As the US turns its back on the lucrative and growing green transition, the Albanese government keeps pushing ahead with its Future Made In Australia bill, on Monday passing an amendment to allow tax credits for the producers of green hydrogen and critical minerals.
In a joint statement federal Treasurer Jim Chalmers, Climate Change and Energy Minister Chris Bowen, Future Made in Australia Minister Tim Ayres and Resources Minister Madeleine King said benefits would flow to local workers, industries and communities, creating “well-paid local jobs” while also “strengthening economic resilience” and decarbonising industries.
The two tax incentives in the legislation include:
- hydrogen production tax incentive valued at $2 per kilogram of renewable hydrogen produced between 2027 and 2040 for up to ten years per project
- critical minerals production tax incentives valued at 10 per cent of processing and refining costs for the 31 crucial minerals necessary to the transition between 2027 and 2040 for up to ten years per project
Notably, uranium was removed from the list of minerals identified by the Labor government to gain support from the Greens to pass the bill.
The remaining minerals will be used in products such as wind turbines, solar panels and electric vehicles. The government noted that the minerals will also be vital to the nation’s defence industry, such as the construction of submarines and aircraft.
Also included in the bill is the green aluminium production credit, which is an emissions-linked credit contract that is payable per tonne of green aluminium produced for up to 10 years.
Incentives will only be provided for projects that are up and running, with a “pay on delivery” model to ensure funds only go to the industry once the product is successfully produced.
Climate Capital Forum, which claims significant credit for pushing the bill through, said this week the bill was vital to kickstarting green manufacturing in Australia.
“This week’s successful passage of Production Tax Credits is a win for the Australian economy, our companies, communities, workers and cleantech sector,” said Blair Palese, founder of the Climate Capital Forum.
Director of Climate Energy Finance Tim Buckley who is also a member of the network said:
“Production credits provide much needed government support until a price of carbon emissions in international trade is established, to extend and leverage the EU & UK CBAM, to provide the needed market price signal valuing embodied decarbonisation.”
- Tim Buckley was a guest on the TFE Live podcast and event last year, talking about the race for green tech in Australia and China. Listen to the podcast here.
The forum added that production tax credits would help close the initial price gap between established overseas producers or fossil fuel based production and new onshore facilities utilising clean production techniques.
The provisions also include community benefit principles such as safe and secure jobs, delivering positive outcomes for local communities, and strengthening domestic supply chains – which the group says will level the playing field and ensure Australia builds a strong social licence for new industries.
The tax credits are set to expire in 10 years, at about the same time that these industries are expected to become self-sustaining.
The forum also wants the green iron and alumina industry to flourish, as well as sustainable aviation fuel.