7 ASIAN LEGAL BUSINESS – JAPAN E-MAGAZINE WWW.LEGALBUSINESSONLINE.COM AUSTRALIA’S RENEWABLE ENERGY AMONG FACTORS LURING JAPANESE COMPANIES 再浮上する豪州への投資 In recent months, Australia has become a key target for Japanese companies as they seek to invest in energy (including renewables), technology, real estate and more. And lawyers expect this trend to diversify, given Australia’s wide range of business possibilities. Japan and Australia have traditionally been close investment partners, with the North Asian country being the second-largest source of foreign direct investment into Australia after the U.S. But the relationship appears to have strengthened even more recently, with Herbert Smith Freehills reporting a “step change” in the past 12 to 18 months. “Changes in the global geopolitical environment have brought the two countries closer together as trusted partners, particularly in the mutual pursuit of decarbonisation and energy security,” the report found. “Japanese M&A and investment activity in Australia was significantly higher in 2022 than in 2021. Investments occurred across many sectors, including energy, technology, financial services, real estate, consumer, infrastructure, construction/housing and services. The energy and technology sectors were especially attractive targets for investment.” One major reason is that Japan has been looking to diversify its energy supply away from Russia, but the country is also keen to secure green energy sources in the long term. While Australia currently supplies around 75 percent of Japan’s coal for power generation and around 43 percent of its liquefied natural gas (LNG), “the Japanese government and companies are simultaneously addressing energy security in the context of decarbonisation as part of the energy transition from fossil fuels,” say Ian Williams and Damien Roberts, partners at HSF. The HSF report identified another factor behind the uptick: As COVID travel restrictions were relaxed, Japanese companies were able to make more frequent Image: chinasong/