1. In your view, what is a realistic assessment of our progress towards Net Zero?

Mekala: “At the global level, in many ways, we have seen meaningful momentum in our progress towards Net Zero – from falling costs to growing investments in climate technologies. However, the fact remains that despite all of the hard work that’s been done, we are at very early stages of this transformation - only 10% of the way there.

Our energy system, while high performing, is linked to 85% of CO2 emissions, so addressing it will be critical to success. And at its core, the transformation required of the energy system is a physical one.  We need to build things at massive scale, and we need to ensure that they work.

To that end, our research has identified 25 physical challenges still ahead of us (see figure 1). These challenges must be addressed if we want to the energy transition to succeed – and tackling this “hard stuff” will take real work.”

Figure 1 – The 25 physical challenges

Victor: “Locally, we have also made real progress. Emissions are down 29% on 2005 levels, and renewable energy provided 40% of total electricity generation last year.

However, we need to acknowledge that the path ahead is challenging. Land use changes have driven a lot of the emissions reductions to date. To make real progress towards net zero we will need to start ‘bending the curve’ of emissions in sectors where they have been flat or continued increasing in line with historic trends - e.g. in buildings, resources and transport. In the energy sector, each incremental percentage point of variable renewables requires more transmission, more firming, and more system services to ensure reliability and security of the grid.

There are some promising signs in the energy sector—investment is up, and there has been significant acceleration in large-scale battery projects. But the build rate of new utility-scale renewable generation has not yet reached the pace required.

2. We hear a lot of concerns about the pace of the transition. What do you see as potential solutions for unlocking some of the current gridlock?

Mekala: “Relentless execution, innovation, and cross-sector collaboration. We’ve broken down the 25 physical challenges into three levels based on our progress so far, and what it will take to achieve them (see figure 1). Level 1 and 2 challenges are those which we have made good progress on. However, level 2 still have some fundamental bottlenecks – we need relentless execution to continue the momentum on level 1 challenges and tackle these constraints for level 2 ones.

Level 3 challenges, which account for around 40-60% of energy-related CO2 emissions, are where we need real innovation. These are areas where often large performance gaps still exist relative to traditional technologies, we are in early stages of deployment and don’t yet have a track record of achievement, and there are numerous interdependencies which means the solutions cannot be siloed. To unlock these, we are going to need innovation with a capital “I” – not just innovating individual technologies but reimagining the entire system.

And to accomplish all of this, more than ever, we need collaboration across sectors. Governments, businesses, and communities must work together to align incentives, and overcome barriers.” 

Victor: “Australia is very much in line with this. First, we must do everything possible to boost the productivity of clean energy project delivery. This will involve investing in building project delivery capability across the industry and looking for as many opportunities as possible to leverage ‘mass production’ approaches, particularly standardisation and modularisation.

Second, we need to create as many opportunities as possible to deploy innovative technologies when and where possible as they mature – in the energy sector this includes virtual transmission (e.g. SIPS), advanced grid enhancing technologies (e.g. aluminium conductor composite cores), and maximising the integration of consumer energy resources.  More broadly, it’s starting to bring together partnership across traditional sector boundaries to start nurturing new value chains – e.g. in sustainable aviation fuel, or in green iron.

Third, we need to find a way as a country to accelerate permitting and approvals.  In some countries this has involved doing more to ensure that communities hosting clean energy infrastructure share in the benefits, or explicitly factoring consideration of the balance between local and global environmental priorities in decision making.

Fourth, we need to ensure the long-term market structures are in place to support investment beyond 2030, which is of course a very live topic with the Review of Market Settings in the National Electricity Market currently under way.”

3. How can Australian leaders capture decarbonisation opportunities amidst global economic uncertainty?

Victor: “There’s no question that this is a challenging time of both technological and geopolitical uncertainty. Leaders are using scenarios to make sense of the inherent uncertainty.  It’s not possible to make a ‘straight line’ prediction at this point, but by thinking through plausible scenarios and the impacts of each on your markets and business, it becomes possible to start to look at what actions to take and ‘options to buy’ in this moment.

They are also using this time to invest in the foundations of competitive delivery – strengthening project execution and productivity in their core businesses, securing supply chains, and driving scaling readiness for emerging technologies.

Looking outward at opportunities while doubling down on productivity will enable Australian companies to remain competitive while helping shape a more sustainable and balanced global economy.”