The 2024 Federal Budget was delivered on 14 May 2024. The $22.7 billion ‘Future Made in Australia’ (FMA) package was a core part of the budget this year, which demonstrates the incumbent Government’s commitment to making Australia a ‘Renewable Energy Superpower’.
Key Takeaways
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In this New Energy Insight’s article, we consider significant budget measures which affect our clients in the energy space, including investments in renewable hydrogen, critical mineral processing, clean energy manufacturing, green metals and low-carbon liquid fuels. Notably, these investments align with the priority sectors identified through the ‘Net Zero Transformation’ stream (of the National Interest Framework).
Hydrogen – Continuing Investments in Renewable Hydrogen
The Federal Government will invest $8 billion from 2024 to 2034 (and $1.2 billion per year from 2034 to 2040) to support the production of renewable hydrogen. This includes:
- $6.7 billion of a Hydrogen Production Tax Incentive from 2024 to 2034 (and $1.1 billion per year from 2034 to 2040) for producers of renewable hydrogen to support the growth of a competitive hydrogen industry and Australia’s decarbonisation; and
- $1.3 billion for an additional round of the Hydrogen Headstart program from 2024 to 2034 (and $151.6 million per year from 2034 to 2038) for an additional round to bridge the green premium for early-mover renewable hydrogen projects.
A further $20.9 million has been allocated to incentives to support the production of, and demand for, low-carbon liquid fuels, as well as the development of a low-carbon liquid fuels certification scheme through the ‘Guarantee of Origin’ Scheme. In addition, the budget allocates $11.4 million to fast track the initial phase of the Guarantee of Origin Scheme for green hydrogen and bring forward work on green metals, including iron, steel and aluminium.
Our article ‘Fifty Shades of Green: Hydrogen Guarantees of Origin’ provides further information in this respect, and discusses the consultation on the Guarantee of Origin scheme.
Prioritising Critical Minerals Investment
The Federal Government has strategically prioritised investment in critical minerals to support Australia’s future economic resilience and security given the global demand for critical minerals is expected to grow by 350 per cent by 2040. Australia has some of the largest reserves of known critical minerals like lithium, cobalt and rare earths, however, 80 per cent of Australia’s landmass is unexplored. The Federal Government has granted $566.1 million to Geosciences Australia to explore and create detailed maps of critical mineral deposits under Australia’s soil and seabed.
The Federal Government has also committed $7.1 billion over the next 11 years to support the refining and processing of critical minerals in Australia, by introducing:
- a Critical Minerals Production Tax Incentive to support downstream refining and processing of 31 critical minerals to improve supply chain resilience. This program is expected to cost $7 billion; and
- allocated $10.2 million for pre-feasibility studies for processing facilities to enhance Australia’s capacity to process critical minerals.
A further $1.2 billion has been committed to strategic critical mineral projects, including the Alpha HPA alumina project in Queensland and Arafura Rare Earth’s Nolans Rare Earth project in the Northern Territory.
We’ve recently published a two part series to explore the opportunities and challenges within the critical minerals industry in Australia: Part I: Unlocking Clean Energy: The Crucial Role of Rare Earth Minerals: Recent Announcements and the Path Forward; and Part II: Unlocking Clean Energy: The Crucial Role of Rare Earth Minerals: What’s all the Fuss About?
Clean Energy Manufacturing
The Federal Government will invest $1.4 billion from 2024 to 2035 to support manufacturing of clean energy technologies, especially solar and battery manufacturing capabilities. The focus to support clean energy manufacturing includes:
- $835.6 million to establish the Solar Sunshot program to promote solar manufacturing capabilities and improve the industry’s supply chain resilience; and
- $549 million to support battery manufacturing, through production incentives and enhancing industry and research collaboration.
Our recent article discusses the consultation on the Solar Sunshot funding program in support of Australian solar manufacturing.
A further $18.1 million has been allocated for the foundational initiatives for the emergence of Australia’s green metals industry. It aims to support the production of green iron, steel, alumina and aluminium.
Innovation and Renewable Energy Technologies – ARENA
The Federal Government will invest $1.7 billion in the Future Made in Australia Innovation Fund, to be administered by the Australian Renewable Energy Agency (ARENA). This will support innovation, commercialisation, pilot and demonstration projects and early-stage development in priority sectors, including renewable hydrogen, green metals, low-carbon liquid fuels and clean energy technology manufacturing such as batteries.
In addition, the Federal Government will invest $1.5 billion from 2027 to 2034 to supercharge ARENA’s core investments in renewable energy technologies, including development, demonstration, commercialisation, manufacture and deployment to make Australia a renewable energy superpower.
Clean Energy Workforce
The Federal Government has committed $218.4 million to support the development of a skilled and diverse clean energy workforce in Australia, including:
- $90 million to address vocational education and training sector shortages, and funding new and existing training facilities upgrades;
- $55.6 million to establish the Building Women’s Careers program to improve woman’s access to traditionally male dominated sectors; and
- $10 million to establish a National Hydrogen Technology Skills Training Sector.
The Federal Government has also committed $134.2 million to ensure workers impacted by the net zero transition are supported during the transition. A further $44.4 million has been committed to deliver the Energy Industry Jobs Plan to assist employees in the coal and gas sector to access new employment opportunities in the renewable energy sector or retire early.
Regulatory Reforms for Investment, Sustainable Finance, and Approvals
The Federal Government has committed significant funds to deliver regulatory reforms in key areas to create a competitive business environment in Australia to better attract and deploy investment. This will have a positive impact on facilitating and accelerating renewable energy investments.
The reforms will be introduced as part of the Future Made in Australia Act for which the consultation is expected to open shortly.
Promote investment:
- $68 million to attract investment in key industries, including $54.7 million for regulatory reforms to develop a ‘single front door’ for major investment proposals; and
- The Federal Government also intends to support Indigenous Business Australia to better leverage their capital to invest in First Nation communities and businesses.
Sustainable finance:
- $17.3 million to develop sustainable finance markets, including $10 million to the Australian Securities and Investments Commission to investigate and take enforcement action against market participants engaging in greenwashing and other sustainability-related financial misconduct; and
- $5.3 million to deliver a sustainable finance framework.
Strengthen approvals processes:
- $182.7 million to strengthen the approval processes to deliver the Government’s Future Made in Australia Agenda, including:
- $96.6 million to strengthen environmental approvals for renewable energy, transmission and critical minerals projects;
- $20.7 million to improve community engagement and social licence outcomes in regional communities affected by the energy transition;
- $19.9 million to develop, agree and maintain a national priority list of renewable energy projects; and
- $15.7 million to streamline Australia’s foreign investment framework. A key part of this framework includes refunding 75 per cent of foreign investment application fees to unsuccessful applicants in the bidding process.
Other Energy Measures
The Federal Government has committed to other budget measures in relation to the clean energy transition, including:
- $7.1 billion to support continued construction of Snowy Hydro 2.0 (noting $4.5 billion will be provided on commercial loan terms and expected to be refinanced once the facility is operational);
- $3.5 billion to extend and expand the Energy Bill Relief Fund to provide a $300 rebate to all Australian households and a $325 rebate to small businesses (in 2024-25);
- $23 million investment to continue to deliver the Government’s circular economy policy following the development of a new national framework;
- $47.7 million to implement reforms to boost the supply of renewable energy resources, develop the Energy Made Easy website and make it easier for consumers to switch between energy retailers through ‘one click’;
- $48 million to implement further reforms to the Australian Carbon Credit Unit scheme (building on the $18.1 million investment in the 2023-24 budget);
- $32.6 million to develop regulatory frameworks on carbon sequestration;
- $399 million to promote orderly and positive economic transformation and to ensure regions and workers realise the benefit of the net zero economy (building on the 2023-24 budget measure titled National Net Zero Authority and Employment White Paper); and
- $154.5 million to implement the recently introduced New Vehicle Efficiency Standard.
Get in touch
For more detailed insights and expert guidance on navigating the opportunities presented by the 2024 Federal Budget’s clean energy initiatives, connect with our New Energy team. 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 Hamilton Locke New Energy Partner Matt Baumgurtel.
