Australia may struggle to meet its climate targets without increased investment from China, according to a recent report by the think tank Climate Energy Finance. The organisation highlighted the need for policy reforms to attract more foreign investment, particularly from China, which has been a leader in zero-emissions technology.
The report, released on Monday, underscores the urgency of the situation. It recommends that Australia enhance transparency in foreign investment decisions and establish a “green lane fast track” for strategic renewable energy investments. The analysis reveals China’s substantial global investments in clean technology, including solar panels, batteries, hydro-electricity, and green hydrogen.
In the past three years, Chinese companies have invested over $US180 billion (approximately $A271 billion) in energy projects, with $US100 billion of that amount committed in just the last year. Noteworthy projects include an industrial park for green hydrogen and sustainable aviation fuel in Brazil, a hydro-electricity initiative in Peru, and battery gigafactories in Spain and France.
Despite this, Chinese investment in Australia has drastically decreased. The report indicates that outbound direct investment from China now accounts for only 1.5 percent of Australia’s total, representing an 85 percent decline since 2018. Caroline Wang, a China analyst and the report’s author, expressed concern over this trend, stating that 70 percent of Australia’s clean energy investments rely on foreign capital.
“Australia stands at a critical juncture,” Wang commented. “Failing to engage with China’s capital and expertise will delay Australia’s net-zero transition, jeopardising its decarbonisation objectives and future economic stability in a global economy moving towards net-zero.”
To reverse this trend, Climate Energy Finance proposed five key recommendations aimed at boosting Chinese investment in Australian renewable projects. These include the establishment of a working group to facilitate cooperation, an advisory body to provide strategic recommendations, and reforms to foreign investment policy, especially concerning renewable energy projects.
Wang cautioned that without significant changes, Australia might find it challenging to meet its climate target of reducing emissions by 62 to 70 percent by 2035. She stressed the need for Australia to adapt its economic and foreign policies to engage constructively with China, noting, “A multipolar world, no longer centred on the US, necessitates an urgent overhaul of its economic, foreign investment and foreign policy settings.”
Ember senior energy analyst Muyi Yang echoed these sentiments, emphasising that a balanced approach to Chinese investment in energy projects is crucial for success. “Almost everyone agrees you can’t hit climate goals without working with China,” Yang said. “However, concerns about over-reliance and de-risking grow louder when co-operation shifts to producing clean products together.”
The challenge ahead is not to exclude China but to build diversified and resilient supply chains that leverage Chinese expertise while fostering the growth of clean industries in other countries. As Australia navigates this complex landscape, the stakes for its climate goals and economic future remain high.
