Australia’s accelerated climate ambitions under its new federal government are likely to trigger a demand for funding that will provide MENAT companies and investors with the chance to capitalize on the nation’s vast natural resources and increasing appetite for renewable energy.

Australia’s land mass, abundant sunlight and wind, and regulatory stability had already lured foreign investment prior to the election of the climate-focused Labor government in May last year, with European and British energy companies playing a leading role.

The Dubai Investment Fund has since announced an investment in two solar power plant start-ups that will initially generate 300 MW of solar energy for local communities.

The potential of this type of investment is significant. Wind and solar farms being developed by offshore investors in the northeastern state of Queensland, for example, are already among the largest of their kind in Australia. Other projects funded with foreign capital aim to boost the nation’s burgeoning green hydrogen industry, facilitate sustainable building construction, and enable the export of clean energy to offshore markets, among other things.

Australia’s newly legislated target of reducing carbon emissions by 43% by 2030 may well transform the steady stream of offshore capital into a flood, as a greater number of foreign investors seek to diversify their energy interests and, equally, to capitalize on ever-expanding business opportunities arising as a direct result of the nation’s climate policies.

MENAT’s existing trade connections with Australia should provide a springboard for other investors eager to explore new ventures. Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE are already-established markets for a range of Australian exports, accounting for AUD 11.1 bn in bilateral goods trade last year. Services are also an increasingly important part of the economic relationship and two-way investment between UAE and Australia, for example, which totalled AUD 14.5 bn in 2021.

The Abu Dhabi Investment Authority is also among MENAT entities that have held Australian interests, including as part of a consortium which owns Sydney’s WestConnex Motorway.

The numbers behind the Australian federal government’s headline climate commitments provide a compelling picture of the green opportunities at hand. Prior to its election, for example, it promised to increase the share of renewables in Australia’s national electricity market to 82% by 2030 versus 68% if it maintained the previous settings that underpinned the nation’s energy transition plans.

It also calculated that its overall climate commitments would generate AUD 76 bn in investment by 2030 — an amount that is equivalent to a hefty 3% of the anticipated national GDP in that year.

Significantly, less than one third of that AUD 76 bn was expected to come from public investment.

For a less populous nation like Australia, a significant proportion of that private investment will inevitably be sourced from foreign direct investment.

Major companies from Germany, Spain, and France have publically signaled their intentions to explore a broader range of Australian projects, and Australia recently signed a Green Economy Agreement with Singapore to facilitate trade and investment in environmental goods and services, and to generally support each other’s climate transition.

There is still much for Australia to do if it is to realize the climate change mitigation vision of the federal government elected by its population earlier this year. But any remaining reticence among foreign investors to commit to green projects in the market is switching to a “fear of missing out” as a nation traditionally recognized as a fossil fuel superpower takes real steps to transform itself into a renewable energy superpower of the future.

This op-ed was written by Antony Shaw, CEO, HSBC Australia (LinkedIn). HSBC’s column in Enterprise appears every second Monday.