Energy challenge: why Australia needs a new energy partnership with Japan

For decades, Japanese investment in energy projects and Japan’s energy purchases have helped build Australian prosperity. But that’s been in fossil fuels and the bilateral economic relationship will need a total transformation as both countries pursue transition to net zero emissions by 2050.The transition is not off to a good start. In 2023 Australia exported $35.4 billion of coal to Japan, accounting for 41 per cent of total exports to Japan, Australia’s second-largest trading partner.

Last year, departing Japanese ambassador Shingo Yamagami warned Australia was seen as a risky energy supplier by Japanese firms. Major gas company Inpex president and chief executive Takayuki Ueda also unleashed at Australian politicians and industry leaders, going as far as to sayJapan was consulted and advised on the nature of the policy changes and that it would have no impact on contracts and supplies to Japan.

Energy policy uncertainty in Australia over the previous 15 years led to under-investment in both renewable energy generation and fossil fuel extraction. This was exacerbated by increased litigation by environmental activists surrounding expansion of fossil fuel projects and the development of new projects.

The energy relationship between Australia and Japan has to be entirely re-thought. Instead of Australia shipping raw energy to Japan, it is becoming cheaper and cleaner to produce intermediate inputs, processing more minerals in Australia, and exporting the embodied energy to Japan and beyond.

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