Australia wants to be a renewable energy superpower. Our critical minerals are being leveraged to build what the Federal Government bills as “a future made in Australia”.
In the global race for new opportunities Prime Minister Anthony Albanese “wants Australia to be in it to win it”.
Outgoing Net Zero Economy Agency (NZEA) chair Greg Combet likens the net zero transformation to post-war reconstruction. Asset owners are being urged to get on board.
But will we truly see economic and social transformation or will the reality be business-as-usual?.
Large amounts of government cash are already flowing to projects (some of which have billionaire backing) but there is limited real action on advancing First Nations’ rights and aspirations; addressing social disadvantage or protecting the environment.
Inequitable distribution
A recent study, A socio-spatial analysis of Australia’s critical minerals endowment and policy implications, confirmed that Australia’s most socially disadvantaged areas host the highest number of critical minerals mines and deposits.
The Federal Government’s Critical Minerals Strategy promises economic “benefit sharing” with host communities and First Nations peoples but study authors (J. Burton et al) believe “without major reforms in policy and practice, the inequitable distribution of mining’s impacts and benefits will persist”.
The first map below from the report shows the Local Government Areas (LGAs) that host most of Australia’s critical minerals projects.
The second map below shows that these critical minerals projects are mainly located in areas that rank high or very high on the index of Relative Socio-economic Disadvantage (IRSD). (The darker the blue the greater the disadvantage.)
And, sadly, it comes as no surprise that the most socially disadvantaged LGAs also have very high-percentage Indigenous populations (see third map below).
The paper says “If responsible government agencies fail to consider the socio-economic and demographic contexts from which these resources will be extracted, Australia’s claim of having strong ESG credentials will be greatly diminished.”
“Australia’s critical minerals strategy is built on the idea that mining is a driver of equitable economic growth,” it says.
“However, many of the places that currently host large-scale mining operations still experience systemic and structural disadvantage.”
Green developmentalism
Another new study, Critical mineral strategies in Australia: Industrial upgrading without environmental or social upgrading, conducted a comparative analysis of 17 Federal and State government strategies targeting critical minerals.
The authors (L. Sinclair and N.M. Coe, 2024) found the strategies typically focussed on facilitating trade and investment, de-risking individual projects, and developing regional hubs. They also typically paid “limited attention” to First Nations’ rights or improving environmental and social regulation.
The paper notes the clean energy transition is opening up new possibilities for “green developmentalism” in resource-rich countries involving a “reconfiguration of development around sustainability and a broader range of beneficiaries is an enticing proposition”.
However, the risk is that green developmentalism “entails new ideological legitimation of the same old extractive actors and practice”.
The paper identified “an emerging Australian mode of ‘green developmentalism’ that, while committing significant public funds to developing the mineral processing industry in the context of decarbonisation, keeps private capital firmly in the centre of its vision”.
ESG credentials?
Federal and State critical minerals strategies typically refer to our “ESG credentials” and take it as a given that these offer us a competitive advantage in global markets. It seems governments are content to rest on what they view as Australia’s established reputation.
Governments seem happy, for example, to ignore that Australia has refused to implement the United Nations’ Declaration of the Rights of Indigenous People (UNDRIP).
The Federal Government’s decision to postponed its promised overhaul of Australia’s environmental laws and allegations that its Climate Active carbon neutrality certification program is state-sponsored greenwashing scheme also don’t exactly boost our ESG credentials.
It is also not clear why governments keep referring to their “ESG credentials”. Having a stable political system and wanting to expedite approval processes for project developers are not ESG credentials – they are just reasons why a company (which may or may not have its own ESG strategy) might choose to invest in Australia.
Access to capital
Modelling by Net Zero Australia (NZA) estimates 43 per cent of all clean energy infrastructure required to get Australia to net zero emissions by 2060 will need to be sited on the Indigenous Estate.
Given that the path to net zero runs through Indigenous lands what should the Federal government be doing to support First Nations’ economic empowerment? Here, submissions to the government’s First Nations Clean Energy Strategy are informative.
The submission from the First Nations Clean Energy Network (FNCEN) called for new financing initiatives to support First Nations access to capital and First Nations-led clean energy infrastructure projects.
FNCEN recommended the establishment of “a government-backed loan guarantee scheme to improve First Nations access to financing (and to make financing more affordable) for First Nations communities and groups who wish to purchase equity in clean energy infrastructure projects”.
One model here might be the Canadian government’s recent 2024 Budget announcement of an Indigenous Loan Guarantee Program providing up to C$5 billion in loan guarantees “to unlock access to capital for Indigenous communities” seeking ownership stakes in resources and energy projects.
FNCEN also called for a tax credit scheme for contributions to First Nations-led clean energy infrastructure projects (allowing eligible investors to claim a percentage of their investment as a tax credit).- to incentivise financial support for First Nations-led clean projects”.
Separately FNCEN has called for the principles of Free, Prior and Informed Consent (FPIC) to be “embedded in the Future Made in Australia Act” announced by the Prime Minister.
Elevated focus
The Australian Sustainable Finance Institute’s (ASFI) submission said the goals of the strategy should be broadened to include “an elevated focus on empowering First Nations businesses in the clean energy transition, addressing historical inequities and fostering economic self-determination and intergenerational wealth”.
ASFI also said the strategy should explore mechanisms to unlock capital for First Nations businesses/communities who wish to purchase equity in projects and should “investigate options for establishing an Indigenous-led finance authority”.
The Responsible Investment Association Australasia (RIAA) strongly recommended the Government implements the principles of UNDRIP into law, policy and practice “without delay”.
“The current status of UNDRIP, being supported by the Australian Government but carrying no formal weight in domestic law, has left vast inconsistencies in the practice of entities which engage directly with First Nations Peoples and communities. It also puts Australia behind in relation to upholding First Nations Peoples’ rights,” the RIAA said.
The RIAA also said “the lack of cohesion and consistency adds significant burden to institutional investors and other stakeholders who are seeking information regarding First Nations projects to guide their own decision-making”.
Stretch goal
Consultancy Pollination recommended the strategy add a “stretch goal” – “First Nations increase their stake as equity shareholders in the clean energy transition” – and called for the removal of legislative restrictions that hamper First Nations bodies raising capital.
Pollination said “if First Nations are not shareholders, particularly in early stages of project development where they can make decisions on cultural heritage protection, they will need to resort to judicial and other means”.
Last year Pollination, East Kimberley traditional owners MG Corporation, Balanggarra Aboriginal Corporation RNTBCand the Kimberley Land Council formed the Aboriginal Clean Energy Partnership (ACEP) to develop the East Kimberley Clean Energy Project.
At lot of positive publicity was recently generated when the Australian Renewable Energy Agency (ARENA) committed $1.6 million towards a feasibility study for the green hydrogen and ammonia export project.
But the real test will be how the government might support ACEP in raising the $3 billion needed to build the project.
Will the benefits be shared?
In a recent National Press Club address Greg Combet said “the transformation is also an opportunity to improve the way governments work with First Nations communities, to better respect their rights and their knowledge of the land and water where economic activity occurs”.
Combet, who is moving to a new job as chair of the Future Fund, said “there is a real opportunity for First Nations people to be involved in and inform new investments, training, business and infrastructure to ensure the benefits of the transformation are shared”.
Aspiring First Nations project developers will be listening to Treasurer Jim Chalmers May 14 Budget speech to hear what new specific action is being taken to help them on their journey to economic self-determination.
