Renewable energy industrial precincts (REIPs) are a promising way to reduce emissions and protect Australia’s future by decarbonising existing industries and attracting new ones to regional areas.
Analysis shows they can help bring thousands of jobs to regional Australia, boosting local economies.
Transitioning Australia’s major industrial regions to net zero will be a significant undertaking. According to the Australian Industry Energy Transitions Initiative, five regions alone account for one eighth of Australia’s total emissions and timely action could reduce the equivalent of all emissions from cars and light commercial vehicles across Australia.
Around Australia, state and territory governments have already begun their own REIP-like initiatives:
- New South Wales has committed to developing ‘Clean Manufacturing Precincts’ in the Hunter Valley and Illawarra.
- Queensland is progressing the ‘Lansdown Eco-Industrial Precinct’ near Townsville.
- Tasmania has set up the Bell Bay Industrial Precinct.
Possible locations for REIPs also include Kwinana in Western Australia, Gladstone in Queensland and Victoria’s Latrobe Valley. Looking internationally, the United Kingdom, Germany, Canada and China – among others – are all investing in their own ‘net zero industrial clusters’.
While there has been some progress, the scale of finance needed is in the billions for each region.
Combined with the pace required to decarbonise industry in line with Australia’s commitments under the Paris Agreement, government funding needs to be pooled together to have greater impact and to attract rapid investment from the market.
Climateworks has been working with key stakeholders to identify how the Australian Government, state and territory governments, industry and private finance can collaborate and co-invest to make REIPs a reality.
What are renewable energy industrial precincts (REIPs)?
REIPs are clusters of industrial businesses with access to low-cost renewable energy.
Precincts could be located nearby to renewable energy zones (REZs), or connected to renewable energy generation through high-voltage transmission lines. They could also access green hydrogen as a zero-emission fuel for industrial processes.
Businesses within each REIP would be powered by 100 per cent renewable energy. They could produce green steel, green aluminium, critical minerals, ammonia or clean technology such as batteries or electric vehicle components.
Another way of thinking about REIPs is as expanded ‘hydrogen hubs’ – an investment focus across Australia and internationally.
How do REIPs help Australian industry and regional communities?
With Australia’s trading partners shifting towards net zero emissions, REIPs can ensure Australia is well placed to thrive in a green economy.
Analysis from Beyond Zero Emissions suggests that clean exports from REIPs could be worth triple the value of fossil fuel exports in 2019, creating upwards of 40,000 jobs in 10 years.
REIPs can also help to attract new industries to regional areas, helping to provide long-term economic growth and jobs.
Why precincts?
Individual businesses can benefit from clustering, as their interconnectedness can lead to partnerships, knowledge sharing, and risk sharing.
It’s a win–win, as collaboration can spur economic performance as well as accelerate decarbonisation.
Costs for each business can be reduced by shared access to transport and energy infrastructure, inputs and labour, cheaper green hydrogen, and circular economy practices.
What does a ‘good’ REIP look like?
With so much at stake, it is essential that governments get the design of REIPs right.
Governments, working with industry and the local community, need to take a place-based approach to the design of REIPs. This means recognising the unique context of each location, from the industries located there to the community and social infrastructure, land, and traditional custodians.
Climateworks, along with Beyond Zero Emissions and WWF-Australia, have identified four key pillars that can support the effective implementation of REIPs.
- Coordination and skills development
Coordination could include bringing stakeholders together at the design stage to co-design roadmaps showing how REIPs can be developed. Skills and training programs help ensure an appropriately skilled workforce, supporting workers to transition to new clean industries.
- Building enabling infrastructure
Critical infrastructure, such as energy transmission and network infrastructure, enables the development of REIPs by supplying renewable energy. Other infrastructure to set up successful precincts could include green hydrogen pipelines to industrial users, and upgrades to ports and roads.
- Decarbonising existing industry
Governments can help existing emissions-intensive industries to decarbonise by setting clear signals (for example, through decarbonisation roadmaps) or by providing funding (for example, through grants or loans) to industry to buy, construct, install or commission new equipment or establish new processes.
- Attracting new industries
By bringing new industries into REIPs, industrial regions can become centres for innovative zero emissions solutions (such as green hydrogen production) and can open up new export markets.
What has to happen to get there?
For such ground-breaking projects, cooperation between federal, state and territory governments, and industry is needed.
As the ‘closest to the ground’, state and territory governments can play a key role by working with industry and the community to co-design roadmaps for REIPs with ambitious decarbonisation goals, leading on land use planning considerations and skills and training initiatives, and co-investing in the enabling infrastructure needed in each location.
To realise the opportunities presented by REIPs, it is crucial the federal government support efforts by coordinating REIP development across the country, co-investing alongside states and territories and industry, and providing advice and coordination around infrastructure and skills and training.
Investment could be delivered by the Australian Renewable Energy Agency or Clean Energy Finance Corporation, and through new programs such as the Powering the Regions Fund and National Reconstruction Fund.
Combined funding will help match the ambition needed to urgently transform Australia’s industrial regions.
More on climate solutions: