Australia’s resource and energy export strategy for the decarbonized era

Australian resource and energy export trends are an important factor for global supply chain restructuring centered on decarbonization and reducing dependence on China. Reasons that can be given for this are that 1) Australia has abundant resources used in products necessary for decarbonization, such as EVs (electric vehicles) and solar and wind power generation equipment, and 2) many of the resources currently exported from Australia are supplied to other countries through China, where refining and processing costs are low. The Australian government’s direction for resource and energy exports has the two following aims:

The first is to increase the added value of the resource and energy industry by making it more environmentally friendly. The Australian government is seeking to enhance the competitiveness of the mining and manufacturing industries by encouraging the development of resource extraction, refining, and processing businesses that employ less environmentally burdensome methods. To this end, it has been coming up with one new restructuring-oriented measure after another, such as the “Critical Minerals Strategy” and “Future Made in Australia” initiative, which provide for subsidies in areas that are expected to increase in importance in the future, and the “National Hydrogen Strategy,” which is aimed at expanding the production of hydrogen derived from renewable energy.

The second is to diversify its export destinations. At present, Australia’s exports are heavily focused on East Asia, mainly China, but the government is stepping up diplomatic efforts to diversify its export destinations. As key themes for its economic diplomacy, the government is working to strengthen relations with developed countries that have high technological development capabilities and are expected to see early diffusion of environmentally friendly products, and to liberalize trade and investment with ASEAN countries and India, where demand for resources and energy is projected to rise in the medium to long term.

The challenges that Australia faces in restructuring its resource and energy industry include the high cost of refining and processing domestically and the lack of potential for ASEAN countries and India to replace Chinese demand. It is necessary to note that the success or failure of Australia’s efforts to transform its resource and energy export structure will also be affected by external factors. One such factor is whether appropriate regulations are put in place in each country to curtail the refining and processing of resources using environmentally burdensome methods and the use of products containing those refined/processed resources. Another is the extent to which the manufacturing industry shifts from China to ASEAN countries and India.

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