AUS Production Tax Credit Bill 2024
How the Production Tax Credit Bill 2024 will shape Australia's renewable energy and minerals sectors.
The Production Tax Credit Bill 2024, formally known as the Future Made in Australia (Production Tax Credit and Other Measures) Bill 2024, is a key piece of Australian legislation designed to boost the nation’s efforts to reduce carbon emissions. It does this by providing incentives for renewable hydrogen production and the processing of critical minerals. The bill was passed by the Senate on February 11, 2025. Here’s a look at its main points:
Hydrogen Production Tax Incentive
The bill offers AUD $2 per kilogram of renewable hydrogen produced between 2027–28 and 2039–40, for up to 10 years per project. This subsidy aims to make green hydrogen more competitive. Green hydrogen is essential for sectors that are hard to electrify, like heavy transport and industry. By lowering production costs, this initiative will help Australia become a leader in green hydrogen production, contributing to global decarbonisation efforts. Currently, there are 69 hydrogen projects in the development pipeline.
Critical Minerals Production Tax Incentive
The bill provides a 10% credit on processing and refining costs for 31 designated critical minerals (such as lithium and cobalt) during the same period. These minerals are vital for renewable technologies (like wind turbines, solar panels, and electric vehicles) and defense applications (such as submarines and aircraft).
This credit will help lower the cost of refining these minerals locally, potentially reducing our reliance on imports and strengthening Australia’s supply chains. Over 118 critical minerals projects are currently underway.
Job Creation and Economic Impact
The Australian Council of Trade Unions (ACTU) estimates that the bill could create over 400,000 jobs by 2040, particularly in sectors such as green aluminum, solar manufacturing, and hydrogen production.
By reducing production costs for renewable energy technologies and critical minerals, the bill aims to strengthen Australia’s role in global clean energy supply chains. For example, a lithium mining company refining ore into battery-grade lithium hydroxide could offset 10% of its refining costs, improving profitability and competitiveness against cheaper overseas processors. By lowering processing costs, Australian refiners can supply critical minerals to global manufacturers of electric vehicles (EVs), solar panels, and batteries, aligning with EU and U.S. demand for ethically sourced materials. A mining company using renewable hydrogen to decarbonize iron ore processing could claim both hydrogen and critical minerals tax credits, amplifying its returns.
Impact on Energy Markets
The PTC Bill incentivizes renewable hydrogen production, which requires large-scale renewable electricity (from sources like wind and solar) to power electrolysers. This will increase demand for renewable energy in the wholesale market, potentially speeding up investments in grid-scale renewables and energy storage solutions.
The bill’s focus on processing critical minerals (like lithium and cobalt) for batteries and electric vehicles will also support energy storage deployment. This could help stabilize grid frequency and reduce price spikes during peak demand, benefiting energy buyers. As a result, energy procurement firms may advise clients to optimize their procurement strategies to align with periods of surplus renewable generation, taking advantage of lower wholesale prices.
In Summary
The Production Tax Credit Bill 2024 is a strategic investment in Australia’s renewable energy and critical minerals sectors, combining economic growth with climate action. The incentives for hydrogen and critical minerals will help reduce emissions by replacing fossil fuels in various industries while enabling the growth of renewable energy sources and electric vehicles.
For energy procurement companies, this bill presents opportunities for strategic sourcing and risk management, aligning with national climate targets and supporting the transition to a low-carbon economy.
NUS can assist commercial and industrial customers in creating roadmaps for the mining sector to decarbonize their operations through energy-efficient technologies and low-carbon energy procurement—strategies that could potentially attract tax credits under the PTC bill.
