From billion-dollar battery subsidies and COP spending to transmission lines carving through regional communities, Aidan Morrison, Chris Uhlmann and Ben Beattie unpack the forces reshaping Australia’s energy future.

This wide-ranging discussion explores the political urgency behind net zero, the economic and technical realities of grid transformation, and the unintended consequences emerging across regional Australia. With sharp analysis and candid debate, they ask a difficult question: are we carefully building the energy system of tomorrow, or accelerating into an experiment with consequences we are only beginning to understand?

The Energy Transition Debate: Unpacking Australia's Renewable Energy Policy

The Current State of Energy Policy in Australia

The past few months have been pivotal for the energy sector in Australia. With rising taxation and the government's push for renewable energy sources, many are wondering about the efficacy and sustainability of these initiatives. The Australian Energy Producers Conference held recently highlighted various perspectives on these pressing issues.

The Push for Renewable Energy Zones

In recent years, the Australian government has aimed to establish Renewable Energy Zones (REZ) across the country. While the intent is clear—boost renewable energy generation—there's significant concern regarding the actual implementation. Many projects that were supposed to be connected to these zones have stalled, with local communities expressing skepticism about the viability of wind energy in their regions.

Why are Projects Stalling?

- Economic Viability: There is mounting evidence suggesting the business model for wind energy is collapsing, especially in areas like New England. Projects that were planned five years ago have failed to materialize, raising questions about the planning and execution of these initiatives.

- Community Response: Local communities have voiced their frustration, with many feeling sidelined in the decision-making process. As Chris Uhlmann points out, the sentiment in regions such as Walker is one of “white-hot rage” against what they perceive as imposed policies from the government without proper consultation.

### The Trade-offs of Energy Transition

Transitioning from traditional energy sources to renewable ones involves trade-offs, often leading to unforeseen consequences. As Chris Uhlmann notes, the shift from concentrated energy sources like coal to more dispersed and intermittent sources like wind and solar can lead to significant land use changes and environmental impacts.

- Environmental Concerns: The push for renewables is often at odds with conservation efforts. For instance, the construction of wind farms can lead to the destruction of natural habitats, raising ethical questions about the overall impact on Australia’s biodiversity.

- Economic Costs: The costs associated with building new transmission lines to support renewable energy can be passed onto consumers, resulting in increased electricity bills. The integration of these new energy sources into the existing grid poses significant logistical and financial challenges.

The Future of Natural Gas in Australia

Despite the emphasis on renewables, natural gas remains a critical component of Australia’s energy strategy. Chris Uhlmann discusses the growing recognition of gas as a necessary energy source, especially in light of recent global events affecting energy supply chains.

The Shift Towards Gas

- Government Policy Changes: There is a notable shift in government policy regarding natural gas, with recent discussions highlighting the need to retain gas as a viable energy source. The Australian Energy Market Operator has included gas in its Integrated System Plan as essential for meeting future energy demands.

- Market Opportunities: With global markets in flux, there is a unique opportunity for Australia to capitalize on its natural gas resources. However, this requires overcoming significant regulatory and logistical hurdles.

The Role of Government Policy

The effectiveness of energy policy is often dictated by the extent of government intervention. The recent gas reservation policy has raised concerns among industry stakeholders about its potential to stifle production and innovation in the gas sector. Moreover, the perception of government policies often influences public sentiment regarding energy projects.

Conclusion

The energy transition in Australia presents both challenges and opportunities. As stakeholders navigate the complexities of renewable energy policies, it’s crucial to strike a balance between environmental sustainability and economic viability. The ongoing debates and developments will significantly shape the future of energy in the region.

Key Takeaways

- The establishment of Renewable Energy Zones faces significant hurdles, including community opposition and stalled projects.

- Transitioning to renewable energy involves trade-offs that impact both the environment and the economy.

- Natural gas remains essential in Australia’s energy strategy, but government policies must adapt to ensure its viability.

The Australian Energy Producers conference in South Australia last week came as the world grapples with its biggest energy shock in decades, while at home the oil and gas industry is being cast as both saviour and cash cow. In the lead-up to the federal budget there was a populist push for a 25 per cent gas tax that industry warned would crush investment. The Albanese government stepped back from that, for now, but its move on setting up a domestic gas reservation has left many in the sector confused.

It was against that backdrop that this discussion, A Global Energy Reset, unfolded.

Dr Michael Green from the United States Studies Centre set the tone by pointing to the shockwaves from the third Gulf war. Even if the conflict eases and the Strait of Hormuz fully reopens, he argued, something more lasting has shifted: energy security is now front of mind, and countries are actively seeking reliable alternatives.

Australia is well placed to meet that demand. As BP’s Rachael Risucci, MODEC’s Soichi Ide and Wood’s John Mtanios each noted, the opportunity is real, but so is the risk. If Australian governments make it too difficult to invest and operate, capital and customers will simply look elsewhere.

The tension, as the panel saw it, is that while domestic politics is confused and flat-footed, the rest of the world is moving fast, scrambling to secure supply in an increasingly uncertain age.

Panel

Prof Michael J Green, chief executive officer at the United States Studies Centre.

Rachael Risucci, BP’s vice president Australia, Gas & Low Carbon Energy

Soichi Ide, senior executive managing officer MODEC

John Mtanios is president of Wood’s Asia-Pacific business

Video courtsey of Australian Energy Producers, the peak body representing Australia’s natural gas and oil explorers, developers and producers.

In 2017, I left the ABC and walked down the corridor in Parliament House to begin again as political editor for Nine News.

This was the first story I filed for Nine. At the time, my new bosses were a little bemused by it, but they humoured me.

I don’t claim credit for the insight. I was convinced by the power of an argument I had heard from a man I had come to know well, former fighter pilot and retired Air Vice-Marshal John Blackburn AO.

In 2014, Blackburn authored a report for the NRMA warning that Australia’s fuel reserves were running on empty. This fossil fuel–rich island nation had lost the capacity to produce and refine its own fuel. We were dangerously dependent on imports. Our reserves were wafer thin.

So thin that we were in breach of our obligations to the International Energy Agency.

We counted fuel on tankers at sea as part of our stockpile.

Nearly 90 per cent of the liquid fuel that kept this nation running came from overseas.

Even then, the picture was clear. We were dangerously exposed in a world that was becoming less stable.

Now the echo from the past is all too real. Today, that vulnerability is no longer theoretical.

The Third Gulf War has choked off the oil that feeds the Asian refineries supplying this nation with diesel, petrol and jet fuel. Prices have spiked. The threat of rationing is real. Parts of regional Australia are already running on empty.

We are hostage to long and fragile supply lines in a world now gripped by an energy war. Our economy depends on more than two massive tankers arriving on our shores every single day.

If that flow is disrupted, even briefly, the consequences will be dire. Oil and gas underpin the price of everything. When they rise, everything rises.

If supply stalls, road transport stops, shelves empty, and the economy collapses. This is a crisis we were warned about.

This is what a just-in-time nation looks like when time runs out.

So the question arises: will we learn the right lessons from this crisis?

The lesson is simple.

Fuel security is national security. We need to be far more self-sufficient in the fuels that keep this country running. We need to tap our vast resources of coal, oil and gas. We need to explore the possibilities of converting coal to liquid fuel. We need to explore for oil. We need more gas.

Otherwise, the next shock will not just test our economy. It will test our sovereignty.

The Gulf war has exposed two hard truths: military force still shapes the world, and hydrocarbons still power it. Coal, oil and gas remain the foundation of modern life, embedded in everything from food and medicine to transport, industry and household goods.

When oil and gas prices rise, the cost of living rises with them.

Australia is especially vulnerable because it still depends overwhelmingly on fossil fuels, particularly imported liquid fuels. Diesel keeps freight, farming and mining moving, and without it the country stops.

See more of Opinionated, on Sky News hosted by Danica De Giorgio.

Dr Oleksandra Molloy is not a soldier. But war has defined her work, reshaped her life, and heightened her fears for the West.

A native of Kyiv, now based at the University of New South Wales, Molloy’s research has focused on aviation, emerging technologies, and the changing face of modern warfare. Her early work was on developing the skills of pilots.

“I’ve been interested in aviation for a long time from different perspectives,” she told Powerlines.

That fascination led her to drones. And nowhere has the war-fighting edge of that technology moved faster than in her birthplace, Ukraine. She has seen firsthand how large and small uncrewed systems are changing the nature of war.

“The battlefield is monitored 24/7. It’s very hard to hide anywhere.”

In Russia’s war on Ukraine, drone combat is constantly evolving and has shifted from large platforms to smaller, more agile ones.

“We are no longer talking about the payload of 200 kilograms, but we are talking about a small, cheap, expendable drone that may be delivering a precise strike. Any large systems, including these big and sophisticated ones, have become obsolete, because anything that is moving 100 kilometers away can be easily detected and destroyed.”

Drones have moved from the skies to the land.

“Uncrewed ground vehicles have been one of those important assets at the front line. Why? Particularly for logistics purpose, but also for saving wounded soldiers from the front line and also for mining and demining.”

At sea, Ukrainian systems have taken a heavy toll on Russia’s Black Sea Fleet. And on June 1, Ukraine launched “Operation Spider’s Web,” using 117 drones smuggled into Russia to strike multiple airbases, destroying or damaging over 40 aircraft—including bombers and surveillance planes—in one of the war’s most audacious attacks. The operation, which inflicted an estimated $7 billion in damage, marked a new level of sophistication in Ukraine’s asymmetric drone warfare.

“They have become a relatively cheap option for destroying multi-million and multi-billion dollar assets.”

European nations are paying close attention to the war on their doorstep and are stepping up their spending on uncrewed systems.

“Now there is a sense of urgency on how to develop the systems at scale. How to find the right capabilities, how to keep up with the Ukrainian forces in their development, and also how can we learn and gain that experience so we are able to protect ourselves.”

But there is little evidence the Australian Defence Force has got the memo.

“We don't often hear about the experience of the ADF Ukraine. We just need to keep up and see what actually matters on the battlefield.”

Molloy says there is much to learn, but Australia must also consider the kind of theatre in which it will be operating.

“Context matters. And understand how these systems could be integrated within our geographical location, within our capabilities and providing that additional support to legacy systems. We are surrounded by water, so obviously naval drone capabilities are very important. There has to be a balance between large and powerful systems and small and expendable ones. And most importantly, we need to invest into electronic warfare and counter drone capabilities to be able to defend our assets, our people, and our country. We need to develop the systems indigenously in Australia and spend the effort to develop that manufacturing base.”

Right now, Australia is in a grey zone where the threat from China is driving a step-up in military spending but it lacks any sense of urgency. We should not waste that most precious of gifts.

“The difference between Australia and Ukraine is we have time. We have time, we have resources, we have many talented people who actually are doing the work in this space and we need to really think how to leverage those resources.”

China is not wasting time. Molloy says it is not just supplying drones and watching what is happening from the Russian trenches.

“I think some of their instructors are actually participating in some operations, in Kursk and so forth, together with North Korean. There are orders by 2027 or 2026 to develop millions of those drones. And I think we need to watch what our potential adversaries are doing. And they are investing in these systems. They are also getting the real world experience from the battlefield. And I think that's a little bit scary.”

Australia’s isolation has fed complacency, but a more dangerous world is on our doorstep and we need to rise to meet the times.

“There is no longer peace mentality, and we really need to be concerned and prepare now to defend ourselves.”

Canberra warns that our region faces the gravest military threat since World War II. But defence spending suggests it doesn’t believe it.

Peter Jennings, director of Strategic Analysis Australia, told Powerlines the gap between words and actions is unsustainable.

“To use an old Trotskyism… we may not be interested in a war, but war may well be interested in us.”

In an interview conducted before Israel attacked Iran, Jennings argues the West is facing an historic challenge from a coalition of tyrannies.

“The big story of our generation is the rise of China, now with the grouping of authoritarian powers around it—Russia, North Korea, Iran... All of them presenting a threat to the global order.”

He’s scathing about Australia’s strategic complacency.

“There seems to be a complete disconnect between that judgment, which everyone in Canberra shares, and what do you do about it? Because successive governments have simply failed to lift the level of investment in defence.”

Jennings traces the shift in urgency among Australia’s defence planners to the Morrison government’s 2020 strategic update, which concluded that we no longer had 10 years to prepare for conflict. Labor’s subsequent strategic reviews backed that assessment, but five years on, defence spending has barely budged.

“Successive Australian governments, really since the end of the last Cold War, have desperately wanted to see security delivered on the cheap... we spend something like two percent of gross domestic product on defence and have done for 30 years.”

The Albanese Government talks a good game on defence spending, but most of the planned increases are incremental. Meanwhile, China’s military transformation has been radical.

“China has moved from... being a vast land-based organisation which was primarily about creating internal stability inside China... into being a very high technology, tri-service military... with the ability to project military power at great distances.”

The People’s Liberation Army now boasts “long-range missiles, ships and aircraft with significant reach,” and is “significantly expanding their nuclear weapons holdings.”

China is flexing its muscles. It has established foreign bases, claimed much of the South China Sea, and is routinely confronting foreign navies, including Australia’s.

“Now every time an Australian ship sails through that region... it's going to come under severe pressure to get out of Chinese waters.”

He’s also critical of how Australia has reacted to provocations. When Chinese warships circumnavigated the Australian continent, “the most embarrassing thing of all... was that our Prime Minister, our Foreign Minister and our Defence Minister all came out and defended China in terms of what it was doing.”

The gap between Australia’s rhetoric and reality is fuelling American frustration. US Defence Secretary Pete Hegseth recently told Defence Minister Richard Marles that Australia should lift its defence spending from two to 3.5 per cent of Gross Domestic Product.

“It couldn’t have been more blunt. And I think more of that’s coming.”

Yet, Jennings says the Albanese government has doubled down on long-term capabilities at the expense of readiness today.

“In order to pay for that fantasy force of the 2040s... they’ve cut a whole range of capabilities out of the current Australian Defence Force.”

He gives example after example: early retirement of Navy ships, axed upgrades, cancelled support vessels, reduced missile programs, a gutted armoured vehicle project—and helicopters “broken up, sold some bits for spare parts and buried the rest.”

“Our 2025 force... would not be able to mount the sort of stabilisation role we played in East Timor in 1999.”

So what happens if a war breaks out over Taiwan?

“If China attacks Taiwan, I can tell you this—we won’t be exporting iron ore and coal to China during that period... Most global shipping will have stopped... We’ll be on rationing the minute there’s a blockade around Taiwan.”

That’s because most of Australia’s fuel is shipped through the South China Sea and our reserves are pitiful.

“We’ve got about, at best, a fortnight, maybe three weeks’ worth of petrol supply.”

Beyond hardware, Jennings points to deeper vulnerabilities—cyber warfare and political cowardice.

“There’s a lot of Australian critical infrastructure which is now vulnerable to sabotage... hostile forces planting malware.” He warns that “cyber attacks against critical infrastructure will be the first stage of any military campaign.”

So what must be done?

“We need sort of an emergency, all-out effort to make the existing defence forces current and capable, as operationally ready to go as we can make them in the next six to 12 months.”

That includes lifting spending and rearming the defence industry. Jennings notes that Australian firms are “really struggling... because they can’t get contracts out of the Defence Department.”

Finally, he returns to the core political failure: spin over substance.

“We’ve now got a government which is incapable of talking to the Australian people about the strategic threats that we face. And on that basis, why would anyone want to increase defence spending if you can’t actually explain what the threat might be?”

If Australia’s strategic position is as perilous as our leaders say it is, Jennings has a blunt response:

“It’s never too late to start on making your own defence capability stronger. Every day is a good day to start the pushback.”

Link to Strategic Analysis Australia here.

Joe Hockey says it is time for governments to get out of the way of energy producers to allow industry to drive Australian productivity and help keep the nation wealthy.

Speaking at the Australian Energy Producers conference in Brisbane, the former Treasurer and Ambassador to the United States said the country is drowning in regulation.

“The cry of energy producers in Australia should be certainty. Give us certainty and stability and we can do the job. We can give Australians cheaper energy. We can give people of the world greater opportunity to consume our product. We can make Australia richer.”

In his current role as principal of the consultancy group, Bondi Partners, Hockey has a ringside seat on the brutal global geopolitics now shaping energy policy. He is crystal clear about the stakes for Australia.

“We are a major global exporter of energy. And we’ve got to keep facilitating that. It’s not just in our interest to export energy. It is in the interest of our region, the fastest growing region in the world. And if we do not continue to supply energy to our region and to the rest of the world, at our capacity, then it comes back on us in the form of global conflict. So we have a duty to continue to grow the oil and gas industry in Australia, to grow it for global consumption.”

Yet, while we have plenty of energy, Australian industry and consumers are being crushed by domestic failures. Hockey lays the blame squarely on both major parties.

“For a single parent in a one-bedroom apartment in Sydney and facing a 10 percent increase in their electricity bills, there’s just something wrong about it, and it’s unfair. And so we need to get domestic policy right. It’s self-reflection on politics in Australia when we’re talking about energy shortages, particularly in New South Wales and Victoria, particularly over the next couple of years. That is a complete policy failure.”

Meanwhile, the rest of the world, and above all the United States, is on the move. President Donald Trump wants an energy dominant America.

“The starting point is every business that has exposure to a global market must have an understanding of what’s happening in Washington, D.C. I think there is such a strong link now between government and capital markets that you can’t be divorced from what’s happening in the United States. Because, as we see with volatility in capital markets or even volatility in the share market, so much of it comes down to geopolitical decisions and decisions made in Washington. I don’t think that’s going to change. I think we are going to continue to go through a very volatile period.”

Trump’s view of power is simple and transactional. He is not bound by process, nor by the usual constraints of diplomacy or institutional tradition. Outcomes are what matter. He enjoys being a disruptor.

“Whatever the end is, he’ll justify the means.”

He sees global and domestic politics as inseparable, and at the heart of both is energy and what Americans pay for it.

“When Donald Trump talks about increasing energy supply in the United States, he’s focused on meeting demand. The massive demand associated with Artificial Intelligence infrastructure, which represents the most significant challenge to the world in our lifetimes, is the growth, the rapid growth of AI and what that’s going to mean for ourselves and our children.”

Australia should beware of going out on a limb. While we chase ever more ambitious emissions targets, the rest of the world is pivoting hard toward cheap, abundant energy.

“Front of mind is affordability of life for everyday citizens. Cost of living is the number one issue. Wherever I go, it is the number one issue.”

And the cost of government is now unsustainable. Feckless Western governments have been spending too much, are running out of money, and are resorting to bad policy to plug the gaps by taxing more and regulating more, rather than doing the hard work of driving productivity and growth.

“We need to get back to some basic principles that if you have less regulation, if you have less onerous taxes and less tax, then you are more likely to grow your economy and, importantly, be able to meet the needs of everyday citizens on a more regular basis.”

Do not expect Trump to follow this advice. Hockey says the great big bill the President is driving will send US government spending soaring and push the deficit higher in the years ahead.

“He doesn’t care about that deficit. Let’s be honest about it. He hasn’t throughout his career. He is focused on creating wealth, on generating wealth, rather than focusing on how to get there. And that’s so much a story of Donald Trump, which people do not understand. Focus on his outcomes rather than his process.”

But the margins for error are narrow.

I think it’s entirely feasible that the United States does go into recession, which can have a material impact right around the world.”

Hockey sees the world as an increasingly dangerous place. And centre stage is the fraught relationship between Trump and China’s President Xi Jinping. On that front, Hockey is more optimistic.

“Well, they both need each other. That’s the point. And they both know that they need each other. They’re also fully aware that their economies are intertwined. You cannot decouple China from the United States. In fact, in the last readout of data, China increased exports to the United States. And I think it will resolve itself, you know, the tariff issue between the US and China will resolve itself.”

Australia’s competitive edge has long been its vast natural resources and access to cheap, abundant energy. But Samantha McCulloch, Chief Executive of Australian Energy Producers, says we risk squandering that advantage.

In a wide-ranging Powerlines conversation, McCulloch offers a clear-eyed assessment of the current paradox: this nation depends on gas for export dollars and to keep the lights on, but government actions have made it harder to produce.

“Gas is obviously really critical, in particular to our energy mix in Australia. It's almost more than a quarter of our primary energy needs. We rely on it every day—for electricity, for heating and cooking in our homes, for manufacturing. There are so many products we can't make without gas. So it's really integral to our economy and our way of life.”

With a career spanning both international and domestic agencies—from the International Energy Agency to the Australian Coal Association—McCulloch has witnessed the global energy debate evolve. Her message is grounded in experience and pragmatism: Australia is a resource superpower, and we should be proud of that.

“Liquefied natural gas is our third-largest export. It’s an industry that contributes around $100 billion a year to the Australian economy and supports 215,000 jobs across the country.”

That success is due in part to natural advantage, and partly to Australia’s reputation as a reliable supplier. Western Australia and Queensland leveraged both to build a multibillion-dollar export industry—one that delivers mutual benefits.

“We’ve had $400 billion of investment in our export industry in the last decade or so. That scale of investment wouldn’t occur without access to large international markets. And our LNG exports literally keep the lights on in cities like Tokyo and Seoul. So any threat of interruption to those exports is existential for their economies.”

LNG exports came under fire as domestic prices spiked in the wake of Russia’s invasion of Ukraine. In NSW and Victoria, supply was in steep decline due to years of exploration bans. Calls to reserve Queensland gas for domestic use and heavy-handed federal interference shook international confidence.

“The interventions we've seen, and some of the messaging from governments and other groups, have really caused concern for our trading partners. Increasingly, we’re seeing them look to diversify—signing long-term contracts with Qatar and the US—to ensure they have the supply that’s critical for their economies.”

The shortages in NSW and Victoria are entirely the result of political decisions. Victoria had a moratorium on all onshore gas exploration and permanently banned fracking and coal seam gas. In NSW, Santos has been trying to develop the Narrabri gas project for over a decade.

Both states and the federal government now acknowledge that the weather-dependent grid they are building won’t function without gas to support it. The Australian Energy Market Operator’s plan for the National Electricity Market requires 15 gigawatts of gas capacity to act as the backbone of the system to 2050 and beyond, enough to power 15 million homes.

“Fifteen gigawatts is a big number. It's actually equivalent to almost all of the installed wind capacity we have in Australia today. It’s a lot of gas. And when you look at the AEMO system plan, it calls for a 170 percent increase in gas use in the 2040s compared to today.”

While the federal government and southern states now back more supply, the change of heart has come too late to avoid near-term shortfalls. Astonishingly, both NSW and Victoria are now building LNG import terminals.

“Australia is a gas-rich nation. It’s an absolute head-scratcher to think that we’re looking at import terminals to bring gas into Victoria and New South Wales when we have so much of it under our feet. We should be developing that, not importing it.”

Meanwhile, competition for export markets is heating up. The United States—freed under Donald Trump’s “drill, baby, drill” directive—has overtaken Australia as the world’s largest LNG exporter and is aggressively expanding.

“They are unapologetically investing in their resources. They want to supply LNG to the world. So Australia really needs to ensure it's able to compete in those new markets.”

Whether Australia remains competitive depends on the decisions made now. The governments in WA and Queensland understand where their prosperity comes from and intend to protect it. But in NSW and Victoria, years of poor policy mean there are no quick fixes.

“The situation's got to a point where there's probably not one solution that will solve this challenge. We need investment in supply, in infrastructure to move gas around, and in storage so we can draw on it during peak periods. And we need to fix the approval system to get projects moving—so we have the gas supply when it’s needed.”

Note: This interview was recorded before the decision to extend the operating life of the North West Shelf gas processing plant in Karratha, Western Australia, beyond the expiry of its current approval in 2030.

From a ringside seat in Australian government departments, David Pearl watched the nation lurch from rational economic policymaking into what he calls “a moral panic.”

Pearl’s experience is broad: he is a former senior Treasury official, economic adviser to a future Labor Prime Minister, and a diplomat posted to the Organisation for Economic Co-operation and Development (OECD) at the dawn of global climate talks.

In different roles, he saw governments wrestle with some of the greatest challenges of our time: the global financial crisis, COVID-19, and climate change. He learned that good intentions don’t always lead to good outcomes, that government can do as much harm as good, and that consensus can be a dangerous thing.

Climate policy, he argues, has replaced religious faith. And those who dissent — even mildly — are cast as apostates.

His message is deeply unfashionable in Canberra: Net Zero is failing, global coordination is a fantasy, and climate policy has reversed the moral order, “under the guise of morality.”

“It’s beyond ironic that the modern-day climate policy agenda amounts to a massive transfer from the poor to the rich.”

Australia’s early position in international climate negotiations, Pearl explains, was pragmatic. Because of our growing population and resource-intensive economy, we secured the right to increase emissions by 12 percent under the Kyoto Protocol.

That pragmatism evaporated after the landmark 2006 report for the UK government penned by economist Nicholas Stern. It argued that the economic costs of inaction on climate change would far exceed the costs of taking early and aggressive action to reduce emissions. Pearl recalls the moment well:

“It triggered a bizarre moral panic across the Western world where climate change ceased to be seen as an economic issue… and became a moral crusade.”

Though the economics of the Stern Review were sharply criticised — most notably by Nobel Laureate William Nordhaus — its political effect was profound.

Pearl even admits to writing the first line in the Labor Government’s incoming brief that climate change was “perhaps the most significant economic and political challenge of our time” — a flourish he added to attract attention. New Prime Minister Kevin Rudd seized on it, added the word “moral,” and made it central to his public platform.

“It may have been the reason he ultimately fell.”

Today, Pearl says, Net Zero is unattainable without enforceable global commitments — which do not exist. The United States, China, India, and Russia have no intention of hitting the target.

“Absent that international regime, the only rational response is adaptation. We’re doing entirely the wrong thing, that will have absolutely no effect on the problem.”

He draws a damning historical parallel: Net Zero is modern-day temperance. Like Prohibition, it’s driven by zealotry, cloaks public policy in moral absolutes, and fuels hypocrisy and corruption. And it was futile.

“Everybody kept drinking. Everybody’s going to keep generating emissions.”

Worse, he says, Net Zero is not merely ineffective — it has become an industry. A class of green grifters now profits from policies that don’t achieve their stated goals.

Pearl sees parallels with the indulgence economy of the medieval Catholic Church. Offsets and emissions-neutral labels are bought like spiritual pardons. Being seen to be involved in “climate action” becomes an end in itself.

“It’s the indulgence that matters, not the climate outcome.”

As a career public servant, he’s scathing about how policy advice has been captured by ideology. He describes how Treasury — once a ‘debating society’ — has become an orthodoxy factory. Those who worked on climate programs a decade ago have been rewarded for their faith.

“We have people in very senior positions in our bureaucracy who are passionate climate zealots and completely incapable of applying a rational cost-benefit lens.”

Pearl sees the same pattern across the major crises he’s worked on — from the financial crisis to COVID: government positioning itself as the cure for all ills. The greatest danger in the bureaucracy, he warns, is rewarding people for thinking like everyone else.