In an engaging episode of 'Moolah,' hosted by Omar de Silva, the discourse around Australia's future energy policy sparked an insightful exchange between two leading experts. Matthew Wright, CEO of Pure Electric, made a strong case for renewables, highlighting their potential to solidify Australia’s position as a pioneer in the global energy sector. Meanwhile, Professor Gigi Foster of UNSW offered a pragmatic perspective, advocating for a diverse energy strategy that includes nuclear power to bolster economic stability and ensure a resilient energy supply. Their engaging exchange not only highlighted the delicate balance between fostering sustainable energy practices and ensuring robust economic growth but also underscored the broader implications for Australia's environmental and economic future. Dive into the full transcript below to catch all the nuances of this pivotal debate.
Omar de Silva 0:09
Are you someone that leaves your projects or assignments to the last minute, using a looming deadline to spark your creativity and productivity, or do you prefer to get an early start and take the deadline out of the question entirely. If we look at the Climate Change conversation, almost everyone agrees there is indeed an assignment at hand. However, as someone who's an interested observer, but by no means an expert, it feels as though that even with certain agreements in place on a global stage, here in Australia, there's a monthly debate as to exactly what the deadline should be, as well as what the scope of the assignment should be in the first place. Again, I'm by no means an expert, but from what I've been able to piece together here in Australia, we have an interesting situation, particularly when we look at it from an energy and emissions perspective, according to some what we do on a local stage, again, at least from an energy and emissions perspective, will have very little, if any, impact on global climate conditions. Thus, questions like what we should do about our energy supply should be driven by what's best for the local economy, and when it comes to things like how much fossil fuel we produce and export, again, what we should do is what's best for the Australian economy, because if it wasn't us doing the selling, someone else would be. On the flip side, many will make the argument that these points are completely irrelevant, and instead, we should be focused on the fact that Australia has a responsibility to act with leadership and if not, at least meet global expectations, that if we don't act as such, we will face negative strategic and economic consequences from a trade perspective, amongst others. And perhaps more importantly, Australia has got a massive opportunity to become global leaders in the renewable space, so we should just get on with that and ensure we maximise again, I'm by no means an expert in this conversation, but I do know one thing, we have a massively important challenge on our hands, and as is the case with all challenges, I believe opportunity lies within. However, if we're going to realise this opportunity, we need to work together with optimism, pragmatism and urgency. We need to have more conversations, not less. And as always, find the shared value for all. I believe we will always find a way, but it would be much better, in this case, to get it done early, rather than waiting to the last minute.
Omar de Silva 2:33
So as I said before, I believe we should have more conversations, not less, and if for no other reason, it helps people like myself who are not at all experts and only have got cursory understandings of big, important topics. It gives us a chance to understand it more and be able to form our own judgments and be able to figure out our own way through this. So, I'm very much looking forward to this conversation that we are going to have over the next hour, which is a special case for us. And again, I'm very much looking forward to it and having the chance to work through all the different elements of this, and to help me have that conversation, I've got two very special guests, which I'm grateful for, for giving me their time. Matthew Wright, CEO of Pure Electric. He's an award winning Environmentalist. He's an, I'm going to say, an energy entrepreneur, which he might have a preferred title, which we will get to. And then also professor, Gigi Foster, a professor in the School of Economics at UNSW, award winning economist, and also award-winning teacher as well. So I'm very much looking forward to the next hour, looking forward to getting in to the conversation. Gigi, I'm going to start with you again. Thanks for joining me. You've spent a lot of time over the years thinking about big questions, big challenges. And so without getting into the details of the sort of topic at hand, I'm curious, from a principle's perspective, what are some of those that we need to keep in mind in having conversations like this one?
Gigi Foster 3:54
Yeah, thanks, Omar. And I want to applaud you and the station for actually allowing the time for this conversation. I think it is really unusual, and to be applauded, it doesn't happen very much on mainstream channels, certainly, I guess, from my perspective as an economist, and it's really the reason I went into my discipline. The most important thing that I always try to go for in my policy advice on whatever topic I'm looking at is what's best for people, what's best to support human living standards, because when human living standards rise, so too does our ability to do things like caretake for the environment or look outside ourselves in other ways, to look beyond just our immediate needs. And that has led to all sorts of wondrous things. You know, the creation of art and our ability to invest in higher education, and, you know, so many other amazing things, technological feats that we can do because we have the capacity, because our living standards are high enough. So I'm always looking for the policy suite that will maximise human thriving, maximise human happiness and length of life, quality of life. So you know, in this case, as well as with other ones, where people may remember me from the covid policy wars, I was very much anti lockdown and anti a lot of the things that we did, allegedly to fight covid, because I felt that those policies had massive downside costs. It's not that there might not have been any benefits of those policies, but whenever evaluating any potential government policy or intervention of any sort, we have to look at both the costs and the benefits across all the different dimensions that those costs and benefits may materialise. And oftentimes, you know, these kinds of debates are very politicised. People look at only a small self-serving segment of costs or benefits, and they kind of sweep under the carpet the rest. My job as someone who is not funded by anybody other than the Australian taxpayer. And you know, students at UNSW is to advocate for what's best for Australia as a whole, everybody, all the groups, not just one particular segment. So I really enjoy that position, and I hope we can get into the conversation today.
Omar de Silva 5:57
Thanks, Gigi, so at risk of oversimplifying, is it fair to summarise as sort of looking at the net position of a particular conversation, taking into consideration all of the different elements?
Gigi Foster 6:06
Yeah, all the elements, and also all the elements from the perspective of everybody who may be affected. So that's not just the, you know, the companies involved. It's the full Australian population, including, you know, people who run the companies and the government employees, but also the man on the street.
Omar de Silva 6:20
Thank you, Gigi and so Matthew, bringing you into the conversation here, over the years, you've done a lot of work with complex stakeholder groups and very diverse stakeholder groups around climate policy, around emissions strategies, and other bits and pieces. When you do some of that work, again, what are some of the principles that you're keeping front of mind to try and get the best results possible?
Matthew Wright 6:38
My concern is that we can flourish into the future as a people, as humanity, so not dissimilar to the aims and objectives that Gigi had put out. But I really want to make it clear that we live within the environment, so we can't think, Oh, we're going to work really hard while costing the environment, because later we can save up and then we can solve environmental problems that we created because we didn't look left and right. We didn't check on those as we continued our development process. So my concern would be that economists might say, Oh yes, no, we need to do the least cost things in order to achieve best well-being and health and wealth. But if we do that and we just pollute the place, undoing that's a lot more costly down the track. It's better to not pollute it in the first place.
Omar de Silva 7:32
And so is it fair to say, then one of your core principles as you work through whatever the question may be, environmental cost, natural environmental cost has to be one of the most, if not the most important principle?
Matthew Wright 7:43
I think it's, it's one of the most important principles, because we live in the environment, and we create little cocoons, little environments at our house, and we, we kind of that then projects out and radiates out in our local communities. So, you know, that's why you see wealthy areas in a city have beautiful trees and flourishing gardens and stuff, and then poor areas don't, because those resources come from the people that have the wealth. If you take a broader perspective, the Earth is not really that big anymore. We can see that because everyone can fly everywhere and get anywhere on Earth in 24 hours, that's our backyard. It's all our backyard. And you don't want to pollute your backyard.
Omar de Silva 8:20
Got it, if we, if we move, and I don't want to get into the to the details of this particular topic just yet. We've got plenty of time to do so. But certain commentators have suggested that talking about nuclear as an energy possibility, it shouldn't at all be talked about, because it's actually it's at risk of being a distraction. It's at risk of taking away from the arguments or the business case for renewables. So Matthew, from your perspective, should the conversation be happening at all?
Matthew Wright 8:46
The conversation can happen, and that's not a problem. But what we're seeing right now is a policy proposal, a major shift, a total paradigm shift in what Australia's intending to do going forward. So that's not really a discussion. That's an abrupt foot on the brake. It's a giant pull of the lever. It's a wholesale change. And that's an issue because we're a Western economy we are incrementalists, we do things on two and three year time frames. And if someone comes in and says, Oh, what you're doing is not the end goal, then people who've got investment in assets that need 25, 30, 40, years to give their ultimate returns are going to say, Oh, we're going to stop doing that. So what it does is it creates delay and confusion.
Omar de Silva 9:31
Got it, okay. And so we're going to get into some more of those details. Gigi, from your perspective, and I think this sort of touches on what you opened with. There are certain people that don't think that this conversation should happen at all. What's your experience been in wanting to talk about topics such as this?
Gigi Foster 9:47
That's a great question, Omar. Yeah, there have been a lot of conversations I would have liked to have had over the last four years about energy, about covid, about so many different contentious things that people really just have lost the appetite, I think, really the courage to have they become, I don't know, it's our culture, I think that just encourages people to start seeing conversation as an opportunity, simply to defend one's own position, instead of to learn about other possible perspectives and maybe grow and develop one's own position and perspectives and understanding of the different dimensions of the problem that maybe one didn't consider before, right? So there's almost a kind of a hubris or a conceit that one's own initial position is the only one, and let's go into battle to defend that. And if we don't feel we can defend it, then cancel it. Cancel the whole debate. Cancel the whole idea of conversation about anything really contentious with somebody who might have a different belief, and I think that is toxic. It's toxic to our culture. It's countered the enlightenment. It's non-scientific, it's anti tolerance, anti human. It's just really, really disappointing. So this is why I say I'm so happy that you're actually hosting this conversation.
Omar de Silva 11:00
Well, with that in mind, straight after this, we're going to get into the next level of detail here. We're going to start to talk about what are some of the key principles and priorities that we need to be considering when it specifically comes to the energy conversation here in Australia, don't go anywhere. We'll be back with Moolah after this.
Omar de Silva 11:20
We're in the middle of a conversation around energy and climate policy here in Australia. So what are some of the economic considerations that we need to be making as we work our way through it? Well, we're going to get into that straight after this
Omar de Silva 11:39
Joining me is Matthew Wright, CEO of Pure Electric. He's an award-winning environmentalist and an energy entrepreneur, and also Gigi Foster, Professor in the School of Economics at UNSW. We're talking about climate change. We're talking about energy policies here in Australia, we're gonna go a level deeper now. Gigi, starting with you again, please. You mentioned in our earlier segment that when it comes to working through challenges, we need to consider multiple areas, multiple factors, multiple costs, multiple benefits. If we narrow down specifically into the energy conversation here in Australia, what are some of those costs and benefits that we should be considering and should be prioritising as we figure out what the best approach is?
Gigi Foster 12:20
Sure. So, I mean, I think the first big picture thing to say about energy is that, as we have seen human societies develop, they've developed on the back of cheaper and denser and more reliable energy. So we've seen that very increase in living standards that has given us here in Australia the luxury of pondering what we should do about various different environmental objectives, because we've been largely for the last 100 or 200 years, burning various types of fossil fuels that has just accelerated hugely human development and longevity. And of course, that's still happening in the in the developing world, like in Africa, right? That's why the whole sort of march towards renewables is much more kind of an issue politically in the developed countries than in the developing world. Because the developing world really just want their cheap, reliable energy, which we all used to develop ourselves back in the day. So the first thing to say is that energy powers human flourishing. It powers sort of an increase in human quality of life. Of course, also different types of energy require different types of production processes, and that means different kinds of jobs. That means different kinds of skills necessary for those jobs. It means different sort of configurations of the industry. So you might have nuclear where you have certain plants in particular places that are large and sort of there aren't that many of them. You might have rooftop solar, where you've got an individual house totally off grid, able to do its own thing. Those are very different systems, right? And then, of course, you have the life cycle of each kind of energy. So for a solar, solar panel or a wind turbine, once they're in place, they kind of for that period of time that they're working and fine, they're kind of renewable, but of course, they have to be built, and then they have to be recycled, or, you know, decommissioned at some point. And so there's a life cycle aspect to understanding what that means. Of course, that's also true for nuclear and for traditional gas and coal. So, you know, all of those kinds of different considerations. And of course, our ability to compete on all of those different markets with competitors overseas. So there's a big argument that Australia should do things that are in its comparative advantage, that actually build upon its strengths. And of course, it's very sunny here in Australia, right? So that's one of the reasons why we've had such an explosion in solar power, right? I mean, we're one of the leaders in photovoltaic energy stuff. Even at UNSW, we have a Solar photovoltaic Technology Institute which is quite advanced. So there are obvious reasons why, you know, you would imagine that we'd be very good at certain things. And of course, gas is also very prevalent in Australia. So these are the kind of considerations I think would be my top of mind.
Omar de Silva 14:55
Gigi, to summarise, what I've heard there is, there's jobs, there's skills, there's a bill to execute, there's life cycle considerations, all of the above. So Matthew, from your perspective, is there anything in there that you think's missing? Is there anything else that you think should be prioritised over something else when it comes to again, the key considerations we need to be making here in Australia, around our energy policies?
Matthew Wright 15:15
As long as we're flourishing into the future and we're not leaving some legacies, dangerous legacies for our children and their children, we're leaving ecosystems intact so that they can, things can evolve on Earth in a way that creates services that support us and also lets them be there for their own end. Then it's kind of fine. It's really important, like I said, that we don't go and soil the land that supports us and soil the world we live in. We can't make little eco bubble on Earth and then decide, Oh, well, we give up now we're going to Mars. The Earth is our backyard. That's important.
Omar de Silva 15:54
Sure, Matthew, from the perspective of energy, here in Australia, should we be considering what we can so the idea of maximising our strengths and being able to use as Gigi was referring to the fact we got lots of space, we got lots of sun, we got lots of wind, so there heaps of opportunity that we can use to create renewables. Is that more of an economic question than it is a climate question from your perspective? And should economics be prioritised over climate or should it be the other way around? Or should it be balanced?
Matthew Wright 16:24
We need to address climate change. We need zero emissions. We need to eliminate local air pollution, which is costing us a huge amount on the health budget. Basically everyone agrees with clean air, and clean air is our objective. What we need to do is we need to act in a way that will create an outcome that is cheapest for us to go forward energy wise. And as the world has pretty much dumped engineering and development of fossil fuel sources and has moved to renewable energies. That is the way forward. Now, fortunately, we are the Saudi Arabia of renewables. We have the best wind resources in the world. We have the best solar resource in the world. It's really just not exceeded by anybody. That means that when we put a solar panel and install that in Australia, we get twice the output of what they get in Germany. So Germany has 81,000 megawatts of solar, which is a lot of solar. If that was installed, it was removed from Germany, installed here, we'd get twice the kilowatt hours out, which means we get twice the economic benefit. We're very lucky. They've shown in Europe. They can do that on their balance sheet. We can definitely do that on our balance sheet, because when we install one, we get twice as much out. The same goes for wind. We're installing wind turbines on sites. The only place that beats us, really, is New Zealand. We're installing wind turbines on sites that give us about 20% -30% more energy for a wind turbine than what they get in Europe.
Omar de Silva 17:52
And so Gigi, with that in mind, I mean, those are all fairly compelling arguments as to why perhaps we should be trying to maximise renewables from all of the thinking that you're doing and the work that you're doing, is it a conversation around whether we should maximise renewables or not, or is it about how we should maximise renewables and we should consider additional things? And sorry, Gigi, we've run out of time, so I'm going to come back off the back of this, and you can answer that question for us to kick us away.
Omar de Silva 18:24
I'm talking energy and climate policy here in Australia with Matthew Wright, award winning environmentalist and CEO of Pure Electric, and also Gigi Foster, Professor in the School of Economics at UNSW. And before we got to the news, I asked Gigi a question, which I didn't give her the chance to answer, which I'm going to do now. And Gigi, I'm going to have another go at asking you the question a little bit more articulately, and I think simplifying it down. It is the question that we should be working through, do we maximise renewables or something else? Or is the question, do we maximise renewables and look at other options as well?
Gigi Foster 18:57
So, it's a really good question, and I think your use of the word maximise is key again, as per what I said before, what we want to maximise is human thriving, human flourishing now and into the future. And I think the other guest and I agree about that, when we think about maximising, that's what the target should be. Renewables can certainly be part of how we do that. But one of the Principles of Economics, there's a couple principles I want to mention. The first one is that is that diversification is usually a good thing. Monopolies are bad for consumer welfare, right? Because they don't put competitive pressure on suppliers, and the suppliers end up producing shoddier products at higher prices than they otherwise would in a competitive market. Similarly, if we're completely dependent on one source of anything, whether it's overseas source or domestic source, then that makes us more vulnerable. I wrote a paper about this in regard to bananas back in, I think 2012 or something, because we produce almost all our bananas in far north Queensland. And that means that if there's a cyclone that wipes out the crop, then we have hugely increased banana prices. That's not good for Australian consumers. Similarly, with energy, right? A good diversification of our possibilities gives us a more robust grid and opportunity set moving forward.
Matthew Wright 20:10
I just want to mention that, with renewables, there's multiple vendors, and they're from different continents. At the moment, we're installing our wind turbines mostly from Vestas of Denmark. They're a European wind manufacturer, and they've got factories all around the world, including developing, possibly developing a factory in Western Australia. And we've got GE from the US, who's provided half of our power infrastructure to date throughout the last, you know, 100 years or whatever. And they are the other provider. So we have diverse suppliers. Globally, there are dozens and dozens of wind turbine manufacturers. And on the solar front, there's about 20 major manufacturers to choose from. And the leading supplier in the world, Jinko panels of China, is actually effectively the commercialisation arm of UNSW photovoltaic research group. So you know for us to actually be in that loop of the R&D from UNSW which transfers over to China into the factory, and the factory then produces the panels, and we buy a small portion of the output. That makes sense. So we're not locked into some monopoly here. There's so many vendors.
Gigi Foster 21:14
I totally agree. I don't contest anything about it, and I don't think that's an issue. I think that's absolutely right. I guess my point about the diversification is that it's diversification of sources of energy. If we are going to be moving away consciously and proactively from coal and gas, which is another question entirely. But if we have decided that's what we want to do, then I think we want to have diverse means of doing so. And so from that perspective, I don't see why we only want to have solar and wind under consideration. I think it makes absolute sense to be thinking at least about the possibility of starting up nuclear because of the fact that Australia is one of the only countries of our level of GDP per capita that hasn't considered it that has had this, this kind of, you know, moratorium on even thinking about it for many years, and I'm very glad that Peter Dutton has at least started to open that conversation. I agree that this particular policy may need to have some revisions, but I think that at least conversing about it is good, because while we are never going to run out of oil, because what will happen is oil will just get too expensive, they won't be economic, and so we'll move away from it voluntarily that may that will happen in, you know, many decades to come. And if we want to think about the development of nuclear, well, just like with the development of other alternative energy sources, it does take a while to get going, right? We need to train people, we need to get the expertise, we get to the infrastructure on site and all that. So it is a multi year, potentially multi decade process to even start. So if we want to have foresight in that area, I think it makes sense to have that conversation. But I do want to emphasise that we're not running out of anything right now because of natural constraints. I mean, we have plenty of gas, we have plenty of coal. We could keep going for quite a while on that sort of fossil fuel generation. But if we do want to be proactive, then I think it makes sense to consider multiple different options.
Omar de Silva 23:02
And Matthew, from your perspective, I think it's a logical argument that we should be considering all options, perhaps, and that there should be, we shouldn't be reliant on only one type of energy source into the future. Your thoughts?
Matthew Wright 23:14
Well, I'm talking about multiple options. There's multiple solar options and multiple wind options and battery, chemical storage. We've got some pumped hydro, which is a limited resource, which is finishing development, and that will also contribute. But basically, with a mix of solar, the different solar technologies and wind technologies, we can get over the line, whereas basically nuclear power development is stalled around the world. In the US, they just finished some plants in Georgia. And Georgia is a low regulation jurisdiction, doesn't have the safety expectations of somewhere like California or Australia. So and they managed to get a nuclear power plant up in 14 years. And there's no plans to build any more third generation reactors anywhere in the United States. That's it. They finished two plants. That's all they did this this century. And that's it. There's no plans for any new ones. Same in Europe. In Europe, there's two projects on continental Europe that have just come to fruition, one in Finland and one in France, and now there's no proposals for any more projects.
Omar de Silva 24:09
And is that an economic decision that's being made and that just doesn't stack up financially? Or is it a safety point?
Matthew Wright 24:14
Definitely an economic issue. Yeah, the cost, part is the cost went up is to try and make them safe, and so they're a lot safer than they were with the generation two reactors, which are the predominantly in the world's reactor fleet, a lot less safe than these new ones that got built, but these new ones that got built just cost phenomenal amount of money. We could have people peddling bicycles to generate power if we want to diversify our sources, but that would be silly, because it would be so expensive, and that's why we don't include nuclear in the discussion of diversification, because it's so damn expensive, it's just crazy, it's insanity.
Omar de Silva 24:47
And is there anything to the argument that it's still so expensive because for a long time, it hasn't been supported, it hasn't been considered, so there isn't the skills, the innovation, but if it was invested in, it could turn around. That's an argument I've heard. Does that stack up?
Matthew Wright 25:00
Well, Australia's 25 million people. China's got more scientists than Australia has population. So we didn't get the scale up. We really contributed a lot from the research perspective, but we didn't cause the scale up of solar energy. The Europeans got the scale up of wind happening, and China's even less so China in wind. So we weren't going to achieve that for wind and solar alone, we're part of a global community. Sure we can, we can throw in our bit in support by getting behind technologies. Same goes for nuclear, and if the Europeans and the US, who've really doubled down over the years since 1950 they've doubled down. They've tried to make this happen, and they've faltered, and they've failed. Australia running in alone at the finish is not going to suddenly turn nuclear from being an economic doozy to something that stacks up. It doesn't stack up. We might as well get kids on bicycles and we'll do better than a nuclear power plant if you want cost per kilowatt hour delivered.
Omar de Silva 25:57
And Gigi, from your perspective, you made the point that the conversation on nuclear it hasn't been had in the past, it now is and you think that that's a good thing. Is there anything that we need to learn, or should learn from the fact that it hasn't been happening? And as Matthew sort of explained, there's some good reason there, from an economic perspective, as to why it hasn't happened.
Gigi Foster 26:16
Well, I mean, I think what we need to do is look around the world to what markets think is a good idea. That's another principle of economics. You know, it's not just that the government decides that, you know, this is the direction. And so we all go in that direction. The power of the market to actually answer the question of what is economic is unparalleled. And so what you see actually, in France, I mean, earlier this year, they unveiled this energy sovereignty bill, which is actually pointing to nuclear as the main way to try to reduce emissions, to decarbonise. And so somebody there has done some kind of calculus that says that's actually still a good idea. It may be that there are fewer reactors coming online, but the existing capacity to create nuclear power in France is very large. Right? That's a very large, largely dependent on nuclear country. And so they have just, you know, decades of history doing it, and somehow it's worked out in the US, there are many different nuclear reactor companies that work with the governments, but just like we have here with this kind of regulated industry, there's private sector involvement, but there's also, you know, government involvement. That's another aspect of Dutton's plan that-
Matthew Wright 27:22
Dutton’s made it very clear that it's going to be a Stalinist state run-
Gigi Foster 27:27
Yeah, again, that's something I don't like about his plan, but he doesn't-, who says that that's the final word? He's opening the conversation, right? That's how this happens in politics in Australia, somebody you know draws a line in the sand, and then we can finally talk about it. And often the final plan is very far from that initial line in the sand. So I don't like the fact that it's fully state owned, but there are other options, and you can look overseas to see what those options look like. And that's what I think we should be doing. Learn a bit from the decades of experience with nuclear power that other countries have had.
Matthew Wright 27:56
I think the reason that they have gone the state owned route is if they came out and said, there'd be industry involvement nobody in industry would stand up and say, we're going to risk $1 on this. Nobody, nobody from abroad, nobody from Australia would say they're going to risk $1 on developing a nuclear industry in Australia, starting from scratch. I mean, France and Finland and the US have a whole nuclear ecosystem. They built those reactors on existing reactor sites. We'd have to import 1000 people for a project, and that's 1000 people who would have to leave their families and decide they're going to come to Australia. Plus 20,000 construction people when we've already got labour issues to even build roads-
Gigi Foster 28:39
I completely agree with you that the transition would be costly, but look at all the transitions humanity has done over the course of many hundreds of years. Some of those transitions have been incredibly costly. And remember, we're thinking about the provision of energy for generations of humans to come.
Omar de Silva 28:54
Gigi, I'm sorry to jump in, we have to go to a break. Hold the thought, though, because I want to make sure that you finish it. We're talking energy policies. We're talking about the viability of nuclear. I'm going to continue the conversation straight after this.
Omar de Silva 29:37
I'm joined by Gigi Foster, Professor in the School of Economics at UNSW, and also Matthew Wright, CEO of Pure Electric. And Gigi, I didn't mean to cut you off earlier, doing our best to work through with the time constraints you were making the case as to why we should consider and how we could consider making nuclear a viable option from a skills and a delivery and an execution perspective.
Gigi Foster 30:01
The basic point is that throughout human history, we have had periods of massive disruption. Talk about going from the horse drawn carriage to the motorised vehicle, for example. And of course, that means that there’re changes in what people do. You have to upskill. You have to have new machine tools imported, and have new factories and all sorts of stuff. And of course, we know that Australia has already decided to go down the route of some kind of nuclear with the Alco submarine purchase, so we are already kind of moving in that direction. There will surely be some technological spillovers there, and with the smaller reactors possibly as well. Peter Dutton's plan is not the only way to consider nuclear. And I guess my final point about this would be simply consider the source, of course, somebody, I mean, with all respect to Matthew, who is representing the renewables industry is going to want to tell us that nuclear is completely out of this world costly because he doesn't want a competitor, right? So you want an independent team of analysts from ideally places where they've got a mix of different kinds of energy sources to assess Australia's situation honestly, objectively and without bias, and give us some good quality policy advice.
Omar de Silva 31:01
Matthew, I'm sure you've got some thoughts?
Matthew Wright 31:04
If I was only interested in self-interest, I'd be bagging wind power and saying rooftop solar all the way because my business doesn't do large scale wind. But no, I want to see an Australia that's 50% powered by large scale wind turbines and 50% by solar. That's rooftop and utility scale. One thing that Gigi just said, there were transitions in the past that have been costly, and we've worked our way through them. The point is we don't need a costly transition, costly also means human endeavour is curtailed. We don't need that because renewables is already doing what we need. We actually have 47% renewables baked into the system right now. So if we pretty much just decided don't do anything more, just finish the wind farms that are under construction and rooftop solar doesn't grow anymore, then we'd actually be at 47% renewable in a few years so half the country's already renewable powered. That's amazing. Most Australians don't know that half the country will be renewable powered. Today, it's 38% but it'll be, it'll be half by 2027 half the country 47% and to get to like the Paris Agreement kind of amount of energy that we need, or electricity that we need to achieve that aim, we need to be about 80 something percent. And that is easily achievable, because in the last four years, we doubled the amount of solar in the country. So we went from 10% of our electricity, from solar to 20% in just four years. If we doubled again, that would then take us to 40% of our power from solar. And that 40% is a huge amount, and that's just doing what we did in the last four years, double our rooftop and utility scale solar one more time.
Omar de Silva 32:36
And is that in these last five years?
Matthew Wright 32:38
Well, we proved we could double it in the last four years. So can’t we double it in the next ones? There's nothing stopping us,
Omar de Silva 32:45
No diminishing returns or anything like that.
Matthew Wright 32:50
No, we've already worked through that. Australia's the leader. We've got things like flexible exports, which are already operating in South Australia and about to be rolled out in three of the main distribution areas, in Victoria, and they'll be rolled out in Queensland. And basically they'll be rolled out everywhere, and they'll be adopted abroad. So it was developed in Australia, flexible exports. That just allows us to curtail solar on like Christmas Day, if it happened to be a perfectly sunny day and there's no industry running or whatever, we can clip a bit of the production off so there's no instability that's already in place. No problem. With wind, we've seen the same in the last six years, we doubled the amount of wind in Australia on the grid. So again, we can double that over the next six years, and that'll take wind right up to be a huge contributor from like 13% today. So we easily can achieve our 80% goal. I think that'll get us to about 77% if we doubled our wind and we doubled our solar over the next four and six years. So that's very easily doable. You don't need to mobilise all this capital, have it sit doing no work, no yield for 20 years while we try and get a nuclear plant built.
Omar de Silva 33:56
And so Gigi, from an economic perspective, it seems as though there's a strong argument there to sort of invest in what's in front of us, maximise that. We can sort of commercialise the technology, use that as an export supply. Markets have got increasing hunger for green and/or renewable power. Is there an opportunity cost here that nuclear represents, if we start to give it attention, so to speak?
Gigi Foster 34:19
Yeah. Look, the analysis that I have read indicates, and certainly what I see around the world indicates that the kinds of percentages that Matthew's talking about, just are very difficult to achieve, and certainly haven't been. I mean, there's no, there's no country that I know of that actually has that kind of sort of full dependence on solar and wind. There are certainly countries that rely on hot rocks, for example, geothermal and, you know, mixes, again, of hydro and this and that. But that much penetration, it's difficult, because solar and wind are inherently variable sources. It depends on the wind and the sun was shining, right? And so you have to have a kind of base load undergirding that, which, in the case of Australia, has been gas mainly, and coal. And I think that's totally feasible and economically sensible for the medium run. But I also think we should look at the actual full lifecycle costs of these things, and the full quantity of costs, which includes connecting to the grid. And of course, these solar panels themselves use various kinds of rare metals, and so whether we talk about them really is renewable. I mean, they're green in some ways, but you also have to dig stuff out of the ground perpetually in order to build new solar panels down through the generations, and then you have these x solar panels to do something with. And so there's a whole life cycle consideration there. So in the longer, longer run, again, I'm thinking about the thriving of human societies down through the ages. Nothing about today's climate targets or whatnot, but more the sort of human thriving needs. I think it just makes sense to consider nuclear because other countries have made it work and how to be part of the mix that they have. And again, maybe it doesn't make sense for us, but I don't see the reason why we shouldn't have the conversation. I mean, why cancel the conversation? And governments, again, they have this hubris that they can decide what will happen. In fact, if something is really, really appealing from an economic perspective, the market will discover it. And maybe that's what will happen in solar and wind. And maybe Matthew's right, it'll double again. You know, great, let's see the market do that. And in the meantime, the government has a responsibility to explore all energy options for the security of Australia moving forward.
Omar de Silva 36:23
Thanks, Gigi. And, Matthew, we've got 30 seconds. I know that's not the time.
Matthew Wright 36:28
The only problem is the market is spooked by this talk by the Federal Opposition, who have got a chance at being the next government of the day, and they're spooked. So therefore that doubling which we can achieve right now, we proved we could achieve it over the last four and six years. That may not happen now, because-
Omar de Silva 36:44
There's now this other possibility
Matthew Wright 36:46
They’re pinning their intention to the mast, and they've said we're going to go a different route. So then all the investors are spooked, and that's, I think, exactly what they wanted to achieve, which then means status quo, burning coal and gas in old power plants that actually need retirement.
Omar de Silva 36:55
Okay, well, I've thoroughly enjoyed the conversation. Very grateful to both of you, Matthew and Gigi. It's a complex conversation for me. It means that we need to have more of it, not less of it. We've done it once. Maybe we'll do it again. Plenty more to come here on Moolah. Stick around.
