New Energy Bulletin: Future Made in Australia (Production Tax Credits and Other Measures) Bill introduced to Parliament

On 25 November 2024, the Federal Government introduced the Future Made in Australia (Production Tax Credits and Other Measures) Bill 2024 (the Bill) into the Australian Parliament. The proposed legislation will (amongst other things) establish production tax incentives for renewable hydrogen and critical minerals.¹

The legislation establishes two tax incentives, each of which applies for a specific project for up to ten years², as follows:

1. The Hydrogen Production Tax Incentive (HPTI), a refundable tax offset of $2 per kilogram of renewable hydrogen produced between 2027-28 and 2039-40 financial years.³
2. The Critical Minerals Production Tax Incentive (CMPTI), a refundable tax offset equivalent to 10 per cent of the non-excluded costs of carrying on the registered processing activities for the production of critical minerals between 2027-28 and 2039-40 financial years.⁴

These measures are designed to unlock private sector investment, enabling the development of renewable hydrogen and critical minerals industries that are vital to both Australia’s net zero future and global decarbonisation efforts.⁵

In addition to supporting industry, the Bill ensures that projects deliver meaningful benefits to Australian communities.⁶ Recipients of the tax incentives will be required to meet the Community Benefit Principles under the overarching Future Made in Australia Bill.⁷ These principles are intended to ensure local workers, industries and communities share in the economic opportunities created by these projects.⁸

The Hon Dr Jim Chalmers MP emphasised in the Bill’s second reading speech that ‘[t]his legislation provides industry the clarity and certainty that it needs to invest in Australian renewable hydrogen and critical minerals projects with confidence’.⁹ By doing so, it positions the nation as an indispensable player in the global net zero transformation.

For further information on the Bill please refer to the Future Made in Australia (Production Tax Credit and Other Measures) Bill 2024 Explanatory Memorandum.

To learn more about the background to the HPTI and CMPTI, please read our previous articles Hydrogen on the Horizon: Unpacking Australia’s New Hydrogen Production Tax Incentive and Rocking Renewable Energy: The Critical Minerals Production Tax Incentive.

The Hamilton Locke New Energy Team will continue to monitor developments and provide insights into how these incentives will shape the Australian renewable energy landscape. Stay tuned for updates in the coming weeks.

The Hamilton Locke team advises across the energy project life cycle – from project development, grid connection, financing, and construction, including the buying and selling of development and operating projects. For more information, please contact Matt Baumgurtel.

¹The Hon Madeleine King MP, Minister for Resources and Minister for Northern Australia, the Hon Dr Jim Chalmers MP, Treasurer, the Hon Chris Bowen MP, Minister for Climate Change and Energy and Senator the Hon Tim Ayres, Assistant Minister for a Future Made in Australia, ‘Production tax incentives to help build Future Made in Australia’ (Joint Media Release, 25 November 2024) <https://www.minister.industry.gov.au/ministers/king/media-releases/production-tax-incentives-help-build-future-made-australia> (‘Joint Media Release’).

²The Hon Dr Jim Chalmers MP, Treasurer, ‘Future Made in Australia (Production Tax Credits and Other Measures) Bill 2024 Second Reading Speech’ (Speech, Parliament of Australia, 25 November 2024) 36 <https://parlinfo.aph.gov.au/parlInfo/genpdf/chamber/hansardr/28042/0080/hansard_frag.pdf;fileType=application%2Fpdf>.

³Explanatory Memorandum, Future Made in Australia (Production Tax Credits and Other Measures) Bill 2024 1 <https://parlinfo.aph.gov.au/parlInfo/download/legislation/ems/r7297_ems_00fa0e2e-bb91-4c72-9a66-086436d63677/upload_pdf/JC014789.pdf> (‘Explanatory Memorandum’).

⁴Ibid 36, 37.

⁵Joint Media Release (n 1).

⁶Ibid.

⁷Explanatory Memorandum (n 3) 13, 39.

⁸Explanatory Memorandum, Future Made in Australia Bill 2024 9-10 <https://parlinfo.aph.gov.au/parlInfo/download/legislation/ems/r7219_ems_62724c50-eb45-411a-9383-11e0448f331f/upload_pdf/JC013569.pdf>.

⁹Chalmers (n 2) 36.