Building the shared energy future of Australia and Japan

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Collaborating on decarbonization is a chance for Australia and Japan to exercise leadership, protect the region’s climate, enhance security and prepare for the future of the relationship, write Llewelyn Hughes and Richard Andrews.

Foreign and diplomatic policy have been central concerns of the new Australian Labor government. New Prime Minister Anthony Albanese barely breathed before flying to Japan to meet the leaders of the United States, Japan and India – the countries which, together with Australia, form the quadrilateral dialogue on the security.

Foreign Minister Penny Wong returned from that trip and immediately traveled to Fiji as part of a new Pacific region re-engagement strategy before she and the Prime Minister depart again, this time to Indonesia .

Australia’s renewed emphasis on climate policy has been a key theme at their various meetings, sending a clear signal that the Labor government understands the importance of the issue not just for the natural environment, but also for the regional security environment.

Australia’s new 2030 target of a 43% reduction in emissions from 2005 levels also signals that in Australia, like Japan, which is targeting a 46% reduction in emissions from 2013, the The climate debate has now shifted from the question of ‘if’ to the question of ‘how’.

The combination of this new alignment of goals and the two countries’ shared strategic concerns creates a significant opportunity to deepen Australia’s crucial bilateral relationship with Japan, while helping to drive the low-carbon energy transition in the two countries.

Under the previous Morrison Government, Australia and Japan entered into a Japan-Australia Partnership on Decarbonisation through Technology, and the Australian Government continues to work closely with Japan on a range of issues related to energy goods and services . Hydrogen and associated energy carriers such as ammonia are proving to be a new and fruitful area for bilateral collaboration.
At the recent Australian Hydrogen Conference, sessions on how to expand Japan-Australia trade and investment in hydrogen fueled the business.

This shows that businesses and governments in both countries can see an opportunity in using hydrogen to reduce emissions.

There is much to be done, including examining the nature, timing and scale of possible offtake deals, assessing the value of providing investment capital in new projects and understanding how quickly Japan fulfills its commitment to use more hydrogen in its national economy.

They must also put in place appropriate public policy to ensure that the increased use of hydrogen results in reduced greenhouse gas emissions in both countries. This includes the crucial issue of measuring and accounting for embedded emissions in hydrogen.

There is a larger and broader energy transition agenda that Australia and Japan can also engage in together – an agenda that uses the competitive advantages that both bring. There are three areas of potential short-term interest.

First, Australia and Japan have enjoyed a decades-long trade and investment partnership that facilitates steel production. Emissions from steel production represent approximately 8% of total global emissions, and the two governments now have the opportunity to work together to implement strategies to decarbonize steelmaking processes.

Second, Australia and Japan are increasing their share of electricity generated from renewable energy sources, such as solar PV and onshore and offshore wind. Japan is doing this while building competitive electricity markets. Australia has extensive experience in managing the low carbon transition in its electricity markets which it could share with Japan.

Third, Australia and Japan also have a common interest in diversifying the supply chain for primary resources that will be crucial in the energy transition. The two countries already have experience working together through Japan’s investments in Australia’s rare earth element deposits, but more can be done.

The benefits of deeper and deeper cooperation also extend beyond the bilateral.

The scale of energy trade between Australia and Japan is enormous. If the scale of current energy trade were replicated for decarbonized fuels and products, it would be a systemic shift with implications for the entire region.

Working together would allow Australia and Japan to exercise leadership and influence that could enhance not only the prosperity but also the security of the region, laying the foundation for open and regulated trade in clean energy to the region and protecting the climate.

While the role of government is important, to maximize the chances of success it must also involve the business community, through initiatives such as Australia Japan Business Cooperation Committee’s Clean Energy Transition Committee. The research community will also play a crucial role in shaping any common energy transition agenda.

OThe mechanism that could be envisaged to help develop this agenda is a bilateral council for the energy transition.

There is already a model for how this might work. Since 2016, Japan and Germany have created a common understanding of the challenges and opportunities associated with the energy transition through the Germany-Japan Energy Transition Council.

A similar mechanism could create networks between the next generation of Australians and Japanese determined to continue to build on the past and achieve a shared clean energy future.

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