That is the finding of a major new report from the Centre for Future Work. The report catalogues new incentives for production of batteries, electric vehicles, renewable energy generation and transmission equipment, and other renewable energy products provided under the Biden Administration’s Inflation Reduction Act and parallel public programs.

Many other industrial countries, including the EU, China, Japan, Korea, and Canada have already implemented major new incentives to support the expansion of the manufactured products and technologies that will be required for those systems.

Australia is considering its response, but with no clear announced strategy yet.

The report provides evidence that the U.S. incentives and content requirements are sparking an unprecedented expansion in manufacturing investment in the U.S. and other industrial countries.

This response confirms that active climate industrial policies are having an outsized effect on the volume and location of sustainable manufacturing investment. It also confirms that Australia must move quickly to respond to this new industrial landscape, or risk losing its chance to leverage our renewable energy resources into lasting, diversified industrial growth.

The report notes that Australia has many advantages in the global race for sustainable manufacturing – including an unmatched endowment of renewable energy sources and ample deposits of critical minerals. However, the painful legacy of decades of policy neglect for domestic manufacturing has left Australia’s industrial base in poor shape to seize the opportunities being opened up by the global energy transition.

The report estimates the proportional fiscal effort that would be required to match the American IRA in the Australian context. The government would need to commit $83 to $138 billion over 10 years in fiscal supports and incentives to match U.S. benchmarks.

The report also catalogues several qualitative best practices that should be incorporated in the Australian response to the IRA, to generate maximum economic, social and environmental impact: including strong labour and environmental standards attached to subsidized projects, public equity participation, and parallel investments in training for workers to fill the new jobs.

The paper was released at the 4th National Manufacturing Summit, being held at Old Parliament House in Canberra from 830am to 430 pm on Thursday, August 3, co-sponsored by Weld Australia, the Centre for Future Work, and several industry bodies.