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Australia—Demand for renewables to support critical mineral exports
The outlook for renewable energy remains positive despite reduced policy support in some of the world’s largest economies. A reduction in US subsidies and tax incentives could attenuate investment in renewables, exacerbated by policy changes in China to remove guaranteed minimum purchase prices and grid volumes for new projects. However, structural factors that have driven investment and demand growth for renewable energy are expected to continue (Chart).
Despite the global economic slowdown, robust energy demand growth derives from increasing air conditioning use, the expansion of data centres and ongoing electrification. Policy commitments to achieve net zero CO2 emissions by 2050 propelled clean energy investment up to over US$2 trillion in 2024, double 2020 levels (though still well below the US$5.6 trillion needed annually through 2030). Beyond climate goals, clean energy investments are incentivised by energy security considerations. For instance, China’s drive to reduce reliance on volatile fossil fuel imports and lead new technology areas, and Europe’s accelerated spending on renewables following Russia’s invasion of Ukraine. Clean energy investment also reflects cost competitiveness. According to the International Renewable Energy Agency, 91% of all newly commissioned utility-scale renewable projects delivered electricity at a lower cost than the cheapest new fossil fuel-fired alternative in 2024. This reflects technological innovation, competitive supply chains and economies of scale that have seen over a decade of steep cost declines in renewable energy prices. As such, wind and solar are expected to cover over 90% of the increase in global electricity demand in 2025.
Continued uptake of renewable energy will support demand for Australian exports of critical minerals used in clean energy technologies and battery storage systems, though will weigh on traditional fossil fuel exports.
