03/12/2021

Analysts have made it clear that the world needs to reach net zero by 2050, if not before, in order to limit the worst impacts of climate change.  The question now is simply ‘how?’—and the answer is far more complicated.  Over the past year we have seen legislative changes, or indications of such changes coming, at both Federal and State level, aimed at accommodating clean energy projects and achieving our net zero targets.  Key legislative developments impacting Australian clean energy projects are:

  • Offshore wind legislation:  The Commonwealth finally followed the lead of the States in turning its attention to wind farms when the Offshore Electricity Infrastructure Bill 2021 (Cth) was tabled before Parliament. There is still detail to be included relating to the licencing regime (most of which has been deferred to the regulations), but the Bill promises to allow the development of large-scale offshore wind farms (or other renewable energy projects), and the storage and transmission of electricity, from between 3 and 200 nautical miles from Australia’s shore.
  • Renewable Energy Zones in NSW: In 2020, the Electricity Infrastructure Investment Act 2020 (NSW) received assent, representing a fundamental shift in policy towards the encouragement of renewable energy projects in NSW.  Under the Act, the Minister can declare a geographical area of the State a “renewable energy zone” (REZ) and specify the generation, storage or network infrastructure that will be implemented in that zone. 2021 saw the declaration of Australia’s first REZ in the Central-West Orana region, which will host at least 3GW of solar, wind and storage. The Central-West Orana REZ—one of at least 5 to be established—will play a key role in addressing NSW’s current infrastructure concerns and demonstrates NSW is ‘walking the talk’ on its 2050 net-zero target.  Construction of the first REZ is expected to commence in 2022.
  • New ‘diversification leases’ lead land tenure reform for renewable energy in WA:  A joint statement recently published by four WA Government Ministers announced significant land tenure reforms headlined by a new form of tenure – the diversification lease.  The reforms facilitate the expansion of carbon farming, with pastoralists set to benefit from the extension of pastoral leases for up to 50 years and associated security of tenure benefits to attract carbon farming capital investment.   However, questions remain how the reforms will ‘unlock land for renewable energy’, such as green projects, because:
    • the best renewable energy sources in the State are in areas predominated by existing pastoral leases;
    • the grant of a new ‘diversification lease’ will still require agreements to be reached with pastoral lease and native title holders; and
    • more carbon farming will potentially create more conflicting land uses for clean energy projects and mining to contend with.

From a policy perspective, Australia has focused on positioning itself as a hydrogen superpower, with all States having now released plans for developing their respective hydrogen industries.  There is, therefore, not only a race to net zero by 2050 but also a race between the States in the development of burgeoning and successful hydrogen economies.

  • With three of Australia’s top trading partners (Japan, Korea and China) having already made clear commitments to use hydrogen to decarbonise, Australian states are racing against each other to position themselves as Australia’s hub for hydrogen export.  Each State’s hydrogen plan highlights their key competitive advantages, including for example, Queensland’s close proximity to Asia and its established infrastructure, Victoria’s connected transport network, which will enable the potential for integrated, multi-mode hydrogen transport, and WA’s abundance of land and renewable resources.  However, the key issues impeding Australian companies from capitalising on each State’s potential are production costs, a lack of enabling infrastructure and regulatory uncertainty.  NSW may just be leading the way in addressing these concerns having released integrated policies which consider the optimal locations for hydrogen production from a full supply chain perspective, ensuring efficiency and driving down costs.  The NSW Parliament also recently approved the Energy Legislation Amendment Bill, which is expected to unlock $3 billion in government incentives and A$80 billion in private investments aimed at increasing the scale and competitiveness of the renewables industry.

Key highlights from the State’s hydrogen strategies:

Interested in offshore wind? See Unfurling the sails: the future of offshore electricity investment in Australia.

For more on WA’s land tenure reforms, see Renewable energy and reusable reforms:  WA’s land tenure amendments are familiar but exciting.

Want more on green hydrogen? See Green Hydrogen: The New Commodity of the 21st Century.

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