Australia Passes Future Made Production Tax Credits, Including Incentive for Renewable Hydrogen
The Australian Government’s Future Made in Australia (Production Tax Credit and Other Measures) Bill 2024 passed the Senate.
This legislation implements production tax incentives for renewable hydrogen and critical minerals.
The incentives are:
1. Hydrogen Production Tax Incentive worth $2 per kilogram of renewable hydrogen produced between 2027-2028 and 2039-40 for up to ten years per project.
2. Critical Minerals Production Tax Incentive worth ten per cent of relevant processing and refining costs for Australia’s 31 critical minerals, for critical minerals processed and refined between 2027-28 and 2039-40, for up to ten years per project.
The incentives will support Australia’s efforts to decarbonise our industries, and produce and process more of the minerals needed for the energy transition.
The incentives will only be provided once projects are up and running, producing hydrogen or processing critical minerals used in products like wind turbines, solar panels and electric vehicles.
Critical minerals are also vital to the defence industry and are needed for the construction of submarines and aircraft.
We recognise that the best opportunities for Australia and its people lie at the intersection of industry, energy, resources, skills and our ability to attract and deploy investment.
These tax incentives will leverage traditional strengths and encourage and enable new industries which help maximise our opportunities in the global net zero transformation.
Australia’s Green Hydrogen Outlook Seen Souring Before Elections
(Bloomberg) — Australia’s ambitions to become a major producer of green hydrogen may follow a similar trajectory to the US’s move away from renewable energy if the government loses elections due by mid-May, according to project ratings agency HySights Pte Ltd.
The ratings of six projects selected under an initial A$2 billion ($1.3 billion) program to encourage the nascent sector have dropped an average of two bands since the third quarter, according to HySights. None of them are now considered “bankable” — or able to meet criteria including minimum costs — after sponsors left or they were paused, the Singapore-based company said.
“Australia’s likely change in ruling party will have a major impact on projects in the country,” HySights co-founder Ciaran Roe said. Considering the “export-oriented nature of four of the projects, these changes have wide-ranging impacts on government incentive schemes for low-emission fuels in Japan, South Korea, and Singapore,” he said.
Anthony Albanese’s Labor government had pushed for Australia to tap its abundant wind and solar resources to develop a clean hydrogen sector, putting in place more than $5 billion of incentives over the next decade to support the nascent industry. The opposition coalition, which has edged ahead in polls, has been less enthusiastic, recently denying A$1 billion of funding for a major project.
Renewable hydrogen remains reliant on government support to be economically competitive, while implementation and fund allocations need to happen faster for the local hydrogen industry to take off, BloombergNEF Analyst Caroline Chua said in a note. Queensland’s earlier withdrawal from financial investment also raises concerns about the federal administration’s ability to deliver on its hydrogen and clean energy supply chain ambitions, she said.©2025 Bloomberg L.P.
Australia passes tax credit law for green hydrogen, critical minerals
The Australian Senate has passed the legislation that will award production tax credits for critical minerals and renewable hydrogen in support of the country’s efforts to decarbonise the industrial sector and achieve its 2050 net zero target.
A RayGen scientist working with a solar cell in a lab. Source: Australian Renewable Energy Agency (www.arena.gov.au).
The Future Made in Australia (Production Tax Credit and Other Measures) Bill 2024 was greenlit by the Senate on Wednesday, the federal government announced.
Under the new regulations, Australia will provide tax incentives worth AUD 2.00 (USD 1.26/EUR 1.21) per kg of renewable hydrogen produced between July 1, 2027, which is the start of fiscal 2027/2028, and June 30, 2040, when fiscal 2039/2040 ends, for up to 10 years per individual projects. The schemes need to reach final investment decisions by 2030.
The Critical Minerals Production Tax Incentive will offer tax incentives worth 10% of eligible processing and refining costs related to rare earths and 31 critical minerals. The refundable credit will be available for a maximum of 10 years between July 1, 2027, and June 30, 2040.
The incentives will be provided once projects are commissioned, producing hydrogen or processing critical minerals used in products like wind turbines, solar panels and batteries. “By processing more of these minerals here in Australia, we will create jobs and diversify global supply chains,” said Federal Resources Minister Madeleine King.
The two incentive packages were included in the Aussie government’s 2024-2025 Budget, in which AUD 7 billion was set aside for incentivising the processing and refining of critical minerals and AUD 6.7 billion was envisaged for renewable hydrogen production tax credits.
(AUD 1.0 = USD 0.629/EUR 0.607)
From Rare Earths to Green Hydrogen: How Australia Plans to Lead Global Supply Chains
February 13, 2025
Production Tax Credits Propel Australia’s Green Hydrogen and Critical Minerals Sectors
The Australian government’s introduction of production tax credits aims to transform the energy landscape by supporting green hydrogen and critical minerals industries. By offering a performance-based incentive for industry players, the government is prioritizing long-term economic and environmental benefits while minimizing taxpayer risks. Here’s a closer look at the technologies, advancements, and what it all means for Australia’s future.
Green Hydrogen and Electrolyzer Advancements
Green hydrogen, produced through renewable energy and water electrolysis, has long been touted as a clean energy alternative. While early production was inefficient and expensive, recent advancements in electrolyzer technology are rapidly changing the game.
Electrolyzers are devices that use electricity to split water into hydrogen and oxygen. One significant breakthrough is the development of thinner membranes, which allow hydrogen to be produced more efficiently. These membranes reduce the energy required for production by improving ionic transport and optimizing gas removal. Additionally, researchers have introduced perforated titanium sheets in place of traditional materials, enhancing durability and conductivity while lowering costs.
Another crucial improvement is the reduced reliance on costly precious metals like platinum, which were previously key components in electrolyzers. New methods, such as spraying thin layers of iridium coatings on components, have drastically cut costs while maintaining performance. These innovations not only make green hydrogen production more affordable but also bring large-scale adoption within reach.
While there are no massive green hydrogen plants currently operational in Australia, the groundwork laid by the government’s tax credits aims to drive investment and scale production. By 2027, eligible producers could receive $2 in tax credits for every kilogram of green hydrogen produced, a significant incentive to foster industry growth.
Critical Minerals Strategy: Building an Independent Supply Chain
Australia holds some of the world’s largest reserves of critical minerals, including lithium, cobalt, and rare earth elements. These materials are essential for renewable energy technologies, electric vehicles, and high-tech manufacturing. However, Australia has historically exported raw materials to countries like China for processing. This reliance has created vulnerabilities in global supply chains, particularly as geopolitical tensions rise.
The government’s Critical Minerals Strategy 2023–2030 seeks to change this dynamic. By encouraging onshore refining and processing, the tax credits aim to position Australia as a leader in the critical minerals supply chain while reducing dependence on overseas markets. Companies refining any of the 31 minerals on the critical list will be eligible for a 10% tax incentive to offset processing costs.
Already, Australian firms are making strides. For example, Iluka Resources is building a rare earth refinery in Western Australia with government support, aiming to meet 14% of global demand for heavy rare earths by the end of the decade. Similarly, Lynas Rare Earths has expanded its processing operations in Kalgoorlie and is refining minerals critical to sectors like defense and renewable energy. These efforts not only bolster Australia’s economy but also align with global efforts to secure stable, ethically sourced supply chains.
Reducing Reliance on China
China currently dominates the production and processing of rare earth minerals used in technologies like wind turbines and electric vehicles. However, Australia is well-positioned to challenge this monopoly. Recent developments, such as Lynas’ new facilities and Iluka’s projects, signal a shift towards domestic refining.
Trade analysts note that Australia’s rising refining capacity will strengthen its role as a strategic partner for countries like the U.S. and Japan. This is especially critical as global tensions lead many nations to seek alternative suppliers for minerals vital to their industries.
Why Tax Credits Are the Right Approach
Unlike traditional grants or loans, which are paid upfront, tax credits are claimed after production. This means companies only receive support once they deliver tangible results, significantly reducing the risk of public funds being wasted on projects that fail to materialize. By linking incentives to performance, the government ensures taxpayer dollars are spent efficiently while encouraging innovation and competition in these emerging sectors.
These credits are projected to funnel billions into green hydrogen and critical minerals, with estimates suggesting an investment of $6.7 billion and $7 billion, respectively, over the next decade. However, the funds will only flow if projects prove viable—a cautious yet forward-thinking approach.Ahat This Means for Everyday Australians
While the conversation around green hydrogen and critical minerals might seem technical, these innovations have real-world implications. The advancements in renewable energy technologies promise more reliable power systems and lower carbon emissions, tackling climate change head-on. Meanwhile, a stronger critical minerals sector is expected to create jobs across mining, processing, and advanced manufacturing, particularly in resource-rich states like Western Australia.
The timelines for these initiatives are ambitious but realistic. The critical minerals tax credits will kick in by mid-2027, and projects reaching investment decisions before 2030 will be eligible for support. For green hydrogen, the next few years will be crucial for scaling up production and overcoming technological barriers.
Using These Technologies Today
Although the large-scale production of green hydrogen is still a few years away, small applications already exist. Hydrogen fuel cells, for instance, are being used to power vehicles and provide backup energy for remote areas. Businesses and local governments can begin integrating these technologies to lay the groundwork for broader adoption.
For critical minerals, individuals and businesses can advocate for sustainable electronics and electric vehicles that emphasize ethical sourcing. Supporting Australian-made technologies not only boosts local industries but also helps reduce reliance on less transparent supply chains.
The production tax credits signal a shift towards a cleaner, more sustainable energy future, and the technology is advancing quickly. While there are challenges to overcome, the groundwork being laid now ensures these industries can contribute meaningfully—both to the global fight against climate change and to Australia’s economic resilience.
https://www.hydrogenfuelnews.com/rare-earths-to-green-hydrogen/8569635/
Will it or won’t it? South Australia hedges bets on world-leading green hydrogen plan
South Australia – already a world leader in the integration of wind and solar on a gigawatt scale electricity grid – appears to be hedging its bets on its commitment to another world-first, a massive green hydrogen electrolyser and hydrogen power plant.
The two facilities, a 250 megawatt (MW) electrolyser and a 200 MW power plant, are due to be built near Whyalla and are part of the state Labor government’s promised Hydrogen Jobs Plan, and rely on a $600 million commitment from the government.
The facilities are supposed to be up and running by early 2026, but that now seems an unlikely timeline, particularly given the uncertainty created by concerns over the financial viability of Whyalla steel works owner GFG Alliance, controlled by Sanjeev Gupta.
The outcome of this ECI phase will result in final construction contracts and a project update.
“As part of ECI the Government of South Australia has secured an agreement with ATCO Australia to contract GE Vernova for four LM6000VELOX aeroderivative gas turbines.
“Commissioning for the project currently remains scheduled for 2026.”
GFG last year delayed by two years a $500 million upgrade to install an electric arc furnace at the steelworks that is crucial to the transition to green steelmaking.
The power plant, which will be capable of running at 100 per cent green hydrogen, but may not necessarily do so from the outset, could be an important part of the state’s portfolio of dispatchable generation necessary to support its grid as it reaches its target of “net” 100 per cent renewables by 2027.
Plug Power seals electrolyzer supply deal for hydrogen-to-ammonia project in Australia
U.S. Plug Power has signed a purchase agreement with Australian Allied Green Ammonia (AGA) to supply three gigawatts (3 GW) of electrolyzer capacity to AGA’s green hydrogen-to-ammonia plant, currently under development in Australia.
Courtesy of Plug Power
As disclosed, AGA will install a 4.5 GW solar plant to power Plug electrolyzers with zero-emission clean electricity, and the green hydrogen produced will be used to make green ammonia.
This purchase deal follows the signed binding framework agreement, memorandum of understanding (MoU) and basic engineering and design package (BEDP). With the final agreement now signed and sealed, Plug will, reportedly, develop BEDP, providing technical details and engineering specifications to attract investors and finalize financing.
Upon a positive final investment decision (FID), expected by Q2 2025, Plug said the company will start the manufacturing and delivery of proton exchange membrane (PEM) electrolyzers starting in Q1 2027.
To note, AGA’s production facility is expected to produce approximately 2,700 metric tons per day (TPD) of green ammonia. Strategically located at Gove Peninsula in the Northern Territory of Australia, the plant is said to be positioned to cater to the growing demand from AGA’s customers in Asia and Europe.
Andy Marsh, CEO of Plug, stated: “Ammonia producers are recognizing the substantial advantages of cost and carbon reduction through electrolysis-based hydrogen. We’re thrilled to partner with Allied Green Ammonia, a leader in global green ammonia production. Together, we’re not only advancing green ammonia production but actively supporting the global transition to a net-zero emissions future.”
Alfred Benedict, Chairman and Managing Director of AGA, commented: “Taking on a project of this magnitude, deploying 3 GW of electrolyzers, is no small feat. From the moment we decided to embark on this journey, we knew we were looking at a long-term commitment to our partners of 4 to 5 years. That’s why our relationship with Plug is so pivotal. Strong, enduring partnerships are the bedrock of successful projects like this. Having the right allies by our side, like Plug, makes all the difference in turning ambitious, green energy visions into reality.”
As for AGA’s other activities related to the project, in 2024, the company signed an agreement with German-based SPG Steiner for the supply of two large-scale 40,000-tonne cryogenic full containment double-wall ammonia storage tanks and an associated refrigeration system. The tanks will store 950,000 tonnes per year of green ammonia produced by AGA and shipped to its offtake partner.