Australia Introduces Hydrogen Production Tax Incentive to Boost Renewable Industry
Key Ideas
- The Australian Government has introduced the Future Made in Australia Bill 2024, including the Hydrogen Production Tax Incentive (HPTI) to accelerate renewable hydrogen projects.
- The HPTI offers a $2 incentive per kilogram of renewable hydrogen to eligible producers for a decade, aiming to lower production costs and promote industry scale.
- The development of a renewable hydrogen industry is seen as a significant economic opportunity for Australia, facilitating exports and domestic use in various sectors like manufacturing and agriculture.
- The HPTI is part of the $22.7 billion Future Made in Australia plan and aligns with the 2024 National Hydrogen Strategy to drive the country's transition towards green energy.
The Australian Government has introduced the Future Made in Australia (Production Tax Credits and Other Measures) Bill 2024, which includes the establishment of the Hydrogen Production Tax Incentive (HPTI). The main goal of the HPTI is to expedite project development, make renewable hydrogen more accessible sooner, and achieve economies of scale to reduce production costs over time. This incentive will operate as a refundable tax offset, providing a $2 incentive per kilogram of renewable hydrogen to eligible producers for a duration of 10 years, from 1 July 2027 to 30 June 2040. The focus on developing a renewable hydrogen industry is viewed as a substantial economic opportunity for Australia, allowing for the production of value-added green products like ammonia, fertilizers, iron, and alumina. The HPTI is a crucial component of the larger $22.7 billion Future Made in Australia plan and is in line with the 2024 National Hydrogen Strategy, aiming to support the country's strategic shift towards sustainable energy sources.