Energy security is a top priority globally as governments face the closing of the Strait of Hormuz, an accelerating clean energy transition, and growing demand for power from AI data centers.
The problem is particularly acute for Asia and the Pacific, as both regions are highly dependent on imported fuels.
This is where Australia can grow as a regional energy superpower, rich in renewables and fossil fuels. Australia could form a new energy security alliance to stabilize regional markets for the long term.
In the short term, this would mean guaranteeing supplies of liquefied natural gas (LNG). In the long term, green exports such as renewable fuels and battery minerals could form the bedrock of Australia’s energy relationship with Asia.
Energy insecurity is widespread throughout Asia
The war between the United States-Israel and Iran caused a major disruption in fossil fuel supplies.
After Iran closed the Strait of Hormuz, Asia lost 80% of its oil supply and 27% of its natural gas supply. The spillover effects on Pacific nations were significant, as these island nations rely heavily on oil and food imports.
The deal to end Iran’s war does not mean an end to these challenges. This year has shown the dangers of relying on Middle Eastern oil and gas producers in a conflict-prone region.
Governments of the Asia-Pacific are looking for for reliable partners to ensure energy security. The world’s two major powers, the United States and China, are trying to expand their energy exports to the region, but in very different ways.
China’s response to the Iran conflict has been to double down on electrification and build up its oil reserves. Beijing is too expanding aggressively its exports of electric vehicles, solar panels, batteries and other green technology exports to eradicate any overseas competition.
Meanwhile, the US is following a strategy of “energy dominance”, focused on producing abundant supplies of oil and gas domestically. Washington believes this will deliver affordable energy, win the AI race against China with cheap energy, and expand energy exports to bind allies closer.
Time for a decisive strategy
Without a clear strategy for energy exports, Australia risks becoming a passive spectator.
The risks are twofold. Our role as a coal and LNG exporter could erode as Asian countries look elsewhere to fill the supply gap, and we could miss the window of opportunity to increase our clean energy exports.
What should this strategy look like? In practice, this would involve working with allies such as the US and Japan to build a regional energy security alliance. This would focus on meeting the region’s urgent energy needs and enable Australia to play a central role in the region’s transition to clean energy. Recently the members of the Quad joint statement it’s a strong start.
Any such alliance cannot simply focus on securing the region’s fossil fuel supply. The transition to a clean energy transition should be included in its design.
Ideally, this alliance should cover the entire energy supply chain. This means critical minerals, natural gas, oil, hydrogen, batteries, data centers and even emerging products such as low carbon fertilizer.
Australia is ready to take the lead
Australia is the only reliable exporter of high-volume LNG in the Asia-Pacific.
The main competitors face challenges that meet the needs of the region. Russian gas is heavily sanctioned, Qatari exports are held hostage in the Strait of Hormuz and US gas export terminals are concentrated in the Gulf Coast, adding an extra 10 days in transit to reach Asia compared to shipments from Darwin.
Australia also has some of the largest sources of clean energy in the world, including critical minerals vital for batteries and renewables.
The US and Canada would also play a role as major LNG and oil producers. Japan will provide the financing and transportation infrastructure that many small Southeast Asian countries cannot. The US and Japan can also help produce EVs, batteries and clean technology to drive the region’s transition.
Despite the Trump administration’s unfavorable views on wind and solar, US battery manufacturing is is projected to increase fivefold.
Such an alliance would give assurances to Indo-Pacific countries such as the Philippines, Thailand and India that Australia and its allies would not prematurely cut off fossil fuel supplies.
This is pragmatic. While Australia is aiming for net zero by 2050, many Asian countries are aiming for 2060 or 2070. They may require fossil fuel supplies beyond 2050 – would we rather the supply came from Australia or Russia?
What should happen?
Shifting energy policies and slow approval timelines have left Australia on the verge of a gas shortage southern states, slowed the transition to renewables and contributed to higher energy costs.
These internal challenges must be balanced with the region’s current need for Australian energy exports.
The Iran war has shown that the world is not yet ready to give up fossil fuels. Despite the very rapid shifts towards renewables and clean transport, there are years ahead where gas and oil will remain vital.
As the region’s most reliable LNG exporter, Australia is well-positioned to cement its position in the Indo-Pacific energy landscape in the long term as green exports grow. Seizing this opportunity requires a cohesive strategy, partnering with like-minded allies, and addressing internal challenges.
Robert Monterosso is a researcher at the Center for United States Studies, University of Sydney
This article was reprinted from Conversation under a Creative Commons license. Read on original article.
