The 2022 AFR Energy & Climate Summit reflected a significant change in policy and market dynamics compared to previous years. The Policy inertia and climate wars seem to be behind us. The debate was not ‘why or what’, but rather ‘how.’ How do we achieve the significant transformation needed to 2030 and 2040, to reach a net zero target by 2050?
This year felt like we passed a tipping point for many energy market participants, who have mostly held on through a period of uncertainty, with several smaller, innovative retailers unfortunately exiting the market. There are still substantial headwinds to come, due in part to the Russian-Ukrainian crisis and high fuel costs.
We heard of the incredible challenges that the market is facing over the next 8 years to 2030, and the tangible actions or signals needed to turn ‘optimism to confidence’. Partner Sandra James opened the summit, stating ‘we must hold our nerve and stand by our commitment to the transition. Our expectations on ourselves and each other must remain high.’
While some were optimistic, generators and retailers spoke of their financial pain. We heard that due to unexpected rising costs and contractual positions, difficult conversations with financiers, banks and shareholders were increasingly common.
The market bodies overall were more upbeat – with plans for increased collaboration, and a focus on improving the experience for consumers.
Keynote speaker Daniel Westerman from AEMO was buoyed by making it through a very challenging Winter 2022, where the market was suspended in an unprecedented move. He has toured global market operators to bring best practice back to Australia and emphasised the importance of cooperation between all facets of industry.
This need for cooperation at scale was a theme through the Summit and reflected by the Panel on ‘The Big Picture’, who reminded us not to lose sight of the big picture. Their view was that now we have stronger emissions reduction targets, we can come together with unwavering focus to ensure Plan A is delivered. Taking a hedged position to deliver a less optimal Plan B is too costly and unwieldy.
Deloitte’s Dr Pradeep Philip emphasised the huge challenge ahead: ‘an industrial revolution in less than half the time’. The economic opportunity associated with the energy transition is similarly massive if well delivered. Inaction is not an option – it will cost us our health, productivity and of course the planet, and the modelling shows that the cost of inaction is greater than taking positive action. Skills and innovation will drive the transition, and secure Australia’s place as a global renewable energy superpower.