CleanTech MoU between Australia and California aligns green energy development

Australia has entered a Memorandum of Understanding (MoU) with the US state of California to propel clean energy technology development and strategic partnerships. Australia is a heavy mining region and will benefit from this green energy collaboration, while California, the largest economy in the United States with Silicon Valley at its heart, might lend operational expertise on this matter.

The MoU was signed on Wednesday and revolves around the active cooperation of these two regions on advancements to curb carbon emissions, protect the ecosystem, and obliterate global warming and climate change.

Australia and California are preparing the greatest of its minds in the metal and aluminium industry, as well as the academia, to work together on matters concerning clean energy supply chains and technologies, clean intra-state or country transportation and the circular economy. The experts will identify all the possible growth momentums and develop futuristic projects for the betterment of society and the international supply chain or trade routes at large.

Sustainable practices are of utmost importance in the aluminium industry as it is an energy-intensive avenue. AL Circle’s Sustainability in the Global Aluminium Industry report delves deeper into the intricacies of the entire aluminium value chain and cites advancements in global green initiatives.

As per the joint press release published by Climate Change and Energy Minister Chris Bowen and Foreign Affairs Minister Penny Wong, the alliance will try to utilise the state’s “ability to set standards for new and emerging technologies.”

Mr Bowen confined to the reporters that the provisions under the deal were being conceptualised since his meeting with Californian Governor Gavin Newsom in September 2022.

He specifically talked about electric vehicles and solar panels as they project an immensely wide spectrum of cooperation. He also praised California’s electric vehicle policy and deemed it to be “very advanced”. The Department of Climate Change, Energy, Environment and Water will look after the investments required in materialising the project, and the funding will come from the existing budget for international conglomerations.

Penny Wong, the Foreign Minister, asserted that the agreement would “accelerate our shared efforts to mitigate and adapt to climate change, including by promoting climate-related disaster resilience and supporting the development of clean energy technologies”.

The new agreement is an epilogue to the Climate, Critical Minerals, and Clean Energy Transformation Compact signed between US President Joe Biden and Australian Prime Minister Anthony Albanese.

The agreement made Joe Biden commit to his Australian ally that the country would be added as a domestic source under the US Defence Production Act. This would let Australian firms get access to US funding that has been kept aside for industries vital for economic security and growth.

The partnership will also encash the Inflation Reduction Act, seeking opportunities for Australia-based units from the enormous US$369 billion worth of allowance for clean energy and renewable technology harnessing operations.

There was this prevailing thought that the Inflation Reduction Act would deflect the capital from being invested in green hydrogen and clean technology projects in Australia. The previous year, the Department urged the US Government to clarify “if any, steps the US may take to minimise the risk of its [Inflation Reduction Act] incentives causing distortion in the global hydrogen market”. MR Bowen feels optimistic about the US$2 billion Hydrogen Headstart production credit initiative as he looks at it as an “early down payment, a deposit, on our broader Inflation Reduction Act response”, with the government having a “more to say later in the year” stance.

Mr Bowen also specified that a carbon border adjustment mechanism would be explored with the aluminium industry as well as cement and steel after conducting the feasibility study.

Chris Bowen analysed: “We want to see emissions come down. We want to see those strategic industries grow. We need more steel and aluminium and cement for this massive transformation, renewable energy transformation, and we want to see that continuing to be made in Australia.”

The US federal leadership has forged various low emissions technology alliances with countries like Singapore, Germany, Japan, India, South Korea and the United Kingdom. A green innovation grant worth US$20 million will be activated between Singapore and Australia by the end of 2023.