Photograph: Australian PM press office/UPI/Shutterstock
Joe Biden and Anthony Albanese say climate and clean energy will become a “central pillar” of the alliance between the US and Australia – and they will ramp up cooperation on critical minerals.
Beyond the flashy headlines, what does this mean?
What have the two countries announced?
After a meeting on the sidelines of the G7 summit in Hiroshima, Japan, over the weekend, the US president and the Australian prime minister said they both recognised “the importance of addressing the climate crisis as a critical component of the bilateral relationship”.
They said climate and clean energy should be seen as “the third pillar of the alliance, alongside our defence and economic cooperation”.
What message are they trying to send?
Michael Green, the chief executive officer of the US Studies Centre and a former senior US official, says the bilateral meeting was a chance for Biden and Albanese to speak more broadly to their own constituencies “than they were able to with the Quad and the Aukus summits and to focus on something that’s personally important to both of them that their predecessors did not focus on”.
Green notes that polling commissioned by the United States Studies Centre shows support for the US alliance “is pretty robust among Australians, but Australians in their 20s by large numbers said they want to see more action on climate in the relationship”.
OK, but is there any substance to this lofty rhetoric?
Well, Biden and Albanese flagged a series of steps to “elevate global climate ambition, accelerate the global clean energy transition, and support mitigation, adaptation and resilience efforts in the Indo-Pacific and beyond”.
This includes signing a statement of intent to advance climate cooperation through the Australia-United States climate, critical minerals and clean energy transformation compact.
But at this stage, a lot of the work is yet to be fleshed out. A series of working groups are being set up, including a ministerial-level taskforce on critical minerals. Another grouping will “develop a new action plan by the end of 2023 to encourage stronger industrial collaboration and accelerate progress towards our ambitious climate goals”.
Will Australia be eligible for grants or incentives under the US Inflation Reduction Act?
Possibly, but this is yet to be put into practice.
Albanese told reporters on Sunday that “the big risk with the Inflation Reduction Act … is that you’ll see capital leaves Australia to go to the United States” – but he said the new measures were “about addressing that”.
Green explains that the Inflation Reduction Act (IRA) is “full of contradictions” between the imperative for international cooperation to reduce greenhouse gas emissions “versus the ‘made in America’ rent-seeking aspects”.
“Australia, like other allies, is very worried about the latter,” Green says, arguing the announcement sends a message to the markets that Australia should not be disadvantaged.
“It’s a strong political signal that since the president and the administration have a lot of latitude in implementing the IRA, that Australia has an open door to come in and say how it should be implemented.”
Green thinks Australian companies may have opportunities to apply for tax credits or grants, but this may well be a case-by-case situation. “So the Australian embassy and ambassador Kevin Rudd are going to have to be on their toes – and Australian companies are going to have to be paying attention – to make sure that when there are subsidies or tax rebates or other incentives, it doesn’t force companies to make a decision not to invest in Australia.”
Are Australia and the US doing enough on the climate crisis?
No. The Climate Action Tracker, an independent analysis tool, rates the US and Australia’s climate targets and policies as “insufficient”.
The analysis of Australia’s policies says the Albanese government’s stronger 2030 targets have improved the country’s overall rating from “highly insufficient” to “insufficient”. But it warns: “Under Australia’s current policies, emissions will continue to rise and are consistent with more than 3C warming if all other countries followed a similar level of ambition.”
The Climate Action Tracker’s analysis of the US says the Inflation Reduction Act signed by Biden in August 2022 is “the most ambitious and potentially impactful climate policy in US history”, but adds that “the totality of the US policies and proposals need substantial improvements to be consistent with the Paris agreement’s 1.5C temperature limit and are not consistent with any interpretation of a fair-share contribution”.
Have the leaders made any further progress on Aukus?
Biden promised to ask the US Congress to add Australia as a “domestic source” within the meaning of title III of the Defense Production Act – a designation that is already afforded to Canada.
According to both governments, this move would “streamline technological and industrial base collaboration, accelerate and strengthen Aukus implementation, and build new opportunities for United States investment in the production and purchase of Australian critical minerals, critical technologies and other strategic sectors”.
Green predicts Congress will be supportive of the move, but it is part of a bigger picture to update export controls to improve the sharing of tech under the Aukus security partnership. “The clear message I heard, when I was in Washington two weeks ago, from Congress and from across the administration is there’s a political consensus to carve out big exceptions for Australia.”
