The federal government has announced it will introduce the Future Made in Australia (Production Tax Credit and Other Measures) Bill 2024 to Parliament as it seeks to support the development of the nation’s green hydrogen and critical minerals sectors.
The proposed legislation will set up a tax incentive worth $2.00 (USD 1.31) per kilogram of renewable hydrogen produced in eligible facilities between 1 July 2027 and 30 June 2040 for up to 10 years per project, the government said.
For critical minerals, the planned law will establish a tax incentive worth 10% of relevant processing and refining costs for 31 critical minerals processed and refined during that same period.
The two incentives combined are worth an estimated $13.7 billion over 10 years and form part of the government’s Future Made in Australia policy.
Treasurer Jim Chalmers said the new legislation will give investors confidence to invest in green hydrogen and critical minerals that are to play a central role in Australia’s, and the world’s, net-zero future.
“This legislation provides industry the clarity and certainty it needs to invest in Australian renewable hydrogen and critical minerals projects with confidence,” he said. “This is all about seizing the vast economic and industrial opportunities from the global net-zero transformation and strengthening our economic resilience.”
Chalmers said an important feature of the Bill is that 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.”
Clean Energy Council Decarbonisation Policy Director Anna Freeman said the Bill will help unlock 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,” she 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.”
Freeman said Australia has a “genuine shot” at being an internationally competitive producer of green hydrogen and its derivatives but suggested the production credit will need support if it is to prove a success.
“It should be complemented with demand-side policy measures to encourage uptake,” she said.
“Other major markets, including the United States and Canada, are providing generous support to hydrogen production, and Australia too needs to create attractive investment conditions if we are to attract the tens of billions of dollars of new private investment waiting in the wings.”
