Australia and the US have announced a bilateral agreement to collaborate on legislation to aid the green energy transition in both countries with a new compact.
The Climate, Critical Minerals and Clean Energy Transformation Compact will see the two countries adopt shared energy goals and policies.
At a press conference, Australian Prime Minister Anthony Albanese stated: “The [US] President will support the Congress taking action to treat Australian suppliers and activity as domestic activity in the United States for the purpose of the Defense Production Act.”
This will in effect allow Australian green businesses to benefit from subsidies and protections provided to US companies under the Inflation Reduction Act, which has prompted a swathe of businesses globally to migrate to the US to benefit from its green subsidies.
Albanese noted that without these new support measures, hydrogen-based industries, for example, would have a “massive incentive” to be based in the US.
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He said: “The big risk with the Inflation Reduction Act […] is that you’ll see capital leave Australia to go to the United States. This is about addressing that.”
In a joint statement, Albanese and US President Joe Biden that they will establish a joint forum in order to set the compact’s agenda.
They said that: “Both countries are determined to, within 12 months, identify concrete actions toward the objectives laid out in this compact.”
With the compact, Australia and the US aim to accelerate the proliferation of green energy supply chains, invest in novel battery technologies and support the development of green hydrogen technologies. Earlier this month, Australia announced a $1.4bn fund to aid the growth of green hydrogen tech in the country.
Through the newly established Australia-United States Taskforce on Critical Minerals, the two countries will work together to expand global access to minerals such as lithium, which will expedite the global energy transition.
Australia is the world’s biggest producer of lithium, a vital component in electric vehicle batteries. Both countries are expanding their lithium production capabilities in the wake of Chile nationalising its lithium industry. In recent years, Australia has raised the importance of lithium as a major industry in the country as a result of growing investment in the sector.