Australia cannot hedge its way to a renewable export future

As admiral Chris Barrie stated at the Australian Clean Energy Summit (ACES): Australia is trying to be two things at once, a renewable energy superpower and an expanding fossil fuel exporter. For years, that contradiction was treated as a sensible hedge. Increasingly, it looks like a strategic liability.

It is also the central finding of WWF-Australia’s new report Energy Crossroads, which examines why managing the decline of fossil fuels is central to securing Australia’s green export future. 

The old bargain is expiring

Across the Indo-Pacific, countries are drawing a hard lesson from repeated fossil fuel shocks. Whether triggered by war, supply disruptions or price spikes, the conclusion is the same: dependence on fossil fuels is a vulnerability, not a source of security.

Governments across the region are electrifying and building domestic energy resources specifically to escape the volatility of imported fuels.

That shift matters profoundly for Australia. For decades our economic and diplomatic position rested on a simple proposition: that we could deliver prosperity and security to the region through coal and gas exports.

But the same shock that may temporarily lift demand for Australian fossil fuels will accelerate the transition that ultimately erodes it.

Australia’s credibility problem

The Australian government has embraced the language of a renewable energy superpower, and Australia’s electricity system is making genuine progress. Renewables now account for 46% of our electricity market, Australia leads the world in rooftop solar, and we have the third-largest utility-scale battery market.

At the same time, governments keep approving new coal and gas, backed by billions of dollars in support and infrastructure built to run into the 2050s and beyond. Australia remains the world’s second-largest exporter of fossil fuel emissions. 

The flawed hedge

Jobs, revenue and royalties are the standard justification for backing fossil fuels. But once public support is netted against gross receipts, and the revenue base is stress-tested against a shifting demand outlook, fossil fuels look less like a durable economic pillar and more exposed than headline numbers suggest.

Analysis in our report by Cyan Ventures finds Australia’s fossil export value could fall by as much as A$70 billion by 2035 as regional decarbonisation accelerates.

The risk is asymmetric. Demand can fall much faster than forecasts anticipate, as history repeatedly shows. Yet supply-side investments are being made on the assumption that demand persists for decades. If that assumption proves wrong, the costs fall on workers, communities, taxpayers and governments.

The deeper problem is the hedge is not neutral. Fossil fuels and green industries compete for the same limited public capital and political attention. Every subsidy, tax concession, approval pathway and diplomatic effort sends a signal about which industries Australia intends to back.

Continuing to expand fossil fuel production while seeking to build renewable exports risks splitting investment signals, slowing the deployment of the low-cost renewable energy that future industries depend on.

The likely outcome is not the best of both worlds, but the worst: stranded fossil infrastructure that taxpayers are left to underwrite, and a renewable export future that arrives too late to capture.

From hedging to clarity

None of this is unprecedented. Australia’s LNG, coal and refining industries did not scale on unsupported market economics. They were actively built, through decades of incentives, infrastructure and diplomacy.

The question is whether we apply that same ambition to the industries that will define the next century, and get serious about deliberately building them, or leave them to compete against a policy architecture designed for the last one. 

Our report sets out three shifts: 

– Plan for the decline of fossil fuel exports: Managing fossil fuel decline means confronting stranded liabilities and having an honest conversation with communities about the costs and risks ahead.

– Build the system that replaces it:  Cheap renewable power is the foundation of Australia’s export future, but getting there requires faster deployment, wider access to the benefits, and development that protects nature and strengthens community trust.

– Redirect policy and capital towards the transition: Ensure rewiring of policy settings that still favour fossil fuels, building demand for green exports, and using today’s resource wealth to fund the industries that will replace it.

The industries of the next century won’t build themselves

The greatest risk is not losing share in a shrinking fossil fuel market. It is being outpaced in the industries that come next and unprepared for a decline that leaves workers, households and businesses behind. 

Australia helped build its fossil fuel export industries through decades of deliberate policy, investment and diplomacy. The industries that will underpin prosperity in the next century will require the same strategic intent.

The choice is not whether the global energy transition happens. It is whether Australia helps shape it and captures its benefits or continues hedging until the opportunity has passed.

Camille Malbrain is renewable exports manager at WWF-Australia.