ESA National Economic Panel Polls

Transition to net zero - ape the US Inflation Reduction Act?

Economists say Australia shouldn’t try to transition to net zero by aping the mammoth US Inflation Reduction Act

Peter Martin, Crawford School of Public Policy, Australian National University

Australia’s top economists are pressing Prime Minister Anthony Albanese not to ape US President Joe Biden’s “think big” approach to clean energy.

Biden’s so-called Inflation Reduction Act – dubbed the largest climate investment in US history – directs nearly US$400 billion (A$605 billion) in federal funding to support clean energy through tax breaks, grants and loan guarantees. Its goal is to halve US emissions by 2035.

Among the biggest beneficiaries will be US firms producing hydrogen, wind turbines, solar cells and batteries.

In the lead-up to this year’s May budget, Albanese said that, like in the US, he wanted Australia’s government to be a partner in the energy transformation, not just an observer.

He wanted to “think big”.

While Australia need not go “dollar-for-dollar” against the US and other nations in the scale of its spending, it could go “toe-to-toe” on the impact of its programs.

Not dollar-for-dollar, not toe-to-toe

Today, in a survey commissioned by the Economic Society of Australia and The Conversation, an overwhelming majority of Australia’s pre-eminent economists cautioned against special support for projects that will drive the energy transition. Instead, most backed grants to innovative firms across the entire economy.

The 44 leading economists who took part have been recognised by their peers as Australia’s leaders in fields including economic modelling and budget policy.

Asked whether Australia should ape the US Inflation Reduction Act by subsidising firms in the same industries, provide access to credit for firms that would supply the US, or merely provide more grants to innovative firms across the entire economy, two-thirds voted for supporting innovation across the economy.

Only four wanted Australia to copy the US.

Two of the experts surveyed declined to pick an option. Economic modeller Warwick McKibbin said labour market and tax reforms were the best ways to encourage new firms. Energy specialist Frank Jotzo said government support needed to deliver returns to the nation, not just prop up company profits.

McKibbin said any support for particular Australian businesses should be in the form of contingent loans, ensuring successful recipients with high cash flows paid back a proportion of their profits.

Mark Cully, a former chief economist with the federal Department of Industry, said there was no point in going head-to-head or toe-to-toe with the United States, the European Union or South Korea in doing things such as making batteries.

Supply the US revolution, don’t copy it

Cully said Australia was well placed to supply the resources those countries will need to develop green industries as well as to benefit from what they produce.

But Australian investment in research and development has been falling as a share of GDP for a decade, endangering productivity. The public component of this investment is now just 0.5% of GDP, the least on record.

Funding should be directed to research and development across the economy through institutions such as the CSIRO and business-university linkages, steering clear of “picking winners”.

Speaking before last week’s announcement of A$840 million in government loans to support a rare earths mine backed by Australia’s richest person, Gina Rinehart, economic modeller Janine Dixon said Australia should do all it could to ensure the benefits of public investments stayed with the public rather than private companies.

Economist Saul Eslake said corporate rent-seeking (businesses getting special favours) helped Australia slide from being one of the richest countries in the world at federation to being about 26th by the early 1990s, when governments became less supportive.

John Quiggin supported advancing loans to firms that supplied US projects. He said while it was less than optimal, the government was almost certain to support manufacturing, and this was better than building AUKUS submarines.

Consultant Rana Roy, who voted for no government support, said Australia was experiencing the biggest dive in living standards in half a century. He said the government would be

better advised to spend the remaining months until the next election concentrating for once on the modest task of preventing a further collapse in Australian living standards.

The United States would shortly elect its next president and Congress. They might be much less well disposed to the Inflation Reduction Act, leaving Australia with little to respond to.

Impose conditions

Many of those surveyed reiterated their support for a carbon tax as the best way of cutting emissions. Many more bemoaned what they said was the futility of “picking winners”. Economist Stefanie Schurer said it had never been a good policy in the past, and would not be in the future, adding:

this remains true even if other countries do it.

While eschewing picking winners, economists Adrian Blundell-Wignall, David Byrne, Nicki Hutley and Lisa Magnani said a well-designed grants scheme could encourage investment if it ensured the recipients provided value for money.

Support should be temporary and come with conditions, as in the United States.

Individual responses. Click to open:

Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Responses (50)


Peter Abelson	To support homegrown emerging green technologies	Provide more grants to innovative firms across the entire economy	I support grants to innovative companies if they are providing, or are likely to provide, public or third party benefits. It is not as open-ended support for innovation with only, or mainly, private benefits. Thus, my support for providing more grants to innovative companies across the economy is qualified.


Garry Barrett	To support homegrown emerging green technologies	Provide more grants to innovative firms across the entire economy


Harry Bloch	To support homegrown emerging green technologies	Provide more grants to innovative firms across the entire economy	Australia has been a laggard in the commercialisation of new technologies. There is no local access to capital comparable to venture capitalists in the US. Grants can provide funding for proof-in-concept development of new products and technologies, which may then attract private finance.


Adrian Blundell-Wignall	To support homegrown emerging green technologies	Subsidise firms in the same industries that are receiving support in the US, such as battery manufac	Subsidies are more efficient than tax incentives, when the profit base of new industries is not sufficient to be an incentive. Subsidies for clean energy companies should be of a temporary nature, and and come with conditions (as in the USA). They should be reduced when new industries become viable. They should not apply to companies already substantially active in fossil fuel industries--this would risk going to the bottom line in a non-targeted way. The approach should be financed by cutting Australia's fossil fuel subsidies, which will accelerate transformation.


Alison Booth	The payoff to clean-energy innovation has increased	Subsidise firms in the same industries that are receiving support in the US, such as battery manufac	The relevant part of the US IRA Act referred to in this poll is the part addressed to clean energy investments. The payoffs to clean energy investment are increasing all the time, and this is not only because innovations are making clean energy cheaper but also because the costs of doing nothing are growing. While a global response is needed with regard to climate change and the urgent issue of switching away from harmful technologies, encouraging our own clean energy investment and innovation will generate externalities both with regard to climate and with regard to our industrial base in clean energy.


Matthew Butlin	The payoff to clean-energy innovation has increased	Provide more grants to innovative firms across the entire economy


David Byrne	To ensure Australia can be part of newly-developing US-linked supply chains \| The payoff to clean-energy innovation has increased \| To support homegrown emerging green technologies	Provide more grants to innovative firms across the entire economy	A well-designed grants/incentive scheme will hinge on firms being able to prove value-for-money, and that would incorporate industries that may have a potential boom as we advance with the US Inflation Reduction Act. In effect, a grants scheme should support those industries if they deliver the best value for money, but possibly other industries if they provide the same or better value. A well-designed scheme (I'll emphasise) has built-in flexibility to incorporate many potential future technologies and demands, which is important given the inherent uncertainty along the green energy transition. "Picking winners" based on today's information risks rent-seeking and lacks flexibility.


Bruce Chapman	The most important way for the Australian government to act with respect to climate change is to subsidise alternative energy sources and remove all contributions to fossil fuel producers.	Provide more grants to innovative firms across the entire economy	There is no more important thing for the Australian government to do than heavily subsidise renewable energy activities.


Melinda Cilento	Support homegrown emerging technologies that can contribute to the global energy transition	Provide more grants to innovative firms across the entire economy	Many countries, with the US out front, are providing significant support for energy transition and industrial policy more broadly. This is increasing competition for inputs and skills, and in this environment, it is critical to lean into comparative advantages, target support and recognise where markets may not get it right (eg natural monopolies, and public goods). Policy certainty, clarity and timeliness are important to supporting investment - including in regard to regulations, planning and permitting, and in terms of coordination and collaboration across levels of government. Finally, human capital is critical ? immigration and local education and training must work in concert to ensure we have the skilled workforce to support investment and transition.


Deborah Cobb-Clark	To support homegrown emerging green technologies	Provide more grants to innovative firms across the entire economy	The approach should be financed by cutting Australia's fossil fuel subsidies, which will accelerate transformation. The relevant part of the US Inflation Reduction Act referred to in this poll is the part addressed to clean energy investments.


Janine Dixon	To ensure Australia can be part of newly-developing US-linked supply chains	Provide access to credit for firms in industries that will supply the US projects, such as nickel an	Private investors will no doubt be opening their checkbooks for nickel and lithium mines all over the world, including in Australia. We should take the opportunity to ensure a fair share of the earnings from Australian mines flows to domestic incomes rather than foreign financiers. I chose this option because trying to collect, for example, a mining resources rent tax, may be less effective than simply financing a proportion of these projects nationally.


Brian Dollery	To ensure Australia can be part of newly-developing US-linked supply chains	Provide access to credit for firms in industries that will supply the US projects, such as nickel an


Uwe Dulleck	The payoff to clean-energy innovation has increased \| To support homegrown emerging green technologies	Provide more grants to innovative firms across the entire economy	Given Australia's resources and environment, the country is a in strong position to lead or significantly contribute to green technologies. This can lead to "good" investments in human capital and drive the development and growth of a more innovative and entrepreneurial workforce.


Craig Emerson	Subsidies generate rent-seeking and are inefficient \| To support homegrown emerging green technologies	Provide access to credit for firms in industries that will supply the US projects, such as nickel an	Sharing the risks of projects in which Australia has a comparative advantage has the advantage over cash subsidies of projects being self-identifying as potentially competitive. A second advantage is that this is off-budget, although it would appear in a statement of risks. Providing cash subsidies runs the risk of projects being selected by ministers who are not businesspeople to support projects that might sound appealing politically but which are not in accordance with Australia's comparative advantage; for example, nuclear power.


ALLAN FELS	To support homegrown emerging green technologies	Provide more grants to innovative firms across the entire economy	These are difficult questions. No easy answers.


john Freebairn	General support for Australian reseasrch and development and learning-by-doing activities which generate external benefits	Provide more grants to innovative firms across the entire economy	Private business investment in research and development and learning-by-doing generate external benefits across most industries. Correcting for the external benefits, and increasing national productivity and living standards, can be facilitated with economy-wide taxation concessions and subsidies. I doubt that the industries involved in the transition to a clean economy experience larger (or smaller) external benefits than other industries. If correct, generally-available subsidies for research and development, and perhaps for learning-by-doing are the appropriate response. Special subsidies to business active investors in the transition to a clean economy is a second-best policy intervention to placing a price on greenhouse gas emissions to correct for the external costs of pollution. The price can be a tax or an emissions trading scheme, and some of the revenue windfall would be recycled to maintain the real incomes of the low-income half of the population. Should the subsidies by governments in other countries, including those of the US Inflation Reduction Act, be considered excessive (relative to the innovation's external benefits), then the subsidised products available for Australia to import are a gift or subsidy transfer to Australia. Yes, the subsidies may cause a contraction or slower growth of the Australian green technologies industries, but Australia's relative comparative advantage has been shifted to other industries.


Lata Gangadharan	To support homegrown emerging green technologies \| Subsidies generate rent-seeking and are inefficient \| Innovation is important and creating the right environment can lead to positive outcomes for the economy as a whole	Provide more grants to innovative firms across the entire economy	Innovation can be the driver of overall productivity increases. Finding ways to incentivise the adoption of clean energy and clean vehicles; designing clean buildings and cleaning up the manufacturing sector would not just help those sectors, but also have positive spillovers to other sectors.


RICHARD HOLDEN	Subsidies generate rent-seeking and are inefficient	Provide access to credit for firms in industries that will supply the US projects, such as nickel an	We should support activities at which we have a comparative advantage and where there is a market failure. And we should not go one inch further than that or be prepared for taxpayer money to be flushed down an expensive, rent-seeking toilet.


Nicki Hutley	The payoff to clean-energy innovation has increased	Provide more grants to innovative firms across the entire economy	The US Inflation Reduction Act has been criticised by many as a de facto trade subsidy and a huge impost on the US Federal Budget. Yet it has also spurred the largest recorded increase in investment and has supported strong growth and productivity gains without reigniting inflation. Australia's Productivity Commission has warned against like-for-like?measures in Australia which it claims would be inefficient. Conversely, the likes of Mariana Mazzucato tell us we need to think big to overcome urgent and existential problems such as climate change. With Australia's economy, and especially export revenue, heavily reliant on emissions-intensive sectors, it is in our interest to support first movers willing to invest in new green industries that will help smooth the net zero transition pathway. The recent $2bn ASEAN finance initiative is a good example of a smart use of taxpayer funds. We need to be bold and invest public funds to promote greater private sector participation that will in turn generate spillover benefits across the economy.


Frank Jotzo	.		Green industry policy needs to be carefully calibrated to realise Australia?s comparative advantage in renewable energy and clean resource processing, not to pursue visions of new manufacturing industries. And it needs to deliver financial returns back to the nation, not just prop up company profits. The US green industry policy is not a good model for Australia. Lump sum tax credits as per the Inflation Reduction Act will waste taxpayers? money. And keep in mind that the US produces largely for the domestic market, so the subsidies benefit American consumers through lower prices. Australian production subsidies will tend to benefit shareholders and consumers worldwide. Government support should take the form of selected early-stage support that gives a financial upside to taxpayers. That could be government taking equity positions in new zero-emissions industries. If it has to be subsidies, then they are best given by concessional finance or underwriting market price risk. Any subsidies should be awarded in competitive tenders, as is common now for renewable energy. In any case, future profits need to be properly taxed. Government also needs to be clear about the objectives for giving any subsidies. Providing support for emerging industries that are likely to develop a cost advantage over time is a strong case. Handing out money to existing industries that can no longer compete in international markets, like nickel mining and processing, is not. Australia can and surely will make a big contribution to global decarbonisation, by exporting clean fuels and commodities produced using renewable energy. But we need to be conscious also of the local costs inherent in large-scale industries, from local environmental impacts and effects on indigenous rights and values, to extra pressure on the supply chains that are needed to decarbonize the domestic power supply. Industry policy needs to be done in ways that benefit Australian society long term. Setting it up for solid future revenue flows to the government is the key.


Michael Keating	To support homegrown emerging green technologies	Provide more grants to innovative firms across the entire economy	I did not exactly agree with any of the options for the first question. I favour subsidies not for innovation across the economy, but more specifically for innovation in green technologies.


Geoffrey Kingston	Copycat behaviour not warranted in this instance	Not provide any support	The Inflation Reduction Act actually makes inflation worse. It is part of a net-zero transition that offshores jobs and prosperity to countries that give little more than lip service to the social costs of carbon emissions. Indeed, the net social benefits of a fast transition to net zero need much more justification than they have received so far. Nuclear looks like a better bet.


Guay Lim	The payoff to clean-energy innovation has increased, To support homegrown emerging green technologies	Provide more grants to innovative firms across the entire economy


Elisabetta (Lisa) Magnani	The payoff to clean-energy innovation has increased \| Support to firms that demonstrate innovation and employment creation in a global context pays off.	Provide more grants to innovative firms across the entire economy	An Australian industrial transformation process as ambitious as the one the current government has to undertake requires a commitment to an energy transition and to employment creation. This commitment has to play out with a view on the specific features of the current economic interdependence, across firms often located in different countries and displayed through global production networks. Integration in global production networks requires a network focus, often at a regional level, rather than a focus on country-level comparative advantages as in the classic trade theory. This is the context where industrial policy and government support need to be seen (see Liu and Ma, NBER Working Paper 29607). In this context R&D allocation and industrial support require an understanding of how downstream and upstream linkages impact the entire network and its evolution. Great efforts should be spent to make the existing private-public partnerships work more effectively towards industrial transformation goals. Forms of support the Australian government may consider are incentives to reinvest profits into energy innovation (as opposed to shares buyback), support to small firms who are willing to adopt renewable energy sources, and penalties to free-riding behaviors.


Leslie Martin	To support homegrown emerging green technologies	Provide more grants to innovative firms across the entire economy	I strongly believe that we should be supporting homegrown emerging green technologies, especially when it comes to large-scale renewables, large-scale battery storage, and initiatives to manufacture products for the "green" export market, such as steel, aluminum, and fertilisers, using renewable power. I don't think that Australia should specifically try to match US industrial policies, though, which is why, when I'm limited to the above choices, I vote in favor of general support for innovation, knowing that much of it is likely to end up directed at the renewable industries that Australia has a huge natural advantage in continuing to develop.


Margaret McKenzie	To support homegrown emerging green technologies	Subsidise firms in the same industries that are receiving support in the US, such as battery manufac	Australia has a comparative advantage in developing and providing renewables and energy saving across the economy which is not being sufficiently exploited. The government actually needs to recognise this and participate directly in those industries to ensure the benefits go to Australian industry and the Australian public. The government needs to play a role in every stage of renewables supply chain. An additional benefit would be the limiting of rentseeking and a cheaper or even costless supply of renewables that will also reduce inflation. It will also support employment.


Warwick McKibbin	.		I don't support any of the listed approaches. There should be a general reduction in barriers for new emerging firms to prosper. These barriers include labor market reform and lower tax rates generally to raise productivity across the economy. A much improves access to housing costs through removing state and local regulations that enable a large rise in housing supply that lowers the cost of housing for human capital to stay in Australia and overseas human capital to relocate in Australia. Picking technology winners has a high risk of failure at the taxpayers' expense. If there are any support to firms to correct a market failure, it should be in the form in cash flow contingent loans so successful firms will pay back a proportion of the profits. The highest payoffs to Australia are likely to be in sectors that aren't being distorted by the US policies.


Flavio Menezes	Subsidies generate rent-seeking and are inefficient	Provide more grants to innovative firms across the entire economy	It is clear that attempting to replicate the Inflation Reduction Act would be both impractical and unwise. The size of our economy and our existing comparative advantages must be taken into account. A more fitting response involves adopting a combination of a carbon tax and research grants. Carbon taxes serve as a cost-effective tool for addressing direct externalities, while research grants offer strong incentives to direct research efforts toward the development of cleaner technologies.


James Morley	To support homegrown emerging green technologies	Provide more grants to innovative firms across the entire economy	It can be challenging for firms to capture the full financial benefits of developing new technologies. So there is some role for subsidies to support research and development, including in green technologies. However, I certainly worry about the design of subsidy programs and whether they will mostly just generate rent-seeking. So a lot will depend on the details of any proposed scheme to support investment in green technologies.


John Quiggin	The payoff to clean-energy innovation has increased, In the absence of a carbon price, (almost( any assistance to clean energy is desirable	Provide access to credit for firms in industries that will supply the US projects, such as nickel an	This is an application of second-best principles. A political point is that the government is almost certain to do something to promote manufacturing and this is the best choice on offer (much better than AUKUS, for example).


Mala Raghavan	To support homegrown emerging green technologies \| To combat unfair competition from the US and countries with similar programs \| To ensure Australia can be part of newly-developing US-linked supply chains	Provide more grants to innovative firms across the entire economy	I have chosen "provide more grants to innovative firms across the entire economy" as a pragmatic means of supporting local innovators and businesses, even those in competition with US manufacturers. It is crucial to adopt a grand-scale vision, especially considering Australia's wealth in nickel and lithium resources. I firmly believe that the "mine and make" strategy supersedes the "dig and ship" approach, as the former significantly adds value to the Australian economy in the long term. While I am not inherently favourable to the notion of a "subsidy," I recognize that some form of support for battery manufacturers is essential during the initial stages to innovate and compete effectively in the global market. As the global economy shifts towards green energy, the rising demand for battery storage reinforces the necessity of this strategic choice.


Alicia Rambaldi	Subsidies generate rent-seeking and are inefficient	Provide more grants to innovative firms across the entire economy	Tax incentives and subsidies can generate rent-seeking and inefficiencies. Grants that require partnerships of firms with research institutions, fund joint training of postgraduate researchers and increase collaboration between industry, government and academia can lead to a number of positive outcomes. These would not only assist with the development of green technologies in general, but it will boost R&D and enlarge the pool of researchers in key areas in Australia.


Sue Richardson	To ensure Australia can be part of newly-developing US-linked supply chains	Provide access to credit for firms in industries that will supply the US projects, such as nickel an	In terms of climate impact, it does not matter where in the world the green transition is happening. It makes sense to join with the strength, which in Australia is likely to extend beyond just mining. There are many other sensible things that the government can be doing, apart from spending taxpayer dollars. These include setting the rules around carbon emissions, making the most of consumer energy resources (eg solar panels and electric vehicles), and promoting the development of the necessary skills and research to underpin this new frontier.


Rana Roy	Subsidies generate rent-seeking and are inefficient	Not provide any support	I have long been, and continue to be, engaged in assisting governments, in Europe, Asia and Africa, develop and execute policies and programmes aimed at sector-wide and/or economy-wide industrialisation and/or reindustrialisation/reshoring ? including in the special field of the energy transition, involving both the electrification of economic activity and the development and decarbonisation of the electricity grid (mainly, it should be noted, by means of nuclear and hydropower to date: for example the nuclear- and hydro-based ?green grid? of France). I therefore wish to stress that my sceptical answer to the question in today?s poll does not reflect any sort of general, let alone ideological, opposition to ?multi-billion dollar initiatives? in this field. Rather, my answer rests on highly specific reasons for scepticism, as set out below, regarding any imminently prospective multibillion-dollar initiative by the Australian Government in response to the US Inflation Reduction Act as it is currently configured. 1. Australia today is experiencing what Peter Martin has rightly described as ?the biggest dive in living standards in half a century?. Real GDP per capita has fallen through the 2023 calendar year, quarter by quarter. Real household disposable income per capita has fallen through both the 2022 and 2023 calendar years and for the whole of the term of the current Government. Quarter by quarter, if not literally day by day, Australians have become poorer. This lived reality in which we find ourselves today makes no appearance whatsoever in the Prime Minister?s speech on ?Australia as a renewable energy superpower?, going ?toe-to-toe?, if not ?dollar-for-dollar?, with ?the unprecedented investments the United States and the EU and Japan and Korea are making in their industrial bases?. Indeed, it rarely makes any appearance in any pronouncements by the Australian Government or the Australian governing class more generally. Against this background, I suggest that the Australian government would be better advised to spend the remaining months until the next election concentrating for once on the modest task of preventing a further collapse in Australian living standards rather than initiating a multibillion-dollar redistribution of the components of domestic demand or the components of our international trade ? at best a speculative investment with only long-term returns and at worst a bad investment and an invitation to unproductive rent-seeking, as argued below. 2. The Prime Minister?s proposal to go ?toe-to-toe? with the United States and the other countries named above rests on a particularly shaky premise: namely, that the United States and all these above-named countries will continue with their current policies as currently configured. In the case of the United States, the likelihood is that the suite of policies embodied in the Inflation Reduction Act will be very substantially reconfigured. The United States will elect a new President and a new Congress in less than eight months? time; a new Administration and a new Congress will take office in 10 months? time. As of today ? see the top right-hand columns on this link, https://www.realclearpolitics.com/ ? President Biden trails President Trump by 2 points in a two-way match-up in the average of polls, by 3 points in a 5-way match-up, and by 4 points in the key battleground states. Importantly, President Biden's job approval rate stands at 39% ? I repeat, 39% ? with 56% of the electorate registering their disapproval. And President Trump?s party also leads President Biden?s party on the generic congressional ballot. This is not to presume that the results of the US election can be predicted with any great confidence today. But given that it is more likely than not to yield a Republican rather than Democrat President and Congress, and given that even the election of a Democrat President and Congress would not guarantee a continuation of current policies as currently configured, rushing to place a multibillion-dollar bet on a continuation of the US Inflation Reduction Act, as currently configured, seems more than a little unwise. As for the other countries named in the Prime Minister?s speech, I can only say that he must have access to sources beyond my ken. From the published data of the relevant international agencies (the IMF, the World Bank, the OECD, et al.), and from my own work with international and European agencies, I thought that much of the European Union, including its largest economy, Germany, is in recession ? as is Japan. Indeed, the only thing that is ?unprecedented? with the ?industrial bases? in these countries today is the unprecedented deindustrialisation that seems to be afflicting Germany! To be sure, Germany, Japan and Korea have conducted remarkable, even unprecedented, recoveries in times past. But once again it would surely be wiser for Australia to wait for the recovery of these economies, consider the policy landscape that emerges thereafter, and then assess how best to respond to it. 3. Australia is already an energy superpower. And the Prime Minister is entirely correct to believe that Australia can remain an energy superpower in a future world of renewable energy. The point, however, is that any new multibillion-dollar initiative needs to be (a) founded on an accurate understanding of the nature and modalities of the energy transition that is actually being progressed across the world (including in such ?minor? countries as China and India, the former ranking first and the latter ranking third in their share of world GDP as measured by purchasing power parity, and neither of which was deemed worthy of mention in the Prime Minister?s speech (b) sufficiently well-crafted, and informed by a sufficiently-wide consensus, so as to be sustainable beyond the next 10 months in the case of the United States and the next 14 months in the case of Australia. In the absence of the above-named conditions, (a) and (b), any new multibillion-dollar initiative is likely to become, like so many past and present multibillion-dollar initiatives, an open invitation to unproductive rent-seeking and a needless gift of billions to the said rent-seekers.


Stefanie Schurer	To support homegrown emerging green technologies \| The payoff to clean-energy innovation has increased	Provide more grants to innovative firms across the entire economy	Grants and subsidies are not necessarily the same, even though the terms are often used interchangeably. Subsidies are current payments with the aim of boosting production or changing the price of a good. Grants are direct financial contributions for specific activities that support the policy objectives. Grants and subsidies however should always be considered a short-term measure to induce structural change, until an industry can survive on its own legs (until marginal cost equals price). I personally prefer grants over pure subsidies (such as those that lower costs for producers), as grants can be set up in a competitive process in which companies have to bid for funding. This ensures that the most competitive proposals receive funding. It would be preferable if companies across the entire economy could benefit from short-term government support so that the whole industrial production can change, not just segments of the economy that are linked to specific markets (here US markets). However, as shown in other countries, a serious shift to cleaner energy adoption & production permeating the economy requires more serious measures than subsidies and grants. What is furthermore needed are policy measures that lift the price of dirty energy production and consumption (fossil-fuelled economy). One example is the minimum floor price for carbon that Germany recently introduced. It has been suggested elsewhere that such a minimum floor price could accelerate the adoption of cleaner technologies. Another measure needed is the introduction of a market mechanism that allows companies to trade their rights to carbon emissions. Countries in the EU, which has trialled an emission trading scheme since 2005, have already decoupled their GDP growth from carbon emissions and are thus well prepared to grow with green energy Economies with cleaner energy benefit from a series of social outcomes other than economic growth, innovation, and environmental protection: They have healthier and safer populations. The health benefits of clean energy are comfortably outperforming the perceived costs of changing the structure of the economy. ?Picking winners? was never a good policy in the past, and will not be in the future. This remains true even if other countries do it. Facilitating innovation in general is a good policy.


Jeffrey Sheen	Successful innovation raises productivity, the primary source of future growth	Provide more grants to innovative firms across the entire economy	?Picking winners? was never good policy in the past, and will not be in the future. This remains true even if other countries do it. Facilitating innovation in general is good policy.


Kalvinder Shields	To support homegrown emerging green \| The payoff to clean-energy innovation has increased	Provide more grants to innovative firms across the entire economy


Elizabeth Webster	To ensure Australia can be part of newly-developing US-linked supply chains \| To support homegrown emerging green technologies \| The payoff to clean-energy innovation has increased	Provide more grants to innovative firms across the entire economy	We need to urgently invest in improved technologies for the production of green iron from our large hematite iron ore reserves in the Pilbara. Given Australia?s potential to provide large-scale wind and solar energy for a green hydrogen industry, we are in a prime position to become leaders in the manufacture of green iron but the cost of processing green iron is too high at present. Without this investment, we will lose iron ore markets to Brazil and Africa.