The Green Transition Gets Strategic
- 17 minutes ago
- 5 min read
Mikey Glover | Climate and Environment Fellow
For decades, the global economy prospered through open markets, interconnected supply chains, and liberalised trade. And yet, geopolitical tensions are pushing governments to build sustainable economies that are self-sufficient and resilient instead. Once motivated predominantly by environmental protection, the “green transition” towards carbon-neutrality increasingly prioritises economic security. Climate policy now manifests as strategic supply chain management and industrial policy to develop critical domestic green industries. With such efforts coming at the expense of the interconnected trade order, Australia is uniquely exposed as a nation whose prosperity depends on exporting carbon-intensive natural resources. At the same time, as a resource and energy powerhouse, Australia is uniquely positioned to become a foundational pillar of this new global economic order.
Seeking Security in Instability
From the 1970s, globalisation has been characterised by economic and trade liberalisation, reducing tariffs and integrating global value chains. Spurred on by multilateral institutions and geopolitical developments such as the fall of the Iron Curtain, surging international trade promoted countries’ industrial specialisation, efficiency, and economic growth. However, the Global Financial Crisis undermined economic activity and openness into the 2010s, before the COVID-19 crisis shockingly exposed the vulnerabilities of interconnected supply chains.
Concerns have only been validated by continued geopolitical instability, including armed conflicts in Ukraine and the Middle East, and economic coercion through tariffs from the United States (US) and rare earths export restrictions from China. Despite the theoretical economic benefits of liberalised global trade, geopolitical risks are increasingly driving countries to retreat from the open economy of the 1990s, and pursue economic security through industrial policy and strategic supply chains.
Self-Sufficient Economies
Climate policy is a clear illustration of this. As the world rapidly decarbonises, the rationale for a green transition has shifted from purely environmental to geoeconomic strategy. For example, the European Union’s (EU) Green Industrial Plan targets EU net-zero technology manufacturing through expedited approvals and subsidies, while the Carbon Border Adjustment Mechanism (CBAM) imposes tariffs on imported carbon-intensive goods. While these measures pursue ambitious environmental objectives, the focus is on building domestic capacity in strategic industries, protecting the competitiveness of local producers that adhere to stricter regulations, and reducing import dependencies.
It also highlights the desire for energy security in particular, especially in the wake of the EU’s dependence on Russian fuel amid the invasion of Ukraine. As the Iran conflict stymies fossil fuel supply through the Strait of Hormuz, it is the countries with domestic renewables capacity, such as China or Uruguay, that are the best insulated, while those dependent on imported fossil fuel are exposed to energy insecurity and rising prices.
In addition, climate policy also increasingly involves strengthening partnerships and “friend-shoring”, such as Canada championing secure and sustainable supply chains for strategically important goods with its political allies in the G7. Even the US–whose political agenda undermines environmental targets–is engaging with international partners such as Australia on critical minerals, in addition to substantial domestic private capital investment into green technology. Self-sufficient green economies are no longer simply a moral imperative, but a necessity for economic security amid increasing geopolitical risk.
Future Made in Australia
The alignment of environmental targets with geoeconomic security is a win for sustainability. However, as geopolitical tensions appear set to increase, there will likely be continued efforts globally to protect domestic industries and tighten value chains. As a nation dependent on international trade of carbon-intensive exports, Australia is uniquely exposed to “de-globalisation”. And yet, we are also uniquely positioned to benefit.
Continued investment in renewable energy generation technology will allow Australia to leverage its natural wind and solar endowments into low-cost energy to achieve national energy security, and then export the surplus at a comparative advantage. Similarly, as the “Brussels effect” cascades the EU’s climate standards globally, domestic green industries will ensure Australian exports not only remain internationally competitive, but capture value beyond the current “dig-and-ship” model. For example, while Australia largely exports iron ore as a raw commodity, processing domestically would allow for the export of green iron instead–a much higher value industrial material.
The situation regarding critical minerals is similar: Australia is a leading global producer of raw critical minerals, with developed upstream mining and export capabilities. However, investment in downstream processing and manufacturing would place more of the value chain within Australia’s domestic economy, and strengthen economic security by diversifying processing capability away from China, where it is heavily concentrated. Downstream capabilities would facilitate Australia becoming further embedded within supply chains with allies, including the US, the G7 critical minerals alliance, and most recently with the EU. It also allows for exploring opportunities for regional integration with ASEAN, given the region’s existing downstream capability and demand. Viewed from this lens, Australia’s green transition presents an opportunity to bolster domestic self-sufficiency while integrating into new international supply chains as a partner of choice.
Ultimately, as geopolitical rivalry intensifies and the green transition accelerates, governments are increasingly prioritising economic security and sustainability over the principles of liberalised trade. Climate policy centres on building domestic capability and supply chain security to develop resilient economies in a decarbonised world. The result is not the end of liberal trade, but certainly a strategic shift. For trade-dependent economies like Australia, the challenge is finding our place, and Australia’s natural gifts present a unique opportunity to become a resource and green energy superpower.
Mikey is a recent graduate of the University of Sydney with a Bachelor of Laws and Bachelor ofScience. He has a strong interest in climate governance, international environmental law, andAustralia’s role in shaping cooperative responses to transnational environmental challenges.
His academic work has focused on international environmental frameworks, including plasticsregulation, water governance, and global climate litigation. As a research assistant with theAustralian Centre for Climate and Environmental Law, he investigated how legal and non-legalmechanisms can protect and restore natural ecosystems.
Mikey also studied in Shanghai at the East China University of Political Science and Law,deepening his interest in China’s climate transition and the implications for Australia–Chinaenvironmental cooperation.
Through this fellowship, Mikey hopes to further explore how environmental diplomacy andgovernance can support a resilient, sustainable, and equitable Asia-Pacific.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect those of Young Australians in International Affairs. All content is original, and no plagiarism has been used in the preparation of this article. AI tools were used for organising initial ideas and limited editorial assistance.