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Labor’s Green Pipedream

Nick SpencerApril 30, 2024
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As initially seen with their haphazard campaign to implement an Indigenous Voice to Parliament in 2023, it has become clear that the incumbent ALP government’s legacy upon its departure from office will be characterised by no shortage of rhetoric but ultimately a gross paucity of substance.

Both Prime Minister Anthony Albanese and Energy Minister Chris Bowen emblematize this notion. They both have undergraduate degrees in economics but perhaps more of an emphasis should be placed on the ‘undergraduate’ element of their qualifications rather than the economics component.

Both Bowen and Albo have consistently reiterated their ambitions for Australia’s transformation into a renewable energy superpower bolstered by domestic production.

Just a few weeks ago the government announced a $1 billion injection of public funding into onshore Australian solar photovoltaic manufacturing.

Albo and Bowen were parading their policy announcement around the now brownfield site of what once was Liddell Power Station up until its closure in August 2023, which they ostensibly intend to turn into a production hub for solar modules.

“There will be more jobs here than ever before,” said Albo.

Bowen said he wants to “not just make renewable energy in Australia, but to make the things that make renewable energy in Australia.”

How exactly this particular policy prescription will manifest in reality is anyone’s guess.

Onshore manufacturing being brought back to Australia truly is a touching sentiment but in my humble opinion, you could pick a year 11 economics student at random with a rudimentary understanding of protectionism and they’d be able to tell you it’s simply not possible.

The establishment of a world-beating solar panel manufacturing industry is in reality entirely predicated on monumental tariffs being placed on Chinese imports. Aussie producers wouldn’t be able to compete otherwise.

Whilst the Australian populace was fixated on the ongoing debate surrounding the ‘Voice’ referendum last year, most of us probably didn’t notice that Chinese solar panel makers were incessantly flooding the global marketplace.

Over the last ten months the volume of solar panels sold swung up 48% whilst their total value plunged 31% in conjunction. The International Energy Agency (IEA) reported large stockpiles of Chinese PV modules piling up into oversupply in both the US and EU.

The supply glut was so large that it cut solar panel prices in half last year as rates of manufacturing tripled.

China isn’t done yet either. The Middle Kingdom is set to account for 85% for the expansion of solar module manufacturing capacity by 2028 despite being far from emptying its tank in terms of production volume.

Its manufacturing utilisation rates — how much it's actually producing relative to what it could produce — dropped 60% in 2023 and could drop even lower to below 40% in the years ahead.

Conversely, further Chinese supply chain expansions aren’t expected to be met with a commensurate magnitude of demand growth for modules which will be conducive to even lower prices globally.

In the EU, given its neoliberal trading environment with feeble sanctions on Chinese importers, makers are being hit the hardest by this price deflation.

Prominent Swiss solar module and cell manufacturer Meyer Burger is currently preparing to shut down its Freiberg plant and gradually shift factories over to the US where sanctions on Chinese products remain relatively elevated in comparison to Europe.

Thus lies the only answer to the potential inception of an onshore solar panel manufacturing industry in Australia — more tariffs on China.

Now riddle me this. Do you think that given Australia’s immense trade war with Beijing has only recently started to subside, it would be a sensible idea to re-implement policies that in the Politburo’s eyes would almost certainly constitute economic warfare?

Do you think it would be a smart idea to re-aggravate the nation on which Australia maintains a unipolar export reliance?

Not to mention, do you think that given the ALP’s frontbenchers, particularly Foreign Minister Penny Wong, are far less hawkish and more lenient towards China than their Coalition predecessors, that they would even consider implementing such tariffs?

No? Then we can safely conclude that Albanese and Bowen’s grandiose vision for Australia as a renewable manufacturing superpower is little more than another pipedream bankrolled entirely by the bank of you and I.

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