Australia is building green industries. Defence could make them strategic
Australia is spending billions to build green industries while Defence is trying to make the Australian Defence Force harder to disrupt. These efforts should reinforce each other.
Future Made in Australia, the government’s clean-industry agenda, is already supporting projects to develop cleaner fuels and materials. To help turn that early production into dependable supply, Defence could qualify those products against its requirements, and, where they meet a military need, commit to early purchases.
The aim would not be to make Defence a weighty climate-policy customer. It would be to use a large, technically demanding buyer to help build industries that serve civilian markets in peacetime and military needs during disruption.
The green energy industry has substantial economic promise. For example, the Commonwealth Scientific and Industrial Research Organisation estimates that a domestic low-carbon liquid-fuels industry could deliver $6 billion to $12 billion a year in direct economic benefits. Government estimates put potential export revenue from green iron and steel at up to $96 billion a year by 2040. These figures measure different things – economic benefit against export revenue – so they should not be treated as an additive GDP forecast. But they indicate a headline opportunity exceeding $100 billion a year across two adjacent industries.
My proposal is that Defence would buy only a small share. Its value is as an anchor customer that reduces early demand risk and helps suppliers reach larger aviation, mining, construction and export markets. Its endorsement as an expert customer would also have value.
Low-carbon fuel is the clearest case for these measures. Australia imports more than 50 billion litres of refined petroleum products annually and domestic production meets only about 20 percent of liquid-fuel demand. Defence has certified all military aviation and land assets for low-carbon liquid fuels and in 2024 began a sustainable aviation fuel pilot at the Royal Australian Air Force’s East Sale base. Its new Defence Fuels Qualification Centre can test fuels domestically. The missing step is commercial: Australian producers need customers willing to sign contracts long enough to finance production.
Defence could provide a signal to investors that a product has a credible, demanding customer, without carrying the whole market. A producer that meets military specifications and demonstrates an Australian supply chain could receive a limited multi-year offtake. The same plant could then sell sustainable aviation fuel to airlines, renewable diesel to mining and freight, or synthetic fuels made from renewable hydrogen. Defence gains assured access to domestic production; industry gains a bankable customer, qualification credentials and a route to scale.
The model extends selectively to materials and energy. Lower-emissions steel has value where Australian processing creates another qualified source for shipyards or sustainment. New cement binders could help Defence if they used domestic raw materials and reduced an external dependency, not merely because their emissions were lower. On bases, solar, batteries and microgrids could reduce reliance on a single grid connection and support critical loads through outages. Green products become defence products when they improve continuity, substitution or replenishment.
Quad partners are already testing versions of this model. India’s defence ministry has approved a 250 MW solar-plus-battery project on its land to improve energy security and reduce costs at defence facilities. The Indian Army and a state-owned Indian electricity company have also developed a 200 kW solar-hydrogen microgrid designed to replace diesel generators and supply round-the-clock power in an off-grid location. This is green investment justified in the language that militaries understand: continuity of capability.
In Japan, the government is using defence procurement and industrial policy at national scale. Renewable electricity is expected to provide about 77 percent of the Ministry of Defense’s electricity procurement in the 2026 financial year. Separately, Japan supports domestic sustainable aviation fuel production through capital assistance and tax incentives. The defence force is not the sole customer; the lesson is that government demand and standards can help industry build for larger markets.
Australia should adopt the same discipline. Every Defence green-industry trial should specify the military customer, performance standard and domestic dependency it is intended to reduce and the contract that will follow the trial’s success. Where qualification and resilience are proven, Defence can use minimum purchases, multi-year offtakes or capacity contracts. Civilian customers should provide scale; Defence should pay for the strategically useful slice of production.
For industry, this reduces demand uncertainty, provides a credible customer and creates qualification records that can open other markets. Defence gains additional ways to fuel aircraft, power bases and source materials when imports or grids fail.
Australia has already funded much of the supply side. The next task is to create disciplined demand: selective early purchases by Defence to meet military needs. Defence should not ask how many green products it can buy. It should ask which Australian industries become commercially stronger and militarily useful when Defence becomes a customer. Get that choice right and procurement can do two jobs at once: help turn clean-industry investment into a larger Australian market, and turn that market into national resilience.
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