Korea, Australia strengthen green partnership amid global supply chain disruptions

Kim Sung-young

Foreign Minister Cho Hyun and his Australian counterpart Penny Wong recently released a joint statement on energy security. In the midst of the global oil crisis caused by the Middle East conflict, the two sides reaffirmed their mutual commitments to securing fuel supplies.

Australia is the largest liquefied natural gas (LNG) supplier to Korea. Korea is one of Australia’s largest suppliers of refined petroleum products, and the largest supplier of diesel. While the focus was on guaranteeing fossil fuel supplies, the two countries have quietly been driving a green revolution that will be pivotal to their economic resilience in the decades to come.

The meeting of the two leaders came ahead of the Australian government’s May announcement stipulating producers of LNG on Australia’s east coast will have to set aside 20 percent of their gas exports for domestic users from July 2027 onwards. Importantly, the policy excludes existing export contracts entered into before the government’s previous announcement in December 2025. The exemption should allay concerns from Korean LNG buyers like Korea Gas Corp., which holds a large stake in the Gladstone LNG project operated by Santos in Queensland. Korea will also be relieved to hear the decision to shelve any proposals to impose a 25 percent export tax on LNG in the 2026 Budget speech.

This is good news for strengthening fuel security for the immediate future. But, looking beyond the news headlines is a green partnership between the two countries, which is now well underway. The key pillars of this revolution are in developing trade in green hydrogen and derivatives, such as green ammonia and green metals.

Korea has been investing in hydrogen-related technologies since 2008 under the widely-publicized Green Growth initiative and as part of plans to ditch the use of coal by around 2040. The country has emerged as a major manufacturer and exporter of fuel cell technologies — which convert hydrogen into electricity — for transport and power generation.

Major Korean conglomerates, such as Doosan Fuel Cells, SK Ecoplant, HD Hydrogen, and small and midsized businesses like Mico Power now compete fiercely for exports of fuel cell equipment and plants in international markets. In the 2019 Hydrogen Economy strategy, Korea also set out a vision to become a major user of hydrogen, identifying Australia as a key supplier in policy documents. The Lee Jae Myung administration continues to promote hydrogen technologies and to expedite the use of clean hydrogen in the energy grid.

Australia responded to Korea’s expected demand for green hydrogen by launching a National Hydrogen Strategy in 2019 with the ambition to lead the world in the production and export of the renewable fuel source. The use of green hydrogen domestically was also expected to help revive Australia’s techno-industrial base, especially in heavy (and coal-reliant) industries such as steel and aluminum.

The two countries boosted bilateral efforts to cooperate on research and development and supply chains for green hydrogen — and in other areas such as critical minerals, and carbon capture and storage — with the signing of the Green Economy Partnership Arrangement on Climate and Energy in December 2024. Australia possesses abundant renewable energy sources, the world’s largest reserves of iron, and federal and state governments keen to drive a green hydrogen industry, which the Korean government and companies have recognized in their investment decisions.

The Western Australian government has just approved Korea’s national champion in steel manufacturing, POSCO, to build a plant, for the production of hot-briquetted iron at Port Hedland using LNG and green hydrogen at a cost of 4.3-billion Australian dollars. The use of iron produced from renewable energy sources is key to POSCO’s survival against competitors from Europe, such as Sweden’s Stegra, which is constructing a zero-emissions steel plant.

The Korea Electric Power Corp. (KEPCO) is also involved in a consortium of international and Australian investors in the Western Green Energy Hub, which is expected to produce up to 3.5 million tons of green hydrogen or green ammonia annually. These commodities will be critical to promote circular energy and resource flows in agriculture, heavy manufacturing, and large transport sectors — in the absence of realistic alternatives.

There have been complications in driving cooperation between the two countries. In October 2025, the Korean government abruptly cancelled the launch of the much-anticipated Clean Hydrogen Power Generation Bidding (CHPS) system. While not yet confirmed, the government is also reported to be limiting the CHPS to domestically produced hydrogen in order to promote energy security objectives. In Australia, KEPCO missed out on winning funding under the federal government’s Hydrogen Headstart Program to develop a massive green hydrogen and ammonia export project in New South Wales.

However, these developments should not be read as signs of these countries’ declining commitments. Rather, somewhat paradoxically, they reflect a deepening sense of seriousness of scaling up commercial green hydrogen trade.

For instance, the Korean government’s rationale in delaying the CHPS was to prevent long-term contracts allowing coal-ammonia co-firing, which would be in breach of Korea’s plans to phase out coal by 2040. The government will launch the CHPS in 2026 with a focus on allowing LNG-hydrogen co-firing plants and by developing a hydrogen quality grading system, awarding higher points for green hydrogen in auctions.

Similarly, the government’s decision to prioritize domestically produced green hydrogen is in part driven by an acknowledgment of the technological limitations and high costs involved in exporting hydrogen over long ocean distances while seeking to address energy security concerns. We know this because in March this year, Korea received the world’s first end-to-end commercial shipment of green ammonia (which had been converted from green hydrogen) from the Chinese company, Envision.

Australia has seemingly preempted the Korean government’s calculations by targeting the government’s investments towards the most in-demand commercial opportunities, such as developing green iron and metals, as reflected in the updated 2024 National Hydrogen Strategy.

The key point is that Korea and Australia are helping to bring about a green revolution, exemplifying how middle powers and allies can build resilience in uncertain times.

Kim Sung-young is a professor of politics and international relations at Macquarie University in Australia.