Spark Club Podcast

Grant McDowell & Tim Buckley– Spark Club Podcast 27 May 2026 Highlights – ACCELERATING RENEWABLES DRIVES NEM ELECTRICITY PRICE DEFLATION Amazing to see electricity price DEFLATION being delivered in Australia in the middle of the latest fossil fuel war, with its resulting hyperinflation of global fossil fuel prices. The Australian Energy Regulator has released its final Default Market Offer (DMO) starting 1 July 2026. Residential flat rate standing offer prices will fall by between 3-5% in NSW and by 7.2% in South East Queensland compared to last year, while South Australian households will have a modest increase of 1.4%. Small businesses will see reductions across all three regions, with prices decreasing by 7-12% in South Australia, 10-14% in South East Queensland, and 9.0-21% in NSW. Earlier this week the Essential Services Commission delivered a further reduction in the Victorian Default Offer; FY2026–27 will be on average 5% lower than last year for households. For small businesses the price is down on average 6%. A major contributing factor is the record high investments into clean energy by Australia's public – with over 400k home battery installs totalling >11GWh achieved in just 11 months, supporting the 3GW pa of rooftop solar installs. Lowlights – China installed just 75GW of RE in 4MCY2026, -41%$ yoy Solar installs of 51GW in 4M 2026 -51% yoy. Still more than the RoW combined, but disappointingly down in the middle of year. China added a depressing 28GW of fossil powered capacity YTD 2026, +26% yoy. Why? China is consolidating after knocking the lights out last year. But also GDP growth is still on track at +5% yoy, and Industrial value-add +5.6% yoy. Keeping their govt. firepower in-case Trump attacks China again, and this time has an impact, unlike the last few times! In the electricity sector, total electricity generation was +5.4% yoy YTD 2026, unfortunately with nuclear down yoy, coal power was +3.8% yoy. Not what we want to see continue over the rest of 2026. Main Story – The ABC / Guardian Australia Epic reveal  A major exposé on ABC Four Corners on Monday, in collaboration with the Guardian, revealed irrefutable evidence of BHP reversing its commitments to meaningfully cut emissions in a credible timeframe. The egregious walkback, as the climate crisis escalates, was laid out in hundreds of pages of leaked internal company records.  What BHP does matters. It is the world's largest mining company by market capitalisation, generating revenues of US$51bn in the last financial year with underlying earnings of US$26bn and a US$18bn pre-tax profit to its shareholders. Andrew Mackenzie, BHP's CEO until 2019, said publicly that decarbonisation was a strategic imperative, with failure to act posing an existential risk. Its Pilbara decarbonisation plans were urgent and comprehensive, and involved rapid electrification of locomotives and haulage trucks, and a massive buildout of solar to reduce diesel and gas dependence. It had plans to deploy US$3bn in decarbonisation investment by 2030 to underpin its climate targets and secure its licence to operate. Then it all went to the proverbial.  In 2024, CEO Mike Henry introduced BHP's Climate Transition Action Plan (CTAP, aka CRAP), which sounds great except for it being entirely hollow. BHP massively delayed its entire decarbonisation trajectory until after 2030 – trashing its stated intention to address climate risk and abrogating its corporate responsibility to act in this critical decade. Astonishingly, the "plan" forecasts BHP's global emissions will rise from FY2025-FY2030. Up is not down. There is currently categorically zero chance of BHP's plans meeting its net zero by 2050 commitment. In the knowledge that this story was coming, BHP vigorously cranked up the spin machine. A curiously timed pamphlet, released last week by economics consultancy Mandala, which has close ties to the PMO, broke down top ASX listed industrial corporates' global scope 1 and 2 emissions profiles in FY2025 vs FY2020, conveniently pitching BHP as a corporate leader. BHP then mounted an ad campaign trumpeting the trumped-up claims. To call Mandala's brochure misleading is generous. BHP primarily relies on the electrification of BHP's huge Chilean copper mining operations and the closure of the high emissions NickelWest business to boost BHP's decarbonisation credentials and obscures BHP's dereliction of its responsibilities in the Pilbara.  Production-based emissions intensity would tell a different story on BHP's progress, and that of other giants like Rio featured by Mandala – despite the coordinated reporting in The Australian engineered to promulgate the Mandala talking points while bashing genuine decarbonisation leader Fortescue. Why the heel dragging by BHP? Follow the money – the billions paid to the big miners each year by the federal government to maintain their imported diesel addiction.  In Australia, BHP extracts from the taxpayer a $620m annual imported diesel refund covering the staggering 1.2 billion litres of this climate-destroying fuel it uses each year in its mining operations. Diesel powers >60% of BHP's total energy needs. This dependency undermines our national energy independence, which requires an accelerated transition to homegrown renewables, and continues to put Australia's energy security at risk. It persists in an increasingly fraught global geopolitical landscape riven by energy wars – see PM Anthony Albanese begging our trade partners for supply as the global oil supply shock rolls on. And BHP is the #1 beneficiary of this insane structural barrier to mining industry decarbonisation and the massive opportunities for onshoring and reskilling of our workforce.  Meanwhile Fortescue is investing US$6-7bn this decade in electrification, decarbonisation and energy security in the Pilbara – a world leading effort to position Australian iron ore mining at the forefront of emissions reduction. It is partnering with the best cleantech firms in the world, who happen to mostly be domiciled in China – Australia's #1 trade partner and biggest iron ore customer. In so doing it is building important geopolitical bridges for Australia even as world trade is undermined by the US.  Despite being a leading beneficiary of the diesel subsidy, Fortescue is a vocal advocate of urgent reform, as demonstrated by CEO Dino Otranto on Four Corners. Fortescue supports CEF's position that the subsidy should be capped at $50m per firm pa, with recipients required to invest any refund above that threshold in decarbonisation, or forgo that amount. This reform would convert a massive headwind to energy transition in mining to a Transition Tax Incentive, instantly accelerating decarbonisation and enabling Australia to grasp the immense green industrial opportunities of the emerging net zero global economy. A tightening of the Safeguard Mechanism is also key to incentivising decarbonisation, with a progressive ratcheting up of minimum Australian Carbon Credit Unit prices, to make polluters like BHP meaningfully cut emissions or pay. The facts are that BHP, like Rio Tinto, Hancock Prospecting and Fortescue for the past 6 years have tapped into literal rivers of gold from their iron ore exports, booking return on capital ranging from 30% pa up to 70% pa. BHP's FY2025 results for WA iron ore cite an "5 year average return of ~65%", which any company would kill for. They have the capital firepower to massively invest, accelerate electrification and decarbonisation of the Pilbara now as Fortescue is doing, and lead the world. Yet they sit on their hands. The region has a pathetic renewable energy penetration of just 2% versus 44% for Australia's national grid. We need an end to the Big Australian's gutless reversals on climate, cheap talk and abysmal underinvestment in Australian decarbonisation. Equally, we need an urgent show of political courage from the government to decouple BHP and its counterparts from the firehose of diesel cash they have clamped themselves to at the expense of the people and the planet. What's coming up?  27/28 May 2026 CEF Tim will be attending the Hunter New Energy Symposium in Newcastle to talk about the progress in the Hunter Valley on practical advances in the energy transition as it is occurring there. 18-27th June Tim is in China with Austrade and SEC seeing my favourite companies e.g. XCMG, Sigenergy, China State Grid, Windrose & Xiami.

The Silicon to Solar study allowed Oliver Hartley and his colleagues assess the opportunity for Australia to play a role in the global solar PV value chain. In this Spark Club podcast Oliver shares how Australia can indeed play a meaningful role in the global solar value chain. All the right elements are there for the taking. A deep global market, big project experience and expertise, willing partners, and a key pillar in our low-cost clean energy intensive industries of the future. A fascinating conversation. Enjoy the podcast.  Link to: ARENA AusSi Study-Knowledge Sharing Report

Highlights – The SEC Sydney conference Brilliant to see a full house standing room only for Minister Bowen's talk. Great to have >8000 attendees to the wider trade hall and >100 speakers over two days in up to 8 theatres concurrently. So many people pulling in the right direction, reinvigorating. Highlights – Fuel Tax Credit reform Whilst the Albanese government has ruled out FTC reform in next TUES budget, it is still a campaign CEF and our allies are working extensively on, maybe for MYEFO Dec'2026. Brilliant to see Twiggy, Chair of FMG, give a SEC keynote speech, and more than half of it was on the need for FTC reform starting in the mining sector. FMG is busy funding an ad campaign to elevate the topic and inform voters. Twiggy's slide deck was mostly leveraging my CEF colleague Matt Pollard's number crunching and work. Highlights – The Cheaper Home Batteries Program and Accelerating capital deployments Almost every presenter at the SEC conference talked about the brilliant milestone of >10GWh combined across 380,000 new home battery installs in just 10 months. April 2026 was a record high, showing how much capital and skills can be deployed at speed and scale when the policy / economics are aligned. Treasurer Chalmers has allocated $7.2bn for the home battery scheme, and to-date $3.3bn has been deployed, including a $1bn in the month of April. Nothing like a single program in a single month deploying $1bn to kick up the momentum. CEF & Greenhouse are tracking budget and capital deployments in cleantech, decarbonisation, electrification and green metal value-add exports and since the start of 2023, an additional $90bn has been put on the table - $82bn federally and $8bn collectively from the states. This $8bn was bumped up nicely last week with the WA Government putting a $1.4bn Clean Energy Fund into the WA State Budget. We have tracked in CY2025 deployments of some $15bn, and in the first 4 months of 2026, we have tracked another $6bn (an $18bn run-rate). CCF and ARIA had been running campaigns to push the governments to accelerate the speed and scale of capital deployments, and we are seeing progress. From 1 July 2026 the new $5bn Net Zero Fund opens its doors, so there is capacity building. But good to see momentum improving. Highlights – More RE share => lower energy prices AEMO QED report highlighted RE share in 1QCY2026 was 46%, after the record high 50% share seen in 4QCY2025. So we are making progress. We also saw reports the installed utility scale BESS capacity will treble in the next 1-2 years, making grid reliability better, and now batteries are the #1 price setting technology in the NEM, diluting the power of gas peakers in setting high prices at times of high demand. BESS => deflation And also worth thinking about the contrast of 2026 vs 2022: in 2026, petrol prices are up 50% vs the start of this year, but domestic gas prices are down 20% vs the start of this year, and electricity prices are down 12% as well. Last time we had a fossil fuel industry war back in 2022 when Putin invaded Ukraine, petrol prices doubled, gas prices doubled and electricity prices trebled. Chalk and Cheese. The gas cartel is in check in 2026, and RE shares are much higher, giving proof to the fossil fuel vested interests lie that RE => higher energy prices. The opposite, we now understand fossil fuel prices are hyper inflationary. And energy independence is a new key theme to add in support of electrification and decarbonisation. We will win this fight, we just need to go twice as fast. Lowlights The Albanese government has ruled out a 25% LNG export levy, very disappointing. The government has made "now is not the time" their mantra to show a lack of political will, using the excuse their #1 priority is to secure oil imports for Australia and they don't have the capacity to do two things at once. Very poor form, but we can never under-estimate the power of the incumbent fossil fuel industry, their lobbyists and their corrupting donations. We did secure an East Coast Gas reservation of 20% of production from 1 July 2027. Good and bad, it helps reduce energy cost inflation for sure, but it also means the hurdle for electrification and decarbonisation is harder, given methane is cheaper. Main Story – Our Clean Energy Finance Report: Green Metal Statecraft: Policy, Investment and Technology Trends in the Green Iron Evolution https://climateenergyfinance.org/wp-content/uploads/2026/04/CEF_Green-Metal-Statecraft_-Policy-Investment-and-Technology-Trends-in-the-Green-Iron-Evolution.pdf The decarbonisation and electrification of the global iron and steel industry is undergoing a structural recalibration, shifting from a period of speculative optimism on the now deflated hype regarding the rapid deployment of GH2, and into a slower decarbonisation trajectory. This report provides qualitative update of the investment, technology and enabling policy trends that will underpin the transformation of the iron and steel value chain. In aggregate the global sector is advancing unevenly, haltingly, sporadically and at a pace that remains deeply misaligned with the speed and breadth of decarbonisation of the sector – which contributes 7-9% of global emissions – demanded by the climate science. For every step forward on an individual project or market-level, the broader investment pipeline showcases an equivalent case study of project delay, cancellation, and restructure in the face of unresolved structural headwinds. Despite tens of billions in state aid, a strengthening carbon pricing mechanism, and supply-side and demand-side market forming mechanisms in the EU, the European investment pipeline has undergone a significant contraction in recent years. The investment trends, or lack thereof, of proposals progressing towards FID in Europe are indicative of structural headwinds. European electricity prices, even prior to the last two energy crises, remain 2-3x that of the US and domestic methane gas costs are 5x that of the US, and a similar order of magnitude higher than the rapidly emerging competing iron reduction region of the Middle East and North Africa (MENA). There remains a clear bankability gap for near-zero carbon routes for iron and steel production. Across both the EU and China, deep decarbonisation means a structural shift away from coal-based production pathways in blast furnaces (BF) and basic oxygen furnaces (BOF). High upfront capital cost intensities, exposure to higher operating costs in electricity and renewable hydrogen – notwithstanding strong public capital support, decarbonising mature lower-emission pathways in hydrogen-based direct reduced iron (DRI) and EAF smelting face major bankability gaps. Despite the US war on Iran, the MENA region is emerging as a strategically important DRI production corridor, with significant methane-based DRI capacity operational, and the largest development pipeline of new gas-based capacity. MENA's competitive advantages in lower-emissions iron and steel production extend further into near-zero emissions manufacturing with some of the world's best renewable energy resources, low costs of capital and less stringent regulations and approvals processes than the EU. MENA's geographic proximity to Europe, existing DRI infrastructure, and access to competitive renewable energy position the region as the most credible near-term supplier of lower-emission primary iron to Europe's growing need for decarbonised iron and steel. At the current pace of decarbonisation, demand for DRI is expected to grow by 50% over the coming decade to reach 224Mtpa by 2035. The day we released our report, the US saw a FOAK 1.9Mtpa hot DRI plant reach FID at US Steel, co-located with 4 EAFs. This US$1.9bn investment is despite Trump's anti-decarbonisation agenda, the economics simply work. A big step forward, even in the US Globally, we have a long way to go. It is a race, and Australia needs to get into the race. Australia is half the worlds iron ore exports, whilst China is half the world's steel production. So there is a massive opportunity for the two biggest countries globally in the steel supply chain to work constructively together. But if we don't want to work with China, they will take their capital and capacities elsewhere. What's coming up? 12 May 2026 we have the Federal 2026 budget 27/28 May 2026 CEF will be attending the Hunter New Energy Symposium in Newcastle to talk about the progress in the Hunter Valley on practical advances in the energy transition as it is occurring there.