TL/DR –
The Albanese government in Australia plans to respond to the US Inflation Reduction Act with multi-billion-dollar subsidies and co-investment in renewable energy and new industries. The move is considered part of the global green energy and manufacturing rush and its details will be announced in the upcoming budget. The US Inflation Reduction Act, which has a budget of $566 billion, includes $414 billion worth of tax incentives aimed at driving renewable energy co-investment and is estimated to create a $2.9 trillion investment opportunity by 2032.
The Albanese Government to combat Global Industrial Competition
The Albanese government is preparing to introduce a multi-billion-dollar package in response to international industrial competitors like the US Inflation Reduction Act. This package will include subsidies and co-investment for renewables and new industries.
Prime Minister Albanese will announce Australia’s participation in the global green energy and manufacturing movement during an address in the coal mining Hunter Valley. He will present this as a part of the forthcoming budget.
Mr Albanese’s statement will emphasise the necessity of governmental partnership in this endeavour, matching the substantial investments from the United States, EU, Japan, and Korea. The approach won’t necessarily be to match the spending dollar-for-dollar but instead focus on the quality and impact of policies.
Other nations have leveraged subsidies and public investment in clean energy to exploit opportunities in decarbonisation. Notably, the $566 billion US Inflation Reduction Act encourages renewable energy co-investment with $414 billion in tax incentives. This act could potentially generate a $2.9 trillion investment opportunity by 2032.
Though the Albanese government has implemented numerous multi-billion-dollar policies, the funds have been slower to reach the market compared to the US. This disparity has attracted some Australian operations to the US.
Response to the Inflation Reduction Act
Last year, investors, unions, and clean energy organisations proposed a $100 billion Australian response to the Inflation Reduction Act, suggesting an Australian Renewable Industry Package. The Albanese government has yet to formally respond, but it has extended its green hydrogen program and committed to underwriting renewable energy projects.
Planning for a robust response to the IRA includes a 16-person taskforce led by the Department of Climate Change, Energy, Environment, and Water (DCCEEW). They are developing plans in collaboration with officials from Treasury and the Industry department.
The Australian initiative will surpass current policies like the $2 billion Hydrogen Headstart program and the $15 billion National Reconstruction Fund, as reported by the Australian Financial Review.
Clean Energy Opportunities
In his address, Mr. Albanese will outline the possibilities of affordable clean energy to power advanced manufacturing and heavy industry. He will also explore potential exports of clean energy technology.
“Reliable and affordable clean energy, from solar to green hydrogen to offshore wind can power a new generation of advanced manufacturing and heavy industry, in our suburbs and our regional centres,” says Albanese.
Clean Energy Council Response
The Clean Energy Council (CEC) supports this new strategic investment. CEO Kane Thornton believes that a far-reaching policy and funding package will attract global clean energy capital to Australia’s competitive markets.
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