It’ll take effort, not hype, to finally achieve the hydrogen future

The Australian government envisions Australia as a renewable energy superpower, with the Future Made in Australia policy committing billions to building a domestic hydrogen industry. For decades, optimists have called hydrogen the fuel of the future, while cynics have said it’s 20 years away—and always will be. Hydrogen offers Australia, particularly northern Australia, great economic opportunity. But more policy work is needed to achieve this opportunity.

The history of hydrogen fuel and industry reveals ambitious promises and disappointing results. Is Australia poised to lead in this energy revolution, or are we caught in a hype cycle?

Hydrogen could help decarbonise sectors including long-haul transportation, ammonia manufacturing, steel making and other industrial processes, commonly by replacing metallurgical coal and natural gas. But transitioning to hydrogen is not easy.

In 2003, then-US president George W Bush pledged US$1.7 billion to hydrogen fuel initiatives and programs to develop more environmentally friendly transportation technologies. Bush dreamed that when children born in 2003 bought their first cars, those cars would be hydrogen powered. 21 years later, their first cars likely still had regular combustion engines.

Despite various initiatives, estimated global hydrogen fuel cell passenger car stock is only 93,000 cars. Instead, electric vehicles are leading in decarbonising road transport: more than 10 million electric vehicles were sold in 2022, about 14 percent of all new car sales. S&P Global projected 13.3 million electric-vehicle sales in 2024 (an estimated 16 percent of total new car sales).

Some analysis attributes the long-running ups and downs of hydrogen hype cycles to both internal factors (such as technological innovation) and external factors (such as domestic politics and national security). The risk is that Australia may now be investing in hydrogen due to these external factors, rather than technological progress and at the cost of investing in other, more successful clean technologies.

The Future Made in Australia initiative commits $8.0 billion to hydrogen over the next 10 years. This includes $6.7 billion through the hydrogen production tax incentive and a further $1.3 billion to the Hydrogen Headstart program, which funds large-scale hydrogen projects.

Northern Australia can especially benefit from the clean energy transition generally, potentially including hydrogen. Its energy expertise, abundant opportunities for building solar farms, and port infrastructure make it uniquely suited to hydrogen production. Government support is also needed—and each jurisdiction in northern Australia has developed a hydrogen strategy and has committed resources to supporting projects.

For example, the Northern Territory government has fast-tracked tracking a proposed H2 green-hydrogen hub at Darwin’s Middle Arm Sustainable Development Precinct. Major hydrogen projects in Tenant Creek, the Tiwi islands are also being explored. Federal and state funding is also backing development of hydrogen hubs in Townsville and the Pilbarra.

However, industry remains wary of over-extending into hydrogen. In October, utility Origin Energy announced its withdrawal from a major hydrogen project in NSW’s Hunter Valley that had been shortlisted for Hydrogen Headstart funding.

Widespread use of hydrogen is possible, but there is no guarantee that the potential will be realised soon. Electrolysis technology faces significant scaling difficulties, and just 4 percent of proposed hydrogen projects globally reach the stage of a final investment decision. Australia has the largest pipeline of hydrogen projects in the world, with an estimated value of more than $225 billion. But as of July 2024, only three of the 76 projects were under construction.

Concerningly, hydrogen has unaddressed demand issues, according to the International Energy Agency. The government is optimistic about massive growth in hydrogen demand by 2050. But projections to 2050 often rely on growth in new applications for hydrogen—such as in heavy industry, long distance transport and energy storage—accounting for up to one third of consumption. Yet these new applications currently account for just 1 percent of total demand. Governments and investors must be wary of the discrepancy.

Valuations of the global clean hydrogen sectors are in decline. In early 2021, S&P’s Hydrogen Economy Index, which measures the value of clean hydrogen companies across the supply chain, peaked at US$293. After steady decline it is now at US$116.

Still, Australia should not necessarily give up its hydrogen bet. But we must remain aware that plenty of work is needed for it to pay off.

Further policy measures are needed. Foreign investment will be needed to grow and sustain the industry. International partners such as the United Arab Emirates—with its capital, investments in hydrogen, national hydrogen strategy, long experience in energy, and free trade agreement with Australia—will be important to realising Australia’s hydrogen potential.

The government and industry will have to communicate more to reduce costs, increase hydrogen competitiveness and understand why major companies are withdrawing from projects.

Governments must prioritise research and development into clean hydrogen production and new hydrogen applications. Australia needs innovation to get a competitive advantage.

Finally, the federal government must deliver on the National Hydrogen Strategy and be ready to adjust it to reflect market situations. The strategy is promising, but it must coordinate the federal government, state and territory governments, and industry to deliver an Australian hydrogen economy.

Designing a force structure for New Zealand’s strategic circumstances

The ANZMIN meeting of foreign and defence ministers in Auckland this week should focus on how Australia and New Zealand can modernise their alliance to deal with worsening strategic circumstances.

The Luxon government has adopted sharper language about the threat posed by China, but New Zealand lacks a comprehensive defence plan fit for its strategic circumstances, equivalent to Australia’s Defence Strategic Review and subsequent National Defence Strategy.

Wellington’s Defence Capability Plan due for publication in early 2025 is an opportunity to rectify that by laying out the force structure that the New Zealand Defence Force needs to develop over the next decade and beyond. That plan should be shaped by the Australia-NZ alliance and be based on firm methodological foundations, as laid out below.

The first priority is a clear assessment of warning time. Strategic warning time requires not only high-level intelligence analysis about future military threats; it also means bringing together assessment of threats to foreign policy, economic and trade interests, and new threats, including cyber war, artificial intelligence and new weapon systems, such as hypersonics.

The New Zealand government needs to develop a high-level national intelligence warning staff headed by an experienced senior official with both policy and intelligence experience. This person should have direct access to both the minister of defence and the minister of foreign affairs and the National Security Committee.

This brings me to what should be the chief force structure priorities for a country of New Zealand’s size and location. They are twofold: first, New Zealand’s geography and key geopolitical interests; second, what sort of military contingencies and other key national security threats could occur?

From the outset, it needs to be made clear that these two key determinants must not waste time or money on such worst-case contingencies as an invasion or direct military attack on New Zealand. This means that rigorous intellectual pressure must be brought to bear on selecting the relevant threats and contingencies.

It is fashionable to assert that geography no longer matters, because of the speed and accuracy of modern missiles. This must be a consideration. Still, New Zealand is a long way from any potential adversary, such as China, and any forces that such an adversary might send to the South Pacific would be very vulnerable to interdiction. But geography would come back into play with a vengeance if China acquired a military base in the South Pacific. This would threaten New Zealand’s and Australia’s vital sea lines of communication with the United States.

New Zealand’s broader geopolitical circumstances require close attention. In the Cold War, Australia and New Zealand were distant from the USSR’s key strategic interests. And for much of the post-Cold War period, the US has been the unchallenged unipolar power. All this is changing because of the rapid increase in China’s military power, China’s alignment with Russia, North Korea and Iran, and its leveraging of trade and aid across the broader Asia-Pacific region.

This means New Zealand needs to give higher priority to the basic security of its region. These geopolitical issues also need to be considered in determining force-structure priorities.

We must ensure that the South Pacific remains a region of peace and prosperity where all countries are able to pursue their national objectives free from external coercion. An unfavourable balance of power in the South Pacific would increase the risk of regional countries, including New Zealand, being coerced and losing their ability to pursue key interests peacefully. New Zealand and Australia must remain the partner of choice for the Pacific family, including in security cooperation. New Zealand’s Pacific Maori culture is central to its relationships in the South Pacific and provides an advantage.

New Zealand needs to maintain high-level situational awareness in the South Pacific, its primary area of strategic concern, to gain warning time and space for decision making.

As noted earlier, the assessment of credible military threats does not include worst-case military planning contingencies. There still needs to be a tough-minded professional group in the Ministry of Defence testing credible contingencies and applying them to judgements on force-structure priorities.

Maritime contingencies clearly need priority. However, there is a challenging role for New Zealand’s army in the South Pacific, perhaps in a joint New Zealand and Australia amphibious force capable of conducting demanding littoral operations in the South Pacific.

New Zealand defence experts’ determination of credible military threats needs to be rigorously consistent with tough-minded analysis of net military assessments. This is a well-known and trusted methodology of measuring a potential adversary’s military capabilities.

Such net assessments need to focus on what foreign military capabilities could realistically be used against New Zealand, and how New Zealand’s future force structure must be developed in response. The chief of the Australian Defence Force, Admiral David Johnston, tells me that Australia is already intensively using a combination of credible contingencies and net military assessments.

Incorporating the defence planning methodology recommended here would provide strategic warning to political decision-makers and ensure a robust New Zealand force structure evolved for its unique strategic circumstances.

The Luxon government must also communicate its new approach properly if it is to build the social licence required for increased defence spending, which is also essential. Australia can help with that process, including through the ministerial statements and press comments that will emerge from ANZMIN this week.

Expect stronger export controls in Trump’s second term

The incoming US presidential administration is likely to build on the use of export controls to hinder China’s access to advanced technologies and maintain the United States’ technological primacy. Its success will depend in part on persuading allies to help.

Trump has signaled that his second term will again feature protectionist, economic security-focused foreign policy. An indication of that continuity is his nomination of Jameson Greer as US trade representative, Robert Lighthizer’s former chief of staff.

The returning president’s approach to trade is likely to target critical sectors that underpin both military and dual-use applications, such as artificial intelligence, quantum computing, biotechnology, and energy-related technologies. As part of this broader technological industrial strategy, critical minerals and renewables could increasingly become targets of regulation, especially due to their growing importance in the clean energy transition and competition with China. This could affect Australian interests.

The US has increasingly sought to bolster its export control regime since Barack Obama launched the Export Control Reform Initiative in 2010, streamlining the regulatory process to focus agencies’ attention on items of greatest concern. Trump continued this approach more assertively, with the Export Control Reform Act of 2018 establishing a new permanent statutory basis for export controls. The act also created an interagency process to identify and impose additional restrictions on emerging and foundational technologies critical to US national security.

The US often exerts influence over global supply chains by exercising export controls unilaterally. For example, the Trump administration’s expansion of the Foreign Direct Product Rule restricted Huawei’s access to US semiconductor designs and finished chips, even if they were manufactured abroad using US-origin technology. The administration thereby effectively embargoed Chinese access to some critical technologies.

In addition to tightening US export controls on entities of concern, the Trump administration also encouraged partner countries to comply with existing regulations enforced through multilateral export control lists. For example, it persuaded the Dutch to enact domestic regulations that prevented ASML from selling advanced lithography equipment—critical for semiconductor manufacturing—to China.

The administration of President Joe Biden has continued the effort to strengthen the US export control regime by attending to regulatory loopholes through a series of export control packages. Biden has also tried to improve the effectiveness of export controls against China by engaging allies and partners in a multilateral collaborative approach. While this coalition-building attempt caused initial frustration for the Netherlands and Japan due to economic costs and lack of consultation, it ultimately reduced opportunities for Chinese entities to exploit regulatory gaps by increasing enforcement consistency across key technology producing nations.

Another round of controls announced this week builds on this approach with a more targeted scope shaped by lobbying from the semiconductor industry and negotiations with the Netherlands and Japan. The measures balance national security priorities against economic interests of allies and industry stakeholders.

To sustain this progress, the Trump administration will need to focus on two priorities: ensuring export control compliance from companies that rely on revenue from Chinese markets to drive innovation; and maintaining collaboration with allies to strengthen enforcement and close regulatory gaps.

Ensuring compliance from companies will require the Trump administration to build on mechanisms that deter violations while offering incentives for adherence to regulations. Compliance could be improved by clearer regulatory guidance paired with strict penalties for non-compliance and by initiatives to offset financial losses for companies reducing dependence on Chinese markets. Focusing on ways to maintain the economic viability of businesses while implementing strict export controls will be critical in protecting the competitiveness of the US technology industry.

The Trump administration could also deepen technical cooperation with allies through such mechanisms as joint regulatory frameworks and synchronised licensing procedures. Rapid coordination in these areas would prevent adversaries from exploiting delays or disparities between national systems, ensuring export controls deliver their intended impact effectively.

Recent Five Eyes cooperation on export control enforcement, primarily targeting Russia, demonstrates how intelligence sharing between allies is being used to prevent the exploitation of loopholes. Expanding this effort to focus on countering Chinese attempts to subvert export controls would create a more robust enforcement framework.

Additionally, facilitating joint investments in semiconductor manufacturing and critical minerals processing in allied nations could reduce global dependency on China while bolstering supply chain resilience. Offering alternative market opportunities in trusted nations would further incentivise domestic companies to comply with export controls and improve relations with allies.

Australia’s position as a leading supplier of critical minerals, including rare earths, places it at the center of potential economic security considerations. In a second Trump term, Australia may face heightened expectations to further restrict Chinese direct investment in critical-minerals projects. Opportunities to increase trade with likeminded partners and fortify allied supply chains can be facilitated through existing partnerships, notably AUKUS and the Quad, which both prioritise economic and strategic collaboration to counter shared challenges posed by China.

AUKUS risks are piling up. Australia must prepare to build French SSNs instead

Australia should start planning for acquisition of at least 12 submarines of the French Suffren design. The current AUKUS plan for eight nuclear-powered attack submarines (SSNs) has always been flawed, and now its risks are piling up.

We should go ahead with naval-operational aspects of the AUKUS SSN plan, such as supporting US and British submarines when they come to Australia. But for the acquisition effort, we should be ready to drop the plan to buy eight SSNs under AUKUS—three from the US that Washington is increasingly unlikely to supply, and five that are supposed to be built to an oversized British design and probably can’t arrive on time.

Instead, we would commence a joint Franco-Australian construction program for a greater number of submarines of the Suffren class, a design that is already in service with the French navy.

To ensure deliveries could begin as early as 2038, the Australian government that’s elected next year should commit to deciding in 2026 whether to switch to the French design.

Even if the AUKUS acquisition plan succeeds, it will deliver a questionable capability. The submarines’ designs would be a mix of two blocks of Virginia-class submarines, more than 14 years apart in design, and yet-to-be-designed SSN-AUKUS using Britain’s yet-to-be-tested PWR3 reactor. Moreover, SSN-AUKUS would be partly built by the underperforming British submarine enterprise that’s under great pressure to deliver the Royal Navy’s next class of ballistic missile submarines.

Displacing more than 10,000 tonnes, SSN-AUKUS submarines will be too big for Australia’s needs. Their size will increase their detectability, cost and crews. (The large size appears to be driven by the dimensions of the reactor.)

The Royal Australian Navy is already unable to crew its ships and grow to meet future demands. It will have great difficulty in crewing Virginias, which need 132 people each, and SSN-AUKUS boats, too, if their crews equal the 100-odd needed for the current British Astute class.

We have yet to see a schedule for the British design process, nor does a joint design team   seem to have been established. In the absence of news that milestones have been achieved or even set, it is highly likely that the SSN-AUKUS program, like the Astute program, will run late and deliver a first-of-class boat with many problems. Knowing that Britain’s Strategic Defence Review is grappling with serious funding shortfalls hardly instils confidence.

Also, eight SSNs will be enough to maintain deployment of only one or two at any time, not enough for an effective deterrent. The difficulty in training crews and building up experience in three designs of submarines would add to the obvious supply chain challenges in achieving an operational force.

Achieving even this inadequate capability is growing less likely. Reports at the recent US Navy Submarine League Symposium reveal continuing US failure to increase submarine building rates. By now an additional submarine should have been ordered to cover the transfer of an existing Block IV Virginia to Australia in eight years, but no contract has been placed. Worse, Virginia production at both US submarine shipbuilders is actually slowing due to supply chain delays. The US’s top priority shipbuilding program, for Columbia class ballistic-missile submarines, continues to suffer delays. In late November, the White House requested emergency funding from Congress for the Virginia and Columbia programs.

This situation flags an increasing likelihood that, despite its best efforts, the US Navy will be unable to spare any Virginias for sale to Australia. The president of the day probably will be unable, as legislation requires, to certify 270 days before the transfer it will not degrade US undersea capabilities.

Meanwhile, Britain’s submarine support establishment is having difficulties in getting SSNs to sea. A recent fire affecting the delivery of the final Astute class SSN can only add to these woes.

The French Suffren SSN class was the reference design for the diesel Attack class that Australia intended to buy before switching to SSNs. It offers the solution to our AUKUS problems. It is in production by Naval Group, with three of the planned six submarines commissioned in the French navy.

At 5300 tonnes and with a 70-day endurance, capacity for 24 torpedoes or missiles, four torpedo tubes and a crew of 60, it would be cheaper to build, own and crew than the AUKUS boats. The design is flexible—optimised for anti-submarine warfare but with a good anti-surface ship capability from dual-purpose torpedoes and anti-ship cruise missiles. It can also carry land-attack cruise missiles, mines and special forces.

The Suffren class uses low-enriched uranium fuel and needs refuelling every 10 years, whereas the US and British designs, with highly enriched uranium, are intended never to be refuelled. But the Suffren reactor is designed to simplify refuelling, which could be completed during a scheduled refit in Australia. Used fuel can be reprocessed, simplifying decommissioning at the end of life.

True, the Suffren design does not have the weapon load, vertical launch missile tubes or 90-day endurance of the Virginia and, presumably, SSN-AUKUS. However, as a nuclear-powered relative of the Attack class it is much closer to the original Australian requirement for a replacement for the Collins class than SSN-AUKUS is shaping up to be. The design offers adequate capability for Australia’s needs in a package we can afford to own. We could operate 12 Suffrens and still need fewer crew members than we would under the AUKUS plan.

If we shifted to the Suffren design, we should nonetheless stick with the SSN training programs we’ve arranged with the US Navy and Royal Navy. We should also go ahead with establishing an intermediate repair facility that would support their SSNs as well as ours and with rotating them through Western Australia.

As for the AUKUS acquisition plan, we need to begin preparations now for jointly building Suffrens with France. Australia cannot wait for the US to finally say Virginias will be unavailable.

To the extent that design needs changing, we can go back to the work done for the Attack class, particularly incorporation of a US combat system and Australian standards.

Difficult, challenging and politically courageous? Surely. But not nearly as improbable getting SSNs under AUKUS on time.

More than innovation: Australia needs fast, low-cost defence production

Conflicts in Ukraine and the Middle East have shown that mass and asymmetry characterise modern warfare. The challenge is to deliver affordable mass—weapons in great numbers—while ensuring technology is evolving ahead of rapidly changing threats. This is both a hardware and software challenge.

We rightly applaud when an innovative prototype is delivered in record time, but that is only half the battle won. The rubber hits the road in the defence sector when innovations are efficiently and inexpensively produced at-scale to deliver an unexpected asymmetric massed effect to defeat an adversary or disrupt its decision calculus.

In releasing Defence’s innovation, science and technology strategy, Accelerating Asymmetric Advantage—Delivering More, Together, Chief Defence Scientist Tanya Monro in September called on the defence industrial base to help deliver credible, potent and future-ready technology.

The question industry must confront is, how do we evolve our thinking, processes and manufacturing to answer this call? Fundamentally, the entire acquisition process and industrial approach need to be redesigned. They need to embrace modern manufacturing processes with the scale necessary for this era. From concept to prototype, to hardware and software integration, to supply chain and manufacturing systems, industry must be much more agile and use viable commercial processes that offer abundant and readily available materials.

The gold-plated processes of the legacy defence industry are optimised for reliability and exquisiteness, not mass and efficiency. To truly deliver asymmetric advantage to the warfighter we must do things in bold and unconventional ways. That will take vision, creativity and courage.

Manufacturing at scale is hard. Historically, it’s not been an Australian strength, in fact, we have a history of thinking that the invention of new things is the end of the innovation process. The reality is that at-scale manufacturing is 1000 times harder than innovation. The industrial redesign needs to be properly funded and become the end point of Australia’s sovereign manufacturing strategy.

We have seen tremendous examples of Australian ingenuity, with several companies making great progress in developing cheap, responsive and high-rate defence capabilities for Australian and global markets.

In 2023 SYPAQ won the Australian Financial Review’s 2023 Most Innovative Companies Award for its Corvo Precision Payload Delivery System—a flat packed, easily assembled, easily operated, low cost, expendable drone now used on the Ukraine battlefield.

Nulka, a defence system developed by Australian scientists, is one of Australia’s most successful defence exports. It’s been in operation with the Royal Australian Navy and the US Navy for more than 20 years. Now made by BAE Systems, it’s a leading example of innovation progressing to scale and success across global markets

Australia doesn’t have the privilege of investing endlessly in innovative ideas without progressing to scale production. We need to invest in the right innovations, those that demonstrate ability to go from ideas to production to scale rapidly.

Another example is the US company Anduril, which has an Australian subsidiary of which I am executive chairman and chief executive. Everything Anduril builds is focused on large scale deployment. We ensure products are ready for manufacture from the get-go by designing the production system and the product simultaneously. So, when we have our first prototype of the product, we also know what the production system looks like. We have a full digital twin of the production system, a virtual representation of it. So, when we are ready to scale up production, we already understand what high-rate manufacturing will look like and how to do it efficiently. Our factories and products are modelled on high-rate automotive and consumer technology that delivers mass at a cost-effective price point.

For example, Anduril’s Barracuda (a family of autonomous-aircraft designs, including a cruise missile) is designed for low-cost, hyper-scale production. A Barracuda takes 50 percent less time to produce, requires 95 percent fewer tools and 50 percent fewer parts than competing products on the market today. The fuselage is made using hot pressing, similar to the method used for producing acrylic bathtubs. It’s incredibly cheap and broadly available.

We have used this approach in our Australian Ghost Shark program for an autonomous submarine, working with Australian suppliers to create a world-class massed production system. We are not just building three Ghost Shark prototypes. Each prototype is an opportunity to rapidly incorporate what we’re learning. The modular design and software-first approach allow accelerating improvements to be attained in military service. The agility in the design allows payloads to be rapidly switched in and out for different roles, This is game changing and could bring a battle-winning advantage to the ADF.

Our asymmetric approach is also being baked into our Australian supply chain. It’s modernising and scaling with us. Our suppliers are installing advanced machinery and AI-powered robotics. We are learning together fast.

Examples like SYPAQ and Anduril show the potential for at-scale manufacturing in Australia to deliver disruptive miliary value—potentially for allies through exports.

The National Defence Strategy 2024 emphasises the notion of human-machine teaming, in which sophisticated crewed systems are combined with massed autonomy. Australia must be capable of large-scale manufacturing of autonomous systems to deliver asymmetric, low-cost massed effects.

South Korean leader’s rash move spells upheaval at home and risk abroad

President Yoon Suk Yeol’s decision to rescind his declaration of martial law, in the face of embattled opposition from South Korea’s parliament, has at least spared the country a disastrous return to military rule. Yoon’s ignominious move is likely to seal his political fate, but also underlines the fragility of democracy in South Korea and will leave behind a disruptive political legacy.

Within the space of a few dramatic and chaotic hours last night, Yoon declared martial law in South Korea, citing anti-state and pro-North Korean forces, and ordered the military to take over the National Assembly, South Korea’s parliament.

The most encouraging aspect from this bizarre episode was the National Assembly’s unanimous 190-0 vote to strike down martial law, with 18 members from Yoon’s ruling party joining the opposition.

If South Korea has been spared the nightmare and embarrassment of a reversion to military rule, this owes much to the bravery of its elected representatives, who were under physical threat. Images of parliamentary staff barricading themselves inside and resisting armed soldiers with fire extinguishers poignantly captured the moment that South Korea’s democracy was literally under siege, at gunpoint. It is extremely fortunate that no loss of life occurred, though this is unlikely to spare the shame of the military personnel who took part in the assault on the National Assembly.

While few could have predicted Yoon’s impetuous move, in South Korea or outside, his anti-democratic methods have been on display for some time, resorting to legal pressure tactics against his political opponents and their family members. The President’s prosecutorial background has manifested in a tendency to rule by law. This has largely gone unnoticed internationally, because Yoon’s major foreign policy initiatives—revitalising the alliance with the United States and pursuing rapprochement with Japan—were widely and rightly welcomed by Washington and its allies.

Given the scale of this debacle, it’s hard to see how Yoon can remain in office for long. Mass protests are certain to follow. The great irony of Yoon now facing potential impeachment is that he rose to politics on the back of his central role in the impeachment of former president Park Geun-hye.

Counterintuitively, Yoon’s move to institute martial law actually adds to the case for South Korean presidents being allowed to run for a second term. There is no excuse for Yoon’s irresponsibility, but his politically desperate act was shaped in part by his ‘dead duck’ status, halfway into his single five-year term. The constitutional limitation on presidential terms was introduced as a safeguard against reversion to military dictatorship. Yet it is has perversely added to the polarisation of Korean politics and the zero-sum mentality of its politicians.

South Korea became democratic only in 1987. This episode is a reminder how fragile that democracy remains—though it would be mistaken to conclude that Western democracies are immune to democratic backsliding, as the events of 6 January 2021 graphically illustrated in the US.

The fact that South Korea is surrounded by China, Russia and North Korea gives its status particular importance, one of very few democracies on the Asian continent east of India. By wilfully extinguishing South Koreans’ hard-fought democracy and resubjecting it to military rule, if only for a few hours, Yoon has unwittingly given a free gift to his autocratic neighbours. For this, his political legacy seems certain to end in shame.

While North Korea appears to have nothing directly to do with Yoon’s decision to introduce martial law—despite his claims to the contrary—Pyongyang will be watching events closely and looking for opportunities to capitalise. With Seoul domestically distracted and the US in political transition, Kim Jong Un may see a favourable window within which to conduct a long-threatened nuclear test.

Moreover, South Korea’s armed forces are likely to be thrown into political convulsions with the apparent complicity of Yoon’s Defence Minister, Kim Yong Hyun in the declaration of martial law and the subsequent Army-led assault on the National Assembly. While this will leave a lasting legacy for South Korea’s delicate civil-military relations, the immediate security risk concerns external defence, especially given likely uncertainties around military command and control in the aftermath of martial law. This will be of obvious concern to the US, South Korea’s treaty ally, and American forces in Korea.

While it seems unlikely that South Korea will deviate from its current foreign policy settings in the short term, there will be no political bandwidth available. Beyond the immediate crisis, the likelihood of impeachment proceedings followed by elections and a change of government to progressive forces is likely to complicate relations with Japan and the US. Of course, the identity of Korea’s president is not the only factor in play, given Donald Trump’s well-publicised efforts to draw down US forces on the Korean Peninsula and determination to maximise South Korea’s financial support for US troops.

Review calls for narrowing Australian Criminal Intelligence Commission focus, but more needs to be done

The Australian Criminal Intelligence Commission (ACIC) is about to transform, shifting from its traditional law enforcement and investigative roles to a more focussed intelligence mandate. This change comes in response to the recommendations from the review by intelligence experts Stephen Merchant and Greg Wilson commissioned by the Albanese government.

The 14 November review report recommends refocusing the ACIC’s efforts on intelligence aimed at combating transnational, serious and organised crime—a growing and complex threat to Australia’s national security and economy. While this reorientation promises to enhance Australia’s intelligence capabilities, it also presents a range of significant challenges that the government must address to ensure the success of the transition.

The first issue that arises from this shift is the question of operational responsibility. If the ACIC is to relinquish its investigative functions, who will assume its operational role of disrupting criminal networks? The Australian Federal Police (AFP) is already overloaded, dealing with a broad spectrum of responsibilities ranging from counterterrorism to cybercrime, and its resources are increasingly stretched thin. Asking the AFP to absorb the ACIC’s operational duties without additional support or funding is a recipe for further strain on an already burdened agency. This is particularly pressing given the increasing sophistication of organised crime, which requires a highly coordinated law enforcement response.

Equally important is how to handle the increasing need for strategic intelligence. The Australian law enforcement community has traditionally been operationally focused, and many agencies have struggled with the concept of strategic intelligence—intelligence designed to inform long-term decision-making rather than provide immediate, actionable data. The ACIC’s new intelligence mandate will require a fundamental shift in focus from operational activities to generating and analysing intelligence that can pre-emptively disrupt criminal activity.

However, intelligence alone is not enough. For the ACIC’s efforts to be effective, the intelligence it generates must be actionable and integrated into broader national security and law enforcement efforts. This requires clear lines of communication and collaboration between the ACIC and other agencies within the National Intelligence Community, which brings together traditional foreign, defence and security intelligence with law enforcement and regulatory intelligence.

The Merchant-Wilson review correctly highlights that the ACIC has been constrained in fulfilling its intelligence mandate by outdated legislative frameworks and a lack of clarity about its role. As organised crime becomes more transnational and complex, the need for a unified and effective intelligence capability is more urgent than ever. However, this shift to an intelligence-focused ACIC raises the challenge of ensuring that the intelligence it produces is used effectively across the broader law enforcement and national security ecosystem.

There is a significant risk that intelligence generated by the ACIC could remain siloed or fail to reach operational agencies in time to make a difference. For the transition to succeed, the ACIC’s intelligence must be seamlessly integrated into the operational activities of other agencies, ensuring that it leads to real-world disruption of criminal networks.

Funding is another major challenge. The review rightly stresses the need for a secure and sustained funding model to support the ACIC’s core intelligence functions. The agency has been subject to unpredictable funding in the past, relying on short-term government initiatives and policy proposals to keep its operations afloat. This model is not sustainable, particularly given the increasing demands on the ACIC as it takes on a more strategic role.

The agency cannot fulfil its expanded mandate without a clear commitment to long-term funding. The government must provide the ACIC with a stable and adequate budget to support its transition to an intelligence agency. This includes funding for personnel and resources and the technological infrastructure needed to gather, analyse and disseminate intelligence effectively.

Workforce capability is closely tied to funding. The ACIC will need to attract and retain a highly skilled workforce capable of generating and analysing complex intelligence. Moving away from a model based on law enforcement means the ACIC must build on its existing analytical and technical workforce. This will be a big challenge, as Australia’s intelligence agencies are all vying for a limited talent pool.

The government must ensure that the ACIC can recruit and retain the right people. Offering competitive salaries and professional development opportunities will help to build a workforce capable of meeting the demands of a modern, intelligence-led approach to combating organised crime.

Lastly, there is the issue of the ACIC’s powers. The review recommends that the ACIC retain its coercive questioning powers, which have proven invaluable in uncovering and disrupting organised criminal networks. However, these powers must be managed carefully to avoid legal challenges and ensure they are used responsibly. The government must provide appropriate safeguards and oversight, including a new approval process for exercising these powers, to ensure they are used appropriately and in line with legal and human rights standards.

The transition of the ACIC to an intelligence-focused agency offers a strong opportunity to strengthen Australia’s response to organised crime. However, for this transformation to succeed, the government must address several key challenges. It must ensure that operational functions are effectively redistributed to other agencies, particularly the AFP, which will need additional resources to take on the ACIC’s former role. The government must also ensure that the ACIC’s intelligence is actionable and integrated into the broader national security and law enforcement framework, enabling it to disrupt criminal networks effectively. A secure, long-term funding model is essential, as is the recruitment and retention of a skilled workforce capable of carrying out the ACIC’s new mandate.

Only by addressing these challenges head-on can the government ensure that the ACIC’s transformation will strengthen Australia’s response to the growing threat of organised crime.

Avoiding downstream consequences: Australia’s role in promoting water security in the Middle East

Australia can partner with Middle Eastern countries on something we both really understand: how to manage scarce water.

Australia’s experience with water management can help to strengthen existing approaches in the Middle East and build capacity in an area that is of critical importance to the region. The government should facilitate two-way knowledge transfer between the Middle East and Australian agriculturalists to better engage the region and as an exercise in whole-of-nation foreign policy.

Highlighted in a report by the Center for Strategic and International Studies (CSIS), water scarcity in the Middle East is increasingly perilous and may worsen instability in the region. Improved approaches to water use are a critical security need across the region.

Australia’s agricultural sector has water-saving solutions that can improve primary production in the Middle East and help protect against some of the worst outcomes of water insecurity. Lending Australian expertise would improve Australia’s diplomatic presence in the region through an uncontentious aid program while also creating new connections for Australian industry. And in working in the Middle East to share their knowhow, Australian experts may learn a thing or two about water management from people there.

According to the hydraulic theory of civilisation, when Mesopotamian farmers in modern-day Iraq became the first irrigators in around 6000BC, the need to ensure the just distribution of water from the Tigris and Euphrates Rivers created perhaps the first organised form of government. Today, those same river systems in the fertile crescent of the Middle East are central to the region’s future stability. Water there is drawn not just from rivers, lakes and so on but from increasingly depleted underground sources. A warming climate is worsening scarcity by increasing surface evaporation and plant transpiration.

A lack of water precipitates social and economic challenges that can contribute to instability. Water scarcity in the Middle East has pushed people off rural land and caused environmental damage, social unrest and even international conflict.

Water scarcity and resulting threats to peace, prosperity and stability are not unique to the Middle East. Similar issues arise around the Nile, Mekong, Ural and Indus Rivers. Globally, disputed water rights present challenges to prosperity and security for individuals, communities and societies.

As the CSIS report outlines, technical, governance and social measures, if implemented in concert, can mitigate water scarcity and therefore the associated risks.

Biophysically, water is perhaps the ultimate growth limiting factor in plant production and, by extension, livestock farming. Other measures to promote crop and pasture yields, such as applying fertiliser, have little effect if there isn’t enough water.

The solution must be higher efficiency in managing and using water. And that comes down to integrating technical, economic and governance measures, areas in which Australian farmers, researchers and industry collaborators have made great advances.

The Middle East and Australia both have large swathes of arid, semi-arid and Mediterranean climate zones, and they are therefore suitable for similar agricultural products. Australian agriculturalists can produce profitably despite hydrological constraints.

For example, water use per kilogram of Australian cotton production has halved over the past 25 years thanks to improved irrigation infrastructure and management efficiencies.

Among approaches developed or used in Australia to mitigate the effects of water scarcity are use of drought resilient plant and livestock breeds, enforcement of water allocations, agricultural diversification, effective governance of water infrastructure, water pricing, applying machine learning to irrigation decisions, and, in places, economic diversification for a mix of agricultural and non-agricultural income streams.

In its Murray-Darling Basin Plan, for all of its shortcomings, Australia has learned internally how to build consensus in sharing water from rivers and lakes that cross political boundaries—in that case, state borders.

Nearly all these advances have been possible because of combined industry and government investment in research and development.

In Australia, water saving policy is routinely explained, discussed and therefore widely understood through conferences, academic journals and industry newsletters. Such communications would not be enough to strengthen water security in the Middle East, however. A hands-on approach would be needed.

The government should take action, including providing funding, to better enable Australian agriculturalists—from producers to researchers and government officials—to directly share their approaches in water management in the Middle East. Methods would have to adapt to the specific governance, economic and cultural contexts of partner nations.

In turn, existing water-smart innovations from the Middle East, many of them long-standing and with cultural value (such as drought-resilient livestock breeds, indigenous plant varieties and underground aqueducts or qanats) can be combined with approaches from Australia, allowing also for a two-way exchange of knowledge

Australian agriculture has thrived despite operating in some of the driest land on Earth. It has knowhow that it should share.

New USAF focuses: fighter-like drones and electromagnetic warfare

‘Listening to new options’, according to a senior civilian advisor, is a key piece of the US Air Force process of force redesign.

One of those options is using the fighter-like drones that will come from the Collaborative Combat Aircraft (CCA) program, which was central to a panel discussion at the US Mitchell Institute’s Air Power Futures Forum in November. Another is a tighter focus on electromagnetic spectrum operations (EMSO), the currently favored term for electromagnetic warfare (EW) and related activities.

CCAs, formerly called loyal wingmen, will be much cheaper than crewed fighters and are intended to work with them and enhance their value—for example, by moving forward to detect targets. EMSO encompasses such decisive effects as seeing what is going on in a battle while blinding or deceiving the enemy’s sensors, foiling the guidance of its weapons, and disrupting its communications while preserving one’s own.

Both designs chosen for the CCA program’s Increment 1, from General Atomics and Anduril, have passed critical design review, according to Colonel Timothy Helfrich, cyber systems lead in Air Force Material Command. The project is ‘ahead in some areas’ of an overall objective to achieve initial operational capability by the end of the decade, he said—because demands had been relaxed where necessary. ‘We need to be able to know when good enough is enough. Instead of adding features, we have made tough decisions.’

Helfrich added that the air force had learned ‘appetite control’ in Increment 1, and that attitude is going into Increment 2, which is to produce new designs and will be the subject of concept refinement studies with industry early in 2025. ‘It’s dangerously close to getting started,’ he said.

Pilots are getting experience with CCAs in the complex Joint Simulation Environment, developed to support the F-35, as well as with live surrogate aircraft. One lesson: ‘Pilots are finding that they can take custody of more CCAs than we thought.’ Helfrich said. The F-35 has flown with Kratos’s Valkyrie test aircraft to demonstrate ‘disaggregation of sensors’—sharing sensor tasks between two aircraft. Helfrich calls the technique ‘unbelievably powerful’.

Mike Shortsleeve, vice president for strategy and business development for General Atomics, said that the first aircraft built under the Increment 1 contract, based on the XQ-67A design, would fly soon. Diem Salmon, vice president for air dominance for Anduril stressed that ‘the schedule is the capability, being able to deliver at the point of need is the capability.’

The air force’s goal is to own and manage a common architecture to build autonomy into CCAs, Helfrich said. Rather than ‘platform-specific autonomy’, the government side is building an industry consortium to create an evolving architecture. His point was echoed by Mike Benitez, director of strategic product development at software-focused Shield AI: ‘You need two things. You need a standard and you need governance—and not one-and-done; it requires continuous involvement.’

Autonomy is not easy. Benitez notes that ‘for every hour of mission autonomy, you need 100 hours of hardware-in-the-loop testing. Behind that is 10,000 hours of high-fidelity, real-time systems-in-the-loop testing, and that’s backed up by 100,000 hours of faster than real-time, low-fidelity systems simulation.’

Once that’s done the picture changes. In development, ‘processing is huge,’ says Shortsleeve, but once you’ve done it, the decision-making by the system is simplified and within the capacity of commercial off-the-shelf chips.

Result: CCAs will evolve in the direction of more autonomy and more onboard sensor processing, increasing the number of vehicles one pilot can manage and lightening the load on communications systems. But in the process, they will rely more on advances in EMSO to keep their systems up to date in the face of a threat that will also evolve rapidly.

‘If we lose in the spectrum, we lose the fight in the air,’ says Colonel Larry Fenner, commander of the 350th Spectrum Warfare Wing, ‘and we’re going to lose quickly. Our job is to make sure that doesn’t happen.’

The wing was activated at Eglin Air Force Base in Florida just over three years ago, and its primary function is to translate electronic and other intelligence into the mission data files (MDFs) loaded into active and passive EW systems. It assumed oversight of the F-35 Partner Support Complex, which manages the MDFs for non-Israeli exported F-35s.

There is a back-story here: as panel moderator Brigadier General (retired) Houston Cantwell explained, ‘for the last three decades, EMSO fell below the Air Force cut-line’ in budget requests and was not properly funded. Cantwell blamed budgets, but active EW, such as jamming, fell by the wayside in the era when stealth was dominant. Panelist Chris Moeller was from the BAE Systems EW business in Nashua, New Hampshire, which was once Lockheed Sanders, and in the early 1990s, the director of engineering at Sanders declared that ‘we see traditional jammer business going the way of buggy whips.’

It didn’t.

The hardware side is coming back, Moeller citing the L3Harris EA-37B Compass Call communications jamming system, built into an adaptation of the Gulfstream G550 business jet, as a system comprising ‘20-plus third-party apps on a BAE baseline’. The open architecture runs with the help of flexible software-defined radio (SDR) components.

Together with a modular approach to assembling the system—and sharing modules between different applications and uses, that opens the way, Moeller says, to upgrading without having to find more space, supply more power and carry more weight. It’s a concept already used on space systems, which is the near-term goal as EMSO technology reaches towards the target of ‘cognitive EW’—systems that can detect a previously unknown signal and respond without human intervention.

‘We’re not there yet,’ says Fenner about cognitive EW, but the government and industry are working on ways to use artificial intelligence and machine learning on the ground, to speed the flow of new data into front-line systems. ‘The data’, adds Fenner, ‘is the weapon.’

America’s tech blind spot

Nationalism has emerged as a potent force shaping global tech policy, nowhere more so than in the United States. With Donald Trump returning to the White House for a second term, his vision for America’s technological future is coming into sharper focus.

At home, Trump promises a sweeping deregulatory agenda coupled with industrial policy aimed at boosting domestic tech businesses. Abroad, his administration appears poised to double down on aggressive restrictions aimed at keeping American technology out of China’s hands.

Yet Trump’s grand vision to make America great again overlooks a crucial detail: the cycle of innovation matters hugely for technological progress. The path the US is charting risks fostering a tech ecosystem dominated by mediocre products, such as attention-grabbing social media apps, while failing to nurture the kind of transformative inventions that drive productivity and long-term economic growth.

Joseph Schumpeter, the renowned Austrian economist who popularized the term ‘creative destruction’, identified three key stages of the process. First, there’s innovation—a breakthrough idea or method. In the realm of artificial intelligence, this stage includes the development of neural networks, which laid the foundation for deep learning, and, more recently, the transformer architecture that has powered the rise of generative AI.

Then comes the stage of commercialisation, when disruptive ideas evolve into market-ready products. This is where tools like ChatGPT—applications built on large language models (LLM)—emerge and become accessible to everyday consumers. Finally, there’s diffusion, the phase when the novel technology becomes pervasive, reshaping industries and daily life.

So far, discussions of tech regulation have tended to focus on the later stages of this process, which bring immediate economic benefits, often overlooking the early stage of invention. It is true that regulations to ensure safety, guarantee data privacy and protect intellectual property can raise adoption costs and slow down product rollouts. But these guardrails are less likely to stifle innovation at the invention stage, where creative ideas take shape.

Of course, the prospect of discovering the next commercial blockbuster—something like ChatGPT—may indeed spur future invention, and widespread adoption can also help refine these technologies. But such feedback is likely to be very limited for most products.

Consider the case of Character.AI, a company that developed a popular companion chatbot. While the product has certainly contributed to the diffusion of LLM-based services, it has done little to spur invention. Recently, the company even abandoned its plans to build its own LLM, signalling that its focus remains firmly on diffusion rather than groundbreaking invention.

In such cases, regulations ensuring that innovations are safe, ethical and responsible by the time they reach the market would most likely deliver benefits outweighing the costs. The recent tragedy of a 14-year-old boy who took his own life after prolonged interactions with Character.AI’s chatbot underscores the urgent need for safeguards, especially when such services are easily accessible to young users.

Lax tech regulation also carries a hidden cost: it can shift resources away from scientific discovery, favouring quick profits through mass diffusion instead. This dynamic has fuelled the proliferation of addictive social media apps that now dominate the market, leaving behind a trail of societal ills—everything from teenage addiction to deepening political polarisation.

In recent years, a growing chorus of academics and policymakers has sounded the alarm over the systemic dysfunction of the US tech sector. Yet, despite the high drama of congressional hearings with Big Tech CEOs and a cascade of bills promising comprehensive reforms, the results have been disappointing.

So far, the federal government’s highest-profile effort to rein in Big Tech has centred on TikTok—in the form of a bill that would either ban the app outright or force its Chinese owners to divest. In the realm of data privacy, the most significant measure so far has been an executive order restricting the flow of bulk sensitive data to ‘countries of concern’, China chief among them.

Meanwhile, US authorities have increasingly directed their scrutiny inward to root out espionage. The now-infamous China Initiative, which disproportionately targeted ethnic Chinese scientists, has stoked fear and prompted a talent exodus from the US. Compounding this is a broad visa ban on Chinese students and researchers associated with China’s ‘military-civil fusion’ program. While ostensibly aimed at protecting national security, the policy has driven away countless skilled individuals.

This brings us to the paradox at the heart of US tech policy: simultaneous under- and over-regulation. On one hand, US policymakers have failed to implement essential safeguards for product safety and data privacy—areas where thoughtful oversight could mitigate risks while fostering a competitive environment conducive to cutting-edge innovation. On the other hand, they have adopted an aggressive, even punitive, stance toward US-based researchers at the forefront of scientific discovery, effectively regulating invention itself.

The irony could not be starker: in its bid to outcompete China, America risks stifling its own potential for the next breakthrough technology.