Accident-prone Energy Minister  Chris Bowen spent the last week or so of July demonstrating that his abilities as a diplomat are on a par with his domestic ministerial performance. So there was little surprise in the outcome of his being sent to Asia to ‘strengthen ministerial and industry connections in support of Australia’s role as a clean energy exporter’ and to resolve the developing crisis over the threat posed to the energy security of Japan and Korea, our second- and third-largest export markets and vital strategic allies, by the Albanese government’s new emissions laws. These are of such major concern that not only have Japanese senior ministers already requested flexible measures under the safeguard mechanism for LNG projects supplying Japan, but PM Kishida has made a similar approach to PM Albanese. And the stakes for Australia are high; last year our LNG exports hit a record $92 billion and coal $124 billion, saving the federal budget from a whopping deficit. What is it to be? Maintain a highly rewarding export industry that attracts foreign investment and provides energy security to allies and neighbours, or sacrifice it all in pursuit of unachievable feel-good emissions targets on the altar of climate change? A delicate diplomatic problem requiring careful treatment. And they sent Chris Bowen.

Following his expedition, two of our key customers are now looking for alternative fossil fuel sources. And his meeting in India with energy ministers of the G20, the world’s richest nations, where he intended to ‘champion Australia’s interests in the clean energy transformation and emission reduction efforts’ ended up a disaster; one commentator describing its failure to reach a consensus on cutting down fossil fuels (its concluding report did not even mention coal!) as ‘reneging on last year’s G20 commitments’. Worse, say its critics, it sets the scene for upcoming likely failures at September’s G20 summit and the Cop 28 climate summit in Dubai.

So while the world’s largest economies, that account for three-quarters of global emissions, can’t agree about such ‘crucial planet-saving’ issues as phasing down unabated fossil fuels by mid-century and tripling renewable energy capacity by 2030, the Albanese government, acting as if overwhelmed with chagrin by Australia’s planet-killing one per cent of global emissions, is pursuing climate purity whatever the cost –  not only domestically but also to our trading partners. Even after Japan had cajoled Australia into joining the East Asia Zero Emission Community, with its insistence that members’ climate measures should only be taken ‘while maintaining energy security and sustainable economic growth’, Australia has ignored these vital conditions of membership that, Bowen was told by Minister Nishimura, ‘is very important to Japan’.

There was certainly no evidence of any Bowen concern for the energy security of our East Asian fellow members (who in total make up the great bulk of the market for Australian gas and coal exports) in his reply to the torrent of complaints he received on arrival in Japan about the impact of July’s changed Australian emission laws, some with retrospective effect. These not only add considerably to the cost of gas but also now depend on the success of the massive carbon capture and storage, still largely untested at this scale, now required.

For Japan, an energy-deficit nation that depends on Australia for 40 per cent of its LNG and two-thirds of its coal, the consequences of the Albanese government’s new rules are potentially seriously damaging. But Bowen’s basic response to pressure from Japan to soften the impact of the new rules for the sake of the entente, was the hollow assurance that Australia would continue to be a reliable energy supplier – but with the emphasis on renewables along with alternatives like hydrogen (although we don’t currently have a functioning hydrogen industry!) He simply ignored his Japanese counterparts’ unequivocal message in the public phase of their meeting that while Japan hoped for ‘deepening of bilateral cooperation in the clean energy field in the future’, currently and for some time to come, Japan needs Australian coal and gas: ‘We are expecting  continuous development of a reliable investment environment in the Australian liquefied natural gas and coal industries.’

Bowen provided no public support for that expectation whatsoever, but reserved his most dismissive Bowen-esque response for those calling for Japan to be exempted from the new Australian emission rules: ‘To be very clear and frank I’m not here to tell Japan what to do… and Japan likewise respects our sovereign policies.’ The reality is that Japan wants a policy change that has been dismissed out of hand. This brought an inevitable reaction not only from the Japanese utilities that have now turned to the Middle East to diversify their LNG import sources in view of Australia’s governmental unreliability, but also from Tokyo.

Coincidentally with the Australian Financial Review headlining, ‘No exemption on emissions, Bowen tells Japan, Korea’, PM Kishida has embarked on a whirlwind tour of the Middle East, culminating in a visit to major LNG exporter Qatar. ‘After meeting with the Emir of Qatar, the two leaders agreed to upgrade their countries’ relationship to strategic, especially in energy, with the Japanese stating that while no new LNG contracts were announced during Kishida’s visit, he told the Emir “LNG serves a crucial role in Asia for a realistic energy transition”.’

This issue has attracted a lot of media attention in Japan, with senior officials accusing Australia of ‘betrayal’ over energy security amid fears that the new rules could derail construction of new export liquefaction facilities in Australia, or make produced volumes much more expensive.

The Wall Street Journal quotes a very senior bureaucrat warning that, ‘If this issue cannot be resolved, it might undermine long-trusted relations.’

And Energy Minister Nishimura told a recent press conference, ‘It will have an extremely significant impact on Japan’s LNG business in Australia’, referring to the Japanese participation in Santos’ controversial  $4.7 billion Barossa gas project 285 kilometres off Australia’s Northern Territory, in which Japan has both an investment and a prospective consuming interest.

But the legal delays due to local activist Aboriginal protesters, who are determined to block the project and to whom the proposed Voice may give added impetus, have yet to be resolved. The combination of recent government-imposed heavy financial disincentives (both federal and state – particularly Queensland where major miners like BHP will no longer invest) and the empowering of Aboriginal activism (as evidenced in recent WA legislation and potentially via the Voice) are creating an unprecedented level of sovereign risk to investing in Australia. Your Labor governments at work.