This report is produced in partnership with the Australia China Business Council under its landmark Green Channel initiative. Green Channel highlights the opportunities for Australian businesses arising from increased collaboration with China on outcomes addressing the climate challenge.
The issue of a global climate challenge and agreed emission targets by definition crosses borders. Confronting it requires international cooperation.
Partnerships and collaborations between governments, industry, the private sector, universities, multilateral institutions and civil society are essential to ensure nations meet their Paris Agreement targets and other international commitments.
Working together is no longer optional - it is an imperative.
Encouragingly, there is a transition underway towards new models of cross-border collaboration to tackle the climate crisis. They will drive the innovation and understanding needed for meaningful change.
As this report highlights, Australia and China have a track record of innovative collaboration across multiple sectors and industries. This is a solid base from which to work together.
Key themes & opportunities
Themes emerged as we met with various experts through the course of producing this report.
There was a strong thread of opportunities to share insights and combine complementary strengths. As stated up front, the resulting report is by no means complete in its industry sector coverage. There are many other areas deserving inspection. Rather, it is a conversation starter.
Powering the Transition
Critical learnings emerge from the accelerated penetration of new variable renewable energy generation into the electricity grid, particularly in South Australia.
New wind, large-scale solar and domestic residential roof-top solar have powered a rapid rise in renewable energy; new jobs follow them.
Most (80%) of the renewable components (wind turbines, solar panels, batteries) are imported from China, and the new hydrogen economy is tracking the path of solar PV . For Australia there is value in leveraging China’s expertise in building local factories fast, positioning it to become a regional renewables hub.
There is a need for new standards and education to prepare for jobs of the future.
Just as Australia’s cities and towns grew on the abundance of resource exports, new wealth will emerge from the industries and capacities of the low-carbon energy future.
The potential needs a plan, supported by policy.
Mining & Future-Facing Industries
There is a new respect industry-wide for environmental limits of traditional mining practices and the need to decarbonise industry.
A refocus on new future-facing mineral resources (including gold, copper, magnetite, zircon, graphene and zinc) creates opportunities for new industries further up the value chain.
New ports and infrastructure are in development as we move to new low carbon industrial practices.
Local value-adding to extractions is an important capability and Australia will need experienced insights to build the smart factories to produce batteries, EVs and new processing plants.
A new corporate governance will emerge from powering that industry, managing its water use and living within the limits of Scope 3 responsibilities.
How can Australia and China work together to innovate?
Transport and Mobility
New fuels, refuelling systems, sales and service infrastructure are the market opportunities of the future for Australia.
There is enormous scope for Australian businesses to learn from China’s lead in industrial transformation at scale and opportunities for technological innovation.
There are wealth creation opportunities from Australia’s future industries.
Powered from an abundance of renewable resources and distributed through efficient HVDC or storage-supported distributed grid infrastructure, Australia’s role as a regional refuelling hub could challenge traditional hydro-carbon exporters in the Middle-east and South-East Asia. A decarbonised future provides tremendous scope for Australia to build its sovereign capacity and reposition itself in the global trends around new, green economy markets.
Capital and capability are still keys to success and Australia must evaluate the pros and cons of working with, rather than against, the scale and demonstrated capacity in China.
With a fresh approach to knowledge-sharing and people-to-people exchange, Australia can fast-track its participation in AI, robotics, advanced manufacturing, and sustainable development that is already occurring in China and increase economic complexity for security and prosperity in the region.
Green Cities
Urbanisation is a global trend driving the growth of cities, often with adverse environmental outcomes and health implications.
Green cities and buildings present an enormous opportunity for Australia to bring together knowledge and ingenuity.
China and Australia have a great deal in common and are uniquely placed for opportunities to design new, and regenerate existing, cities.
China’s accelerating efforts to ‘green’ its cities through policy settings and pilot projects provide opportunities for Australian service providers and technology innovators to find new markets.
China’s ambitions to create ‘sponge cities’ presents opportunities for Australian cities and businesses to share experiences in water sensitive urban design.
Collaborations on the application of Australian technology in China, and piloting innovations in Australia, provide a platform for wealth creation and solutions to the new green economy of the future.
Information exchange between China and Australia in terms of lessons learnt will have a considerable impact.
A ‘green’ Olympics in 2032 could act as a catalyst.
Funding the Transition
Australia is a capital constrained economy and the scale of transformation requires foreign investment and advanced manufacturing capabilities.
China carries the potential to become one of the greatest sources of capital to the region, funding green projects and generating green jobs; yet there is some hesitancy in Australia to source funds from China.
Australia has an opportunity to lead the way in regional green economy investments.
Australia can have a role in standards setting, allocation management and policing of green finance projects, particularly in the Asia Pacific region.
There is an opportunity to engage with Australia’s First Nations people and ensure their participation, benefiting from their extensive history in and knowledge of land management.
Agriculture
The future of food is green.
For Australia there is a chance to learn how to scale and grow new innovations in an era of eco-agriculture and new alternative proteins.
China's agriculture sector is investing in sustainable agriculture, global EMS standards, and AI monitoring and processing.
Australia has led the way in sustainable agricultural practices, building original product differentiators via standards and reporting requirements. Efforts to apply rigour to sustainability measures must accelerate.
Landowners and farmers are already maximizing yields through more efficient, sustainable farming practices integrating agritech from local and global innovators.
How can China and Australia work together to solve tomorrow’s water, food and fibre challenges in the green circular economy?
Collaboration: the heart of the challenge
If there was an overarching approach that emerged in preparing this report, it was one of open-mindedness and eagerness.
Innovation and adaptation are widespread – whether global, national, regional or local. Yet the role any technology will play in five to ten years’ time is hard to predict. Policy settings and political support, the scale and nature of investors, and local conditions all play a role.
This is why collaboration is a critical focus regardless of the sector or setting. Not only engaging in projects, but also sharing insights and innovation. The all-pervasive challenge draws stakeholders from across the economy. Governments must work within and across their borders to get the foundations right and allow business to take the lead.
With complexity and pace comes a need to combine forces
“Collaboration is fundamental. We’re now in an environment where the pace of change is extraordinary. Particularly for the energy sector and system, the levels of complexity and uncertainty have increased. This old idea that one organisation knew the answer – the reality is there’s no individual with a monopoly on ideas and the future.”
Kane Thornton, CEO, Clean Energy Council
Whatever the precise future mix of renewables, Clean Energy Council CEO Kane Thornton highlights a significant challenge for Australia: the congested grid. The regulatory settings are complicated, including a mix of state-based electricity safety rules and federal pricing oversight.
It showcases how the big challenges and opportunities lie in the integration of technology, consumers, suppliers and markets. To Thornton, that means bringing people together for solutions. He points to inverter technology as one example. With an inverter on the side of Australia’s 3 million solar-rooftop homes, Thornton says there’s a need to better understand and utilise the sophisticated technology.
From a regulation perspective, the Clean Energy Council wants to see a new market framework to allow generators to “trade their way around congestion” (for example, a wind farm could send its power to a nearby battery for a price, rather than adding it to the grid). Better information flows between generators, network service providers and market bodies would accompany the market, to drive efficient and low-cost outcomes.
The industry group, representing more than 1,000 members across clean energy, put its argument to the Energy Security Board in its June 2022 submission on reform consultations. The Energy Security Board itself explicitly championed the need for “high levels of understanding, trust, and cooperation” and working together “in new ways” to deliver its planned reforms to the outdated system.
Continuing the conversation
This report has explored the foundations for the conversations we need to have. Not just about the relationship between Australia and China, but their respective roles in this new era of decarbonisation.
Australia and China share mutual visions for future prosperity and taking a leadership role in a global transition.
Important conversations are happening within and across borders. To reach ambitious but critical goals, they are conversations all must join in the vigorous and tireless pursuit of net zero.
As we look to COP27 and beyond, we welcome you to the table to discuss.
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