Supporting a future 'Made in Australia' – Energy policy announcements in the 2024-25 Federal Budget
17 May 2024
17 May 2024
Businesses should remain alert to further Federal Government announcements about these policies, programs and tax incentives and engage in consultation where possible on any decisions that may impact your business.
The Federal Government has made several significant energy policy announcements as part of its 2024-25 budget.
The announcements provide more detail on the Federal Government's $22.7 billion Future Made in Australia package (Future Made Package). The Future Made Package includes new policies, tax incentives and expenditure aimed at helping Australia become a renewable energy "superpower", securing its place in a changing global economic and strategic landscape.
Below, we have provided more detail on the key energy policy announcements in the 2024-25 Federal Government budget.
The Future Made Package will be established under the Future Made in Australia Act and implemented in line with a National Interest Framework (Framework).
The Framework will guide Federal Government decision making on significant public investments. Under the Framework, there are two priority industry "streams":
The Treasury has released a supporting paper on the Framework, providing further details on this significant Federal Government policy.
The Federal Government is hoping to kick-start the hydrogen industry, by providing $6.7 billion over a decade for a new Hydrogen Production Tax Incentive (Hydrogen Incentive). The Hydrogen Incentive will be available for production between 2027–28 and 2039–40 and provide a $2 incentive per kilogram of renewable hydrogen produced for up to ten years per project. Projects that reach final investment decision by 2030 will be eligible.
The Hydrogen Incentive will operate alongside the Hydrogen Headstart program, which has been expanded in the budget by $1.3 billion.
Green hydrogen is not in large-scale commercial production anywhere around the world, but the Federal Government is betting on the industry's growth, driven by increasing heavy industry demand for fossil fuel replacements.
In addition to the Hydrogen Incentive, the Federal Government has announced the Critical Minerals Production Tax Incentive (Critical Minerals Incentive), costing approximately $7 billion over the medium term. The Critical Minerals Incentive aims to support the processing and refining any of the 31 minerals on Australia’s critical list, many which are used in the production of clean energy products like solar panels, batteries, electric vehicles and wind turbines.
The Critical Minerals Incentive will be available between 2027–28 and 2039–40 and provide a production incentive valued at 10 per cent of relevant processing and refining costs for Australia’s 31 critical minerals, for up to 10 years per project. Projects that reach final investment decision by 2030 will be eligible.
Other recently-announced programs aimed at supporting Australia's critical minerals industry, include:
The Federal Government has outlined its commitment to establish a new "front door" for investors in major, transformational investment proposals, making it simpler to invest in Australia and attracting more global and domestic capital.
The front door is designed to:
The Federal Government's "front door" initiative includes policies to help unlock and encourage investment in renewable energy projects, including:
The Federal Government has announced several initiatives to scale-up Australia’s clean energy manufacturing capacity. These include:
Global supply chains for certain clean energy technologies are highly concentrated, particularly solar panels and batteries. With these policies, the Federal Government hopes to improve Australia's economic resilience by diversifying its clean energy supply chains.
A major focus of the 2024-25 budget is reducing cost of living pressures for Australian residents. As part of this, the Federal Government has announced $ 3.5 billion in energy bill relief over three years, extending the Energy Bill Relief Fund. Under this program, over 10 million households will receive a $300 energy bill rebate and around 1 million small businesses will receive a $325 energy bill rebate.
Additional consumer support has also been provided in the form of $47.7 million over four years (from 2024-25) for several consumer-focussed energy programs, including:
The Federal Government has also announced $10 million for ASIC to investigate and enforce greenwashing and other sustainability-related financial misconduct.
The 2024-25 budget is full of initiatives impacting the energy industry, signalling the Federal Government's focus on this priority area.
Some additional key energy policies include:
Most of the announcements in the 2024-25 budget have been high-level, with little detail provided on specific programs or the Future Made in Australia Act.
Also, most of the funds announced will not become available until mid-2027 and will be spread over a decade. It may be a while before businesses can find out about the substantive detail of these energy policies or see any impacts from these programs.
However, businesses should remain alert to new Federal Government announcements about these policies, programs and tax incentives and engage in consultation where possible on any decisions that may impact your business.
Authors: Kate Phillips, Partner; Thea Walton, Lawyer.
The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
Readers should take legal advice before applying it to specific issues or transactions.