Gas Pains: Why Australia Must Reset Its Energy Ties With Japan and South Korea

The Diplomat

19-07-2025

Australia can't be a regional climate leader unless it has hard conversations about LNG with its friends in Japan and South Korea.
Behind closed doors, Australia has been lobbying hard to secure its bid to host the UNFCCC's annual climate forum in 2026. Although the deal has yet to be inked, key stakeholders in this space are already preparing for an Australia-Pacific COP31, with an end to fossil fuel expansion expected to be a key pillar of negotiations.
Following its decisive re-election in May, Australia's center-left Albanese government is confident it can sell its climate credentials on the world stage. This is in no small part due to a rapid rollout of renewable energy projects, with over 40 percent of Australia's main electricity grid now powered by solar, wind, and hydropower.
However, this success story is dramatically undercut by Australia's unwavering support for its fossil fuel exports, and the diplomatic nexus protecting this trade.
Australia is the second-largest exporter of gas in the world, and Japan and South Korea are two of the primary destinations for this gas.
While these countries have historically relied on Australia's gas exports (i.e. liquefied natural gas, or LNG), both Japan and South Korea have made public commitments to transition away from fossil fuels and increase renewable energy capacity, and their domestic demand for gas is already declining.
In spite of this, the Japanese and Korean governments continue to invest heavily in the extraction, processing, transport, and deployment of gas. Between 2008 and 2024, both countries contributed over US$20 billion of public finance into Australian gas projects, as outlined in Jubilee Australia's newly released research report. Such finance, funneled through export credit agencies, has been a key factor in the economic viability of many large Australian gas projects.
With these projects facing increasing scrutiny on the grounds of their intensive emissions contributions, international civil society have called for an end of the Japanese and Korean taxpayers bankrolling fossil fuel expansion.
In what have become familiar refrains in diplomatic and trade talks, Japanese and Korean financiers point to two key justifications for their expansion of Australia's gas production. The first is the need for further gas supply to meet their domestic energy security requirements. The second is that LNG is a bridging fuel, needed to transition regional developing economies out of coal and into renewables.
Neither argument stacks up.
A growing evidence base has been produced by independent financial analysts that demonstrates Japan is contracting more gas than its domestic economy requires. The surplus is resold around the region, with the buildout of the LNG supply chain intended to keep the gas industry operating and profiting for as long as possible. Japanese companies and public financiers invest heavily in downstream infrastructure, such as power plants, to 'cultivate Asian demand.' While Korean investment in Australian gas projects has declined in recent years, major industry firms continue to invest in LNG shipbuilding and transport. These corporate profit margins rely on the Australian government keeping the tap running, by opening up new and emissions-intensive gas fields for export purposes.
This 'Gas Empire,' as detailed in the Jubilee report, is heavily reliant on a sophisticated diplomatic apparatus to protect its interests. When the Albanese government has developed policies to support Australia's climate and energy priorities that would potentially derail proposed fossil fuel projects, Japanese government-aligned think tanks and industry bodies have made bold interventions in the Australian media to skew the domestic energy debate. These interventions appeal to Australia's national pride in being a reliable energy trading partner, with the more benign being calls to 'keep the lights on in Tokyo.' However, more alarming rhetoric has implied any moves by the Australian government to phase down its fossil fuel exports would jeopardize global peace.
Some members of the Australian government have seemingly welcomed these interventions, expressly inviting submissions by Japanese and Korean gas industry groups in drafting Australia's energy policies, notably last year's Future Gas Strategy that envisaged a role for gas 'beyond' 2050. As concern continues to grow within the Australian public about its own energy security, and the substantial taxpayer subsidies and favorable arrangements provided to the fossil fuel industry, we have to ask the question: can the Australian government exercise sovereignty in its own energy policies?
With COP31 on the horizon, the Albanese government is running out of time to answer this question.
A key test in the lead up to this event will be at the Asia Zero Emissions Community, or AZEC. Despite the name, civil society groups around the Asia-Pacific have lambasted AZEC as a greenwashing exercise for Japan's fossil fuel expansion. The criticism is that AZEC enables fossil fuel interests to promote technologies to 'mitigate' their emissions. These dangerous technologies, such as carbon capture and storage and ammonia co-firing, are proposed as solutions but consistently fail in their efforts to reduce emissions. Instead, they are promoted to justify opening up new gas projects. The gap between Japan's rhetoric and its action has previously been noted by other analysts on The Diplomat.
As a member of AZEC, Australia has a responsibility to hold it to account. Australia is involved in 12 proposed joint ventures under the initiative, only three of which are actually focused on renewables. With renewable energy alternatives already cheaper, cleaner, and less susceptible to geopolitical tensions, Australia's continued support for Japan's mythical fossil fuel abatement technologies is placing it on the wrong side of history. Though the comparison may have seemed unlikely some years ago, these diplomatic efforts to greenwash fossil fuels stand in stark contrast to China, which is well on the way to realizing its vision of being the region's renewable energy export superpower.
As humanity stands on the precipice, United Nations Secretary General Antonio Guterres has called for world leaders to scale up ambition to avoid irreversible climate damage. At a recent summit with world leaders he proclaimed that 'the world is moving forward, full-speed' and added: 'No group or government can stop the clean energy revolution.'
Diplomatic efforts between Australia, South Korea, and Japan must reflect this imperative. Australia's commitment to the Clean Energy Transition Partnership has marked an end to its public financing of the international fossil fuel sector, and the Albanese government must now take active steps to welcome South Korea and Japan into the agreement. Bilateral decarbonization agreements must be struck to support an orderly transition away from fossil fuel reliance. And in the lead up to COP31, Australia must set a clear standard that rejects the influence of fossil fuel lobbyists in multilateral climate negotiations.
But above all, Australia, South Korea and Japan must embrace the diplomacy of the future: no new coal, oil, and gas.