Australian resources are in line for billions in grants after US President Joe Biden announced he would ask Congress to define Australia as a domestic source for sectors critical to national defence and economy.
During a meeting at the G7 summit, President Biden and Australian Prime Minister Anthony Albanese agreed to make climate and clean energy a key focus of their strategic alliance. This move will allow Australian companies to access US subsidies under the Inflation Reduction Act without having to relocate, and will support the nation’s efforts to establish a thriving multi-billion-dollar battery industry through its world-leading raw material production.
The two leaders’ newly signed Statement of Intent: Climate, Critical Minerals, and the Clean Energy Transformation outlined the goals to build resilient critical mineral supply chains and accelerate the transition to clean energy.
“The United States supports Australia’s actions towards becoming a renewable energy powerhouse globally and in the Indo-Pacific, supplying essential materials and products fundamental to meeting global climate goals,” it read.
“Similarly, Australia welcomes the United States’ actions to transform its domestic energy and industrial base to establish a global clean energy economy, leveraging its technological innovation to global benefit.”
There were real concerns that billions in US subsidies would disadvantage Australian production. Still, domestic companies now recognise that the US cannot compete alone to secure the supplies of critical minerals needed for global electrification.
Hot on Hydrogen
Albanese highlighted Australia’s hydrogen industry as one sector which could reap the benefits of a strengthened alliance.
Canada has this at the moment. If you think about industries like hydrogen, without that support, there would be a massive incentive for hydrogen-based industries to be based in the United States,” Mr Albanese said.
“So the big risk with the Inflation Reduction Act … is that you would see capital leave Australia to go to the United States. This is about addressing that. This is about creating an enormous opportunity for Australia.”
Australian Energy Minister Chris Bowen told the Australian Financial Review it was a significant step forward in Australia’s ambitions of renewable energy exports as the nation looks to become a leader in global green hydrogen production.
“It sets up a framework for co-operation with the United States and builds on the work, for example, our Hydrogen Headstart, in the recent budget.” Mr Bowen said.
“It’s been a significant whole-of-government effort across several portfolios and has involved high-level representations with key interlocutors in the United States.”
US supply woes
There is only one operating lithium mine within US borders, one for nickel, with zero graphite production since the 1950s, and its crippled rare earth industry is increasingly considered a matter of national security as China threatens export bans to maintain a long-standing dominance in the sector.
US mines produced just US$82 billion in minerals in 2020, mainly gold, copper, iron ore and zinc, while the Australian mining sector achieved AUD$246 billion in sales in 2022 – from Western Australia alone.
Australia is primed to hold its global eminence as a producer of raw materials. Still, it remains to be seen what greater hold of the electrification industry can be claimed for the global transition.