Treasurer Jim Chalmers delivered his third Federal Budget on Tuesday, 14 May 2024, featuring the promised details and costings of the recently announced Future Made in Australia Act, and more specifically, what was in it for the Australian cleantech ecosystem.
I'd foreshadowed some of this in my previous article, which was necessarily light on specifics.
The "Future Made in Australia Act"
Hot on the heels of President Biden's Inflation Reduction Act ("IRA"), which among other initiatives earmarks unprecedented investment in cleantech, and the European Commission's more self-explanatory Green Deal Industrial Plan comes the Future Made in Australia Act ("FMAA"), which was announced recently by Prime Minister Anthony Albanese.
Whereas the scale of the American IRA is literally of the order of hundreds of billions of dollars in tax breaks and subsidies over the next decade, Mr Albanese's initiative is more proportionate to our global scale and footprint.
Under promise and over deliver
Previous estimates based on the Government's selective pre-release of information were surprisingly understated by nearly 25%. In total, around $22.7 billion is to be spent in bringing together a range of manufacturing and renewable energy programs under one umbrella.
A number of measures were announced by Treasurer Chalmers:
- A $6.7 billion hydrogen production tax incentive and $1.3 billion in additional Hydrogen Headstart funding to accelerate the hydrogen industry across green, pink, turquoise, yellow and white sections of the hydrogen spectrum
- $3.2 billion additional funding for Australian Renewable Energy Agency (ARENA) technology commercialisation, including $1.7 billion over 10 years from 2024-25 to support innovation, commercialisation, pilot program and early stage development in priority sectors through the Future Made in Innovation Fund
- $1 billion for the Solar SunShot program, which aims at increasing the number of Australian-made solar panels
- A new $7 billion critical minerals value-adding Production Tax Credit
- $230 million for Western Australia's Liontown Resources, which operates as a lithium producer, targeting the EV and energy storage industries
- $470 million to build the world's first "fault-tolerant" quantum computer in Brisbane, with an equivalent commitment coming from the Queensland State Government
- $566 million over the next decade for Geoscience Australia to create detailed maps of critical minerals under Australia's soil and seabed
- $840 million for the mining company Arafura to develop its combined rare earths mine and refinery in Central Australia.
- $185 million to fast-track Renascor Resources' Siviour Graphite Project in South Australia
- $500 million Battery Breakthrough Initiative
- $400 million to create Australia's first high-purity alumina processing facility in Gladstone
- $209 million funding for the Net Zero Economy Authority
$168 million to prioritise approval decisions for renewable projects of national significance - $91 million to accelerate the development of the clean energy workforce
- $14 million to work with trade partners to strengthen high quality critical minerals benchmarks.
In the lead-up to the budget, Finance Minister Katy Gallagher
positioned the Government's thinking in interviews, saying:
"It's clear that government investment in the right areas will support [the clean energy] transition."
"How do we attract private sector investment to support that economic transformation [and] play a serious role in it."
"Set the framework, make a very clear statement about what we think the government's role is, for the next generation hopefully deliver the benefits of that growth agenda. You will see that [the Future Made in Australia Act] is a big part."
The Albanese Government has consistently expressed a desire to see Australia step up in areas such as battery and solar panel manufacturing, harnessing the materials mined in Australia but currently exported overseas for processing, etc. A good example is lithium, in which we supply about 50% of the global market yet bank only about 1% of the proceeds.
Commentary
My first thoughts upon scanning the bullet-point list above was "that's smart". I don't mean "smart" as in instantly recognising many of the beneficiaries or knowing key details about their respective operations (although it's safe to assume that each is best-in-class, or close to it). Rather, I mean "smart" in relation to Mr Albanese's quote:
"Obviously, Australia cannot go dollar for dollar with the United States' Inflation Reduction Act.. ..But this is not an auction – it's a competition and Australia can absolutely compete for international investment when it comes to our capacity to produce outcomes, the quality of our policies and the power of our incentives."
We have more lithium than anywhere on the planet. Our potential to produce green, pink, turquoise, yellow and white hydrogen is unmatched. We have as much sunlight, silica and circumference (coastline) as anyone. And our alumina and rare earth reserves are vast.
Why wouldn't we play to our strengths? Given our resources, these are sectors of the cleantech continuum in which we have "home court advantage".
In context, Australia aims to reach Net Zero greenhouse gas emissions by 2050. We're not going to get there passively. The FMAA is a roadmap for us to get there strategically and actively.
Next steps
The FMAA is not yet an Act of Parliament. In fact, it is not yet even a Bill (draft legislation).
The next step is to legislate the initiatives foreshadowed in the Federal Budget. Of course, there's due process to be followed and given the criticality of the measures proposed, one would hope the Albanese Government is able to enact the associated legislation within the current parliamentary term.
Reach out to our cleantech and innovation intellectual property experts for assistance.
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