Could a net zero future boost Australia’s GDP by 36 per cent? A conversation with CSIRO’s Dr Larry Marshall

Reading through the results of our Accelerating the journey to net zero report, I was struck by a confounding statistic. Although 80 per cent of Australian business leaders say technological innovation is key to achieving their sustainability goals, only half of them are actually investing in it.

Australia’s national science agency, CSIRO, is working to change that.

With its work on everything from fast WiFi to 3D printed body parts, CSIRO has been the nation’s innovation catalyst for many years. And now, with climate change making the agency’s work more crucial than ever, Microsoft ANZ is proud to be its partner.  

In researching our report, I sat down with CSIRO’s Chief Executive, Dr Larry Marshall, to find out how he thinks Australia is tracking on sustainability. In this edited transcript of our conversation, Dr Marshall shares the latest scientific breakthroughs in the sustainability space. He offers his thoughts on the politics of climate change, and explains how CSIRO is empowering emissions-intensive industries like aviation and mining to innovate towards net zero.

I hope you find our conversation as fascinating as I did.

How do you think Australia compares to similar countries when it comes to sustainability?

In Australia, the issue can be quite divisive. We often focus more on critiquing individual politicians than policies themselves, which I think is a mistake.

In the United States, for instance, the fact that emissions were going up under Obama and down under Trump had nothing to do with the leaders. The reason they went down under Trump was because the US started to realise that natural gas was better ­– emissions dropped because people realised it was more profitable to use gas than coal.

But if you look at the United States, around 26 per cent of GDP comes from venture­­-backed start-ups ­– from innovation. It’s clearly an innovation economy. I don’t know what the number is for Australia’s innovation metric, but it’s certainly not 26 per cent. The numbers I’ve seen are more like 1 or 2 per cent.

We do have some advantages, though.

Australia is very good in that space, but you’d never know it. And that’s a big strength of CSIRO. We have a huge team working with the public to explore how we catalogue and preserve our biodiversity, and showing people what they can do in their own backyards.

How are you approaching the more difficult challenges, like decarbonisation?

When I first came to CSIRO, I went to the cattle industry, I went to the coal industry ­­– I went to all different industries, trying to figure out ways of breaking these deadlocks. So, with cattle farmers, we listened to them and they listened to us. To their credit, they let us put all manner of scientific equipment on their properties and worked with us to find solutions.

Ultimately, we came up with a special cattle feed supplement, called FutureFeed. We put about 1 per cent of it in with the regular cattle feed, or we sprinkle it on the grass to get cows to eat it, and it significantly reduces their emissions. It costs about the same as other feed supplements and while we’d never hang our hat on saying it improves health and growth, it certainly has no negative impact.

All cattle farmers needed was for this solution to not cost more, and not make things worse. With those criteria met, adopting the new feed supplement was quite straightforward. And I think there’s a secret in that for driving change.

Have you worked on similar initiatives in other industries?

We have. We’ve got a partnership with the Commonwealth Bank around quantifying climate risk for enterprise. It enables them to go out to their client base and help those clients first understand what their own risk is, and then use mitigation strategies to reduce it. And again, the bank’s doing that because they know it’s in their long-term best interest as a business to figure that out.

It’s not government money paying for that, it’s actually private money. And that’s been a theme in most of the interventions we’ve done that have been successful.

We invented this thing called the hydrogen cracker, which was actually commercialised through a partnership with FMG. It’s a unique material that filters gaseous hydrogen from liquid ammonia. It’s a super-efficient process to transition from one to the other, so you can either start with ammonia or start with hydrogen.

The thing is, when you want to ship a big tanker of energy to Japan or Korea, like we do now with LNG, transporting it as a gas means you have to freeze it and apply tremendous pressure in order to get the same amount of energy in that tanker. It’s very risky. But if you turn it into ammonia, then as a liquid, it’s 20 times more dense, so you don’t need the ultra-cold temperature, and you don’t have the big pressure problem. It’s a really nice way to use what we’ve already got.

Then we’re involved in another project with the two biggest steel manufacturers in the world to crack that eternal, wicked science problem of how to make green steel.

How do industries navigate between the risk of taking an initiative that doesn’t work and costs money, and the risk of not taking a step at all?

We did a seminal piece of work called the Australian National Outlook back in 2016, which showed that in the net zero scenario, we could increase the GDP of the country by about 36 per cent by 2050.

The counterfactual was that if we didn’t do anything about emissions, energy would continue to get more expensive as the world shifts. That would make our industries less competitive, and our economy would slide down.

Of course, it’s intuitively obvious, but we actually mapped it and modelled it really rigorously. It is a model, but it’s a model very strongly based in science, without a lot of the variables that you might find in an economic model.

We do a similar thing for the whole energy system every year, called GenCost. It’s an annual process of analysing the costs of various electricity and generation and storage technologies. It’s been really clear that renewables are a better investment.

We’re deploying about 6 gigawatts of renewable energy a year, a big number for the size of our population. But we still have the challenge of replicating that wonderful, stable, spinning baseload that Europe gets from nuclear and hydro. How do we balance our grid while we build mass-scale storage? CSIRO does have batteries deployed in a lot of places, but we worry about their capacity to deliver massive amounts of energy quickly.

Armed with that knowledge, we can then pre-tune the grid to cancel that out. That stability would accelerate us really nicely.

A lot of global momentum on renewables relies on governments collaborating to move the energy around. How does that work for Australia? To what extent do we need to collaborate with others to maximise our own renewable potential?

Innovation loves collaboration, and 70 per cent of everything CSIRO does involves global collaboration.

Collaboration comes quite naturally to Australia ­– we have to do it because we’re far away. In terms of energy resources, I think Australia will contribute a lot to the world, like hydrogen. Having a rich resource base, I think we’ll also do a lot more in lithium, adding value to the ore.

I think the change you’ll see in Australia is that rather than digging things up and shipping them overseas as commodities, you’ll start to see us add more value here – so, critical energy, metals for battery technologies and power converters, energy storage devices, those sorts of things.

I don’t think we’ll build those things here. But I think we’ll upscale the raw materials that the rest of the world needs. And in exchange, the rest of the world will then work with us on things like smart grids and large-scale storage systems.

Are you seeing more collaboration within Australia as well?

At CSIRO, we have been going out to our customers in the private sector and seeing whether they’d be willing to back some of our sustainability missions. Our Microsoft partnership is very much like that. Your company has its own ambitious plan for the entire enterprise, and CSIRO is able to collaborate with you on achieving that. Then there’s Boeing, which wants to figure out how to do sustainable aviation fuels by 2030.

Once companies like yours come in with industry money, government becomes really interested and suddenly, you see things like hydrogen hubs spinning up around the country. You’re seeing biofuel hubs, you’re seeing AI hubs. We’re running some of them, but not all of them.

With Microsoft, for instance, we use their technology in our enterprise, and we also help your team develop cutting-edge, new technologies. Then we work together on deploying some of these technologies to solve major problems, particularly environmental problems.

CSIRO has access to a huge amount of space data in Australia. Our work in the Northern Territory is a good example.

It’s a very deep partnership. And it’s a really good example of how a profit-making business can help to solve environmental challenges. That’s very much our strategy: thinking about how we can make sustainability attractive for business.

I’m really happy it’s worked out this way. We’re seeing collective leadership. It isn’t just about us, it’s about the system joining together to realise that they need each other to solve the problem.

Australia has previously had a very finite pie mindset, with businesses having the mindset that for me to win, you have to lose. Whereas now we’re seeing businesses realise that actually, if they collaborate, they can make this pie a bit bigger. And that’s why industry is investing in areas where previously government would have led.

Industries have all woken up to realise that their customers will walk away from them if they don’t go to zero. Forget politics, forget policy, that’s what’s going to shift us. And I think that makes it a lot easier for government. Their job then becomes, “Okay, how do we manage the economy? How do we not derail the economy during that transition?”

You mentioned your work developing FutureFeed in the cattle farming industry earlier. Are you seeing progress in your work with other sectors?

Decarbonisation is obviously a major challenge in industries like aviation and mining. But I’m cautiously optimistic. Qantas and Boeing have really leaned in hard with us around biofuels or hydrogen fuel. If you’d asked me before they jumped in, I would have thought that’s a 2040 thing, but now we have a 10-year roadmap and I’m thinking that we’ll see movement in this decade.

And then in the mining space, we’re collaborating with FMG, which is a huge resources company trying to get to net zero by 2050.

They’re facing a lot of challenges. They have trains, they have ships, they have big holes in the ground, and they’re all too far away from a power system where you can hook them up to solar or wind. But they, and others in the industry now too, have this amazing vision of “Well, let’s try and do a hydrogen-powered ship”, or “Let’s try and do a solar storage system for mine sites”.

We deployed Australia’s first large-scale solar battery system quite a few years ago for astronomical research. But astronomical sites are like mine sites, because they are so remote, and we’ve been able to apply a lot of our learnings there to our work with FMG.

I’ve actually been stunned at how much technology capability is in the mining industry. You think of it as just digging stuff up out of the ground and selling it, but the level of AI capabilities, and knowledge of material science and chemistry, it’s quite amazing.

Once we started working with them, it brought out this latent skillset in their workforce. People started coming up from places we didn’t expect to help us crack these problems. It’s been very much a mission approach, collaborating on a single, clear objective, with a clear deadline for delivery.