The Federal Government has introduced the Future Made in Australia (Production Tax Credit and Other Measures) Bill 2024 to Parliament to seize the economic and industrial opportunities the clean energy transition presents.
The legislation will implement production tax incentives for renewable hydrogen and critical minerals and also expand the role and remit of Indigenous Business Australia.
The Federal Government said the bill is a big step in making Australia indispensable to the global net zero transformation and strengthening Australia’s economic resilience.
The bill is expected to help unlock private sector investment to build a stronger, more diversified and more resilient economy powered by renewable energy that creates secure, well‑paid jobs around the country.
The Federal Government said it’s also about making sure the benefits from the investment flow to local workers, industries and communities around Australia.
The legislation establishes two tax incentives:
- It establishes a Hydrogen Production Tax Incentive worth $2 per kg of renewable hydrogen produced between 2027–28 and 2039–40 for up to ten years per project.
- It establishes a Critical Minerals Production Tax Incentive worth ten per cent of relevant processing and refining costs for Australia’s 31 critical minerals, for critical minerals processed and refined between 2027–28 and 2039–40, for up to ten years per project.
The Federal Government said renewable hydrogen and critical minerals are both essential to the world’s path to decarbonisation and these tax incentives make that clear, ensuring these projects are delivered in ways that provide broader benefits to local communities.
The legislation is expected to provide industry the clarity and certainty it needs to invest in Australian renewable hydrogen and critical minerals projects with confidence.
The Federal Government said the incentives will only be provided once projects are up and running, producing hydrogen or processing critical minerals used in products like wind turbines, solar panels and electric vehicles.
Recipients of the production tax incentives will also be required to deliver benefits relating to the six Community Benefit Principles included in the overarching Future Made in Australia Bill. The specific requirements will be detailed by rules set by the Treasurer, which will be subject to further consultation.
The Federal Government said it recognises that the best opportunities for Australia and its people lie at the intersection of industry, energy, resources, skills and the ability to attract and deploy investment.
The tax incentives are expected to encourage and enable new industries that put Australia on a path to net zero and strengthen its economic resilience.
Industry response
The Clean Energy Council welcomed the introduction of the Future Made in Australia (Production Tax Credits and Other Measures) Bill 2024 into Federal Parliament.
Clean Energy Council Policy Director – Decarbonisation, Anna Freeman, said the bill is a critical measure, and a catalyst, to unlocking hundreds of billions of dollars of private investment in new clean energy industries.
“The Hydrogen Production Tax Credit will support early-mover, large-scale green hydrogen production in Australia, which will play an important role in the decarbonisation of our heavy industries and can stimulate massive economic expansion opportunities.”
Ms Freeman said there are many ‘hard-to-abate’ industries – like steel making, shipping and aviation – whose most promising prospects for decarbonisation depend on the availability of competitively priced hydrogen.
“With the best renewable energy resources in the developed world, Australia has a genuine shot at being an internationally competitive producer of green hydrogen and its derivatives.”
