But with US President Joe Biden’s Inflation Reduction Act “tilting the balance globally”, these individual policies and “early indications” needed to be bolstered by “overarching policy frameworks” and new initiatives.
“Individual policy settings in their own right will not be enough to make [energy-transition projects] investible. Overarching policy frameworks are needed to de-risk investment,” he said.
“It’s urgent because policies implemented today will take time to filter through, and major energy projects will take time to come online. But they need to be funded now.”
He called for:
- A refreshed hydrogen strategy;
- More priority and funding for project-enabling infrastructure in northern Australia;
- “Targeted measures over and above the safeguard mechanism to generate demand for, and supply of, renewable fuels as transition fuels for hard-to-abate sectors”;
- More government-to-government deals between Australia and its key trading partners such as Japan, South Korea, Germany and Britain.
Without this, he said, Australia would struggle to make the most of its natural endowment of sun and wind, and its skilled workforce and stable regulatory frameworks.
Mr Baudry said BP’s multibillion-dollar pipeline of projects in Australia had put the country into the energy giant’s top three investment locations worldwide.
“BP’s projects in Australia are real projects. They mount up to tens of billions of dollars, but they will also soon require hundreds of millions of dollars of commitments,” he said.
“We still haven’t cracked the code to make these projects economically at scale. It’s a chicken-and-egg situation.”
Collaboration needed
He said BP’s customers needed firm and binding commitments for the supply of reliable, competitive, low-carbon energy, but BP did not have firm commitments and prices from its suppliers.
Meanwhile, suppliers could not build facilities because they needed firm commitments from their downstream clients and customers.
“At every step along the way, whether you are a customer, whether you are a project developer, whether you are a supplier of renewables into these projects, or whether you are a banking or financing partner into these projects, everyone needs to firm up their commitments,” he said.
“We also need a greater urgency in collaboration between industries, governments and customers.”
BP’s projects include the repurposing of the former Kwinana refinery near Perth into a renewable fuels refinery, with a final investment decision due later this year. A green hydrogen operation on the same site has $70 million of federal funding.
There is a wind and solar generation plant to produce power and green hydrogen at Geraldton; the Australian Renewable Energy Hub joint venture with Macquarie, CWP Global and Intercontinental Energy; and various EV charging and hydrogen refuelling projects.