A renewable energy future focused Budget

By Mark Montag, Meg Lee, David Cooper and Mark Dessi

For months it has been flagged that energy transition and renewable energy would be central to the 2024-25 Federal Budget and it appears to have delivered funding and initiatives across many areas. We outline several important renewable energy and ESG focused initiatives that were announced on Tuesday night to support Australia’s target of 82% renewable generation in the energy grid by 2030 and securing Australia’s place in a changing global environment.

In short:

• The $22.7 billion Future Made in Australia package was a centrepiece of the Budget, with investment in innovation and clean energy technology, with the aim to ensure Australia remains a globally competitive ‘renewable energy superpower‘.
• $168.1 million has been included for the National Interest Framework, which is to prioritise statutory approval decisions with the aim of improving decision-making time-frames and attracting investment in the renewable energy sector.
• Other key funding was allocated to battery investment, critical mineral exploration, energy transition workforce support, as well as household energy bill relief.

The Future Made in Australia package

The global energy transition has been said to be a ‘golden opportunity’ for Australia and a major plank of this Budget has been aimed at supporting the Government’s ambitions to position the nation as a ‘renewable energy superpower’. The so-called Future Made in Australia package provides $22.7 billion for a variety of energy-related initiatives as follows:

• $7.1 billion of expanded funding and new budget programs for the Australian Renewable Energy Agency (ARENA).
• A $1.7 billion Future Made in Australia Innovation Fund supporting innovative technologies, including renewable hydrogen, green metals, batteries and low carbon liquid fuels (to be administered by ARENA). ARENA’s funding support for developing technology areas has been critical to the green energy sector for close to a decade now (many will recall the impact of ARENA’s large-scale solar funding round in 2015/16) and this funding announcement will enable ARENA to expand its important role in funding further emerging technologies in the market.
• $1 billion for the Solar SunShot program (to be administered by ARENA), supporting development of Australia’s solar manufacturing capabilities, critical minerals and improving renewable industry supply chain resilience.

Hydrogen was also a key focus of the Future Made in Australia plan and includes the following key initiatives:

• $6.7 billion toward a Hydrogen Production Tax Incentive to support commercialisation of Australian green hydrogen projects. This has been welcomed by the industry as a much needed response to US and European subsidies for their industries, enabling Australia to become more competitive in this new sector.
• $17.1 million to implement a National Hydrogen Strategy aimed to support Australia into becoming a global hydrogen leader by 2030.
• $1.3 billion invested in the previously announced Hydrogen Headstart program supporting early‑mover projects in the hydrogen sector.
• $32.2 million to fast‑track the Guarantee of Origin scheme, which is focused on Australia’s export capabilities in the clean energy sector. With a focus on renewable hydrogen, it also aims to expand the scheme to accredit the emissions content of green metals and low‑carbon liquid fuels.

National Interest Framework

Renewable energy investment in Australia has suffered from significant uncertainty about the layered and lengthy approval process for projects at each of the various local, state and federal levels in Australia.

The Budget announcements seek to address much of this investment uncertainty through the National Interest Framework. This framework is proposed to impose additional structure and rigour for Government decision-making, although it remains unclear how this will address the three-tiered approval system operating in Australia.

The Budget provides the following support mechanisms aimed at improving investor certainty including:

• $17.3 million committed to implementing a comprehensive agenda that mobilises private investment in sustainable activities.
• $134.2 million to prioritise environmental, cultural heritage and planning approvals for renewable energy projects of national significance, with the aim of faster decision making.
• $20.7 million to support the Australian Energy Infrastructure Commissioner and improve engagement with communities impacted by the energy transition.
• $15.7 million to improve scrutiny and decision-making process for high-risk foreign investment proposals, including a stronger, more streamlined and more transparent approach, aiming to attract strong foreign investment.
• The Government will also encourage foreign investment by providing refunds of 75 per cent of FIRB application fees for unsuccessful competitive bids (subject to further details).

This is in addition to the previously announced expanded Capacity Investment Scheme, which will unlock $65 billion of renewable energy capacity through a revenue underwriting scheme.

Carbon credits and sequestration

Following the independent review of the Australian Carbon Credit Unit scheme, $48 million is included in the Budget for implementation of the Government’s response to the review. This funding will go towards establishing the Carbon Abatement Integrity Committee to oversee the new ‘proponent-led’ method development process and to strengthen the integrity and transparency of the system and to support First Nations participation and consent processes.

In addition, $32.6 million has been allocated to establish new regulatory frameworks and bilateral instruments to support heavy industry to reduce emissions through carbon sequestration in geological storage sites, where proven, to assist Australia in meeting its Paris Agreement targets and to assist regional partners with carbon management solutions.

Nature Positive Reforms

Further funding has been provided in the order of $40.9 million for the ongoing implementation of the Nature Positive Plan – better for the environment, better for business. This additional funding will go towards establishing and commencing operation of the Nature Repair Market, the Clean Energy Regulator’s costs to administer the Market and legislative reforms to implement the market.

Energy initiatives for consumers

In addition to the industry and investment support announcements, the Budget also included numerous initiatives aimed at the consumer hip pocket and to encourage transition at the household level, such as $3.5 billion toward energy bill relief for Australian households.

Other major energy sector announcements

• $549 million over eight years from 2023-24 to support battery manufacturing, including establishing the Battery Breakthrough Initiative to provide production incentives (administered through ARENA). This announcement was made despite the accompanying Treasury paper stating that Australia would be better to instead exploit cheaper technologies developed offshore at scale in countries such as China.
• $556 million investment over 10 years to support Geoscience Australia develop tools to discover and map Australia’s deposits of rare earths and critical minerals.
• $91 million to accelerate the development of the clean energy workforce through better facilities and training, including an encouraging focus on increasing participation by women in the clean energy sector.

Looking ahead

Clean Energy Council Chief Executive Kane Thornton has welcomed the significant investment in renewable energy, stating that the Budget ‘demonstrates resolute and ambitious leadership by the Albanese Government on the nation’s clean energy transition’.

These are certainly significant announcements across most sectors of the energy market; however, we will watch with anticipation to see how they are implemented and how they interface between the federal and state levels of government, investors, suppliers, developers and other market participants.

This article was prepared with the assistance of Tom O’Sullivan, Law Graduate.