The “Future Made in Australia” initiative represents a significant shift in the country's approach to energy, manufacturing, and economic growth.
Future Made in Australia involves approximately $23 billion of new public spending over ten years. The majority of this is accounted for by two new tax credits incentivising private investment into domestic critical minerals processing and renewable hydrogen production. These credits are available from 2027 and are estimated to entail $13.7 billion in public industrial support by 2035-35. Also notable is approximately $4.5 billion in new funding for the Australian Renewable Energy Agency (ARENA) across several new initiatives, providing grants, subsidies, and investment for the manufacturing and developing renewable technologies, including batteries and solar panels.
With a focus on developing sovereign capabilities, reducing dependency on fossil fuels, and advancing the transition to renewable energy, this policy has far-reaching implications for the Australian energy sector. The aim is to foster a robust, self-sufficient economy by creating jobs, increasing investment in clean technologies, and ensuring long-term energy security.
One of the key drivers of the Future Made in Australia is the modernisation of Australia's electricity market, which is crucial for supporting the country's energy transition. The policy aligns with ongoing efforts to redesign the National Electricity Market (NEM), ensuring that it can handle the increasing integration of renewable energy sources such as wind and solar. These changes are vital as Australia moves away from coal and gas-based power generation toward cleaner, more sustainable energy sources.
Three major reforms are underway to future-proof Australia's electricity market:
A critical component of Future Made in Australia is strengthening domestic manufacturing, particularly in the renewable energy sector. With the policy’s focus on sovereign capabilities, Australia aims to reduce its reliance on imported technologies and develop its own manufacturing base for renewable energy components such as solar panels, wind turbines, and batteries. This is especially important as the global supply chain for renewable technologies has been disrupted by geopolitical tensions and the COVID-19 pandemic.
The Australian Greens’ deal to exclude fossil fuel projects from receiving flagship industry policy support highlights the government's commitment to prioritising clean energy manufacturing. This shift means that only industries aligned with the clean energy transition will benefit from financial incentives and regulatory support.
This presents both opportunities and challenges. Many people believe that fossil fuels will be needed for an extended period to stabilise the grid and support intermittent generation. De-incentivising gas in particular may destabilise energy security before Australia is ready to be 100% net zero.
At the heart of Future Made in Australia is a commitment to achieving a net-zero economy, with clean energy playing a central role. The policy not only supports expanding renewable energy production but also encourages the development of new industries, such as green hydrogen and battery storage, which will be crucial for decarbonising the energy sector. Australia’s vast natural resources—such as solar, wind, and minerals needed for battery production—position the country as a potential global leader in clean energy exports.
The policy’s emphasis on building a domestic clean energy sector aligns with the global shift toward sustainability and low-carbon economies. By leveraging clean energy resources, Australia can create thousands of new jobs, attract international investment, and secure long-term economic growth through clean energy exports. The development of hydrogen hubs, for example, presents an opportunity for Australia to become a major supplier of green hydrogen to energy-hungry countries like Japan and South Korea.
However, the current high costs associated with hydrogen production, storage, and transportation make it a risky area for heavy investment. A global hydrogen market is still in its infancy, and there are significant uncertainties regarding the scalability and long-term viability of hydrogen as a dominant energy source. Over-reliance on hydrogen could divert resources away from more established, cost-effective renewable technologies, slowing the progress towards net-zero goals.
The Future Made in Australia policy is set to drive transformative change across the Australian energy sector, with a clear emphasis on clean energy, local manufacturing, and energy security. By modernising the electricity market, boosting renewable energy manufacturing, and advancing the clean energy transition, the policy paves the way for a more resilient and sustainable energy future.
The government's focus on hydrogen as a central pillar of the Future Made in Australia policy is a calculated risk. If successful, 2024 could be viewed as a turning point in Australia’s clean energy transition, positioning the country as a leader in hydrogen innovation. However, if hydrogen fails to deliver on its promises, more established aspects of the policy, such as expanding renewable energy manufacturing and grid modernisation, will still drive significant progress. Ultimately, only time will tell whether the hydrogen bet pays off or becomes a missed opportunity in the broader push towards a net-zero future.
Hindsight is always 20/20.