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Supporting a future 'Made in Australia' – Energy policy announcements in the 2024-25 Federal Budget

windmills and solar panels

    What you need to know

    • The Federal Government has made several significant energy policy announcements as part of the 2024-25 budget.
    • This includes providing more detail on the $22.7 billion Future Made in Australia package, which aims to help Australia become a renewable energy superpower.
    • The Future Made in Australia package will be implemented in line with a "National Interest Framework" focused on building Australia's net zero transformation and economic security and resilience.
    • Key energy policy announcements include tax incentives for green hydrogen production and critical mineral mining, streamlining approvals to facilitate investment in renewable energy and building Australia's clean energy manufacturing capacity.

    What you need to do

    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.

    Energy policy and the Future Made in Australia package

    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.

    National Interest Framework

    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 "net zero transformation" stream includes sectors that can make a significant contribution to achieving net zero, where Australia has grounds to build enduring sources of comparative advantage, such as renewable hydrogen, low carbon liquid fuels and green metals; and
    • the "economic security and resilience" stream includes sectors the Federal Government has identified as critical to Australia's economic resilience and which are vulnerable to supply disruptions, such as critical minerals and clean energy manufacturing.

    The Treasury has released a supporting paper on the Framework, providing further details on this significant Federal Government policy.

    Giving hydrogen a headstart

    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.

    Tax incentives for critical minerals

    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:

    • committing up to $1.2 billion in strategic critical minerals projects through the Critical Minerals Facility and the Northern Australia Infrastructure Facility; and
    • investing $566.1 million for Geoscience Australia to map Australia’s endowments of critical minerals and national groundwater systems.

    Opening the investment "front door"

    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:

    • provide a single point of contact for investors and companies with major investment proposals;
    • deliver a joined up approach to investment attraction and facilitation;
    • identify priority projects related to the Federal Government’s Future Made in Australia agenda;
    • support accelerated and coordinated approval decisions, and
    • connect investors with the Federal Government’s specialist investment vehicles.

    The Federal Government's "front door" initiative includes policies to help unlock and encourage investment in renewable energy projects, including:

    • $134.2 million for prioritising approvals of renewable energy projects of national significance, including faster decisions on environment, cultural heritage and planning approvals;
    • working with the states and territories through the Energy and Climate Change Ministerial Council to accelerate electricity grid connections;
    • $20.7 million to improve renewable energy projects' social licence, by engaging with communities impacted by the energy transition, accelerating the delivery of key energy projects and permanently establishing the Australian Energy Infrastructure Commissioner;
    • $15.7 million to strengthen scrutiny of high‑risk foreign investment proposals, enhance monitoring and enforcement activities and support faster decisions for low-risk projects; and
    • encouraging foreign investment by providing 75 per cent refunds of application fees for unsuccessful competitive bids.

    Promoting green manufacturing

    The Federal Government has announced several initiatives to scale-up Australia’s clean energy manufacturing capacity. These include:

    • $1.5 billion for ARENA to build capability in solar and battery manufacturing;
    • a $1.7 billion Future Made in Australia Innovation Fund to support innovative technologies and facilities linked to priority sectors (ie green metals, batteries and low carbon liquid fuels); and
    • $523 million for the Battery Breakthrough Initiative, with tax credits for local manufacturers (in addition to the previously-announced $1 billion for the Solar Sunshot Scheme and Battery Breakthrough Initiative).

    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.

    Supporting energy customers

    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:

    • investigating a "one-click-switch" to a cheaper energy deal, cutting excess fees and charges to switch energy providers;
    • unlocking greater savings from Australia’s uptake of consumer energy resources (eg rooftop solar, batteries and electric vehicles);
    • investing in the Australian Energy Regulator to boost capacity and information for households on energy choices;
    • reviewing electricity market laws to protect consumers from misinformation.

    The Federal Government has also announced $10 million for ASIC to investigate and enforce greenwashing and other sustainability-related financial misconduct.

    Other energy initiatives

    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:

    • Climate and energy diplomacy. $76.60 million has been allocated to climate and energy diplomacy with Pacific and international organisations ahead of Australia’s bid to host the COP31 international climate summit.
    • Guarantee of Origin Scheme. The Federal Government is fast-tracking the initial phase of the Guarantee of Origin Scheme to measure and certify emissions intensity across the supply chain of key products, providing an additional $32.3 million to support the expansion of the program to green metals and low-carbon liquid fuels.
    • Net Zero Economy Authority. $209.3 million has been committed to expand the Net Zero Economy Authority, to catalyse private and public investment and support workers affected by the transition.
    • Australian Carbon Credit Scheme. The Federal Government is providing an additional $48 million in reforms to the Australian Carbon Credit Unit scheme, to support the integrity of the net zero emissions scheme (including establishing the “Carbon Abatement Integrity Committee”) and improve First Nations' participation.

    Next steps

    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.

    Links to related articles

    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.


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