Why Australia needs friends (and a climate AUKUS) to reach its climate goals

The Quadrilateral Security Dialogue, a strategic cooperation between Australia, India, Japan and the USA, has recently been the subject of attention in relation to defence strategy. The $368 billion (USD 250 billion) AUKUS deal has had some critics arguing that Australia’s money would be better spent fighting climate change. 

While it’s true that switching to clean energy is a national security imperative much in the same way that defence is, looking at the AUKUS deal as simply consuming capital that could go towards climate-related industries is rather blinkered. Likewise, to view the Quad simply as a strategic defence cooperation partnership underestimates its potential. 

Minister Bowen, in his speech to the Smart Energy Conference in May, noted that supply chain logistics is now a key focus of discussions in the Quad. It is not a matter of every member manufacturing everything, but ensuring that every member can contribute to a diversified supply chain and ensuring that we have secure supply chains amongst our friends. 

AUKUS and the submarine procurement is, at its core, a massive example of ‘friendshoring’ – the act of focussing supply chain networks on countries regarded as political and economic allies. Given the challenges Australia is currently facing in achieving its ambitious climate goals, wouldn’t it make sense to apply a similar approach to our climate challenges?

Say what you like about the defence industry, but there’s no denying it has always driven innovation and cooperation between allies. Imagine if we could channel the same collaboration and innovation to bring an end to climate change.

Climate change and national security are intrinsically linked. The Ukraine war, for example, has resulted in a massive acceleration in the uptake of renewable energy globally, as countries wake up to the realities of relying on unsavoury regimes for oil and gas. 

Australia’s increasing overreliance on China for renewables is a similarly worrying development, highlighting the urgent need to diversify our global partners. As things stand, Australia is 90% dependent on Chinese supply chains for renewable energy, presenting a sovereign risk. The lack of cybersecurity measures present in these products poses a huge risk for Australia, as they could be hacked, leading to widespread energy outages. 

Compare our situation to that of the US, where stimulation as part of the Inflation Reduction Act will localise production of the large swathes of the renewable energy and hydrogen production supply chain. Thanks to the subsidies, it’s possible that US panels will actually become cheaper than Chinese panels. The IRA will stimulate massive investment in the US.

The problem is, even if Australia had the money for a similar stimulus package, the size of our market simply isn’t big enough for to support the complete localisation of the renewable energy supply chain. 

In the same way that Australia is not a big enough player to survive without like-minded allies from a defence perspective, we’re in the same position with our renewable energy transition. So, we’ve come to a crossroads. We either remain at the behest of people who aren’t our allies, or we work together with our allies to shore up our (and their) supply chains. 

With the UK and US’s massive economic stimulus packages underway, Australia is at serious risk of missing out on supply support or being forced to rely on its global opponents to supply. We must use our own incentives to support the growth of the renewable energy industry, but we should also draw on the support of our allies by ensuring Australia is a key player within their own incentives.

The emergence of new overseas competitors is a direct result of Australia’s inability to satisfy the demand for energy products – a problem that could be remedied by strengthening Australia’s climate allies.

Through a wider network of treaties and trade deals, we could turn Australian-made renewables into an incredibly attractive proposition to the global market. Take battery cells for solar PV systems, for example. Most battery cells are still currently coming out of China, posing an unnecessary risk. A lot of the minerals required for the battery cells are available here in Australia, presenting a huge opportunity for Australia around critical minerals and critical mineral processing, to produce battery cells for both local use and to sell to our overseas ‘friends’. 

Existing partnerships, such as the German-Australian Hydrogen Alliance, give us an insight into what the future could look like if climate friendshoring was implemented on a larger scale. The bilateral alliance on hydrogen production and trade was signed on June 2021,  helping Australia strengthen its renewable energies export infrastructure, while allowing Germany to meet its growing energy needs via cleaner sources. Imagine what the future might hold if we would create an ongoing network of similar partnerships, formed with allies from around the globe. 

A ‘climate AUKUS’ or clean energy Quad has the potential to secure manufacturing, onshore our processes, secure the availability of equipment, and make Australia’s abundance of critical minerals available both locally and to our allies to facilitate the renewables transition. 

So, rather than looking at the money that AUKUS takes away from climate change, or the Quad as simply a strategic defence cooperation, let’s look at how we can build a partnership like that with our global friends to tackle this huge multi-generational issue together, from a technology and a supply-side perspective.

In order to get there, Australia must apply the same rigour to its ‘climate allies’ as it has its security allies. It’s time we started pushing for a climate AUKUS and a green Quad.

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Author: Joshua Birmingham is the Senior Vice President Sales and Markets at SMA Solar Technology AG