Shortcuts / 04 July 2024

The Future Made in Australia policy

What is the Future Made in Australia policy?
Put simply, it’s the Albanese Government’s plan to turn Australia into a “renewables superpower” by building our own stuff in that space and processing the natural resources we have in the ground instead of sending them overseas. 

What sort of stuff will we build?
We’re talking about things like solar panels, batteries, and wind turbines, as well as growing our green hydrogen industry and turning our abundance of critical minerals into big business.

Why do we want to do that?
It’ll help us reach our emissions reduction targets sooner while making sure we’re not overly reliant on supplies from overseas.

Is it expensive?
Yep. At nearly $23 billion, it’s a major investment. But the government says these energy transitions are happening all around the world, and if Australia is leading the way, we’ll be in a prime position to make the most of those opportunities as more countries switch to renewables for their power. 

What are other countries doing?
The PM has taken note of what’s been happening in the US and Europe, where their governments have ploughed hundreds of billions of dollars into creating “green” businesses, which have helped them to considerably reduce emissions in the past 5 years, and also lessened their reliance on China for renewable “ingredients” like refined critical minerals. 

I heard we have a lot of critical minerals…
We sure do… And they’re in big demand all over the world.

What exactly are they?
They’re called “critical” minerals for 2 reasons – one, because they’re essential for making “green” technologies like solar panels, rechargeable batteries for electric vehicles, and wind turbines used in wind farms. The other reason is that there’s a risk that their supply chain could be disrupted due to the dominance of one country, world unrest, or, let’s say, a pandemic… 

Which ones do we consider “critical”?
In Australia, we have 31 critical minerals on our list and they include copper, nickel, cobalt, lithium and rare earth elements. 

And which ones do we have a lot of?
We’re the world’s largest producer of lithium and some of the biggest natural deposits of copper, nickel and rare earth minerals on the planet. 

What do we do with them?
Currently most of what we mine is sent overseas for refining – mostly to China, which processes 60% of the world’s critical minerals for the renewables market. 

Can we process them here instead?
Yes, by stepping up our own refining facilities, we’ll be less reliant on China and also be in a position to sell our products to overseas buyers like the USA, the European Union, India, Japan, South Korea and the UK.

How can we make it happen?
The government is offering tax incentives of 10% of processing and refining costs for companies to get the ball rolling.

What difference will it make?
Building our own industry and supply chain here is something the government really needs to happen because our renewable energy supply depends on it. We need to shore up our security because of the increasingly unstable situation in the world. And analysts have said it’ll ensure we still have a market for our resources if, for instance, tensions between China and the US boil over and we’re forced to choose a side…

Doesn’t China already invest here?
Yep. And China’s made no secret of the fact they want to invest more in Australia’s critical minerals industry. But that comes with complications…

Why’s that?
Because we’re closely aligned with the US, which is in fierce competition with China. The US has been a big supporter of Australia building an alternative supply chain in order to weaken China’s stronghold on renewables.

Got it. What else do I need to know? 
There are more tax incentives in the Future Made in Australia policy for Aussie companies to produce “green hydrogen” – aka hydrogen made from renewables. If we use green hydrogen to produce “green metals”, we’ll be leading another field in the renewables space and helping to reduce 13% of the world’s emissions caused by metal production. 

Great. Anything else?
How long have you got? We haven’t yet talked about the plan to invest in emerging technologies like AI, robotics, and Quantum computing… 

Maybe you can explain those in a future Shortcut…
In the meantime, the government has put the details in a Bill they introduced to parliament this week, so we’ll see all the nitty-gritty soon…

What has the reaction been?
Mixed. The Coalition, for one, isn’t on board. Coalition Leader Peter Dutton says the government shouldn’t be using taxpayer dollars to prop up emerging industries. He says the private sector should fund them and be able to stand alone. He also said in offering tax credits to the mining industry, the government would be “giving handouts to billionaires”.

What happens if the Coalition oppose the Bill?
The government will need the support of the Greens and crossbenchers for it to pass. And they’re not convinced yet either… 

Why not?
In short, they’re worried the government is relying heavily on gas – a fossil fuel – to prop up gaps in the energy grid during the transition to renewables.

And the energy debate continues…
Yep, these are some of the issues we’ll no doubt be talking about as we get further into the energy debate and closer to the next election.

Squiz recommends:
Listening: This ABC News Daily podcast episode called, Can Australia Really Afford to Make Stuff?, provides insight into some of the challenges the government might face with its Future Made In Australia policy.

Reading: This article published in The Conversation called, Critical minerals for the world – or just for the US? Turning Australia into a green minerals powerhouse comes with risks, gives a good summary of Australia’s predicament when it comes to critical minerals.

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