Japan and Australia enjoy a long-standing relationship when it comes to energy trade. According to Japan, “(t)he energy and resources sector is the bedrock of the Japan-Australia economic partnership”. But the two countries’ efforts to decarbonise their economies to reach their respective emissions reduction targets have been threatening to jeopardise this gas-fuelled obsession. Japan has been lobbying hard against any change to fossil fuel regulation in Australia. Now, under the guise of Japan’s Asia Zero Emission Community (AZEC), Japan and Australia have found a new way to keep the relationship going.

On paper, AZEC serves as a platform to support achieving net-zero emissions across the Asia-Pacific region. AZEC allows its 11 partner countries to benefit from Japanese funding for energy projects. Through AZEC, Japan aims to lead the energy transition across Asia. Research by Zero Carbon Analytics shows that, since AZEC was launched in March 2023, 158 project agreements have been signed across the Asia Pacific. Prime Minister Albanese took part via video message in the inaugural AZEC leaders’ summit in December 2023.

But AZEC is not as environmentally friendly as it sounds. It needs to be seen in the context of Aus-Japanese energy politics and trade. In early 2024 Madeleine King, Minister for Resources, visited Japan, a visit to assure her Japanese counterparts and the gas industry that despite AZEC’s name, it would be business as usual on fossil fuels. The core message to Japan was that “Australia is committed to remaining a trusted trade and investment partner for natural gas” and that the “government will continue to provide a stable investment environment for gas explorers and producers”.

King’s briefing specifically anticipated interest for “the development of the Future Gas Strategy, and the long-term policy framework it will provide for LNG gas exports”. The Strategy was then released in May 2024, delivering on promises made to Japan. According to the Strategy, not only is gas “critical” to Australia’s economy and its decarbonisation, but it also supposedly plays a key role in helping trade partners transition to net zero too.

Those arguments don’t stack up.

Until now, the gas industry has paid very little royalties or tax on exported gas, so it is unclear how ongoing gas exports are essential to the economy. Gas is touted as a “transition” fuel, but it has a carbon footprint that is equivalent to, or worse than coal. Furthermore, Japan has the potential to achieve 90% clean electricity by 2035 and has been on-selling Australian LNG due to surpluses to their supply.

So, even if it somehow is Australia’s responsibility to help Japan decarbonise its economy, it is hard to see how expanding gas exports help.

It comes as little surprise that, of the 12 AZEC agreements in Australia, seven of them involve fossil fuel technologies given Japan and Australia’s vested interests in spuriously promoting gas as a transition fuel. An example of such agreement is the “Memorandum of Understanding” (MoU) between the Northern Territory government and the state-owned Japan Organisation for Metals and Energy Security (JOGMEC). This agreement establishes a “framework for cooperation in various energy sectors including natural gas, carbon capture and storage and hydrogen production.”

Although the agreement is still in its early stages, it is hard to understand how it fits in a zero-emission framework. As mentioned earlier, natural gas is far from being a carbon-neutral energy source. Carbon capture and storage is an unproven technology that has served to delay fossil fuel phase-outs. As to hydrogen, 99% of global production relies on fossil fuels as feedstock, usually gas (so-called “grey” hydrogen), and Australia’s current and planned production of green hydrogen is barely enough to cover domestic industrial use, leaving no green hydrogen to export.

Many of AZEC’s early-stage MoUs and other “feasibility studies” will only serve to mask ongoing gas exports from Australia to Japan, bringing no benefits to Australians and justifying extending and maintaining fossil fuel infrastructure instead of fostering genuine emissions reduction. This is especially of concern where electrification is a viable alternative to decarbonise.

Continuing on this path is contrary to both the Japanese and Australian governments’ climate commitments: Japan pledged in 2022 to end international financing for unabated fossil fuels alongside other G7 leaders, and the Australian government has announced its ambition to host COP31 and to become “a clean energy superpower”.

More cooperation on genuine decarbonisation across the Asia-Pacific is good. Every dollar invested in fossil fuels is a dollar not spent on renewables, and the only beneficiary from ongoing gas reliance is the gas industry. In 2023, Japanese energy companies have made more than US$14 billion profits from gas.

Australia is giving away its gas for free to the Japanese gas industry to profit from. The status quo contributes to delaying decarbonisation across the Asia-Pacific. If Japan and Australia are serious about climate action, they cannot allow projects involving fossil fuels and unproven technologies to go forward under the guise of AZEC, at the expense of everyone but the gas industry.