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Maximising Australia’s green growth

A new strategic framework is needed to transform Australia from fossil fuel supplier into Asia’s trusted clean energy partner.

Kristy Graham

22 May 20254 min read

Last year, the Albanese government launched its Future Made in Australia policy suite – a bold, $25 billion strategy to build sovereign clean industry, reindustrialise the nation, and position Australia as a renewable energy superpower.

But a fundamental question remains underexplored: who will buy these green exports?

For decades, Australia’s prosperity has been tied to fossil fuel exports. Coal, gas, and petroleum account for nearly 28 per cent of the country’s export income. These industries have underpinned both our trade surplus and our geopolitical influence –especially in the Indo-Pacific. But that era is ending. China, Japan, South Korea, and much of Southeast Asia are rapidly decarbonising. As its customers shift their energy profiles, Australia must evolve – from a supplier of fossil energy to a provider of clean industrial solutions.

The global context adds urgency. As the United States retreats into protectionism and China intensifies its economic statecraft, Australia must act decisively to position itself as a reliable, decarbonised supplier to Asia’s industrial base.

Australia has always succeeded when it matches domestic ambition with international engagement.

Fortunately, we are well placed to meet this moment. With vast reserves of critical minerals, abundant renewables, and a reputation as a trusted trading partner, Australia has the ingredients to become a key supplier of green iron, battery materials, and hydrogen-based fuels. But to realise this vision, we need more than a domestic strategy – we need a global one.

Australia needs a Sustainable Growth Strategy: a framework that matches incentives at home with demand certainty abroad to secure the estimated $630 billion and more of domestic investment required by 2040 to decarbonise Australia’s energy and industrial sectors for green exports. This approach is detailed in Maximising Australia’s Green Growth, a report prepared by Kaya Partners for the Australian Sustainable Finance Institute (ASFI). It shows how Australia can align its trade, climate finance, and diplomacy to open markets for clean exports and deepen ties with key partners.

One of those partners is China. Australia’s largest trading partner is already reshaping global supply chains through its green transition, and Australia must engage deeply with this shift.

Over the past year, ASFI has led the development of Australia’s first sustainable finance taxonomy – a common standard to accelerate green and transition investment across sectors including energy, construction, manufacturing, agriculture, transport, and, in a world-first, mining and metals. But domestic credibility isn’t enough. For green exports to thrive, these standards must be interoperable with those of key trading partners like China.

Shared standards will ensure that Australian inputs – such as green steel or processed critical minerals – are trusted as compliant, low-emission components in China’s clean industries. This is especially crucial as Europe and others introduce carbon border adjustments. Helping China decarbonise its inputs isn’t just smart diplomacy, it is a commercial opportunity to secure Australia’s place in clean supply chains.

In 2024, Treasurer Jim Chalmers and his Chinese counterpart Zheng Shanjie agreed to cooperate on climate and renewable energy investment, and technical engagement has now begun. ASFI, the University of Western Australia, and Chinese institutions are working to align green and transition investment standards. The Western Australian government has also supported bilateral trade delegations and clean industry cooperation. This momentum is promising but it must be expanded.

Japan should be a priority. A longstanding LNG customer and critical regional partner, Japan is now seeking to decarbonise while maintaining its manufacturing base. Australia’s fossil exports helped fuel Japan’s industrial rise and we can again be its most reliable energy partner, this time through green inputs. Japan’s advanced manufacturing sectors, from batteries to electric vehicles, will require secure, low-carbon materials. Australia is well-positioned to provide them. But unlocking this opportunity requires more than market signals. It demands shared standards, coordinated infrastructure, and co-investment in innovation.

The Maximising Australia’s Green Growth report calls for Sustainable Growth Partnerships – formal frameworks with key trading partners, anchored in mutual decarbonisation goals. These partnerships can align climate targets and industrial strategies through bilateral transition plans, and de-risk early-stage investment through long-term contracts and demand-side mechanisms such as advance market commitments.

Australia has done this before. In the 1970s, Japan and South Korea helped build Australia’s mining boom through long-term investment and trade. Public finance and coordinated policy underpinned the rise of our LNG and iron ore sectors. That same model, mutual interest, co-investment, and strategic diplomacy, can now apply to green exports.

This isn’t just a trade agenda. It’s a geopolitical one. A Sustainable Growth Strategy will strengthen our climate diplomacy, supporting Australia’s COP31 bid, and providing assurance to Pacific neighbours that the government has a plan to become a supplier of embodied green energy to the world.

For this to work, we need strong central coordination across the Department of Foreign Affairs and Trade, Treasury, the Department of Climate Change, and the Department of Prime Minister and Cabinet. More importantly, we need champions. Leaders in government, business, and civil society must be willing to make sustainable growth a defining pillar of Australia’s foreign and economic policy.

Australia has always succeeded when it matches domestic ambition with international engagement. Future Made in Australia sets the stage. With vision, coordination, and committed partnerships, we can build the next great chapter of Australian prosperity – not just made at home, but in demand across the world.

About the author

Kristy Graham

Kristy Graham is the CEO of Australian Sustainable Finance Institute (ASFI).

Topics

Trade & investment Economy Australia Climate & environment Cyber & technology