Start with steel: A summary of the Grattan Institute report

The Grattan Institute has released a report which looks at the opportunities for a green steel industry in Australian regions such as the Hunter Valley. The report looks at existing carbon intensive jobs in these regions (16,300 in the Hunter Valley) and seeks to offer comparative replacements in low-emissions jobs.

They say that it is crucial for governments of all levels to play a part in transitioning these regions to clean industries before the world market for fossil fuels dries up. They take the approach of saying to do otherwise is against the national interest.

The report offers a range of pathways for Australia to take toward decarbonising our exports. This diversified approach again addresses the risks inherent in our current single-industry approach to coal export. Their examples include exporting renewable energy (either as electricity or hydrogen although this is expensive), or the creation of low-emissions energy-intensive commodities, such as metals, chemicals, and biofuels. They primarily focus on the green steel industry as their evidence shows that the other industries will not have as many jobs associated with them.

Key points

• Carbon workers are primarily in the regions with around 100,000 ‘carbon workers’ stretched across the major coal mining regions of central Queensland and the Hunter Valley (power stations and metal smelters here too). The Hunter Valley employs some 16,300 carbon workers.
• Carbon workers in regions face greater social and economic challenges than those in other areas because, for example, metropolitan workers have more access to a greater range of replacement jobs. Additionally, if jobs were to dry up in these regions they would face greater competition for jobs and would find it hard to find employment which pays as much as their existing job.
• Green steel is the greatest opportunity for the regions according to Grattan because “it is both large enough and economically credible enough to justify policy action… and represents the best opportunity for exports and job creation in key regions”.
• Balancing interests. Grattan say that the creation of an Australian green steel industry could help resolve the tension between the interests of carbon-intensive regions (jobs) and the broader national interest on climate action (emissions).
• Governments of all levels need to play a role in policy support for the emerging green steel market, as well as helping to build skills and capability needed for transition. State governments also need to help with coordinating land use planning and regional development which assists new global-scale manufacturing industries such as green steel.
• Technology not yet proven at commercial scale so Grattan suggest there should be a ‘flagship’ project to prove the case.
• Clean energy jobs are a feasible replacement for carbon-intensive ones. Grattan say the modelled scenarios translate to between 40,000 and 55,000 ongoing jobs across green steel, green ammonia, and biofuels for aviation. This is similar to the numbers currently employed in carbon-intensive industries in regions (55,000). They say this estimate is conservative as it does not include associated jobs in construction.
• Regions that host carbon-intensive industries today are well placed to host these new jobs. As well as a significant workforce, carbon-intensive industry regions also have port and electricity infrastructure to help capture opportunities in emerging clean energy industries.
• Similar skills required. Grattan say that the skills required for new industries like green steel are likely to be similar to those used currently in carbon-intensive industries including coal (technicians, trades workers, machinery operators). New clean energy manufacturing jobs are also likely to pay better than other jobs in the same regions.
• Diversification is key. Groups like the Hunter Joint Organisation are calling for a recognition that their region faces challenges with the potential loss of carbon-intensive industries (also see here and here). They are looking to diversify local industries to meet this challenge.