Production tax incentives through new bill

The Federal Government will today introduce the Future Made in Australia (Production Tax Credit and Other Measures) Bill 2024 to Parliament for renewable hydrogen and critical minerals.

It will also expand the role and remit of Indigenous Business Australia.

The legislation establishes two tax incentives:

• a Hydrogen Production Tax Incentive worth $2/kg of renewable hydrogen produced between 2027–2028 and 2039–40 for up to 10 years per project; and
• a Critical Minerals Production Tax Incentive worth 10% 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 10 years per project.

In a joint statement released today by Federal Resources Minister Madeleine King, Federal Treasurer Jim Chalmers, Federal Climate Change and Energy Minister Chris Bowen and Federal Assistant Minister For A Future Made in Australia Tim Ayres, it says “renewable hydrogen and critical minerals are both essential to the world’s path to decarbonisation”.

“The [Federal Government] sees them playing a central role in Australia’s net zero future and these tax incentives make that clear and ensures these projects are delivered in ways that provide broader benefits to local communities,” the statement said.

“This legislation provides industry the clarity and certainty it needs to invest in Australian renewable hydrogen and critical minerals projects with confidence.”

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.

Recipients of the production tax incentives will also be required to deliver benefits relating to the six Community Benefit Principles included in the overarching Future Made in Australia Bill. The specific requirements will be detailed by rules set by the Federal Treasurer, which will be subject to further consultation.