The Smart Energy Council is grateful for the opportunity to provide a submission for the Senate Economics Legislation Committee, Inquiry into Future Made in Australia Bill 2024 [Provisions] and the Future Made in Australia (Omnibus Amendments No. 1) Bill 2024.
The Smart Energy Council (SEC) is Australia’s peak independent body for renewables including solar, batteries, wind, utility-scale generation and storage, Finance, renewables manufacturing, green hydrogen and everything in the Australian Renewables ecosystem.
The SEC has over 1400 members and over 65 years of experience in the sector having been established by the photovoltaic pioneers in the 1950s and 60s who designed and built some of the world’s first solar panels and solar hot water systems.
The Smart Energy Council and its member companies strongly support the Future Made in Australia program and this Act and have deep interest in the design of the Solar Sunshot program, Production Tax Credits and other measures and we would expect a number of our member companies to apply for support through these programs to deliver Australian manufacturing opportunities across the solar supply chain.
With the world’s best renewable energy resources, and innovative people and businesses, Australia has the opportunity to be a smart energy leader. As such the Smart Energy Council offers a range of initiatives for consideration.
Smart Energy Council Recommendations:
The Smart Energy strongly supports the Bill and we have worked with our partners in the sector and in civil society to generate a series of views that we believe would strengthen the Bill and will help the Government achieve its stated objectives. In particular, the SEC is closely working with the Australian Conservation Foundation and others to develop enhancements to the Bill to make it the success story we all need to truly make Australia a renewable energy superpower.
The Smart Energy Council offers some suggestions for the Bill to include a stronger focus on reducing greenhouse gas emissions in the Bill’s objectives and community benefits sections to include a strong focus on a decarbonised economy. Additionally, the economic resilience and security stream should be linked to a net-zero economy to clarify its role in supporting decarbonisation. The SEC also recommends investing in green industrial hubs and common infrastructure to support green industry growth. We also suggest encouraging beneficiaries to strive for environmental conservation and restoration to ensure nature-positive outcomes. Lastly, the SEC believes including a standalone First Nations benefit-sharing principle to recognise the need for First Nations communities and Traditional Owners to participate in and benefit from Future Made in Australia initiatives.
To that end, the Smart Energy Council offers the following recommendations for consideration in relation to this bill:
Recommendation 1: The Smart Energy Council recommends that the Future Made in Australia Bill 2024 be revised to include a stronger focus in the objectives to reducing greenhouse gas emissions.
Amending the Bill’s objectives and community benefits sections to include a strong focus on a decarbonised economy. The economic resilience and security stream should also be linked to a net-zero economy to clarify its role in supporting decarbonisation.
Recommendation 2: The Smart Energy Council recommends that to be eligible for Future Made in Australia support, a sector assessment must be completed and presented to Parliament. This ensures that the National Interest Framework is followed and that the support is appropriate for the sector.
Recommendation 3: Improve the Future Made in Australia plans to make sure companies are responsible for following community benefit principles. The Smart Energy Council suggests changing the Future Made in Australia Bill 2024 to make the plan an effective way to enforce these principles.
This includes requiring a plan before receiving any Future Made in Australia support and creating a way for communities to make sure companies follow the principles.
Recommendation 4: The Smart Energy Council recommends that the Future Made in Australia Bill not support fossil fuels or their infrastructure. We suggest adding a prohibited sectors clause to ensure that funding is not used for fossil fuels. This clause should prohibit fossil fuel extraction, production, power, and infrastructure, as well as nuclear power and carbon capture and storage technology.
Recommendation 5: The Smart Energy Council recommends expanding the community benefits principles. To include:
1) Promote the achievement of Australia’s greenhouse gas emissions reduction targets by incentivising low-emission operations and technologies.
2) Support Renewable Energy Industrial Precincts and green industry growth by investing in green industrial hubs and common infrastructure.
3) Ensure nature-positive outcomes by encouraging beneficiaries to strive for environmental conservation and restoration.
4) Include a standalone First Nations benefit-sharing principle that recognises the need for First Nations communities and Traditional Owners to participate in and benefit from Future Made in Australia initiatives.
The Smart Energy Council believes that the recommendations above will help enhance this bill and should be considered as amendments. The SEC urges the Australian Parliament to pass this strengthened Bill at the earliest opportunity to lay the foundation for Australia to become a renewables and critical minerals superpower.
About the Bill:
The Future Made in Australia Bill forms part of the Federal Government’s Future Made in Australia policy announced in the 2024-25 Budget.
The FMIA Bill sets out a National Interest Framework to guide Government investment and decision-making, an assessment process to identify opportunities in sectors that align with the Government’s investment direction, and community benefit principles to inform support given under the proposed legislation.
The Bill establishes broad parameters around Future Made in Australia support, which includes funding, grants, loans, guarantees, equity investments.
The Bill establishes powers for the Minister to make rules in relation to the provision of Future Made in Australia support mechanisms.
National Interest Framework and Sector Assessment Processes The Bill proposes to legislate the National Interest Framework, which has two streams: net zero transformation; and economic resilience and security. The Bill sets out more detail about whether a sector of the Australian economy is aligned with the streams.
The net zero transformation stream focuses on sectors that could have a sustained comparative advantage in a net zero global economy and where public investment is likely to be needed for the sector to make a significant contribution to emissions reduction at an efficient cost.
The economic resilience and security stream focuses on sectors where some level of domestic capability is necessary or efficient to deliver economic resilience and security, and where the private sector will not deliver the necessary investment in the absence of government support.
The National Interest Framework is used as the basis for the sector assessments as well as guiding the investment direction of the Government. The Bill establishes sector assessments, which provide a mechanism for the Secretary of the Department of Treasury at the direction of the Minister to undertake assessments of the extent to which a sector aligns with the National Interest Framework and the opportunities to address barriers to private investment.
The Treasurer highlighted the intention for the National Interest Framework and sector assessments together to give guidance to private sector investors on the Government’s position on certain sectors. The EM states that sector assessments are not intended to inform all government decisions or replace other policy frameworks and that sector assessment reports must be tabled to Parliament.
As noted above in the recommendations the Smart Energy Council believes expanding the community benefits principles. To include: the promotion of the achievement of Australia’s greenhouse gas emissions reduction targets by incentivising low-emission operations and technologies. Also to support Renewable Energy Industrial Precincts and green industry growth by investing in green industrial hubs and common infrastructure. As well to ensure nature-positive outcomes by encouraging beneficiaries to strive for environmental conservation and restoration. And also include a standalone First Nations
benefit-sharing principle that recognises the need for First Nations communities and Traditional Owners to participate in and benefit from Future Made in Australia initiatives.
Sector Assessment Should Incentivise Low-carbon Production Methods
As noted above the Smart Energy Council believes that to be eligible for Future Made in Australia support, a sector assessment should be completed and presented to Parliament. This ensures that the National Interest Framework is followed and that the support is appropriate. Sector assessments need to include incentives and methods for new sectors to function with low or no carbon production, particularly in relation to new clean energy supply chain industries. These new sectors will reduce domestic and international carbon and help Australia become a renewable energy superpower and when being
produced should have low or no carbon emissions in their production supply chain.
Fossil Fuel Projects and Investments Should be Expressly Excluded
As noted in our recommendations above, the Smart Energy Council believes that the Future Made in Australia Bill should not support fossil fuels or their infrastructure. We suggest adding a prohibited sectors clause to ensure that funding is not used for fossil fuels.
Fossil fuel extraction, production, power, and infrastructure, as well as nuclear power and carbon capture and storage technology, should be excluded. The national interest framework should include a provision for no fossil fuel projects or investments to be considered in the national interest, this should also be
extended to Carbon Capture and storage projects.
Community Benefit Principals
The SEC supports the inclusion of Community Benefit Principles in the FMIA bill for the provision of Future Made in Australia support. There are a number of key questions that are not dealt with adequately in the bill with respect to this provision.
The lack of clarity in the community benefit provisions leaves open issues relating to the interpretation of what a community benefit is and what is and how it can be measured. If there is an additional explanation of the community benefit provisions in the regulations that underpin the Bill then this allows future governments to redefine and repurpose the provisions of this bill.
It may be of benefit to include more detail in the bill around measurements of community benefit and what elements take precedence when considering community benefit.
Support for Future Made in Australia
The Smart Energy Council has long been a supporter of making Australia a renewable energy superpower and the Future Made in Australia package is a pathway to making that happen.
Australia has a huge task ahead to meet our legislated emission reduction goal of 43% by 2030 and to increase our renewable power generation to 82% within the same timeframe. These are targets that can and must be met and will require a whole of government approach.
There are significant headwinds and challenges facing Australia over the next decade including supply chain issues and workforce shortfalls. These challenges must be faced head-on if we are to reach our renewable goals and meet our potential to be a smart energy superpower.
If Australia is to become an exporter of renewable energy the Smart Energy Council has made clear our
support for;
- Manufacturing of high-energy goods using renewable energy and exporting the goods as a zero carbon product.
- Manufacturing and exporting renewable energy components such as batteries, solar panels, wind turbines, etc.
- Directly by generating renewable energy electrons and exporting via electricity transfer such as sending them across to Singapore, as proposed by Sun Cable.
- Making hydrogen and ammonia using 100% certified renewable energy sources and exporting it on ships, as we do with LNG now.
- Growing other exports such as engineering expertise and software services.
There is a clear abundance of resources, a competitive advantage in technical know-how, and a sector that is up to the challenge of delivering on these areas of focus. What is needed is a clear plan, a pipeline of priorities and investment, and a commitment to achieve these goals. The Future Made in Australia Bill goes along way to making this happen.
Critical Minerals Production Tax Credits
The Smart Energy Council supports and commends the $7 billion Production Tax Credit (PTC) plan for critical minerals. Australian minerals have for too long been dug up and shipped to other parts of the world without any value add in the process.
Implementing critical minerals production tax credits can position Australia as a significant contributor to the global battery value chain, particularly in the refining sector. Australia holds vast potential in the production of lithium hydroxide, nickel, precursors, cathodes, and cells. However, the absence of
appropriate policy frameworks may hinder our ability to fully capitalise on these opportunities. Given Australia’s prominent role as a leading global producer of spodumene, lithium hydroxide refining represents a notable chance for growth.
Australia operates three lithium hydroxide refineries, with several more proposed. According to work done by Mandala on behalf of industry, in 2023, without further investment, these refineries could process up to 20 kilotons of domestically produced spodumene, representing 6 percent of Australia’s output. By 2030, this capacity could increase to 290 kilotons, accounting for 31 percent of our spodumene production.
The 10% production tax credit will go a long way to achieve this growth and take advantage of the potential uplift in Australian critical minerals that will help make Australia a global renewable energy Superpower.
The SEC agrees with recent calls from the Climate Capital Forum that encourages the development of transparent criteria for eligibility including commitment to Environment and Social Governance (ESG) and an emission reduction pathway including targets. Ultimately, all projects need to be required to be at least partially powered by renewables within a defined period, with the goal that PTC inclusion of methane gas as a fuel source to be phased out over time, and a higher tax credit level available if no methane is used.
Hydrogen
The Smart Energy Council along with Zero Carbon Hydrogen Australia strongly welcomes the Federal Governments continued investment in green hydrogen. The additional commitment of $6.7 billion for the Hydrogen Production Tax Incentive (PTI) and additional $1.3 billion in Hydrogen Head Start funding are strong signals that the Government see’s the value in creating and promoting a zero carbon hydrogen sector in Australia.
The Smart Energy Council welcomed the announcement of the Hydrogen HeadStart Program in the 2023-24 budget and has actively worked with Hydrogen member companies to be involved in the program.
The Smart Energy Council believes this program will be a success and recognises that this program is the first step towards ensuring Australia has a competitive advantage in the rollout of Hydrogen and the potential to create a valuable export market for the product.
The initial investment in the Hydrogen HeadStart is valued at $2 billion and is designed to provide revenue support for large-scale renewable hydrogen projects through competitive hydrogen production contracts. The program is designed to accelerate the development of Australia’s hydrogen industry and help Australia connect to new global hydrogen supply chains, taking advantage of hydrogen’s immense jobs
and investment potential.
While cost pressures that currently have volatility have seen some slow down on the production of green hydrogen as a suitable replacement for coal and gas fuels, the certificate of origin scheme identifying renewable-made hydrogen would help to drive Australian resources companies to pivot to value-adding,
such as processing critical minerals and producing strategic metals such as green steel. Therefore investment in such a scheme is still considered a priority.
Solar Sunshot
The Smart Energy Council strongly welcomes the $1 billion SolarSunshot program announced before the budget. This program creates enormous opportunity for a sector that needs support to reach scale. The program provides strategic support designed to identify initial steps for future investment in solar panel manufacturing supply chains in Australia. There is enormous opportunity to convert our intellectual property in solar into a product manufactured here at scale. Ultra-low cost solar products like SunDrive’s offering will mean Australia can compete again in building solar in Australia.
The SEC believes this initiative represents a good first step but recommends additional resourcing for the program to encourage private equity flow into Australian up-stream solar and battery manufacturing. This is crucial to ensure we are moving fast enough to capitalise on the economic opportunities here and for exports. The SEC believes that with the right support, Australia can become a leader in this industry, attracting significant investments and creating numerous job opportunities. The SEC sees it as important that the SolarSunshot initiative be used to leverage and enhance Australian solar cell technology developments. By maximizing our world-leading university research reputation and outcomes in this field, we can ensure that Australia remains at the forefront of solar technology. This will not only benefit the local economy but also position Australia as a key player in the global market, driving innovation and sustainability.
The program could be enhanced with an explicit requirement that any manufacturing facility be majority Australian-owned but undertaken in equity partnership with a global technology leader. This approach will ensure ongoing access to world-leading technology, automation, and global supply
chains. By fostering such partnerships, Australia can benefit from the expertise and resources of global leaders while maintaining control over its own manufacturing capabilities. stainability.
Battery Breakthrough
The Smart Energy Council warmly welcomed the 2024-25 budget announcement of $500 million for the Battery Breakthrough Initiative. This significant investment is expected to catalyse the growing Australian market, which is now seeing many local and regional opportunities in the supply chain. The initiative will engage Australian manufacturers harnessing the potential of green metal production and the global circular battery economy. This includes recycling and remaking fully decarbonised batteries for future generations, leveraging Australian intellectual property for these systems.
The Smart Energy Council believes that significantly more investment and incentives are needed. Now is the time to invest heavily in facilities and materials stockpiling to prepare for the inevitable upswing. Allowing Australia to extend its competitive advantages in critical minerals mining to selective onshore value-adding. We are already witnessing this in the processing of lithium spodumene into lithium hydroxide onshore. Such strategic investments will ensure that Australia remains at the forefront of the global battery industry. The opportunities of green metal production and the potential global circular battery economy that includes recycling and remaking fully decarbonised batteries for generations to come as well as Australian IP for these systems, significantly more investment and policies to incentivise private equity investment is needed.
Investing in the facilities and materials stockpiling to be ready for the inevitable upswing, and to allow extending Australian competitive advantages in critical minerals mining to selective onshore value-adding, as we are already seeing in lithium spodumene being processed onshore into lithium hydroxide.
