The federal government has spent years declaring its ambitions for Australia to become a renewable energy superpower, exporting what the world needs to decarbonise, such as green iron and critical minerals. Remarkably little of that conversation has been about the state that will be central to achieving this goal.
Western Australia produces almost half of Australia’s export goods. It is the world’s largest producer of iron ore and lithium, the second largest producer of alumina, and the world’s third largest liquefied natural gas exporter.
It is also the only Australian state to have increased total greenhouse gas emissions since 1990, largely on the back of the resources boom that has driven incredible growth in iron ore and LNG exports over the past decades. Our emissions aren’t just nationally significant. The downstream emissions from burning our oil and gas and smelting our iron ore and alumina overseas are roughly 16 times the state’s domestic emissions, or about 2.6 per cent of global emissions.
Overlapping this export dominance and emissions problem is energy security. Australia’s two remaining oil refineries are in Queensland and Victoria, making WA completely dependent on imported fuels. The state’s mining, transport and agricultural sectors rely predominantly on diesel for their energy needs.
The closure of the Strait of Hormuz in February was a warning about the risk of reliance on energy imports, yet the Commonwealth’s response has been a $15 billion fuel security package that is directed almost entirely at securing supply of refined fuels and fertiliser, rather than reducing dependency through decarbonisation. In July, Prime Minister Anthony Albanese and WA’s premier, Roger Cook, travelled to Karratha to jointly announce a $4 million study into the construction of a new oil refinery in the state. It would be the first large-scale refinery built in this country since the 1960s – a move suited to the previous century, when we need to be looking ahead to a clean-energy future. Petrostate or electrostate – WA must choose between two diverging paths.
All other Australian states are pursuing their own versions of a renewable superpower, and they should, but so much of the raw potential sits in WA – the iron ore that becomes green iron, the lithium and rare earths that go into batteries and magnets, the land and sun and wind at the scale that heavy industry requires, and the resources infrastructure and expertise. If Australia is going to earn export income from decarbonisation rather than merely spend money on it, much of that has to happen in the West.
Over the past year, my office has consulted with more than 50 industry leaders and energy experts, surveyed 2300 Western Australians and mapped out a pathway for the state’s decarbonisation and diversification into clean energy exports.
This week we released the resulting report, “Clean Power: Securing WA’s Future Prosperity”. I am an independent MP with a small team. We are not the natural stewards for a project of this size, but I wasn’t seeing it happen anywhere else.
All other Australian states are pursuing their own versions of a renewable superpower, and they should, but … [i]f Australia is going to earn export income from decarbonisation rather than merely spend money on it, much of that has to happen in the West.
The Commonwealth and the state both say they want WA to become a clean energy exporter, and both have put real money behind it. Both also keep extending the fossil fuel economy well past what a managed transition requires, connecting new homes to gas, approving gas export expansion, funding larger fuel stockpiles and investigating new refineries.
This hedging is politically comfortable, because it does not require anyone to commit to a clear vision of the future. The problem is that the risks of the clean energy and fossil fuel futures are not the same size. If WA’s renewable energy transition moves faster than the rest of the world, we end up with cheap domestic electricity, an energy supply we control and lower emissions. The export pay-off may arrive later and smaller than hoped. That is the potential downside. But if WA moves slower than the rest of the world, we are left with fossil fuel assets nobody wants, an economy still running on fuel bought from somewhere else, and the sacrifice of our position in new export markets. There is no catching up on that.
Straddling a growing divide by attempting to do both cannot succeed, as progress towards either future undermines the other.
We have just watched this play out in the global car industry. China set an electric vehicle strategy two decades ago and put public money into battery manufacturers and refining lithium, cobalt, manganese and graphite. The motive was to reduce a dependence on imported oil that left China captive to foreign powers. The investment has paid off: China now makes about 90 per cent of the world’s battery components and more than three quarters of its electric vehicles.
Japan hedged. The first mass-market electric cars were Japanese, but Japan’s manufacturers kept backing combustion engines, hybrids and hydrogen, protecting the technologies they were already winning on, while treating electrification as a longer-term project. Europe did much the same. Both are now scrambling to course-correct after seeing China overtake them. Many of the new electric models now coming out of Japan and Europe are built on Chinese components or rebadged from Chinese cars. Hedging did not reduce the cost of the transition. It meant paying late, and to a competitor.
The Iran war has pushed Australian EV sales to record highs. Consumers have been clear about which future they are backing, and economics and energy security, not climate, are the motivators.
So, what would it take for Australia to truly commit to a clean energy export future?
The first priority is to build renewable electricity at export scale, and to design the policy so it reaches Western Australia. WA is not part of the National Electricity Market. The state government has significant control over the South West Interconnected System, but electricity supply for WA’s massive mining operations in the Pilbara and Goldfields regions are largely private and off-grid. The Capacity Investment Scheme, a federal program that guarantees finance to build more wind, solar and battery storage projects, was adapted to work here, and it concludes in 2027. Its successor, the Electricity Services Entry Mechanism, has emerged from a review of the NEM, will be implemented under National Electricity Law, and was agreed between NEM jurisdictions. Providing renewable electricity to existing and future export industries in regional WA requires renewable energy policy support that is truly national.
The second priority is to replace imported fuel rather than to stockpile it. Every state’s mining, freight and agriculture carries this exposure, but WA is the acute case. A serious strategy would target the sectors that are most diesel-dependent and have the fewest alternatives, such as heavy freight, mining and farming, with electrification where it is ready and domestic sustainable fuels where it is not. It would also cover fertiliser, which the Commonwealth has already bracketed with fuel in its own security package. WA makes ammonia today, from gas. Made from clean hydrogen, it would become both a fertiliser supply we control and the foundation of a new clean export industry.
The third priority is to get the proposals that already exist over the line. WA’s clean industry pipeline is real but often stuck in development, and proponents consistently name two barriers to reaching final investment decision: a lack of demand certainty from buyers and risk profiles that can’t meet government financing requirements. Public money is not arriving early enough to give confidence to private investors. Many projects in green iron, clean hydrogen and ammonia and biofuels are first-of-a-kind, and governments need to see these as strategic investments to establish new sovereign capabilities. Turning a pipeline into an industry does not mean subsidising projects indefinitely but rather creating the conditions that let new industries emerge, then removing the training wheels.
If taxpayers are asked to carry the risk early, they should hold a claim on the upside. This is the fourth priority, which receives so little focus. Public benefit from the clean energy transformation relies on getting the tax settings right now, rather than trying to retrofit them years down the track – as WA’s gas experience demonstrates. We built an enormous gas export industry, which turns a profit from publicly owned natural resources, and yet the public return has been paltry. In 2023/24, only 15 per cent of the gas industry’s profits were returned to the public through the petroleum resource rent tax and company tax combined.
Reforming the PRRT and the Diesel Fuel Tax Credit could add billions to the budget, helping to fund this transformation and removing fossil fuel incentives that pull in the opposite direction.
Decarbonising and diversifying our economy isn’t a sacrifice, it’s an opportunity to improve prosperity, security and climate action all at once. It lowers energy costs, creates jobs, reduces dependence on foreign fuel markets, and turns our emissions liability into a global climate contribution. But governments at state and federal level are failing to seize the full opportunities of clean power.