Australian Prime Minister Anthony Albanese and US President Joe Biden have signed a formal agreement that will see the two nations collaborate to develop solar, wind and storage technology, co-ordinate critical minerals supply, develop new battery technologies, and support emerging hydrogen markets. The pair signed the Climate, Critical Minerals and Clean Energy Transformation Compact during a bilateral meeting held on the sidelines of the annual Group of Seven Summit in Japan on the weekend.

“Australia and the US will deliver sustainable, resilient and secure critical minerals and clean energy technology to the world,” the two leaders said in a joint statement. “We intend to identify areas where Australia and the US can coordinate the development of our respective clean energy industrial bases, including but not limited to solar, wind, storage, and clean hydrogen materials and technologies.”

Albanese said the joint initiative is the “largest action by any country” to deal with climate change and to direct investment into the clean energy transformation. “And if we think about industries like hydrogen, without that support, there would be a massive incentive for hydrogen-based industries to be based in the US,” he said.

Albanese said the agreement will open up new opportunities for Australian manufacturers and suppliers and help address concerns that the impressive subsidies offered by the US Inflation Reduction Act will disadvantage Australian companies.

“So the big risk with the Inflation Reduction Act … is that you would see capital leave Australia to go to the United States. This is about addressing that. This is about creating an enormous opportunity for Australia,” he said.

A climate change action plan is to be developed by the end of the year and new ministerial-level dialogue will be established between Australia and the United States to encourage stronger industrial collaboration and accelerate progress towards net zero emissions.

Biden hailed the agreement as a “huge step forward” in the fight against the climate crisis, saying climate and clean energy has become the “third pillar” of the Australia-US alliance, alongside defense and economic co-operation.

“This contract can enable the expansion and diversification of clean energy supply chains, especially as it relates to critical materials,” said Biden.