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Trade Minister Don Farrell and key cabinet ministers will mount a high-powered push to reset the energy security partnership with Japan on Sunday, in a bid to assuage concerns over Australia’s reliability as an exporter and investment destination for coal and gas.
Japan’s Energy Minister Yasutoshi Nishimura will meet Farrell in Melbourne, along with Energy Minister Chris Bowen and Resources Minister Madeleine King, to cement an agreement for greater dialogue on proposed policies in commodities like coal, gas and iron ore, and climate action.
Trade Minister Don Farrell will lead high-powered ministerial talks with Japan.Credit: Alex Ellinghausen
It is unprecedented for three Australian ministers to attend the annual Australia-Japan Ministerial Economic Dialogue, a move spurred by months of anxiety within Japan’s senior leadership over Labor’s domestic energy policies.
Japan sources two-thirds of its coal, a third of its liquefied natural gas and more than half of its iron ore from Australia. Any disruption to supply could disrupt Japan’s industry, harm its economy and raise household power bills.
In comments ahead of Sunday’s meeting, Farrell said the discussion would cover a range of regional trade issues and “common objectives in managing our economic and energy security interests and developing new opportunities in the energy transition”.
“Holding this annual dialogue with four ministers is unprecedented and reflective of the deep and broad range of economic and trade challenges Australia and Japan are working together on,” Farrell said.
Australian cabinet ministers will meet with Japan’s Energy Minister Yasutoshi Nishimura in Melbourne. Credit: AP
Farrell will use the meeting to formally accept Japan’s invitation to travel to Osaka later this month for the G7 Trade Ministers’ Meeting. It is the first time an Australian trade minister has been invited to attend.
The Japanese government and industrial heavyweights have warned the Albanese government that its climate policies could affect international relations, following new rules that require new Australian gas projects to have net-zero emissions.
These fears were exacerbated late last year after the federal government intervened in the domestic gas market, slapping price controls on local gas supplies and threatening to invoke unprecedented export controls if Australia’s LNG exporters did not comply.
The move prompted accusations from one of Japan’s most senior business leaders, energy giant Inpex’s chief executive Takayuki Ueda, that Australia was “quietly quitting” the gas industry.
In an address to a private function in Parliament House in March — attended by Farrell, senior bureaucrats and industry leaders — Ueda warned of the “potentially very sinister consequences” that Russia, China and Iran would likely fill any void created by Australia, an outcome that would represent a “direct threat” to peace and stability in the region.
Following Ueda’s intervention, Bowen visited Japan in July and made a speech to calm fears that the Albanese government’s upgraded climate targets would disrupt gas exports.
New gas projects would be able to offset their emissions, enabling increases in production while projects meet climate goals, Bowen argued, while promoting the prospects for bilateral cooperation in clean energy exports like hydrogen.
In comments before Sunday’s meeting, Bowen said Australia and Japan could strengthen their national security by working together to increase action on climate change and energy security.
“We can build new economic opportunities that will increase energy trade, drive down power prices in both of our countries and put us back on track to reaching net-zero emissions by 2050,” Bowen said.
Japanese investment has been crucial in the development of Australia’s huge coal, iron ore and gas export industries and Japanese companies are currently in partnerships for major production projects on all three commodities.
Resources Minister Madeleine King has already met Nishimura three times since May last year and said Japanese trade and investment was vital to Australia’s economy.
“Japanese investment helped build Australia’s iron ore industry in the 1950s and our LNG industry in the 1980s. Our economies are joined to one another in a way that few others are,” King said.
The Grattan Institute’s climate and energy program director, Tony Wood, said it was unreasonable for Japan to complain about the Albanese government’s climate policies impacting gas production given that the instrument it was using, the safeguard mechanism, had been on the former Coalition government’s books since 2016.
However, because both nations were committed under the Paris Agreement to increase the efforts to cut greenhouse gases over time – and reach net zero by 2050 – the current dilemma was an opportunity to enhance ties, Wood said.
“The Japanese cannot expect that Australia will just continue to extract gas with the emissions that it generates in Australia and that Japan will continue to burn a lot of it, also generating emissions,” he said. “We both have to agree on what must be the inevitable phasing-out of gas.”
Prime Minister Anthony Albanese, along with Bowen and King, has voiced strong support for the future of the gas export industry.
A shock decision from the Federal Court last month, however, will do nothing to dampen Japanese fears about the challenges of investing in Australian fossil fuels.
A large new gas export project, which could shore up future supplies to Japan, was halted after the court ruled proponent Woodside had not properly consulted traditional owners over its plans to conduct seismic testing at its offshore Scarborough gas field.
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