The Times Australia
The Times World News

.
Times Media

.

Cooperation with the US could drive Australia’s clean energy shift – but we must act fast

  • Written by Wesley Morgan, Research Fellow, Griffith Asia Institute, Griffith University

A new pact[1] between Australia and the United States highlights the pivotal role our nation’s mineral wealth will play in the clean energy transition. But it also underscores the massive effort now required from Australia.

Prime Minister Anthony Albanese and US President Joe Biden inked the landmark deal in Japan over the weekend. It cements cooperation between the two nations on climate action, including sharing resources and coordinating on clean energy policy and investment.

Australia and the US have been allies since the end of the Second World War. The new agreement adds climate action as a “third pillar” of the alliance between the two nations, along with defence and economic cooperation.

The enhanced partnership could accelerate Australia’s transition from major fossil fuel exporter to clean energy powerhouse. But success is far from assured. Australia must act fast to seize the opportunity now before us.

wind turbines against blue sky
The deal could accelerate Australia’s transition to a clean energy powerhouse – if we play our cards right. Russell Freeman/AAP

Allies in a warming world

The Australia-US alliance was not established with a warming planet in mind. However, the climate crisis is now recognised as a national security threat in both Australia[2] and the US.

In both countries, defence agencies have been increasingly involved in disaster relief operations following unprecedented extreme weather events supercharged by climate change. They include the Black Summer bushfires in Australia and Hurricane Ian[3] in the US.

Climate change continues to worsen – and Australia and the US must share some blame. The emissions targets and broader climate policies of both nations are not consistent[4] with achieving the Paris Agreement goal of limiting warming to 1.5℃.

Both Australia and the US need to accelerate the shift from fossil fuels to clean energy technologies. This includes ending coal-fired power, moving beyond gas and investing in renewables infrastructure. It also requires re-thinking personal transport and decarbonising heavy industries such as steel and cement.

The new climate pact between the two countries recognises the urgent task at hand. It could enable Australia and the US to develop a shared response that matches the scale of the climate crisis.

The deal aims[5] to drive ambitious action on climate change and clean energy this decade, both domestically and across the world. Australia and the US will now formally work together to expand and diversify clean energy, and develop the supply of critical minerals used in low-emissions technologies.

Biden was effusive when announcing the deal. Taking hold of Albanese’s arm, he said the agreement[6] was testament to the close relationship between the two countries. “And I mean that: close”, he said.

Importantly, Biden will ask the US Congress to designate[7] Australia as a “domestic supplier”, essentially linking the industrial bases of both nations. This would make Australian companies eligible for select US government subsidies.

More broadly, the pact means Australia may benefit from the huge global momentum on clean energy flowing from the Inflation Reduction Act – the biggest climate spend in US history.

Read more: We want more climate ambition in our foreign policy – here's how we can do it[8]

coal-fired power plant
Both Australia and the US must accelerate the shift from fossil fuels to clean energy. Dan Himbrechts/AAP

The race for tomorrow’s economy

The Inflation Reduction Act allocates $US369 billion (A$555 billion) in subsidies to drive investment in renewable energy infrastructure and clean energy technologies. The investment is equal to about a quarter of the Australian economy.

Already the act has stimulated more than $A220 billion[9] in private investment in clean energy projects in the US, driving a boom in new solar, battery, and electric vehicle manufacturing facilities. Ultimately, the policy is expected to:

When the world’s largest economy makes such a move, it changes the game for everyone. Already, other major economies – including the European Union[10], Japan[11] and South Korea[12] – have responded with industry policy and stimulus packages to support their own clean energy industries.

Effectively, the US has turbo-charged the global clean energy transition.

Read more: 6 reasons 2023 could be a very good year for climate action[13]

seated man is applauded by colleagues
US President Joe Biden, surrounded by fellow Democrats, signs the Inflation Reduction Act in August 2022. The policy has turbo-charged the global energy transition. JIM LO SCALZO/EPA

Australia’s moment

The pact signed between Albanese and Biden at the weekend was scant on detail. However, given the billions the US is throwing at clean energy, Australia can expect to benefit[14] from the pledge to formalise co-operation on policy and investment.

The Inflation Reduction Act is a major opportunity to expand Australia’s critical mineral exports. Consider lithium, a key component in batteries. Australia is already the world’s biggest lithium supplier[15]. US battery manufacturers wanting to access subsidies must use minerals sourced domestically, or from countries with which the US has an existing free trade agreement, such as Australia.

So the US policy will stimulate demand for Australian lithium. As early as 2028, the value of Australia’s lithium exports is set to overtake[16] our thermal coal exports – a sign of the times.

However the Inflation Reduction Act also presents a challenge for Australia. Its sheer scale threatens to draw investment and talent away from Australia’s own emerging clean energy industries to the US instead in areas such as green hydrogen and steel.

The federal government is taking steps to address this. The May budget, for instance, contained A$2 billion to support the development of a renewable hydrogen industry in Australia. Climate Change and Energy Minister Chris Bowen described it as a “down payment[17]” on a more fulsome response to Biden’s Inflation Reduction Act.

This response must match the scale of this once-in-a-century opportunity to become a clean energy powerhouse. It should include targeted support to develop new green export industries and help Australia move past a “dig and ship” approach to our resources. By processing minerals here, using Australia’s competitive advantage in renewable energy, we can create more benefits at home.

Clean energy commodities and critical minerals could drive investment and jobs at a scale comparable to the recent mining boom[18]. But the race is on, and we need to act fast. If we don’t, other nations – including our US allies – will eat our lunch.

References

  1. ^ new pact (www.whitehouse.gov)
  2. ^ Australia (www.canberratimes.com.au)
  3. ^ Hurricane Ian (www.defense.gov)
  4. ^ not consistent (www.theguardian.com)
  5. ^ aims (www.whitehouse.gov)
  6. ^ said the agreement (www.abc.net.au)
  7. ^ designate (www.theaustralian.com.au)
  8. ^ We want more climate ambition in our foreign policy – here's how we can do it (theconversation.com)
  9. ^ more than $A220 billion (cleanpower.org)
  10. ^ European Union (www.afr.com)
  11. ^ Japan (www.allenovery.com)
  12. ^ South Korea (www.bloomberg.com)
  13. ^ 6 reasons 2023 could be a very good year for climate action (theconversation.com)
  14. ^ benefit (www.afr.com)
  15. ^ biggest lithium supplier (www.bbc.com)
  16. ^ overtake (www.reuters.com)
  17. ^ down payment (www.afr.com)
  18. ^ comparable to the recent mining boom (assets.nationbuilder.com)

Read more https://theconversation.com/cooperation-with-the-us-could-drive-australias-clean-energy-shift-but-we-must-act-fast-206199

The Times Features

HOYTS Gift Cards are coming in hot this festive season

With a hot selection of blockbuster movies coming to the big screen this summer, avoid the crowds and enjoy some movie magic at HOYTS with discounted gift cards—perfect for stuff...

Top 10 holiday houses across Brisbane

As Brisbane gears up to become an Olympic city, the Sunshine State capital is seeing a surge in new residents, luxury hotels, and major developments including The Star Brisbane...

Australian small businesses set to win big as many brace for a bumper holiday season

With the holiday sales season in full swing, new data from the Commonwealth Bank reveals small businesses could be set to receive a much-needed end-of-year financial reward...

BeerFest Sydney at Darling Harbour Tumbalong Park

Sydneysiders’ ultimate summer party is here! BeerFest Sydney is making its triumphant debut at Darling Harbour’s Tumbalong Park on 6–7 December, bringing together NSW’s best bo...

The Importance of Regular Roof and Gutter Maintenance for Adelaide Home

The Importance of Regular Roof and Gutter Maintenance for Adelaide Homes Your roof and gutters can be integral to maintaining the structural integrity and aesthetic appeal of yo...

Designer Wardrobe reports surge in pre-loved wedding gowns

As Australia’s wedding season approaches, and amidst a challenging cost of living backdrop, new insights from Designer Wardrobe reveal that Australia and New Zealand (ANZ) brid...

Times Magazine

PawPawUp: Pamper Your Pet

Got a lovely critter that makes you smile? Pets are great, however much like us, they need things to be happy and wholesome. That's in which PawPawUp is available! We offer a wide variety of awesome puppy supplies to hold your bushy (or feathery, o...

Some Tips For Buying The Right Pair Of Sneakers

The old saying goes "Never judge a book by its cover". This august wisdom applies to a lot more things in life than just books, including today's topic, sneakers. It's easy to be charmed by clever designs, bright colours, and blingy glitz, but it's...

A Guide to Finding The Best Painters in Sydney

Are you prepared to turn your space into a work of art? Whether it's your home or workplace, professional painting holds undeniable power. Beyond enhancing aesthetics, it adds significant value to your property. This comprehensive guide walks you ...

6 Reasons Why Perfume Gift Sets Make an Ideal Present

Perfume gift sets are the perfect way to show someone you care. Whether you're looking for a special treat for a loved one or want to give yourself a luxurious gift, perfume gift sets are a great choice. They come with a variety of different scents...

The Vital Role of Digital Marketing in Business Growth

Digital marketing has transformed the way businesses reach and engage with their customers. With the rapid advancement of technology and the widespread use of the internet, businesses can no longer rely solely on traditional marketing methods. This...

Can and Should I Register my Trade Mark in Australia?

Yes, you can register your logo as a trademark in Australia. Trademark registration is an important step for any business to protect their brand and prevent others from using similar marks that may cause confusion in the market.  This article will...