Energy security is a top priority globally, as governments grapple with the closure of the Strait of Hormuz, an accelerating clean energy transition and surging power demand from AI data centers.

The problem is especially acute for Asia and the Pacific, as both regions are highly dependent on imported fuels.

This is where Australia could step up as a regional energy superpower, rich in both renewables and fossil fuels. Australia could form a new energy security alliance to stabilize regional markets for the long-term.

In the short term, this would mean guaranteeing supplies of liquefied natural gas (LNG). In the longer term, green exports such as renewable fuels and battery minerals could form the bedrock of Australia’s energy relationship with Asia.

Energy insecurity is rife across Asia

The war between the United States-Israel and Iran triggered a major disruption to fossil fuel supplies.

After Iran closed the Strait of Hormuz, Asia lost 80% of its oil supply and 27% of its natural gas supply. Flow-on impacts to Pacific nations were significant, as these island nations rely heavily on diesel and food imports.

The deal to end the Iran war doesn’t mean an end to these challenges. This year has shown the risks of relying on Middle Eastern oil and gas producers in a conflict-prone region.

Asia-Pacific governments are looking for reliable partners to ensure energy security. The world’s top two powers, the United States and China, are jostling to expand their energy exports in the region but in very different ways.

China’s response to the Iran conflict has been to double down on electrification and build its reserves of oil. Beijing is also aggressively expanding its exports of electric vehicles, solar panels, batteries and other green tech exports to root out any overseas competition.

Meanwhile, the US is pursuing a strategy of “energy dominance”, focused on producing abundant supplies of oil and gas domestically. Washington believes this will deliver affordable energy, win the AI race against China with cheap power and expand energy exports to bind allies closer.

Time for a decisive strategy

Without a clear strategy for energy exports, Australia risks becoming a passive spectator.

The risks are twofold. Our role as a coal and LNG exporter could erode as Asian countries look elsewhere to fill their supply gap and we could miss the window of opportunity to grow our clean energy exports.

What should this strategy look like? In practice, it would involve working with allies like the US and Japan to build a regional energy security alliance. This would focus on meeting the region’s immediate energy needs and enable Australia to play a central role in the region’s transition to clean energy. The Quad members’ recent joint statement is a strong start.

Any such alliance cannot simply focus on securing fossil fuel supply to the region. The shift to clean energy transition must be factored into its design.

Ideally, this alliance should cover the full energy supply chain. That means critical minerals, natural gas, diesel, hydrogen, batteries, data centers and even emerging products such as low-carbon fertilizers.

Australia is poised to take the lead

Australia is the only reliable high-volume LNG exporter in the Asia-Pacific.

Key competitors face challenges meeting the region’s needs. Russian gas is heavily sanctioned, Qatari exports have been held hostage in the Strait of Hormuz and US gas export terminals are concentrated on the Gulf Coast, adding 10 extra days in transit to reach Asia compared to shipments from Darwin.

Australia also has some of the greatest clean energy resources in the world, including critical minerals vital to batteries and renewables.

The US and Canada would also play a role as major LNG and oil producers. Japan would provide the financing and shipping infrastructure that many smaller Southeast Asian nations cannot. The US and Japan could also help produce the EVs, batteries and clean tech to drive the region’s transition.

Despite the Trump administration’s unfavourable views on wind and solar, US battery manufacturing is forecast to increase five-fold.

An alliance like this would give certainty to Indo-Pacific countries such as the Philippines, Thailand and India that Australia and its allies would not prematurely turn off fossil fuel supply.

This is pragmatic. While Australia is aiming for net zero by 2050, many Asian countries are aiming for 2060 or 2070. They may require fossil fuel supply beyond 2050 – would we rather that supply to come from Australia or Russia?

What needs to happen?

Shifting energy policies and sluggish approval timeframes have left Australia close to a gas shortfall in southern states, slowed the renewable transition and contributed to higher energy costs.

These domestic challenges must be balanced with the region’s current need for Australian energy exports.

The Iran war has shown the world is not yet ready to wean itself off fossil fuels. Despite very rapid shifts to renewables and clean transport, there are years ahead where gas and oil will remain vital.

As the region’s most reliable LNG exporter, Australia is well placed to cement its position in the Indo-Pacific’s energy landscape in the long term as green exports ramp up. Grabbing this opportunity requires a cohesive strategy, partnering with like-minded allies and fixing domestic challenges.

Robert Monterosso is research fellow, United States Studies Centre, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.