More Than Hot Air: What Australia Needs to do to be a ‘Renewable Energy Superpower’

By Theo Mendez, a PhD researcher at Melbourne Climate Futures and the Asia Institute, University of Melbourne

Australia’s new policy direction on climate change under the Albanese government must be consolidated by working closely with foreign partners, like South Korea and Japan, on the renewable energy transition, writes Theo Mendez.

The recent announcement of a National Electric Vehicle (EV) Strategy by Australia’s federal government came as a welcome reprieve from decades of policy stagnation in this area. Analysts have long warned that Australia’s lack of fuel efficiency standards and lethargic promotion of EV uptake have left it vulnerable to becoming a dumping ground for older, dirtier car models that fail efficiency tests in Europe and elsewhere.

Alongside the National Electric Vehicle Strategy, since his election as Australia’s prime minister in 2022, Anthony Albanese has also overseen legislation to strengthen the safeguard mechanism, the country’s key policy tool for reducing emissions from businesses, and passed the Climate Change Act, which officially legislated Australia’s net zero 2050 target and obliges the government to provide annual updates on its progress towards this and other climate goals. Importantly, these legislative achievements have been framed as part of a broader vision that Albanese has laid out in which Australia is a ‘renewable energy superpower’ that substitutes fossil fuel exports with cleaner energy products like hydrogen and critical minerals. The federal government’s embrace of such a concept is more significant than it may initially seem, given its potential to facilitate deeper shifts in Australia’s domestic and international image following a decade of stagnation in climate policymaking.

If Australia is to realize its energy superpower aspirations, it will need to reengage with its allies on climate and energy matters. This is especially important in the case of countries like Japan and South Korea, which are eager to import future Australian clean energy products to power their own visions of green growth or the hydrogen society. Russia’s invasion of Ukraine and its impact on the European energy market has made the need for secure energy partners even more apparent. Furthermore, countries like Australia, Korea, and Japan cannot expect to match the  aggressive, and often implicitly protectionist, funding of clean energy industries by larger countries. The United States’ Inflation Reduction Act, passed in 2022, promises massive subsidies for clean energy industries like green hydrogen, and the European Union’s Green New Deal is similarly Herculean in its ambitions to wean the continent off Russian fossil fuels. In the absence of funding on such a scale, Australia should use its diplomatic alliance networks to facilitate cooperation between its businesses and those of its trading partners, generating strong market signals and sharing the risks of innovation, research, and development in bilateral or ‘minilateral’ contexts, rather than on a purely domestic level.

The opportunities available to Australia if it were to become a renewable energy superpower, estimated by Beyond Zero Emissions as being worth over $300 billion to the Australian economy, will not fall at our feet. Securing Australia’s place in this new world will require active engagement through diplomatic networks and business linkages. Examples of this are emerging from the private sector, including a consortium of Korean companies proposing a $20 billion dollar investment in Queensland’s hydrogen industry, and a $2.35 billion dollar Japanese investment in Victorian hydrogen produced using carbon capture by Japan Suiso Energy. There is still doubt surrounding the emissions intensity of the hydrogen that will result from these projects, however.

In their respective hydrogen strategies, AustraliaKorea, and Japan have not yet committed to utilizing purely ‘green’ hydrogen, produced via electrolysis with renewable energy, and have maintained strong support for ‘blue’ hydrogen that is produced with fossil fuels using carbon capture and storage. In order to minimize the risk of stranded fossil fuel assets, while also ensuring that the transition to hydrogen is truly clean, business figures like Fortescue’s Andrew Forrest have stressed the importance of committing to deploying green hydrogen at scale as quickly as possible.

All three countries would benefit from making an unequivocal commitment to exclusively pursuing green hydrogen. First and foremost, this would help each country meet its 2050 net zero target. In addition to this, it would also assist in better aligning Japanese, Australian, and Korean investment on long-term horizons by avoiding a split in R&D efforts across various technologies at different stages of maturity. The core strength of Albanese’s ‘renewable energy superpower’ branding of Australia is in the image it projects of a country that is committed to playing its integral role in the decarbonization of global energy trading networks. This is a necessary step given how dramatically Australian climate policy has oscillated since the 1990s, and helps ensure that Australia’s trading partners are equally prepared for a world in which Australia’s fossil fuel exports are reduced.

Collaboration between Australia, Korea, and Japan on hydrogen and other clean energy technologies is especially notable for the fact that it involves countries that sit on opposite ends of the energy supply chain – Japan and Korea are large energy importers, whilst Australia is a producer. When it comes to the task of creating new energy industries from the ground up, this creates a chicken-and-egg problem. If Australia were to commit to producing only green hydrogen, it is likely that Japan and Korea would realign their policies to accommodate this change. Likewise, if Japan and Korea made a commitment to only import hydrogen below a certain emissions intensity, Australia would need to adapt its export strategy to ensure that its goods could penetrate their intended markets. In the absence of an international agreement on hydrogen export standards, this coordination problem can be overcome through close bilateral and trilateral collaboration with the goal of standardizing clean energy trade on long-term horizons.

Despite being situated on opposite ends of the energy supply chain, the challenge facing Australia, Japan, and Korea in transitioning to net zero is not all that different. All three countries need to build new economic models that decouple economic growth from carbon emissions. This is especially challenging given the extent to which they have all relied on fossil fuel trade to build their economic models. As such, growing enthusiasm in the private sector for clean energy trade between Australia, Japan, and Korea should be viewed as a welcome trend due to its potential to satisfy three interrelated goals at the same time – energy, environmental, and economic security. The challenge will be making sure that these industries are truly green, and do not simply serve as proxies for continued trade in fossil fuels.

Australia is currently situated on the cusp of a significant opportunity to work with its closest Asian partners to build truly clean energy markets, attract investment, and co-finance R&D that will in turn help transition its own economy away from fossil fuels. To take advantage of this opportunity, it is imperative that Australia continue to build on its links with Japan and Korea through business and diplomatic engagement to ensure that prospective gains are not lost to others eager to take a slice of the expanding clean energy pie. The marketing of Australia as a renewable energy superpower is an important first step in rebranding the nation as one that is committed to long-term engagement in this area. Achieving superpower status will not be easy, however, requiring innovative policies, substantial investment, and strong public-private collaboration alongside close cooperation with allies throughout Asia. If Australia can successfully turn this vision into reality, the results may prove transformative in the global race to net zero emissions.

Theo Mendez is a PhD researcher at Melbourne Climate Futures and the Asia Institute, University of Melbourne. He researches the geopolitical aspects of Australia’s clean energy transition.