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The Federal Budget: A Future Made in Australia

On Tuesday May 14, Dr Chalmers delivered the Federal Budget for 2025. A central part of the budget was the Future Made in Australia initiative which committed $22.7 billion over the next decade to attract investment and propel Australia as a renewable energy superpower globally. This is aimed at accelerating investment in priority industries that include critical minerals processing, renewable hydrogen, low carbon liquid fuels, green metals (which include some commodities produced using low-carbon technologies) and the manufacturing of clean energy technologies.

On Tuesday May 14, Dr Chalmers delivered the Federal Budget for 2025. A central part of the budget was the Future Made in Australia initiative which committed $22.7 billion over the next decade to attract investment and propel Australia as a renewable energy superpower globally. This is aimed at accelerating investment in priority industries that include critical minerals processing, renewable hydrogen, low carbon liquid fuels, green metals (which include some commodities produced using low-carbon technologies) and the manufacturing of clean energy technologies.  

The investment also includes a Critical Minerals Production Tax Incentive of 10% of relevant processing and refining costs for the 31 critical minerals produced in Australia. The incentive will apply for up to 10 years for each production for projects that reach final investment decisions by 2030 and where production is between the financial years 2027/28 and 2039/40. Additional funding will also be provided for pre-feasibility studies for critical minerals common-user processing facilities to enhance our capacity to process critical minerals. A further $1.2 billion has been allocated to critical minerals projects including the Critical Minerals Facility and the Northern Australia Infrastructure Facility. 

Support for renewable hydrogen production includes a Hydrogen Production Tax Incentive of $2 per kilogram of renewable hydrogen produced for up to 10 years per project. Similar to the Critical Minerals Incentive it will be for projects that reach final investment decisions by 2030 and where production is between 2027/28 and 2039/40.  The Hydrogen Headstart program will also be expanded to support early investors in the development of the industry. Funding has also been committed to deliver the 2024 National Hydrogen Strategy that includes infrastructure planning and industrial safety training and regulation. 

The Budget also commits funds to attract investment in key industries to support a Future Made in Australia including: 

  • $54.7 million to establish the National Interest Framework legislation and consult with industry, investors and stakeholders. The aim is to improve the attraction and facilitation of major investment proposals;
  • $11.4 million to establish a National Interest Account with Export Finance Australia. This will be to support domestic projects that are consistent with A Future Made in Australia National Interest Framework; and
  • $1.9 million to review the Northern Australia Infrastructure Facility Act 2016. 

The Australian Renewable Energy Agency (ARENA) has also been funded for a further seven years to continue to develop, commercialise, manufacture and deploy renewable energy technologies. This will support our ambition to be a global leader in renewable energy. ARENA will also administer the Future Made in Australia Innovation Fund. This will support innovation, commercialisation and early stage development in the priority sectors identified by the government. As noted above, these industries include renewable hydrogen, low carbon liquid fuels and green metals. 

Clean energy technologies have also received a boost, with ARENA charged with establishing the Solar Sunshot program. The program will develop solar manufacturing capabilities and provide production incentives to improve supply chain resilience for the industry.  ARENA will also establish the Battery Breakthrough Initiative to promote the development of manufacturing capabilities with production incentives. 

Additional funding also exists to support battery research collaborations, identify incentives to support the production of low carbon fuels and expedite our green metals industry. 

Funding has also been allocated to support our innovative, scientific and digital capabilities. This includes funding to Geoscience Australia to map Australia’s national groundwater systems and resource endowments which may potentially discover critical minerals and strategic materials. 

The process for obtaining environmental and other approvals for renewable energy, transmission and critical minerals projects will also be strengthened with funding allocated to the Department of Climate Change, Energy, the Environment and Water. The Department is also charged with developing and maintaining a national priority list of renewable energy projects and process assessments. 

Australia’s foreign investment framework will also be strengthened and streamlined with more effective monitoring, timely review of foreign investment applications and enforcement conditions. If an applicant is unsuccessful in a competitive bid process they will also be refunded 75% of their fees for their foreign investment application. 

The Australian Carbon Credit Unit scheme has received additional funding in response to the recent Independent Review. This includes establishing the Carbon Abatement Integrity Committee which will strengthen integrity and provide more transparency while supporting consent processes where projects are on Native Title land.  

Overall, the Budget continues to demonstrate the Federal Government’s commitment to the energy transition and in achieving net-zero carbon emissions. The initiatives are also focused on ensuring economic benefits of the global transition are realised in Australia.
 

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