The United States and Australia agreed this weekend on a clean energy manufacturing pact with a focus on the energy transition and emissions reduction.
The so-called Climate, Critical Minerals, and Clean Energy Transformation Compact establishes climate and clean energy as a central pillar of the Australia-United States Alliance, the White House said, reporting the signing of the pact during the G7 leaders' summit in Hiroshima, Japan.
Under the agreement, U.S. President Joe Biden will support Congress taking action to treat Australian suppliers and activity as domestic activity in the United States for the purpose of the Defense Production Act and to open tax incentives in the Inflation Reduction Act (IRA) to Australian companies.
The IRA is "the largest ever action by any country to deal with the challenge of climate change and to attract investment into the clean energy transformation. What this will do is that the President will support the Congress taking action to treat Australian suppliers and activity as domestic activity in the United States for the purpose of the Defense Production Act," Australian Prime Minister Anthony Albanese said at a news conference in Japan.
The White House, for its part, said that "the framework intends to coordinate policies and investments to support the expansion and diversification of responsible clean energy and critical minerals supply chains, accelerate the development of markets for established and emerging technologies, meet the growing energy and adaptation needs of the Indo-Pacific, and enhance the region's role as a driver of resilient and sustainable global prosperity."
The IRA has nearly $370 billion in climate and clean energy provisions, including investment and production credits for solar, wind, storage, critical minerals, funding for energy research, and credits for clean energy technology manufacturing such as wind turbines and solar panels.
Australia's government has recently allocated $1.33 billion (AUS$2 billion) in the 2023- 24 budget to accelerate large-scale renewable hydrogen projects, aiming to become a world leader in green hydrogen production. Australia is also a major producer of lithium, the key mineral in the current leading battery technology globally.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More