On the sidelines of the recent G7 Summit, Australia and the United States announced that they had committed to establishing a so-called bilateral Climate, Critical Minerals and Clean Energy Transformation Compact (an official statement of strategic intent), and had reached an in-principle agreement on a technology safeguards agreement that will allow the U.S. to launch space technology in Australia. The two nations also discussed plans to improve information sharing and technology cooperation mechanisms under the recently signed AUKUS partnership.
Climate and Biodiversity – Clean Energy investment
It was recently announced that the Climate, Critical Minerals and Clean Energy Transformation Compact will introduce a framework designed to ‘advance ambitious climate and clean energy action’.
In the joint press release regarding the Compact, the countries announced the establishment of a Clean Energy Industrial Transformation Forum which would identify actions within the next 12 months to support the following goals:
- accelerate the expansion and diversification of clean energy supply chains, by identifying areas where Australia and the United States can coordinate the development of their respective clean energy industrial bases (which includes solar, wind, storage, and hydrogen materials and technologies);
- promote responsible, sustainable and stable supply of critical minerals, including by sharing information to coordinate the supply of ‘critical minerals’. While ‘critical minerals’ is not defined or expanded upon in the joint statement, it should be noted that Australia is particularly rich in natural resources and is a global leader in producing lithium, titanium and rare earth minerals;
- drive the development of emerging battery technologies, including through technical engagement and coordination on battery interoperability, international standards, regulations, battery tracing and recycling, and offtake agreements; and
- support the development of emerging markets for clean hydrogen and its derivatives across the Indo-Pacific, including by coordinating approaches on fostering clean hydrogen.
While there is currently limited detail available regarding the practical implementation of the Compact, the joint press release flagged that the following steps may be taken in order to achieve the broader goals mentioned above:
- engagement with critical minerals and clean energy industries to determine financial and non-financial barriers to accelerating and expanding development of critical minerals and clean energy, with the view to enhance two-way investment flows between the financial sectors of both countries;
- collaboration on projects and standards for clean energy supply chains, including in connection with the Inflation Reduction Act and the Powering Australia Plan;
- promoting robust emissions accounting methodologies for key sectors and products like hydrogen, and green metals; and
- assessing clean energy job projections and workforce requirements to identify where additional skills and training support is necessary to advance the Compact’s goals, with a particular focus on supporting workforce development in critical minerals and critical technologies sectors.
AUKUS Update – Streamlining the Defense Production Act
In March 2023, a tripartite deal between the U.S., the United Kingdom and Australia was announced, in which the countries would, amongst other things, collaborate on the design and construction of new nuclear submarines known as the SSN AUKUS.
It was announced on 20 May 2023 in a joint statement with the White House and Canberra that President Biden plans to approach Congress to add Australia as a ‘domestic source’ within the meaning of Title III of the Defense Production Act.
Broadly speaking, Title III provides the United States Federal Government with the authority to enact various financial measures to incentivise investment in ‘domestic sources’ of industrial manufacturing. Allocation as a ‘domestic source’ would be highly beneficial to Australian industry, as it would create opportunities for U.S. investment into the production and purchase of resources produced in Australia (including for the purposes of implementing AUKUS, as well as for the purposes of obtaining the critical minerals and technologies mentioned above in relation to the Compact).
Launching a new era in space collaboration – new technology safeguards agreement
The joint statement also announced that an in-principle agreement regarding a new technology safeguards agreement (TSA) had been entered into. The TSA will allow for the transfer of sensitive U.S. launch technology and data to Australia. A press release by the Australian Department of Industry, Science and Resources also revealed that the agreement would allow U.S. space technology, including rockets and satellites, to be launched from Australia.
The joint statement also flagged that the countries intend to establish a new Australia-based ground station supporting NASA’s Artemis space program.
While details are scarce, the joint statement also indicated that both parties were committed to:
- increased collaboration on harnessing emerging technologies, such as quantum and advanced technologies, expanding on the Joint Statement of Collaboration on Quantum, signed in November 2021; and
- cooperation on strengthening cyber-security and preventing online child sexual exploitation and abuse, including by establishing the Australia-United States Joint Council on Combatting Online Child Sexual Exploitation.
While there are few details at this stage regarding the implementation of these agreements, industry should watch this space for further announcements regarding the progress of these agreements, which have the potential to create greater and more streamlined investment opportunities. The changes are likely to be of particular significance to businesses operating in space, defence, energy, mining and resources sectors.
For businesses operating in renewable energy and critical minerals sectors, be aware that further announcements regarding the implementation of the Compact will be made available in the next 12 months.
Authored by Mandi Jacobson, Angell Zhang, and Bonnie Liu.