Australia to unveil new plan for clean energy, green manufacturing: PM

Australia expects to unveil a new plan in 2024 to support clean energy and green manufacturing projects and compete better against other nations' schemes such as the US' Inflation Reduction Act (IRA) to draw investments in clean fuels, Prime Minister Anthony Albanese said April 11.

Australia will announce the 'Future Made in Australia Act' this year for new initiatives, including measures for sustainability and circular economy among others, Albanese said, without providing the size of the funding to back it.

"... Australia cannot go dollar for dollar with the US' Inflation Reduction Act ... but this is not an auction -- it's a competition," Albanese said. "And Australians 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."

Albanese said, in the May budget for fiscal year 2024-25 (July-June), the government will be "building" on the foundation for clean energy.

Australia's A$15 billion National Reconstruction Fund is aimed at supporting new sustainable manufacturing, while the proposed Net Zero Economy Authority aims to facilitate public and private sector investments in emissions reduction projects.

The IRA in 2022 announced the Hydrogen Production Tax Credit that is to provide a subsidy of up to $3/kg for renewable hydrogen, a move that has attracted several large-scale hydrogen developers from around the world to set up projects the US.

Drawn by high credits, two of the top Australian energy companies, Woodside Energy and Fortescue group, are pursuing projects for large-scale renewable hydrogen/ammonia production in the US, in addition to Australia.

The Australian government announced an investment of A$2 billion ($1.35 billion) for its Hydrogen Headstart plan to boost renewable hydrogen production and export centers with a view of entering global export markets in the 2023-24 (July-June) budget.

New investments likely

Albanese's speech could be an indication of more new investments due to come into Australia's clean energy sector, an analyst said.

"We should expect to see more government investment in the energy transition beyond recent announcements," Logan Reese, research and analysis associate director at S&P Global Commodity Insights said.

The announcement was also "about financially backing the mandates of the proposed Net Zero Economy Authority that aims to attract investment, transition the workforce, and coordinate policy across all levels of government," Reese said.

Australia has been boosting its renewable capacity with policies such as the Capacity Investment Scheme that seeks to usher in 32 GW of new renewable power capacity by 2030 and the Solar SunShot program that seeks to manufacture solar photovoltaic panels domestically with a $1 billion support.

"... part of the objective here is about Australia presenting potential investors with 'a single front door'," Albanese said. "A clear path to investing in Australia, in Queensland, in hydrogen, green metals and advanced manufacturing."

A member from a renewable energy trade body said that while there was still a lot of funding to agree on, this was the right approach to energy transition.

"It is a positive sign that the Australian government sees its future economic prosperity in renewables and clean exports," Richie Merzian, international director, Smart Energy Council told S&P Global. "Too long it has relied on coal, iron and LNG which either need to phase out or transition."

S&P Global's Hydrogen Production Assets database shows that Australia has over 100 renewable and low carbon hydrogen projects with a combined projected capacity of around 13 million mt.

Platts, part of S&P Global, assessed Queensland hydrogen produced via alkaline electrolysis at $2.59/kg on April 9, down 30% from a month earlier.

Platts assessed Japan hydrogen produced via alkaline electrolysis at $4.21/kg on April 9, down 5.4% from a month ago.