The Federal Government’s 2021-2022 Budget has given a clear indication the government is backing gas (both natural gas and hydrogen) as the key technology in Australia’s transition away from fossil fuels. The balance of the renewable energy sector, such as solar, wind and batter storage, is largely ignored.
Highlights of the Federal Budget
For the resources and energy sector, the Federal Budget is headlined by a $1.6 billion expenditure over ten years to incentivise private investment in technologies identified in the government’s Technology Investment Roadmap and Low Emissions Technology Statements. This roadmap is the foundation for the government’s “technology-focused approach” to reducing emissions.
The roadmap encourages the use of low emissions technology, with particular focus on hydrogen and carbon capture. $1.2 billion of the stimulus is allocated to creating a technology co-investment facility that supports the development of:
- regional hydrogen hubs;
- carbon capture, use and storage technologies;
- very low-cost soil carbon measurement and new agricultural filed technologies; and
- a high-integrity carbon offset scheme in the Indo-Pacific region.
Other major expenditures within the sector include:
- a further $215.4 million over six years to support the development of hydrogen ready gas generation infrastructure; and
- $279.9 million over ten years to establish a “below baseline crediting mechanism” to help realise abatement opportunities in large industrial facilities.
The Junior Minerals Exploration Incentive, established in 2018, has been extended through to 2025. The Incentive provides a tax incentive for investment in junior minerals exploration companies that are raising capital to fund greenfields exploration activity.
Summary
This year’s Federal Budget is the clearest indication yet that the Federal Government is backing gas as Australia transitions away from fossil fuels. Investment in both natural gas and hydrogen gas are being supported, although the precise uses of the funds allocated for investment in these technologies remains to be seen. There is little to no to investment in solar, wind or battery storage, with these technologies largely overlooked in this year’s Federal Budget.
If you would like any further information on the above, please do not hesitate to contact our Resources and Energy team.