Australia Introduces Tax Incentives for Renewable Hydrogen and Critical Minerals Production
The Australian government will introduce legislation on Monday to implement production tax incentives for renewable hydrogen and critical minerals, aiming to boost investment in the sector and contribute to energy transition plans.
The proposed law will establish a tax incentive worth 10% of relevant processing and refining costs for 31 critical minerals from the fiscal year ending June 2028 to the 2039-40 fiscal year, for up to 10 years per project, the government stated.
For renewable hydrogen, the planned legislation will provide a tax incentive worth A$2 ($1.31) per kilogram of renewable hydrogen produced during the same period.
“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,” Treasurer Jim Chalmers said in a statement.
The incentives will be available once projects are operational, producing hydrogen or processing critical minerals used in products such as wind turbines, solar panels, and electric vehicles, according to Chalmers.
Major economies are looking to invest billions to support clean energy projects and compete with China in manufacturing electric vehicles and semiconductors, which are considered essential for both prosperity and national security.
Australia’s center-left Labor government pledged in its May budget to introduce tax incentives worth A$7 billion ($4.57 billion) for the processing and refining of critical minerals and A$6.7 billion ($4.38 billion) for renewable hydrogen production from 2027/2028 to 2039/40.
