Power plays: three strategic alliances
Collaboration between countries is what will lead to a cleaner, more efficient and more secure global energy supply system By Tom Wadlow, Partner, WD Editorial
As the world recalibrates its energy systems in response to climate imperatives and geopolitical events, strategic energy partnerships have emerged as crucial conduits for ensuring security, driving economic growth and accelerating the transition to a cleaner world.
From Asia Pacific to the Atlantic, bilateral and regional energy trade relationships are reshaping the global energy landscape. Here, we take a look at three such alliances.
Australia and Japan: From coal to hydrogen
Australia and Japan represent one of Asia Pacific’s most enduring energy partnerships. Australia provides more than a third of Japan’s energy imports, including most of its coal and liquefied natural gas (LNG).
“This longstanding trade has fuelled Japan’s economy and strengthened Australia’s prosperity through decades of investment,” explains Azman Nasir, Regional Director (Asia Pacific) at EIC.
With both nations committed to net zero by 2050, the relationship is evolving. Historically dominant coal is giving way to cleaner alternatives.
“While coal remains dominant, the focus is shifting toward hydrogen to balance economic stability with sustainability goals,” says Nasir. Japan’s coal imports reached A$57.1bn in 2022, but its high emissions profile is pushing both nations toward a 2030 phase-out.
This trade has fuelled Japan’s economy and strengthened Australia’s prosperity
Japanese expertise is proving instrumental in Australia’s hydrogen development, with around A$2.1bn invested in projects such as the Hydrogen Energy Supply Chain. Companies such as Mitsubishi Heavy Industries are working with Australian firms to develop green hydrogen facilities, while the Japan-Australia Partnership on Decarbonisation supports joint research and development in clean energy solutions.
“Moving forward, their energy trade could evolve from raw materials to processed clean energy, setting a precedent for sustainable energy supply chains in the Asia Pacific region,” Nasir says.
UK and Europe: Shared resources, shared future
Despite Brexit, the energy trading relationship between the UK and Europe remains robust, built on geographical proximity and mutual interest in energy security.
“There is one thing that’s really very clear – there is continual trade, and one of the aspects that hasn’t really been impacted by any of the issues of Brexit has been trade in electricity and other commodities,” explains Neil Golding, EIC’s Director of Market Intelligence.
Central to this relationship is the network of interconnectors – bidirectional electricity and gas transmission cables that enable flexible cross-border energy flows. These have become increasingly important as both regions incorporate more renewable generation.
“They are bidirectional and grid sharing,” says Golding. “Ultimately, using renewable resource that’s in the North Sea and then dependent upon where the draws are, the electricity can be moved in either direction. The North Sea is our shared resource and that’s the way we should look at it – as a shared resource.”
Major projects in development include Nautilus, connecting the UK and Belgium, and LionLink, joining the UK and Netherlands. These involve several major players, including the UK’s National Grid, TenneT and Elia.
The China-Brazil trade relationship is expected to expand, driven by economic complementarities
The UK’s role in supporting European energy security became evident during the energy crisis that followed Russia’s invasion of Ukraine. More than a quarter of Europe’s lost Russian energy was replaced by UK exports, with the country’s LNG terminals serving as crucial entry points for global supplies.
Analysis from Energy UK shows that greater UK-EU cooperation could reduce the cost of meeting the 300GW offshore wind target in the Ostend Declaration by €13bn, highlighting the economic case for cross-border collaboration.
Looking ahead, the UK Government aims to achieve 18GW of interconnection capacity by 2030, which will almost entirely be to countries in the EU Internal Energy Market. According to the National Energy System Operator, GB interconnector capacity is set to almost double by 2050, even in the most conservative scenarios.
To aid this and other objectives, some industry experts have called for the UK to return as a full member to the North Seas Energy Cooperation, where it currently holds observer status.
China and Brazil: Complementary economies, strategic partnership
The energy trading relationship between China and Brazil shows how complementary economies can create mutually beneficial partnerships. China, with its massive manufacturing capacity and growing energy demands, has found in Brazil a reliable partner for both traditional and renewable energy.
“It is highly significant, as China is Brazil’s largest trading partner and a key investor in its energy infrastructure,” explains Clarisse Rocha, Director – Americas at the EIC. “China and Brazil have complementary economies.”
Brazil has become a crucial oil supplier to China. “In 2024, Brazil’s oil exports increased by 5.2%, with China being the main destination,” says Rocha. “The Chinese market absorbed 45% of Brazil’s total oil exports.”
This relationship extends to infrastructure: 20 of the 39 floating production storage and offloading units contracted by Petrobras abroad are being built in Chinese shipyards.
Meanwhile, China has become dominant in Brazil’s renewable sector. In 2024, nearly all imported solar panels in Brazil came from China, with purchases increasing by 25%. Chinese wind turbine exports to Brazil have also surged, with their volume increasing sixfold in 2024 and their value rising by 256% to US$346m.
Chinese companies are establishing a significant presence in Brazil’s renewable infrastructure. State-owned SPIC has inaugurated major solar projects in Ceará and Piauí, while State Grid is developing Brazil’s largest power transmission project, valued at US$3.6bn.
This partnership is strengthening further with a focus on green hydrogen. In August 2024, State Grid subsidiary CPFL Energia announced a partnership with Mizu Cimentos for a green hydrogen production pilot plant.
“The China-Brazil trade relationship is expected to continue expanding, driven by economic complementarities, deepening renewable cooperation and growing Chinese investments in Brazilian infrastructure,” Rocha says.
The future of global energy trade
These three strategic partnerships reflect the broader trends that are reshaping global energy trade.
First, traditional fossil fuel relationships are evolving to incorporate cleaner alternatives, as shown by Australia and Japan’s pivot toward hydrogen. Second, cross-border infrastructure and market integration are driving energy security and economic efficiency, demonstrated by the UK-Europe interconnector network. And third, complementary economic strengths can create powerful synergies in both traditional and renewable energy sectors, as seen in the China-Brazil relationship.
As the global energy transition accelerates, these strategic partnerships will likely deepen and evolve further, balancing immediate energy security concerns with long-term sustainability goals. The nations that successfully navigate these relationships will be well-positioned to thrive in the emerging clean energy economy.
Australia and Japan
Deepening ties through decarbonisation
In April, the energy relationship between Australia and Japan was bolstered by the opening of Mitsubishi Heavy Industries’ new branch office in Perth, Western Australia.
Perth is a hub for economic development in Western Australia, with robust mining and natural resources industries and a state government that is supportive of decarbonisation infrastructure and projects such as hydrogen, ammonia, and carbon capture, utilisation and storage.
In opening the new office, Mitsubishi Heavy Industries aims to deepen cooperation with local companies, tap into the region’s decarbonisation-related business opportunities, and enhance its responsiveness to the Australian market.
UK and Europe
Nemo Link: A bridge across the Channel
The Nemo Link interconnector between the UK and Belgium exemplifies the benefits of cross-border energy infrastructure. This 1GW capacity undersea cable has become crucial to the energy systems of both countries since its 2019 launch.
Bart Goethals, Chief Commercial Officer of Nemo Link, part of Elia, comments: “Nemo Link plays an important role in enhancing economic welfare, increasing energy security, and enabling renewable energy integration for both the UK and Belgium.”
Its value was proven during the recent energy crisis, he adds: “GB was relatively better supplied with gas and could generate electricity at a lower price to export via interconnectors like Nemo Link to continental Europe.”
Nemo Link has transported 36TWh of electricity between the countries, with 30.7TWh imported to the UK. Its reliability stands at 99.5% availability outside planned maintenance.
“Thanks to its outstanding commercial performances, Nemo Link returned over €200m to British and Belgian consumers,” says Goethals. It has also delivered environmental benefits, with around 1.4m tonnes of CO2 emissions avoided in its first five years.
With the EU-UK Trade and Cooperation Agreement up for revision in 2026, energy cooperation is likely to feature prominently, with assets such as Nemo Link highlighting Europe’s shared energy future.
Image credit | Shutterstock | Getty | Alamy
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