May 2024
Key takeaways

Future Made in Australia is designed to support Australia to become a renewable energy superpower

Production tax credits for hydrogen, critical minerals and solar manufacturing

The agricultural sector will have greater budget support and private sector capital for resilience measures

Focus on accelerating renewable projects and ensuring community benefits

May 2024
Key takeaways

Future Made in Australia is designed to support Australia to become a renewable energy superpower

Production tax credits for hydrogen, critical minerals and solar manufacturing

The agricultural sector will have greater budget support and private sector capital for resilience measures

Focus on accelerating renewable projects and ensuring community benefits

Energetics welcomes yesterday’s Federal Budget which features a $22.7bn 'Future Made in Australia' cornerstone policy, focused on redefining Australia’s economy as led by clean energy: powered by renewables, and competing globally with clean exports and value-added critical minerals.

For the first time we have a policy explicitly designed to unlock private capital and seize the opportunities presented by our abundant natural resources, heavy industry foundations and strong technical and innovative capabilities. Notable in the 'Future Made in Australia' policy is a shift away from ‘picking winners’ with the introduction of tradable production tax credits for critical minerals, hydrogen, and solar advanced manufacturing.

We’re excited about this chapter in Australia’s transition which will benefit many of our clients. However, there are also risks. Despite our natural resources, other jurisdictions far outpace Australia in terms of level of investment and capability. Time will tell if these measures are sufficient to support Australia’s leadership ambitions.

'Future is Made in Australia' – the headline measures

Resource and Industry sectors

Funding is allocated as follows:

  • $7.1bn for a Critical Minerals Production Tax Incentive with additional funding for critical minerals mapping.
  • $8bn for a Hydrogen Production Tax credits, Hydrogen HeadStart Program and National Hydrogen Strategy.
  • $1bn Solar Sunshot Program, which aims to support manufacturing facilities in Australia across the solar PV supply chain.
  • $549m for battery manufacturing
  • $18m for green metals
  • Additional funding for Australian Renewable Energy Agency and the establishment of the Australia Innovation Fund.

'Future Made in Australia' is structural reform, establishing the Net Zero Economy Authority to ensure co-ordination and consistency with Australia’s existing policies and programs including:

  • Achieving a net zero emissions economy
  • Just transition, with particular focus on supporting coal and gas-fired power station closures
  • $218m to growing a clean energy workforce
  • $182.7m for prioritising and accelerating approvals related to transition and renewable projects (an issue for many Energetics’ clients)
  • Ongoing stakeholder engagement with industry, unions, communities, and the public sector.

There is also a continued commitment to carbon sequestration with $32.6m allocated, as consistent with the Future Gas Strategy. No money has been allocated for improved methodologies for methane measurement for oil and gas (i.e. the Oil and Gas Methane Partnership) and open cut mines under NGER.

Beneath the headlines – announcements of interest to Energetics’ clients

Finance and Agriculture Sectors

Australia’s finance sector has been waiting for the Sustainable Finance Taxonomy which will help drive private investment into decarbonising the economy. The Budget provides further funding for the taxonomy to include the agricultural sector as we await the upcoming release of individual sector decarbonisation plans.

We know from our work across the Australian Carbon Credit Unit (ACCU) value chain that the market is experiencing a lack of confidence due to delays to new methodologies and ill managed sunsetting of existing ones. $48m has been committed for improved integrity measures following the Chubb Review, and the establishment of the Carbon Abatement Integrity Commission.

In terms of resilience for agriculture, there are a range of measures for water and a $519.1m for the Future Drought Fund to support farmers and communities to manage drought and climate change with Drought Resilience Adoption and Innovation Hubs and the Farm Business Resilience Program.

Energy markets

Delays to approvals continue to be a major hurdle for renewable energy projects, particularly in NSW. Energetics welcomes the $96.6m allocated to strengthen approvals process including for transition and renewable projects and $19.9m for a national priority list of renewable projects.

We work closely with clients to identify co-benefits with our Power Purchase Agreement transactions and welcome measures to improve social licence for renewable projects. The Budget includes $20.7m for the establishment of the Australian Energy Infrastructure Commissioner to develop national developer standards and a regulatory reform package to realise community benefits in regional communities affected by the energy transition.

Although the Budget fell short in terms of home electrification, there is progress on exploiting the opportunities with consumer energy resources (CER). $27.7m is allocated to implement CER to boost the supply of renewable energy on homes, $16m upgrading digital systems through the Energy Made Easy website and $1.6m for a statutory review of the Prohibited Energy Market Misconduct Act provisions in electricity, retail, contract and wholesale markets.

We’ve also seen $20.3m for the Powering Australia Industry Growth Centre and Future Battery Industries CRC for battery research, transport, and recycling.

Decarbonisation plans and climate-related disclosures  

For all our clients preparing for mandatory climate-related disclosures, we were pleased to see $1.3m committed to developing guidance and support for businesses for transition plans.

Many Energetics clients already have decarbonisation strategies, and the Budget’s announcement of $154.5m for the New Vehicle Efficiency Standards (due to pass parliament this week), will likely bring down the cost of EVs and broaden the range available on market, which may bring forward fleet upgrades. Most notably for our client, Australian Automotive Dealers Association, $60m has been earmarked for electric vehicle charging infrastructure at dealerships, redirected from the Powering Australia – Driving the Nation Fund.

Many of our clients have forecast a future reduction of fuel tax credits in their scenario analysis of transition risk, which benefits the business case for decarbonisation. However, the Budget shows a net increase in billions of dollars of fuel tax credits, at least in the short term.

Are we doing enough to manage climate risks? What was missed

Climate change is already here, with extreme weather events a risk to productivity and contributing to rising insurance costs. The climate risk scenario work we undertake with our clients clearly illustrates the increasing impacts to the bottom line of business and disruption to the economy.

Although the Budget outlined targeted support, such as for farmers (as described above), one broad area of neglect was adaptation and resilience.

More needs to be done to integrate adaptation requirements into the National Construction Code, fund programs to incentivise resilience upgrades and to extend the Sustainable Finance Taxonomy to include adaptation measures.

Also, while supply side energy considerations have been generously supported, insufficient attention has been paid to the demand side of the equation – energy efficiency, energy management and demand response, without which we will still lag behind on delivering the least cost pathway to net zero.

What does this climate focused budget mean for your business?

Energetics contextualises the Budget from our clients’ perspective.

Related insights


Get our thought leadership directly to your inbox

Keep up to date with the latest insights on net zero, climate resilience and clean energy transition.