Regulatory certainty and entrepreneurship: Unlocking Australia-China climate collaboration

Nov 27, 2023
Australasia Punch. Man fist with Earth map.

Entrepreneurs occupy a pivotal role in bridging the gap between Australia and China, especially when it comes to climate collaboration.

Collaboration between Australia and China on solar energy technologies stands as a testament to the potential of entrepreneurship and international partnerships in driving innovation and sustainability. The synergy had led to various successful joint ventures and research initiatives. Such collaborations not only boost technological advancements but also play a vital role in addressing global challenges like climate change. With their inherent qualities of innovation, agility, and risk-taking, entrepreneurs can navigate the complex socio-political and economic landscapes of both nations to find common ground.

Since the Labor Party took government, there have been renewed discussions about the opportunities offered to Australia for engaging China on climate cooperation. Despite these discussions, actual actions remain weak.

Australia and China, as leading coal producers, confront substantial risks from climate change, given the vulnerabilities inherent in their respective ecosystems. Both countries have announced ambitious carbon neutrality plans. In September 2020, President Xi Jinping announced that China will ‘aim to have CO2 emissions peak before 2030 and achieve carbon neutrality before 2060.’ Two years later, in September 2022, Australia passed legislation enshrining a pledge to cut carbon emissions by 43 percent by 2030 and to reach net zero by 2050.

The complementarity of interests between Australia and China in climate change collaboration is reflected in trade relations: China is Australia’s largest importer for lithium and liquified natural gas (LNG) and a significant supplier of renewable energy products, including batteries and solar photovoltaic panels. Increasingly, China is becoming the largest supplier of electric cars for Australia. Just over 86 percent of Australia’s battery electric vehicles (BEVs) are sourced from China, including all Teslas and Polestars, all electric Volvos and some BMWs.

However, significant barriers exist to move beyond trade relations, both external and internal to each country.

Recent studies highlight the growing apprehension in the scientific community regarding potential risks associated with cross-border collaborations. The evolving landscape of technology, exemplified by innovations like smart grids, inherently carries risks such as cybersecurity threats. As these smart grids become more sophisticated and interconnected, the vulnerabilities increase, and so do the apprehensions, especially given the current geopolitical climate between Australia and China.

Investment-wise, Australia has always been an attractive destination for Chinese capital in the renewable sector. Between 2013 and 2016, leading Chinese energy companies such as Goldwind, PowerChina, CECEP, Beijing Jingneng, and Astronergy, have invested in Australia’s renewable energy sector. However, the tightening of foreign investment regulations in Australia, driven by a mix of national security concerns and political dynamics, has cast a shadow over potential Chinese investments. These regulatory changes, perceived as hurdles by Chinese enterprises, combined with the politicisation of Chinese operations, have led to a perception of increased risk and cost.

China’s regulations also, especially those introduced in recent years, have the potential to stymie cleantech collaboration. Its legislations, while rooted in national security and sovereignty concerns, can inadvertently act as barriers to the free flow of technology and capital essential for global climate action.

Lastly, domestic politics and vested interests in both countries further complicate the issue. Both Australia and China possess strong factions resistant to rapid transition away from fossil fuels, primarily coal. These groups, owing to their economic significance and political influence, have often been a hindrance to aggressive climate policies.

Moving forward, both nations need to navigate these challenges judiciously to tap into the mutual benefits of such collaboration, especially in the face of pressing global climate imperatives. In the increasingly globalised and interconnected world of today, collaboration between nations, especially those as influential as Australia and China, is not just beneficial, it is inevitable. Such collaboration is fundamental for addressing complex global challenges, especially those pertaining to the environment and the economy.

Both nations must recognise the mutual advantages that can arise from pooling resources, expertise, and innovation. However, to ensure effective collaboration, it will be crucial to set clear boundaries. This will involve establishing a ‘negative list’ that details areas or sectors where collaboration might be restricted due to national security, intellectual property concerns or other significant reasons.

The introduction of such a list will provide transparency and clarity for businesses, investors, and policymakers on both sides. It will demarcate the areas where collaboration can proceed unhindered, and others where additional scrutiny might be needed or absolute limits applied.

By proactively addressing potential concerns and providing a clear roadmap for collaboration, both Australia and China can foster a relationship built on mutual respect and shared objectives. This can not only strengthen bilateral ties but also set a precedent for other nations in the increasingly complex world of international diplomacy and cooperation.

Entrepreneurs occupy a pivotal role in bridging the gap between Australia and China, especially when it comes to climate collaboration. Australia’s economic engagement with China is underlined by the professional experience and social capital of a large number of Australia-China entrepreneurs. According to a recent report from the University of Sydney in collaboration with KPMG and AustCham Shanghai, titled Australia-China Entrepreneurs: Cross-border Business Ecosystems, renewable energy is one of seven industries where Australia China cross-border ecosystems are emerging driven by entrepreneurs in Australia and China. Aggregating resources and networks across fragmented entrepreneurial business ecosystems opens new avenues for Australian entrepreneurs of different backgrounds to jointly innovate and enter new markets such as climate change collaboration.

 

This article is part of P&I’s extended series: China: Perspectives beyond the mainstream media, guest edited by Jocelyn Chey.

Read the full series below:

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