Energy security has become a pressing concern worldwide, with governments facing disruptions like the closure of the Strait of Hormuz, the push for clean energy, and rising power demands from AI data centers. For Asia and the Pacific, heavily reliant on imported fuels, the challenge is particularly acute. Australia, rich in both fossil fuels and renewables, is uniquely positioned to emerge as a regional energy superpower, potentially forming a new energy security alliance to stabilize markets over the long term.
In the short term, this would involve guaranteeing liquefied natural gas (LNG) supplies. Over time, green exports such as renewable fuels and battery minerals could become the foundation of Australia's energy ties with Asia. The recent US-Iran conflict, which led to the Strait of Hormuz closure, highlighted vulnerabilities: Asia lost 80% of its oil and 27% of its natural gas supply, with cascading effects on Pacific island nations dependent on diesel and food imports. Even as a deal to end the Iran war emerges, the risks of relying on Middle Eastern producers in a volatile region persist.
Competing Visions from Beijing and Washington
Asia-Pacific governments are seeking reliable partners. The United States and China, the world's top powers, are vying to expand energy exports but with contrasting approaches. China's response to the Iran crisis has been to accelerate electrification and build oil reserves, while aggressively exporting electric vehicles, solar panels, and batteries to dominate green tech markets. Meanwhile, the US pursues an "energy dominance" strategy, boosting domestic oil and gas production to lower costs, win the AI race, and strengthen alliances through energy exports.
Without a clear strategy, Australia risks becoming a passive observer. Its role as a coal and LNG exporter could erode as Asian countries seek alternatives, and it might miss the window to grow clean energy exports. A cohesive approach would involve working with allies like the US and Japan to build a regional energy security alliance, focusing on immediate needs while enabling Australia's central role in the clean energy transition. The Quad's recent joint statement offers a promising start.
Such an alliance must go beyond fossil fuels, encompassing the full supply chain: critical minerals, natural gas, diesel, hydrogen, batteries, data centers, and emerging products like low-carbon fertilizers. Australia is the only reliable high-volume LNG exporter in the Indo-Pacific, with competitors like Russia sanctioned, Qatari exports held hostage in the Strait of Hormuz, and US terminals on the Gulf Coast adding transit time. Australia also boasts vast clean energy resources, including critical minerals for batteries and renewables.
The US and Canada would contribute as major LNG and oil producers, while Japan provides financing and shipping infrastructure for smaller Southeast Asian nations. The US and Japan could also produce EVs, batteries, and clean tech to drive the region's transition. Despite the Trump administration's skepticism of wind and solar, US battery manufacturing is forecast to quintuple. An alliance like this would reassure countries such as the Philippines, Thailand, and India that Australia and its allies won't prematurely cut off fossil fuel supply, a pragmatic approach given that many Asian nations target net zero by 2060 or 2070, potentially needing fossil fuels beyond 2050.
Domestically, Australia faces challenges: shifting energy policies and slow approvals have led to gas shortfalls in southern states, slowed renewable transitions, and higher costs. Balancing these with regional export needs is crucial. The Iran war has shown the world isn't ready to abandon fossil fuels; despite rapid renewable shifts, gas and oil will remain vital for years. As the region's most reliable LNG exporter, Australia can cement its position in the Indo-Pacific's energy landscape as green exports ramp up. Seizing this opportunity requires a cohesive strategy, partnerships with like-minded allies, and fixing domestic hurdles.
