Analysis

This year's federal budget offers a preview of what the next decade of climate wars will look like

Below the radio grabs for this budget — the $300 power bill rebate for every household and the extra rent assistance and the tax cuts and the inevitable "does my budget look inflationary in this?" back-and-forth that will no doubt accompany its release to economists everywhere, including the ones at the Reserve Bank that really matter — there thrums a fascinating and revelatory story.

Two stories, actually.

The first is called: This is what the next 10 years of climate wars are going to look like.

And the second, it's related, is called: This is how the Albanese government hopes to win re-election. 

Over the next 10 years, the budget reports, Australia will spend $19.7 billion on "Making Australia A Renewable Energy Superpower".

And yes, this title does conjure some upsetting visuals of Energy Minister Chris Bowen wearing his underpants on the outside — but it's very clear where the money is going. Renewable hydrogen. Low carbon liquid fuels. Refining of critical minerals. Solar. Battery supply chains. These are mainly technologies on which Labor and the Greens would agree.

Labor recently reversed its distaste for gas and confirmed that it would be a non-negotiable part of the energy mix until 2050. I mean, the government hasn't done anything so rash as to actually tax the gas industry properly (musical laugh) but it does make the Greens angry, as gas is of course a fossil fuel.

The Coalition has no problem with gas. It would probably wave gas around in parliament, were such a stunt not disappointingly prohibited by the laws of physics.

Not mentioned or funded? Nuclear. And nuclear is the technology that Peter Dutton — and a big chunk of his party room — are keen to explore. So keen that Mr Dutton made nuclear a plank of his budget reply speech last year.

There was a suggestion, even, that by budget day 2024 — that is to say, yesterday — Mr Dutton would have released six proposed sites for small-scale nuclear reactors. This has not happened. Perhaps in the budget reply speech on Thursday?

Either way, the whiplash-inducing handbrake in the climate and energy debate over the last three years has been extraordinary.

The coal to nuclear pipeline

Hard to believe, but it was only in 2021 that the Morrison government — with only days to go until the Glasgow COP26 climate summit — cobbled together a truly bizarre collection of bribes to get Barnaby Joyce and the National Party over the line to agree to net zero emissions by 2050.

Dams, fast trains, all sorts of tempting chew toys were poked into the National Party leader's pram to distract him from the fact that he was signing up to something he hated.

There was still, at that point, much support to be found in the Coalition's right flank for building new coal-fired power stations. And, indeed, even for the federal government to subsidise them. (This is why Malcolm Turnbull found his period of leadership so very tiring.)

But now, Coalition opposition to net zero as a target is pretty much a thing of the past. The remaining argument is not about "if" but "how".

And while large parts of the Australian energy sector remain temporarily addicted to coal (even in Victoria, around 70 per cent of base load power comes from burning brown coal), the hard-core climate deniers of the Coalition are in the process of kicking the habit. Their methadone equivalent? Nuclear.

In terms of the culture wars, nuclear enrages the greenies in the same satisfying way that coal does. So, for your hardcore Sky After Dark watcher, it delivers the same political high.

Sure, it's a lot more expensive. A nuclear power generator takes a very long time to build and no-one has started building one and even though there are many other countries who use nuclear as part of the mix (they are invoked enthusiastically by nuclear proponents), well, the thing is, they built theirs already.

And we did have a debate about it in Australia in 2007, when John Howard took an interest and commissioned former Telstra CEO Ziggy Switkowski to examine the feasibility of domestic nuclear power. The idea fell into a million pieces during that year's election campaign, which Kevin Rudd spent his visits to key electorates wondering aloud to voters whether they'd be getting a John Howard nuclear reactor in their backyard. Game over.

The next instalment: Future Made in Australia

The government's new Future Made In Australia policy — unveiled earlier this year by Prime Minister Anthony Albanese on one of his increasingly frequent visits to Queensland — is about the government getting its hands all over things that for many decades now, economists have agreed should be left to the private sector.

The PM wants to spend public money helping Australian businesses to make stuff here. He kicked things off with $1 billion to bring some Queensland expats home to build the world's first quantum computer in Brisbane. Will it work? I mean brilliant if it does, but as with all complex innovations, perhaps it won't.

This is why economists get extremely itchy about governments "picking winners".

And that's just the beginning. According to the budget, the government will fund Geoscience Australia to map Australia's groundwater systems and critical minerals to better capitalise on what we have. The "Renewable Energy Superpower" package hurls billions at solar panel manufacturing, battery manufacturing, hydrogen, you name it.

Picking winners? You bet. Economists hate it. And the opposition will no doubt make the point that this policy is an ideologically-charged and market-distorting intervention into the energy market.

And it is. But there are plenty of comparable economies around the world doing a similar thing, including most of our closest allies. And the Coalition — which under Tony Abbott's Direct Action plan actually paid polluters to pollute less and has always been comfortable with diesel fuel subsidies and so on — might struggle to make this argument with a straight face.

Particularly when any company considering building nuclear power stations around Australia would absolutely be looking for some very elevated amounts of sweet, sweet taxpayer dough to get them across the line.

Shadow Treasurer Angus Taylor told Insiders on Sunday that nuclear would have to stack up economically, on its own terms. But if it was a deadset economic winner, one wonders why Australia — politically stable, geologically stable — isn't covered with nuclear reactors already?

The coming climate war era

Anyway, this is what the climate debate is going to look like from now on. Labor and the Coalition agreeing on gas, but disagreeing on nuclear. Greens fighting with the Coalition on nuclear and gas, and with Labor on gas, but supporting — one assumes — the public spending on green energy projects.

Dutton's task on nuclear is ticklish. Not a million miles from Albanese's difficulty on the Voice, in fact. Does he keep the detail vague on nuclear, and fall prey to every single scare campaign going, from nuclear waste to three-eyed fish? Or does he spell out every conceivable detail, including locations for proposed nuclear power plants, and buy himself a whole new set of localised nightmares? It's a tough one.

For the clean energy sector — which for more than a decade in this country slogged away on wind and solar while prime minister after prime minister was ripped down over the shrill and tribal screaming-match about whether climate change was even a thing — this budget must be a positively arousing read.

And the path to electoral victory? Well. The Future Made In Australia package will allow the prime minister to travel around Australia describing actual projects that will create actual jobs. Telling a story, in other words . Much easier than explaining an emissions trading scheme or the intricacies of carbon pricing — a rhetorical task that ultimately flattened several of his predecessors.

It doesn't hurt that many of these projects will, by definition, benefit resource-rich states like Western Australia and Queensland, where (good gracious, what a fortunate coincidence!) many of the seats Labor needs to retain or win just happen to be located.

A quick scan of the budget's $4.1 billion list of "priority infrastructure projects" reveals a strong flavour of Queensland, WA and western Sydney.

And the spending on every initiative discussed here — energy, infrastructure, the lot — is backloaded into the budget's out-years, which is why tonight's budget shows a surplus of $9 billion (non-inflationary, Michele Bullock, please, please please don't raise interest rates, dear sweet kind RBA governor) then in the following years lapses back into the red with deficits of $28 billion and then $43 billion.

Pork barrelling? Look, sure. But the commuter car parks and swimming pools and sporting grants hurled around by the previous government — so richly excoriated after the fact by the national audit office — were a pretty crude form of pork.

This pork at least has the defence of being part of a wider strategy. A strategy with an ideology. Which may be opposed by an opposition with a different ideology and a different strategy — and voters will get to choose.

And God knows, it's a good long while since we had a federal election like that, let alone a climate debate that was actually about something.