development opportunities for Australia’s workforce. It is claimed Snowy 2.0 will generate around 4,000 direct jobs in the Snowy Mountains region throughout the life of the project, and thousands more in supply chain and services roles.
The concept of closed-loop manufacturing and the circular economy must be more widely understood and adopted in order to properly revive manufacturing whilst taking climate action.
Innovative ‘circular’ manufacturers are popping up all over Australia, working to reduce wastage and the impacts of the linear flow of materials in our ecosystem. Just an hour’s drive from Singleton, a historical coal mining town in NSW, a company named Molycop is exhibiting the benefits of closed-loop manufacturing. Molycop is making the steel balls that are used in mining equipment to grind down rock by tumbling it in what the company’s Brett Allen likens to a giant steel can. Rather than making the balls from scratch, they’re made from melting down local scrap steel. “From an environmental perspective, it’s about a quarter of the carbon footprint of a traditional steel making method,” Brett says.
A company called Great Wrap also deserves a shout-out. With two manufacturing facilities in Victoria, the group is growing rapidly on the back of their innovative product. Great Wrap is manufacturing compostable cling wrap from potato waste and a mix of other compostable biopolymers for homes and businesses, soon to be launching compostable pallet wrap. Their mission is to remove 150,000 tonnes of plastic stretch wrap sent to Australia’s landfill each year.
Effective climate action and a manufacturing revival can coexist. It is crucial that the focus of attention is on the new technologies available that facilitate cleaner, greener production processes and outputs. Careful management of a transition away from fossil fuels is imperative so as to not upend the communities that have developed around them by replacing old industry with renewables led activity. Perceptions of what manufacturing is are changing, and this has to continue to successfully build an efficient, world-leading manufacturing industry that contributes to climate targets, instead of restricting them.