lowyinstitute.org Elizabeth Thurbon Oliver Yates

A new policy model that removes the risk in clean commodity innovation will put Australia ahead of the pack.

Australia will need to lead as global supply chains pivot towards low-emissions production (Getty Images)

Published 9 Jul 2025  Australia Australian trade, investment & economy

As global supply chains pivot towards low-emissions production, Australia will need to lead, or risk being left behind. The country’s challenge is not a lack of technology, capital, or ambition. It’s a gap in policy architecture. Without bankable demand, Australia’s most promising clean commodity projects – green iron, sustainable aviation fuel, and clean ammonia – remain stuck at the starting line.

To meet that challenge, we propose a new demand-side policy model: the Clean Commodities Trading Initiative (CCTI) – a flagship example of green energy statecraft. At its heart is a new tool for national transformation: Clean Commodity Credits that reward innovation and emissions savings.

A market-friendly mechanism to kickstart large-scale clean production.

Green energy statecraft is a strategic approach to governance that uses the clean energy transition to simultaneously advance a nation’s economic, environmental, social, and geostrategic goals. Unlike conventional industry policy, which focuses on domestic market corrections, statecraft treats clean energy as key to national security and prosperity – used to build alliances, secure supply chains, boost productivity, and shape global rules.

The European Union, China, Japan, and South Korea are all pursuing variations of green energy statecraft. Australia must do the same – on its own terms, with tools suited to its advantages, institutions, and budget.

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