Budget a ‘promising downpayment’ on Australia’s cleantech future

BUDGET REACTION - THE CLIMATE Energy Finance (CEF) organisation has given ticks to the Federal Government’s Budget announcements of $21 billion in new funding initiatives under the Future Made in Australia Act strategic framework – plus the $1bn Solar SunShot and $466 million PsiQuantum funding.

Treasurer Jim Chalmers’ 2024-2025 Federal Budget also announced a range of key initiatives including a new $7bn Critical Minerals value-adding Production Tax Credit (PTC), $3.2bn in additional funding for ARENA technology commercialisation and a $6.7bn Hydrogen Production Tax Incentive and $1.3bn of additional Hydrogen Headstart funding. The hydrogen funding is expected to be focussed on domestic use programs such as ‘green’ metals.

CEF also highlighted the budget’s $209m into the Net Zero Economy Authority, $168m to prioritise approval decisions for renewable projects of national significance, a $500m Battery Breakthrough Initiative and $14m to strengthen high-quality critical minerals benchmarks with trade partners.

There is also $179m in additional employment and skills supports for regions, plus $56m in the Building Women’s Careers program and $91m to accelerate the development of the clean energy workforce while also expanding the New Energy Apprenticeship Program. Significantly, there is also $777m for a strong First Nations workforce participation and development program. 

The implementation of the Future Made in Australia Act (FMIA) will be guided by a framework comprising: 1. A 'net zero transformation' stream, where Australia has grounds to build enduring comparative advantage; and 2. the ‘economic security and resilience’ stream, which will identify sectors that are critical to our resilience and vulnerable to supply disruptions. 

Five industries are highlighted as aligned with the National Interest Framework: Renewable hydrogen; Critical minerals processing; Green metals; Low carbon liquid fuels; Clean energy manufacturing, including battery and solar panel supply chains.

The Federal Government will establish a ‘new front door for investors’ with major, transformational investment proposals related to Future Made in Australia to make it simpler to invest in Australia and attract more global and domestic capital. This is a strategically important initiative – collaboration with global technology leaders is going to be key to FMIA’s success.

Business and finance analyst Tim Buckley, who is the founder and director of CEF said, “CEF has been calling for $100bn of capital and budget support over the coming decade to accelerate and turbocharge the development of zero-emissions industries of the future here in Australia. In tonight’s Budget we saw an excellent $21bn down-payment.

“It is great to see that this is additional funding, not the usual political trick of rehashing previous press releases.

“The development of the production tax credit (PTC) model for critical minerals and green hydrogen to incentivise onshore value-adding is a very strong step forward, a clear acknowledgement that Australia can’t simply leave it to free markets when other countries have made such significant public interest interventions, undermining global trade. 

“This will leverage Energy Minister (Chris) Bowen’s 82% Renewables by 2030 initiative, turbocharged by the 32GW Capacity Investment Scheme which is driving the rollout of utility scale firmed renewables by underpinning and catalysing private investment, meaning Australia can power our refineries with renewable energy so as to export embodied decarbonisation,” Mr Buckey said.

“The world is in a rapidly accelerating technology, trade and finance decarbonisation race to the top as the global energy transition speeds up. This is Australia’s biggest investment, employment, and export opportunity in a century to reorient from our fossil fuel reliant past, but we clearly needed this budget to respond strategically, proportionally and fast, which it has done.

“(This) budget shows a government that understands both this imperative to act to transition Australia to its future as a clean, green superpower and the opportunity cost and risks of not acting to secure Australia’s place in the new net zero world economy.

“The over $9bn (budget) surplus … shows this government’s financial credentials. Now they are starting to show us the money,” he said.

“While tonight’s result is pleasing, we would encourage the government to consider more  ambitious capital support in future budgets to massively accelerate renewable energy and electrify everything; stimulate value-adding onshore of our world leading critical mineral and metals resources; and rebuild our manufacturing base so we can make things here and secure our position in cleantech supply chain. This will attract an influx of private capital to energy transition.

“CEF will continue to advocate for more patient, strategic capital support, in terms of debt, private equity, infrastructure and equity to support majority Australian ownership and de-risk private capital. 

“The 2023 Budget allocation of $15bn to the National Reconstruction Fund is a serious downpayment, and rapidly getting established, as is the $20bn Rewiring the Nation funding support into the CEFC.

“We applaud the extra $3.2bn funding into ARENA, but continue to call on the government to give the Future Fund a $20bn value-add equity mandate for mining value-adding, to leverage the new investments galvanised by the combination of the $4bn Critical Minerals Fund, $7bn critical minerals PTC, $6.7bn Hydrogen Production Tax Incentive and the 32GW Capacity Investment Scheme.

“We note the reference to leveraging Export Finance Australia’s National Interest Account, expanded to support for projects where domestic capability is critical to protect our national security interests.

“We particularly note the absence of any additional stimulus on ‘electrifying everything’, and only $28m of new funding to better integrate consumer energy resources into the grid. This is disappointing when household electrification and grid modernisation is key to cheap, clean, secure energy for all Australians. $3.5bn in new energy bill relief for households will help offset a fraction of the fossil fuel sector hyperinflation.

“Australia must play the energy transition long game, but front-load it this decade, as the climate crisis heats up and as every other advanced economy in the world commits unprecedented investment into decarbonisation to ensure national and energy security and shore up sovereign supply chains,” Mr Buckley said.

“We are hopeful that this … emphatic entry of Australia into the global race is a harbinger of the government’s intention to seize its once in a century opportunity to remake Australia as a zero-emissions trade and investment leader, and reap the massive economic, employment and climate benefits for all Australians into the future.”

www.climateenergyfinance.org

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