The retirement of the Trump administration of American climate policy poses an immediate geostrategic challenge for Australia: how to remain relevant for Southeast Asia, because the region quickly builds green supply chains. The transition from Southeast Asia to clean energy is inevitable and Australia must either deepen its commitment or the risk of late.
Southeast Asia is one of the fastest growth regions in the world, which should represent 25% of global energy demand by 2035, exceeding the European Union by the middle of century. Under the imports of fossil fuels, the nations of the region have economic and strategic incentives to move on to green energy. And they turn more and more towards a partner to make it a reality: China.
China represented $ 818 billion of the 2.1 dollars of dollars invested in the global energy transition in 2024, according to Bloombergnef, a large part of which enters Southeast Asia. These investments build supply chains to the test of prices in Southeast Asia to produce batteries, solar cells, wind turbines and electric vehicles that will feed the global economy in the decades to come.
But the absence of environmental and social guarantees, or price signals to encourage them, has created a number of problematic results. In Indonesia, for example, where Chinese investments have created a virtual monopoly on the transformation of nickel, the pricing of Australian transformers and others, the accompanying infrastructure led to a proliferation of new coal -fired power plants, undermining the efforts of Indonesia To reduce its coal dependence.
These environmental and geostrategic problems have motivated the Biden administration to support American investments in clean energy supply chains in Southeast Asia through the Act on the Reduction of Inflation and Multilateral Initiatives such as Energy transition partnerships Just in Indonesia and Vietnam. Australia had hoped to prosper in this investment coalition with the United States, Japan and India thanks to quadrilateral strategic dialogue. However, the second Trump administration does not seem to be interested in supporting the region’s green industry. In the absence of American incentives, Australia must act quickly to secure its place in the green industrial transition of Southeast Asia.
Fortunately, Australia has a lot to offer to the region. It houses the best wind and solar resources in the world, and substantial deposits of metals and key minerals essential to the green economy. Australian universities can provide the skills and research necessary to speed up the transition. However, the realization of this potential requires an increase in diplomatic efforts to position Australia as a renewable superpower in the region.
To make this promise a reality, Australia must prioritize its commercial and economic diplomacy. Working with key partners such as Japan and South Korea, which are also based on exports of fossil fuel, will be crucial. There is an increasing momentum towards a miniiilateral group with these partners, focused on the cooperation and investment of the green economy, which should be encouraged. The strengthening of bilateral links with the main manufacturing countries in the region and the promotion of cooperation in their own economy, including through trade agreements, are essential. In addition, the potential accommodation of Australia of COP31 in 2026 could lead to a new approach to energy transition cooperation in the region.
Australia should also work with Southeast Asian countries to improve its value proposal for foreign investors, especially in clean energy supply chains where Australian companies could play a key role. Currently, fossil fuel subsidies and strict local content requirements throughout the region increase the risk of the project and dissuade investments.
Australia has long been a trusted partner in the region, providing technical assistance that has helped Southeast Asia countries recover from the Asian financial crisis. By increasing development assistance to support the reform of climatic and energy policies, Australia can help improve the institutional frameworks necessary for the green transition. The sharing of lessons learned from the own energy transition and construction partnerships of Australia between Australian and regional institutions can remove foreign investments.
Australia faces a clear choice: to seize the opportunity to join the Green Industrial Revolution of Southeast Asia or to remain away while others shape the economic future of the region. The global energy transition is already underway, driven by economic forces that will survive political changes. By forging stronger regional partnerships, by conducting investments in clean supply chains and positioning the nation as a trusted partner in the energy future of Southeast Asia, we can guarantee prosperity at long term and continuous relevance for the dynamic neighbors of Australia.