Australia’s parliament has successfully passed legislation aimed at providing significant tax incentives for the production of critical minerals and renewable hydrogen. This initiative is part of the country’s broader strategy to achieve net zero emissions by 2050 and reduce reliance on China for essential resources.
Key Highlights:
Tax Incentives Overview:
The new law offers a 10% tax break on processing and refining costs for 31 critical minerals from the fiscal year ending June 2028 to 2040, applicable for up to 10 years per project.
For renewable hydrogen, a tax incentive of A$2 ($1.26) per kg produced will be implemented.
Government Statement:
Resources Minister Madeleine King highlighted that processing more minerals domestically will create jobs and diversify global supply chains.
Global Context:
Major economies are investing heavily in critical minerals projects to compete with China, the leading producer of rare earths.
Critical minerals and rare earths are vital for manufacturing solar panels, batteries, submarines, and aircraft, all essential for reducing carbon emissions.
Political Opposition:
The opposition Liberal-National coalition voted against the legislation, criticizing it for imposing “additional and unnecessary red and green tape” after their amendments to reduce environmental and Indigenous consultations were rejected.
Electoral Strategy:
The Labor government, led by Anthony Albanese, aims to promote these tax breaks in resource-rich electorates in Western Australia and Queensland ahead of the national election due by May.
Budget Commitments:
In its May budget, the Australian government pledged A$7 billion for the processing and refining of critical minerals and A$6.7 billion for renewable hydrogen production from 2028 to 2040.