Australia Parliament
Future Made in Australia (Production Tax Credit and Other Measures) Bill 2024 introduces two key tax incentives. Pixabay

In a major move to support the energy transition and boost investment, Australia is set to introduce new legislation that provides production tax incentives for renewable hydrogen and critical minerals.

The Future Made in Australia (Production Tax Credit and Other Measures) Bill 2024 introduces two key tax incentives.

First is the Hydrogen Production Tax Incentive, which will provide companies with AU$2 for every kilogram of renewable hydrogen produced between 2027–2028 and 2039–40. This incentive will be available for each project for a period of up to ten years.

Second is the Critical Minerals Production Tax Incentive, which offers 10% of the relevant processing and refining costs for Australia's 31 critical minerals. This incentive applies to critical minerals processed and refined between 2027 and 28 and 2039 and 40, and is available for up to ten years for each project.

Incentives will be provided once projects become operational and begin production of hydrogen or processing critical minerals used in products, such as wind turbines, solar panels, and electric vehicles. Recipients will also be required to follow the six Community Benefit Principles outlined in the Future Made in Australia Bill. The treasurer will set the specific rules, which will be open for further consultation.

"The legislation will give investors clarity and certainty to invest in Australia's potential to add more value to its natural resources, and help deliver cheaper and cleaner energy," Reuters quoted Treasurer Jim Chalmers.

Besides tax incentives, the bill was also aimed at expanding the role of Indigenous Business Australia, while ensuring that the benefits of investment reach local workers, industries, and communities across the country.

In its May budget, the federal government had committed to introducing tax incentives totaling AU$7 billion for the processing and refining of critical minerals, and AU$6.7 billion for renewable hydrogen production, covering the period from 2027/2028 to 2039/40.