Labor's Political Threat and Price Cap

In this episode, activist Miriam Lyons gives an overview of Australian climate policy past, present, and future.

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Text transcript:

David Roberts

G’day mates! As you all know, I’m in Australia at the moment, on a whirlwind speaking/listening tour regarding this country’s response to the Inflation Reduction Act.

I’ve been learning a ton about Australia’s history with climate policy, its clean-energy resources, and its current politics. It’s all much more complex and interesting than I appreciated before coming, so I thought it would be cool to record a podcast “in the field,” while I’m here, with someone who could provide an overview of all that stuff.

To my great delight, I was joined — live! in studio! — by Miriam Lyons. Lyons’ resume is … daunting. She founded a progressive think tank called the Centre for Policy Development and led it for seven years; she led the climate justice campaign at GetUp, the Australian equivalent of Moveon.org; she has written or co-written two books on economics and the clean-energy transition; and currently, she is director of the Australian Economic Transformation program at the Sunrise Project, which works to scale social movements and accelerate the transition.

Needless to say, she is quite familiar with the ins and outs of Australian climate politics! We had a fascinating and wide-ranging discussion. Enjoy.

So, Miriam Lyons. Welcome to Volts. Thanks so much for coming.

Miriam Lyons

Thank you so much. Very excited to be on the pod.

David Roberts

This is excellent. Oh, also, Volts listeners might be excited to know that this is the first Volts that I've ever recorded in person in the same room with my guests. That's exciting too. I know usually I'm a hermit at home, so this is cool. I would like to do more of it. Okay, so let's start then with a little bit of capsule history. I think the Volts audience is aware of the agita of climate politics in the US. From sort of Waxman-Markey era of 2009, 2010, all the way through the turbulence, et cetera, through IRA.

So let's talk a bit, a little bit about what's been happening in Australia during that same time period. Give us a sort of summary of the history.

Miriam Lyons

I've been thinking about how to sum up all of Australian climate politics really briefly. Okay, so in a galaxy far, far away. A colonized country was sitting on one of the world's biggest carbon bombs, and what happened next is an epic tale of triumph and betrayal. I think the TL;DR version is that we are one of the world's biggest exporters of climate pollution. We are also the sunniest continent on Earth and one of the windiest. So we have this enormous potential to be a massive exporter of climate solutions. And we're currently hitting our crossroads, which is that moment where we decide whether we want to be a Kodak country that is so attached to its old technology that it's failing to notice —

David Roberts

Oh, that Kodak. For the minute. I had the bear in my head. I was like, wait, what's the bear analogy? Oh, and the photograph analogy.

Miriam Lyons

Yeah, that one. It's just like, oh, there's all this sun and wind. What could we possibly do instead of killing the world with our coal and gas exports? So that informs a whole lot of the history of our climate politics, of course. And our fossil fuel lobby have been experts in using their enormous profits to win friends and influence policy and more importantly, to bully politicians when they don't get their way. And that playbook has worked really well for them for quite a long time, but it is now running out of oomph. And I think, you know, a big question now is whether our major parties will notice that the gun that the industry is holding to their heads doesn't have quite so many bullets in it anymore, but to kind of go back in time:

John Howard was our second longest-serving Prime Minister and a climate denier. He was unseated by Kevin Rudd in 2007 for two main reasons. So one was a massive backlash against his attacks on workers' rights, but the other reason was his failure to act on climate change. I saw the polls at the time. Those were the consistent two main reasons that voters switched from him to Kevin Rudd. So Kevin Rudd came in, he signed the Kyoto Protocol and he introduced a very modest emissions trading bill. So it was going to cut emissions by about 5% and any stronger emissions cuts were going to be conditional on what other countries did.

David Roberts

Let's discuss the political parties here. I forgot, we have different political parties at play. So the Conservative Party here is called the Liberal Party.

Miriam Lyons

Yes. So this is down under everything's topsy turvy. The Liberals are the conservatives.

David Roberts

Exactly, southern hemisphere thing. And the liberal party or the center-left party is the Labor Party.

Miriam Lyons

The Labor Party.

David Roberts

So Rudd was of the Labor Party.

Miriam Lyons

Rudd was of the Labor Party and the Labor Party was born from the workers' rights movement. And the Greens Party is also very relevant, which was born from the environmental movement.

David Roberts

So Rudd comes in, does some mild emissions cutting.

Miriam Lyons

Yeah, he plans for a very modest emissions trading scheme. And that bill did not pass the senate for reasons that you should not ask Australian climate campaigners about, unless you want us to break our own personal version of Godwin's law. Then the Copenhagen COP flopped, which took a bit of paint off Rudd because he had really been pinning his kind of domestic story to the idea that we would be acting in a pack. Then Malcolm Turnbull, the moderate leader of the conservative Liberal Party, who Kevin Rudd had been negotiating with, was overturned by his own party in favor of Tony Abbott because he was considering actually negotiating on a climate bill.

And so Tony Abbott was a Trump style climate denier. So suddenly Rudd had lost his prospect of having somebody reasonable on the opposition to negotiate the bill with. He then decided to shelve that bill, which turned out to be a very unpopular decision because immediately afterwards, his polling started to plummet, which resulted in his own party losing faith in him and overturning him in favor of Prime Minister Julia Gillard.

David Roberts

All these names are ringing very, very faint bells.

Miriam Lyons

And there's more. So she then narrowly won an election and was only able to form government with the help of a couple of progressive rural independents who were very clear on what climate change was going to do in terms of damage to the farmers in their electorates. And so they demanded strong climate action as part of their deal to allow the Labor Party to form government. Which meant that between them, they put together another climate package, which included an emissions trading scheme again, but also the Australian Renewable Energy Agency, which then had a big budget to invest in a whole bunch of really important grants to bring the cost of renewables down in Australia.

And the Clean Energy Finance Corporation, which was essentially like an investment, publicly owned investment bank that could invest in the clean energy sector, but with a slightly lower rate of return, so enabling that kind of investment to get up. Green bank. Exactly. But there's also more. So while all of this was going on, the Rudd and Gillard governments were also trying to make the mining industry pay a little bit more tax for the massive, massive profits that they were making on the back of a massive mining boom, very little of which was staying around in the country.

Our mining sector is by far the majority multinational owned, so most of those profits go offshore. And of course, the mining industry was not a fan of paying more tax and neither was Tony Abbott. So both of them ran a massive culture war campaign against Julia Gillard, which spooked her party, who then turned around and dumped her in favour of Kevin Rudd. Again, same guy back in.

David Roberts

Wait a minute —

Miriam Lyons

So it's pretty safe to say that backstabbing is not voters' favourite quality in a candidate. So they then handed the election to Tony Abbott a couple of months later, who then dismantled the carbon price, but interestingly, was unable to dismantle the Renewable Energy Agency and the Clean Energy Finance Corporation.

David Roberts

Some political lessons. And so Rudd comes back in and loses to Abbott.

Miriam Lyons

Well, no, Rudd got dumped in favor of Gillard, who then won, who then got dumped in favor of Rudd, who then lost to Abbott in 2013.

David Roberts

And then so Abbott begins a long reign of doing nothing.

Miriam Lyons

Yeah, Abbott repeals the mining tax, repeals the carbon pricing part of that big clean energy package, tries to get rid of the renewable energy target, which we should also talk about, but fails to completely eliminate it. It gets a small, I think, roughly 20% cut to the renewable energy target, which is a really big success story, actually, of Australian climate and energy policy. Tries to overturn the Clean Energy Finance Corporation, tries to overturn ARENA, isn't able to because they've got too many fans in the Senate, basically too many fans in the public and the Senate.

David Roberts

Right.

Miriam Lyons

But then yes does absolutely nothing.

David Roberts

And then Abbott's in charge until just recently, yes?

Miriam Lyons

Abbott, then embarked on an incredibly ideological public service cutting push, which was not popular. So then his polling started going down. So he was then dumped by his party in favor of Malcolm Turnbull. So he was then back again. Then Malcolm Turnbull starts glancing sideways at the idea of something that kind of, if you squint at it, might look like carbon pricing within the energy sector. And in order to do that, he had to negotiate with the states. The states were putting some quite reasonable requests on how to make sure that it actually worked.

As soon as the right wing of his own party started to get the idea that the scheme might do something, they dumped Malcolm Turnbull. But in this case, what happened was that Peter Dutton had put in the bid for the leadership spell, so he'd instigated the backstabbing. Yet he didn't actually win that spell. Scott Morrison did.

David Roberts

Scott Morrison? Another name that rings a faint bell.

Miriam Lyons

Yeah, yeah.

David Roberts

Good grief. *Sirens wailing in background*

Miriam Lyons

Somebody's telling the truth about climate politics, send in the cops. So Scott Morrison then ends up the leader of the party going into the next election. And people don't blame him for having stabbed Turnbull in the back because it kind of looked like he was the person who got him by default. So then he was able to be elected, then he did a whole lot of damage. And Scott Morrison was quite famous for having held a lump of coal in parliament, doing that as a bit of a stunt or waving it around. What then happened was actually a bunch of climate disasters, so particularly some horrific bushfires, just unprecedented in how much damage they know.

Property lost, enormous swathes of bush that had never burned before, burning for the first time, and lives lost. And everybody was very annoyed about this. And Morrison was out to lunch and specifically out of the country. And then when confronted on why he was neither taking the climate change that had caused the intensity of these bushfires seriously, nor really being very present to try and look after the people who were surviving this disaster, he famously said, "Well, I don't hold a hose, mate."

David Roberts

There's some real political skill right there.

Miriam Lyons

Yeah. So people didn't like that so much. And that was like, really emblematic of people's sense that he was just failing on a whole bunch of national issues that were hurting people's lives, where he just wasn't providing leadership, so he then lost. And now the prime minister is Anthony Albanese.

David Roberts

So this is an incredible amount of drama and back and forth, two emission trading schemes, both of which more or less got defanged. So let's take stock then, after all of that. You know, right now, Labor is contemplating what to do on climate change. May or may not do something big. We'll discuss that in a minute. But taking stock, sort of, what is there now of climate and energy policy in Australia? What do you have going for you currently?

Miriam Lyons

So now we have a Climate Change Act, which basically means that the government's emissions reduction target, a 43% cut in emissions by 2030, has been legislated. But the legislation basically says this is our target and every year we have to turn up to parliament and tell you what we're doing to meet our target. The legislation does not make them meet the target, it just makes them have an annual moment of accountability where they have to say whether or not the dog ate their homework.

David Roberts

Right. This is something anyone who has followed me for a while knows I yell about a lot, the illusion that targets are policy, but they're not actually policy.

Miriam Lyons

They have an enormous amount of soft power, right, which you shouldn't discount completely. Like it's good to have accountability on whether or not the dog's eating your homework, but doesn't actually make you do the homework. Not the same as homework.

David Roberts

And there's a 2050 target as well, right?

Miriam Lyons

Yeah. Net zero by 2050 is now bipartisan. So that was one thing that did happen under Morrison, was that they formally adopted a net zero by 2050 target, but again, with absolutely no homework. They had a pamphlet that they said was their roadmap on how they were going to meet the target. Then other pieces of policy that we have there was something called the Safeguard Mechanism, which was introduced under the Abbott government, if I'm not mistaken. So it was a very Abbott style way of saying that you were doing something on climate without really doing anything on climate.

The way that mechanism worked was to say that the covered facilities, so it was 200 largest facilities in the country, had to reduce their emissions below a baseline, but they set the baseline so much higher than their actual emissions that it never made them reduce their emissions. And so what Labor took to the last election was a promise to turn it into a scheme that did something — terribly designed scheme. It's not like even a third best policy design, right? This is like the 6th to 7th best policy design, but it was a piece of policy that already existed.

So, they were hoping that by saying, "Oh, we're just going to have the same policy but make it work," they would diffuse attacks on them having a climate policy going into the election. Naturally, that did not diffuse any attacks anyway. Yeah. So the Liberals were very happy to attack their own policy in the context of the election campaign. Also, something we should learn lessons from, probably.

David Roberts

Yes.

Miriam Lyons

No negotiating with terrorists. Appeasement does not work. Yeah. So we have a safeguard mechanism now which has been strengthened with a whole lot of campaigning from the climate movement, a whole lot of negotiation from the Greens and also from an independent senator and independents in the lower house, all working to try and improve the scheme. So it actually does something, looks like it's going to actually do some things, still a few holes, some devil in some detail. A whole lot of work is going to have to go into actually making sure that it does the things that it has the potential to do.

David Roberts

Right. And yeah, maybe it's worth pausing to say this is something I think all Australians know, but it's worth pointing out that these defeats of Labor throughout the 2000s and the 2010s on the back of their attempts to do emissions trading schemes, their attempts to do climate policy have left them somewhat gun shy and paranoid about backlash. I think that's kind of the sense I get. The context that this is all taking place: On the one hand, this sense that we have to do something. On the other hand, this sense that we've been burned before and here we are, finally we have the government, let's not screw it up, let's not go too far, let's not risk another backlash.

Miriam Lyons

All of those things now.

David Roberts

A lot of push and pull both different ways.

Miriam Lyons

But what's changed, obviously, since that time is renewables are so much cheaper than they were when the last round of the climate wars was happening. The popular understanding of that has shifted. I've sat in focus groups all over the country, including in some of our most carbon-intensive locations and it's actually some of the places where there are the most workers in fossil fuel industries where people are paying the most attention to the fact that the writing is on the wall. And I can show poll after poll that shows that people are quite happy to embrace the transition to clean energy as long as they know that government has a plan to look after workers and community along the way. Because we actually expect governments to do their jobs in this country.

David Roberts

Weird. Yeah. This is actually something I meant to ask about earlier, but this might be a good time to flesh it out, which is the extent to which Australia is dependent on fossil fuel exports. I think people know that Australia exports a lot of coal and now gas. But the extent to which the economy rests on that, maybe, I think, was a little mind-blowing for me. So you talk about that for a second.

Miriam Lyons

Yeah. On the one hand, we are a massive problem. We have a big problem domestically. We have a big problem externally that we are exporting to the world. So we have the highest emissions per person than any other rich country other than Canada. Our domestic and export economies combined add up to about 11% of the emissions of the entire Asia Pacific region. We are the second biggest exporter of thermal coal in the world, biggest exporter of met coal. We have more proposed export coal mining than anywhere else on Earth. We are equal largest exporter of gas, along with the US and Qatar.

We have unexploited gas basins whose size is similar to the giant Marcellus Shale gas basin your readers, your listeners are probably familiar with. So what is quite interesting is that despite all of that damage, the entire fossil fuel industry still only employs 1% of Australians. But it is a significant provider of well-paid jobs in some very politically influential regions, often regions that have high unemployment otherwise. So that makes it very easy for the fossil fuel industry to use those workers as human shields to hold back progress.

David Roberts

A familiar dynamic.

Miriam Lyons

Yeah. And it's less a significant source of government revenue than you would assume because of aforementioned mining industry success in fighting off attempts to actually make it pay its way.

David Roberts

Right.

Miriam Lyons

But where it does really show up is in our export profile. So we have a small domestic market, big export-oriented kind of economy and our top exports in order are iron ore, coal and gas.

David Roberts

Oh, my goodness.

Miriam Lyons

Right. So I think the only major export that we have that's very more knowledge sector, knowledge-intensive sector is education. But also we treated international students quite badly under COVID and so that's a highly competitive sector. So we're not doing a great job of actually preserving that bit of diversity in our export economy. And so we have essentially Dutch disease. So our dollar is intensely tied to the price of our commodity exports. And what that means is that every time there's a boom, the dollar goes up and that makes all of our other exports less competitive.

So some of them shut down. So it hollows out the rest of our export economy, which then makes our dollar even more closely tied to commodity prices and so on. And that can also show up in the influence of other sectors politically. So these sectors, all of the mining sectors really are enormously profitable and they are able to use those profits to influence how politics goes, including with very expensive ad campaigns.

David Roberts

Right. Yeah. Talk about this. Is it Harvard that does it, this measure of economic complexity? This was really interesting to me to find out.

Miriam Lyons

Yeah. We are the world's 13th largest economy, but we rank 74th in economic complexity. So yeah, we really have the resource curse in all of the ways, whether it's what it does to the rest of the economy, but also when it comes to the influence it has on our politics.

David Roberts

What it does to politics, what it does to the dollar. I think Australia is unique in that way in being a sort of modern, developed, wealthy economy, resting almost entirely on this pillar of dirty exports.

Miriam Lyons

Yeah, certainly when it comes to our export economy. But it is important to kind of temper that with the recognition that when it comes to domestic employment, it doesn't loom as large as people would assume, given its big footprint in our exports.

David Roberts

Yes, the same in the like. People are always saying the coal industry doesn't — employs fewer people than, you know, Hardee's or Arby's or whatever, forget what the cliche is, but it's not actually that big of an employer. But it looms so large in politics.

Miriam Lyons

We kind of had Dutch disease of the mind.

David Roberts

Yes. So you mentioned some policies that are in place. One thing that I have found somewhat peculiar when I started reading about Australian climate politics and talking to people and hearing these sort of rundowns and such is kind of over on the side, weirdly, rarely mentioned, is this wild success Australia has had in rooftop solar power, which is like kind of this anomalous thing that doesn't really fit in with the rest of the story. And it seems like Australia would be out there waving this flag and bragging about it, but I hear weirdly little about it.

So tell us, how is it that Australia ended up with basically the cheapest rooftop solar power in the world? Basically, as far as I know, the cheapest the people who have rooftop solar in Australia now, the soft costs are so low that they basically have the cheapest residential power of anyone in the world.

Miriam Lyons

In world history.

David Roberts

In world history. And yet, you hear weirdly little about it. So, what is the kind of valence of this? How did this happen and why aren't people bragging on it more?

Miriam Lyons

Yeah, good question. Back to a little bit of potted policy history. One of the very, very few things that John Howard, winding back in time, did that was good on climate was introducing the mandatory renewable energy target. Very, very modest at the time, just 2%, but it created a piece of infrastructure that could then be turned up, that was then increased under the Rudd government. So that was actually a real success of that first Rudd government, increasing that target to 20%. Very little fanfare, very little debate at the time. Then Tony Abbott wanted to turn it down because it was doing such a good job of getting more renewables into the system and cutting energy emissions.

But it was beloved, so he was able to cut it by about a fifth in 2015, but it stuck around, and it stuck around until 2020, when it was completely met. But that target was split into two parts. So one was the large-scale renewable energy target, which has now been met, but the other part was the small-scale renewable energy scheme, which creates an incentive for rooftop solar, basically, and that is still in place and is actually still creating an incentive for people to adopt rooftop solar. I think it equates to about a $2,500 rebate off the top of installing rooftop solar in Australia still.

And because that scheme was so long-lived, it really helped the industry scale up and learn and bring down those soft costs over time. So the industry got kickstarted by state-based feed-in tariffs that were very generous, usually the case. Right. You need those really generous feed-in tariffs.

David Roberts

Very generous at first, from what I heard.

Miriam Lyons

Yeah, absolutely. But that is the thing that gets you the deployment, that allows the learning rates to kick in. It brings down the costs. So they do end up paying for themselves several times over, but then having something stable like that national Small-Scale Renewable Energy scheme pick up and then just stay the course year after year allowed for the industry to scale up, build their supply chains. Also, I think one of the things that did was it was so popular that almost before the distribution companies and the big utilities, the big private utilities, almost before they had noticed, it had been taken up wildly, was wildly popular.

And there was a whole cohort of people who were willing to defend their solar to the death. And so any attempt to slow down that uptake got fought with a kind of particular credit to the Smart Energy Council who set up to represent the small-scale sector. And so anytime a distribution company would say, oh, we want to limit solar exports, or anytime somebody tried to cut the small-scale renewable energy scheme, solar citizens who represented people who had solar on their roofs would fight that off and successfully. So, yeah, it created this constituency of people who were directly benefiting from solar on their roofs, who were then able to defend a great piece of policy.

David Roberts

That's, again, a very familiar story in the US and in Germany, I think, both in that it kind of got born because nobody much noticed, because nobody much thought it would do anything. And then by the time the sort of powers that be realized what was happening, it's too late. You have all these constituents, which is another interesting political lesson here about distributed energy, I think. It's not just its energy generating power, but its constituency generating power.

Miriam Lyons

Yeah. And it's the combination of the kind of climate history that we talked about and examples like this that make me increasingly attracted to ambition loop theories of policy change on climate. How do we actually create climate policy that stays? We make it popular by ensuring that it's delivering real benefits to real people in real places, whether that is good clean jobs in some of those carbon-intensive regions, or whether it's savings to households. And the job's not done, right. Even when it comes to rooftop solar. Yes, we are wildly successful, fastest uptake in the world.

Rooftop solar makes up half of our renewable capacity by gigawatts now — three gigawatts a year every year. Quite reliably and less volatile than the large-scale wind and solar construction industry.

David Roberts

Let's say one out of every three households. That is so wild.

Miriam Lyons

One in three. Yeah. And at half the cost of the US. So, yeah, wildly successful. And a lot of that is just because of that success in bringing down the soft costs. Right. But despite all of that success, we're currently at maybe 20 gigawatts, give or take, of rooftop solar capacity. If you look at our rooftop real estate, we have the potential for up to ten times that and we should be using it all because that is just about the lowest land use clean energy that you can get. It makes so much sense. Obviously, you get to avoid a bunch of transmission and distribution costs and it's really fast and the workforce is already there and it enables everybody to get a slice of the benefits of the clean energy sector on their roofs.

So of course we should be using all of that. It's not enough to get the whole job done, but if you look at very ballpark calculations of what it would take to completely repower Australia's domestic economy, that adds up to about half of the capacity that we would need. It's a big part of it.

David Roberts

What is the statistic Saul Griffith is always fond of citing: He says even if you could build this magic low-cost nuclear whatever, just the cost of transmitting power from a power plant to a house is greater than the cost of rooftop solar. So even if you can make free power, it would be more expensive to get it there than people are getting from rooftop solar.

Miriam Lyons

And of course we need the large-scale renewables as well. Right. We need wind so it generates at night. We do the transmission we need the negative correlation between the different parts of the country.

David Roberts

What about the Duck curve, because I'm imagining if everybody's got solar everybody's generating at the same time and you have, you know, already in California, for instance, where there's a lot of rooftop solar. You get, you know, flood during the day more than people need and then it drops off at night and you have this ramp up of other sources. Is that starting to pose a problem to the Australian grid?

Miriam Lyons

Yeah, I mean it's been a thing that we've been dealing with for a long time and every time people say that we couldn't possibly handle any more, then it gets proven wrong and a whole lot more gets installed and it's actually fine. One of the bleeding edge places where that's happening is in South Australia where they're actually quite often seeing getting close to zero demand at points in the day because of rooftop solar. And yeah, they're starting to come up with really creative ways of dealing with that. One of the ones that I am very excited about is that they have a virtual power plant scheme which has solar and batteries in a whole bunch of social housing properties.

So, this is publicly owned social housing for low-income people, and by being part of that virtual power plant, the residents of those houses get a big discount on their bills. But the grid operator gets a source of dispatchable power that they can deal with en masse instead of piece by piece. So that's pretty amazing. There's been a really interesting history about the relationship with the distribution companies and rooftop solar where they fought it tooth and nail, and it's starting to look like maybe there'll be some kind of enemies-to-lovers rom-com plot twist at the end where they'll actually decide that it's great and embrace it.

In South Australia, they've done a new thing where they're embracing flexible exports where basically they get a little bit more control over the export to be able to turn the solar down basically when they need it for local grid stability. But in return, the houses get to up the amount that they can export to the grid. So that earns the houses more from their rooftop solar exports. But yeah, the distribution company gets what they want too. But overall, even though it's like a pretty dreamy story here compared to other places, we still have further to go.

So the distribution companies really need to be made to shoulder the burden of proof of how much solar can you have. Because at the moment the default is that they just get to say no, we can't have any more and they don't have to show their data about why that might be the case. And we keep on finding out that they're being too conservative. So if we could shift that so that they had to prove that they couldn't handle anymore and release their workings, that would really shift things. Particularly, I think, for the somewhat larger installations.

So at the moment there are some limits on the bigger commercial rooftop solar installations. So you could unlock a whole bunch more of those by shifting that burden of proof.

David Roberts

This brings up two questions actually. One is, which I forgot to ask earlier. What is the sort of balance of the Australian grid currently? How much fossil is it versus renewable? Where are you at?

Miriam Lyons

We're at 35% renewable now.

David Roberts

35%. And it's mostly coal that's the fossil domestically. Right? But coal is declining, that's my —

Miriam Lyons

Certainly is. And there was a massive acceleration in the coal closure dates being brought forward. So we saw a couple of really big announcements. One was our biggest domestic polluter, AGL had a massive corporate campaign against them run very effectively by Greenpeace and a few other groups along with some really great strategic impact investment. So activist shareholders also being in the same mix so in response to all of that, AGL massively accelerated their coal closure timelines with a commitment to look after workers along the way and investing in clean energy.

David Roberts

Political pressure, not —

Miriam Lyons

Campaign pressure.

David Roberts

— not some sort of physical —

Miriam Lyons

Response to campaigning, but also response to the way that once you've got a certain amount of renewables in the system, the economics of coal shifts. Of course, because that solar dip in the day, that Duck curve really eats the lunch of coal company's profits.

David Roberts

You need flexible sources. And the other thing is, anytime I have to do this, I'm required by law to do this because otherwise someone will send me an angry email. I have to ask about nuclear. Since we're talking about dispatchable capacity, what is the sort of Australian disposition towards nuclear? There's none here, there's none on the grid.

Miriam Lyons

Yeah, there's no nuclear power here. And by the time that it would be plausible for a new nuclear power industry to get off the ground, 1.5 would have been and gone. So it's completely irrelevant on the timeline of 1.5 degrees in Australia.

David Roberts

Right. So it's not a big political — it doesn't come up a lot.

Miriam Lyons

So the Liberal opposition is mad keen on nuclear —

David Roberts

Oh, of course.

Miriam Lyons

And really, in the context of Australia, when you look at the economics, when you look at how cheap our renewables are, when you look at the way that the cost of batteries are coming down dramatically over time, like it is very, very clear that on any reasonable timeframe, there is no way that nuclear will stack up economically. And there is also no way that it can contribute to reducing our emissions on a timeline and that is relevant for a 1.5 degree world or the attempt to overshoot and get back to it.

So this is really a delay tactic. Right. Embracing unfeasible technologies is like one of the last resort plays in the playbook of the climate denier.

David Roberts

Yes, familiar. Speaking of this, also, I keep hearing about this sort of semi-crisis of rising power prices, rising residential power prices, and it has something to do with the fact that you stopped using all your gas domestically and started exporting it. Is that right? When was that?

Miriam Lyons

It was over quite a few years that it happened, and governments at various levels were warned that when we had a massive LNG export industry and effectively hooked the domestic price of gas to the international price of gas, the price of gas would go up. In Western Australia, they had a domestic gas reservation policy, which meant that didn't happen. But on the East Coast yeah, there was nothing to basically stop gas companies from just getting as much as they could, which often meant actually signing long-term contracts to the international market and undersupplying the domestic market. And of course, when Putin invaded Ukraine, those global prices went through the roof.

And look at the kind of windfall profits that Australian gas companies were making in that context and it was in the tens of billions to — yeah, I think I saw 80 something billion of windfall profits, essentially war profiteering by coal and gas companies. And in response to that so that was one of the things that massively pushed up energy prices last year. Another factor was that our coal fleet is extremely old and unreliable and so it breaks down from time to time, unpredictably. And so, yeah, we had seen a couple of units go out at one coal plant and that pushed the price up.

So this is the situation we're in in Australia as well, is that we actually have to replace the coal plant. It's not like we can just keep it online forever. It needs to be replaced by something because it is old and some of the boilers are sort of held together with sticky tape.

David Roberts

Is this a political threat to Labor currently, like these rising prices? Do they view it as like do people blame Labor for well —

Miriam Lyons

What they did last year was introduce a price cap, which was a very popular move. The thing that I think was a bit of a missed opportunity there was that there was also massive popular support for introducing a windfall tax on those war profits at the time. And if they'd done that and put that money straight into household clean energy access so rooftop solar for the people who are currently locked out of it, like renters. Energy efficiency for the people who are currently living in Australian buildings that are built like leaky tents on average.

David Roberts

I hear, unusually notoriously leaky.

Miriam Lyons

So bad. So, yeah, that could be fixed with that kind of money. And that would give people a permanent reduction in their energy bills as opposed to what did happen, which was effective capping of wholesale prices and some direct assistance to households to help with a short-term impact on prices, but in a far more complicated way than you could have done with a windfall tax. Because what it actually meant was that the government was then on the hook for hundreds of millions of dollars in payments to essentially buy out the contracts that had been signed above the cap so that they didn't get sued by companies who wanted to make even more money.

David Roberts

Right? And in the US now, we're stampeding toward building these LNG export terminals, just attempting to follow that very same narrative. We love our cheap gas and then we love our exports and then like, wait a minute. Let's take a sharp turn here back toward politics. One of the things that I have been most fascinated to hear about since I come from a land of incredibly stupid, binary, simplistic politics, I always find when I talk to people from other countries, they want me to tell them about the subtleties of American politics. And all I can ever tell them is, no, it's just as dumb as it looks. Just as dumb as it looks from the outside.

It's black and white, this side and that side. So tell me about the Teals, this phenomenon of basically what we would call, I think at home, moderate Republicans, maybe even Liberal Republicans, which in the context of US politics is an extinct species, here exists and has some power. So tell us a little bit about how that came about.

Miriam Lyons

Yeah, I mean, I think the real origin story is a bunch of community movements starting up in some specific places, interestingly, not even in inner city Australia, which is where the Teals had a real landslide in the last election. But there's one example of a rural area in our state of Victoria where people were very unhappy with an incumbent MP who was very right wing, more so than the community. And a bunch of community activists got together and said hang on, the fact that this person is out of step with our community means that there is an opportunity to change things here.

David Roberts

But they would never vote for Labor.

Miriam Lyons

But they wouldn't vote for Labor because it was not the kind of identity in group. Right. Voting for Labor was just not the thing that people thought of people like them as doing, if that makes sense. And so yeah, they got together and ran an amazing campaign where they picked their own candidate to represent the broader community and then ran that candidate as an independent —

David Roberts

With no party affiliation.

Miriam Lyons

No party affiliation. And so that sparked movement all over the country of people realizing, ha, hey, if I'm not happy with my representation I too can run "Voices of Warringah" or "Voices of Indi" or "Voices of" all of these different places. There's the whole "Voices of" basically movement that are based in these different electorates where the community gets together and says, hey, if we're unhappy with our representation we can find someone else.

David Roberts

And this is mostly conservative communities where the representatives are nutbags and they want something that's not Labor but not a nutbag.

Miriam Lyons

Exactly.

David Roberts

Which seems like a lot of our communities would want to in the US. If they had any way out, any option. And so yeah, I should just say that teal is blue and green. Blue ,to scramble US brains, blue is the conservatives. And so these Teals, several fascinating things about them, they're still, I think, what you would call fiscally conservative but are good on climate.

Miriam Lyons

In other words, they're representing their communities.

David Roberts

Yeah, conservatives who are good on climate and good on social issues too, right?

Miriam Lyons

I think yeah, exactly.

David Roberts

And they are mostly professional women, is that right?

Miriam Lyons

Which again was a constituency that was wildly underrepresented when the hard right had control of the Liberals nationally. And I should also note that we just talked about a couple of examples where it was hard right MPs who were very at odds with their community. In some cases these voices of movement started because even though their MP was from the moderate faction of the party, they weren't voting like a moderate, they were still voting for policies that were at odds with the values of the community.

David Roberts

And so now there are these what are called Teals and what sort of power do they wield? How important are they to politics?

Miriam Lyons

Well, they're a big part of why the coalition lost the last election in a bunch of its heartland, including seats that it had held for many decades. So they're a big part of why it is going to be very, very hard for the National Liberals to get back into government unless they get better on climate. So that does change the dynamics a bit. There's also an independent senator from one of the states who is on a very similar kind of model and that's senator David Pocock. And he sometimes has a casting vote on policy, or a very influential vote on policy, needing to pass the Senate.

So that's the upper house. So that's a bunch of hard power right there to shape policy as it's made.

David Roberts

And so the Teals are viewed then as allies to Labor on climate.

Miriam Lyons

I think it's a little more complicated than that. I think you've got a bunch of representation of different sorts, different places, different sections of the community. Everybody plays politics against each other sometimes and with each other at other times. And through that giant shemozzle, sometimes you're able to get decent policy through.

David Roberts

Imagine complexity and coalition building. I don't suppose the National Liberal Party has responded to this defection of moderates by moderating.

Miriam Lyons

Not yet at a national level that you can see as reflected in their current leadership. But there are increasing numbers of moderate champions who are being a little bit more outspoken within the party nationally. I think sometimes those lessons do take a while to learn. So one can always hope that they're going to recognize that they're on the wrong side of history, the wrong side of demographics, the wrong side of economics, and might need to get with the program. And I guess the one reason to hold out hope that that might be possible at some point, even though it's very hard to see right now, is that here in New South Wales where we're recording this podcast, the moderate treasurer so the previous treasurer, Matt Kean, was a massive champion of clean energy, massive champion of renewables.

Instituted a quite ambitious energy transition package to get the state to when we calculated, I think it was roughly 75% renewable by 2030. And managed to do that with the support of his whole party. Bringing his whole party along, including a bunch of rural conservatives who basically said, well, I can't vote against this many jobs and this much investment in my electorates.

David Roberts

Interesting.

Miriam Lyons

So the recipe is there like the playbook is there if they want to embrace the future rather than the past.

David Roberts

Right. And this is also something that's very important to point out is one thing they can't do is what US Republicans are doing, which is picking and choosing their voters, or trying to suppress some voters and bring others out because —

Miriam Lyons

We have an independent Australian Electoral Commission that actually makes decisions.

David Roberts

No gerrymandering and compulsory voting.

Miriam Lyons

Correct.

David Roberts

Everyone votes. So that alone, I think, is a firewall of sorts against lunacy, American-style lunacy. Everybody votes. There's an independent commission that does the district making, and there's also ranked choice or what we call ranked choice voting, all of which I think probably has moderating effects on. You can't get this sort of weird cultish —

Miriam Lyons

It's a lot less about playing to the fringes or even playing to the base. A lot of it is actually about who can reach disengaged swing voters, which is its own kind of difficult task.

David Roberts

Yes, but you know they're going to vote like they have to vote. So that's super fascinating. Of all the reforms that we talk about in the US, for some reason that one never comes up: compulsory voting. But from what I've heard about it here, it really has a lot of effects that we could use in the United States. What about the climate movement in Australia? We've seen in the US, the climate movement sort of beating down the door for years and finally has really sort of made its way into the upper echelons of the Democratic Party, has pushed climate to the top of the Democratic agenda in the US.

How big of a force is the climate movement here? Maybe you're slightly biased.

Miriam Lyons

Yeah, definitely not an unbiased observer, but best attempt to be objective. If you look at where we are now compared to where we were a decade ago or a decade before that, and you think about why that has happened. Right, so the climate movement has got us to the point where the Liberals are unable to win places in their heartland unless they have a decent climate policy. Like that is quite transformative. The climate movement has got us to the place where large parts of the business sector are very reluctant to associate themselves with fossil fuels, where banks are rolling out investing in fossil fuels.

So that is a fairly transformative situation and obviously when you put that kind of pressure on the corporate sector and the corporate sector starts to change what it does, that in turn flows through into politics. So there were some fantastic campaigns to get 20 something of Australia's biggest companies to set 100% renewable targets by 2025. Actually, it's the corporate PPA sector, the power purchase agreement sector, that is currently underpinning a whole lot of renewables coming into the system and when that comes in, it changes the economics of the energy sector and that changes the politics. So a combination of that corporate campaigning and the community campaigning, that's just put climate higher and higher on the agenda of the voting public over time.

That has got us to where we are, but obviously where we are is still not good enough. So there's a lot further to go and there have been gaps. So I think that there are a bunch of places where geographically the climate has built up a whole lot of power to the point that it is now very hard to take a stance at odds with decent climate action. But there are a whole bunch of places where that work really needs to be scaled up. So that includes the fact that over a quarter of Australia's population is multicultural and the climate movement in Australia has historically been very white.

There are fantastic organizations who are working to change that, like Voices for Power organises multicultural communities. Here in New South Wales, Democracy in Colour are working to organize multicultural communities to get climate action that actually serves their communities. And historically, generally, I think the climate movement has not done enough to organize in low income communities and actually have organizing that is resourced both by and for low income communities getting the kind of clean energy solutions that serve them.

David Roberts

Let's talk about, briefly, critical minerals. This is something I didn't know until I started poking around coming down here, which is that Australia is like, I think, a top five country in almost all of these critical minerals that people are, which have become a very common subject of discussion in the climate world in the US. As we shift to renewable energy, certain minerals are going to become very hotly demanded and currently a lot of the supply chain for the minerals, especially minerals processing, goes through China. But what I did not realize is that Australia is a top five location for almost all of those critical minerals.

It's a huge, huge source of those minerals. So tell us a little bit about kind of what role that's playing in people's climate vision, because right now, as I understand it, they just mine them and send them abroad and then China processes them and then Australia buys them back as products. So do people have schemes? Because part of what IRA does is set the US on a trajectory to find friendly sources of these things and here's Australia a friendly source. So what role is that playing?

Miriam Lyons

Yeah, well, if we go back to what it would take for Australia not to be a Kodak country, the real recipe there is taking the fact that we are the sunniest continent on earth and one of the windiest that our solar penetration per capita, like just the radiation per capita that we have at our fingertips is literally off the charts. Like you draw a chart and then it's off the top. And that gives us this enormous potential to take a whole bunch of the energy intensive materials that the world is going to need to decarbonize and decarbonize them here. So yes, we're exporting — we're currently the world's number one exporter of lithium, but we could also be doing more of the processing of that here using renewable power. We are currently the world's biggest exporter of iron ore. We could be doing a massive favor, really, to the world that needs to decarbonize its primary steel industry by processing that here using renewable hydrogen, because that will lower the cost of turning it into green iron. But it will also lower the environmental footprint of turning it into green iron because it lowers the land use footprint, because you basically need half as much renewable hydrogen to make green iron.

If you're using the hydrogen where it's made, rather than sticking it on a ship and sending it overseas. So there's an opportunity to do that also feels like a massive responsibility that we have to eliminate the enormous scope three emissions in our ore exports.

David Roberts

Right. So the idea is you use your massive wind and solar resources to generate green hydrogen and use the green hydrogen —

Miriam Lyons

To take our iron ore and turn it into green iron. And then that gets stuck on a ship much more efficient. And then that gets turned into green steel in a bunch of our trading partners where we're currently sending the iron ore that have much more limited availability to do that kind of large scale renewable hydrogen production, but that would like to keep their steel industries so they get to still make the steel. Right? And there's a bunch of people who are really interested in this as a pathway and there's already a bunch, know, MoUs getting signed with companies in South Korea, in Japan and Australia looking at this pathway, which makes so much sense.

David Roberts

Yeah, it sounds politically popular here too. Like when I was talking know, lawmakers in Canberra, this seems to be —

Miriam Lyons

Everybody loves manufacturing —

David Roberts

Everybody's on board with this.

Miriam Lyons

People love making something that hurts when you drop it on your foot. But one thing that is incredibly important to remember when we're talking about all of this is that we are a colonized country without a national treaty. And all of this land is First Nations land, which obviously creates a clear moral obligation for anybody doing any of these developments to seek the free, prior and informed consent of the First Nations owners of the land where these projects are happening. There are also inadequate but real hard legal obligations for any company in most of the places where you'd be looking at these kinds of developments.

So if people are looking at Australia externally and going, "This is a massive opportunity," do make sure that you're doing your homework and figuring out when you're asking about any specific project, whether the company and the developer involved has actually negotiated in good faith with First Nations people. And there are some good examples starting to pop up of First Nations communities instigating large scale renewable projects themselves.

David Roberts

Potentially a huge opportunity for those communities.

Miriam Lyons

Exactly. It really depends on the community, whether that is part of the vision for their own self-determination. Right. But in some cases, you've got these projects getting instigated where First Nations people are actually getting equity in some of these big projects. And that is, of course, what you would be wanting to see.

David Roberts

Right. And tell me about the phrase "hydrogen superpower," because I hear it over and over and over again. Tell me what role that's playing. What is that vision, and do you buy it?

Miriam Lyons

I think that because of the Dutch disease of the mind that we talked about earlier, where it's really hard for Australia to imagine anything that doesn't look like what we've already done. The hydrogen hype was very effective in breaking the back of the idea that Australia could never export anything that wasn't fossil fuels.

David Roberts

Right. It's just a different gas.

Miriam Lyons

Yeah. But what is actually exciting is that while we only want to use hydrogen for the things that we definitely need it for because it's a lot less energy efficient than electrification or efficiency for that matter, we do need it for some things, and we do need it for things like green iron. And so where we do need it, there is this enormous potential and a clear competitive advantage for Australia economically in using the renewable hydrogen where we make it so that we're essentially exporting embodied decarbonization.

David Roberts

Okay, well, this is a lot to take in and this is a huge question to wrap up on, but I would like to hear two things from you. One is, as we said, Labor is at once suffering from a little PTSD from its previous backlashes and failures on climate and is a little leery about spending too big or going too big. But on the other hand, there's this enormous momentum from the climate movement, there's this enormous momentum from the public. There's this huge resource available. There's this pathway now via critical minerals and iron ore and hydrogen for Australia to pivot and become a productive force for good in the climate world rather than just a source of emissions.

So if you were predicting or guessing, where do you think all this going to shake out? What do you think Labor might do? What do you think it might actually take on and try to do? And then following up on that, what would you like to see it do that's within the realm of plausibility?

Miriam Lyons

Well, I mean, if we were starting from what I'd like to see them do, let's start with what has to happen and work backwards from there. So I'd love to see us actually embrace the fact that we're going to have to fully decarbonize our domestic and export economies and work backwards from there with a strategic plan to transform the economy and a plan to look after workers and communities along the way. That's what I'd love to see, and that is what the science tells us that we need to see. What I would love is actually to see them stop thinking incrementally and start thinking transformatively.

David Roberts

It seems like IRA, the Inflation Reduction Act, has at least sort of like introduced that glimmer of possibility. The fact that the US sort of went big at least has put going big on the table for Australia, it seems like.

Miriam Lyons

Yeah, absolutely. Yeah. I mean, basically right now they're doing a bunch of modest and incremental sensible things when it comes to decarbonizing the domestic energy sector and then kind of putting their hand over their eyes when thinking about the damage that our coal and gas exports are doing to the world. And modest and incremental is better than Tony Abbott grade wrecking, but it really doesn't cut it in a world where the IPCC is saying we have to be net zero by 2040 and the International Energy Agency is saying we need no new coal and gas starting now.

So modest doesn't match the scale of the problem, but it also doesn't match the scale of the opportunity. And Bowen, our Energy Minister, loves to say that the world's climate emergency is Australia's job's opportunity and it is true. I will believe that we are embracing that opportunity at the scale that it warrants when I start seeing announcements that are closer to the scale of investing in a bunch of silly submarines, in a bunch of terrible defense policy at the cost of hundreds of billions of dollars.

David Roberts

We don't have time to go down that rabbit hole. But for some reason Australia is buying nuclear submarines. That's broken my brain when I found out about it.

Miriam Lyons

Yeah. So basically it's a question of scale and speed. So they need to be both embracing the scale of the jobs opportunity when it comes to actually ensuring that we get the firmed renewables to the industrial hubs that will be doing this decarbonization of our exports for the benefit of us, for the benefit of the world. Like when we're actually seeing the renewables being delivered at scale and the investment in that at scale that will start getting to the point where we're really matching the scale of the opportunity. Also when we're actually recognizing that the job's not finished when it comes to clean energy justice at a household level.

And that the way that you deal with the volatile prices that we have been seeing because essentially our coal and gas industries are quite greedy, is to actually enable every household to access the benefits of energy efficiency, of rooftop solar, particularly the renters who have really been locked out until now.

David Roberts

What would that look like, though? Will this be one big policy package, do you think? Do you want to see a renewable energy trading scheme or big subsidies and investments like IRA?

Miriam Lyons

I want standards and investment and justice, David!

David Roberts

Awhee!

Miriam Lyons

Yeah, I think we need a great big package that delivers the clean jobs to the regions and the clean energy savings to households. Some of that would involve some standards at a national level. Some of it would involve some payments to the States in order to enable them to expand household clean energy access, because the Feds have most of the money and the States do most of the service delivery in this country. Very familiar picture, I'm sure. So, yeah, if we were to see something like that at scale, then we'd be getting there.

David Roberts

All right. Fingers crossed. Well, Miriam Lyons, thanks so much for coming in and chatting and explaining Australia to us.

Miriam Lyons

Thank you.

David Roberts

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