Government pledges $2 billion to drive aluminium sector’s renewables shift

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The federal government has unveiled a $2 billion (USD 1.24 billion) Green Aluminium Production Credit that will provide targeted support to Australian aluminium smelters switching to renewables such as solar and wind before 2036.

The production credits, announced as part of the Future Made in Australia policy, would be offered to aluminium producers for every tonne of “green aluminium” they make over a period of 10 years.

Australian Prime Minister Anthony Albanese said investing in a renewables-driven aluminium industry is a major opportunity to capture the rewards of the global clean energy transition with the world increasingly looking for green metals.

“Investing in the Australian-made aluminium industry is a massive opportunity to create well-paid jobs in our regions and suburbs, and set Australia up for the future,” he said. “We’ve got the resources, the workers, and the know-how. The only thing we don’t have is time to waste.”

Albanese said supporting the aluminium manufacturing industry’s shift to renewable-powered processes will not only deliver economic wins for Australia, but will also help significantly reduce emissions.

Aluminium plays a critical role in renewable energy technologies, including solar panels and electric vehicles, but its production is an energy-hungry activity and smelter operators in Australia, including Rio Tinto and Tomago Aluminium, are already pursuing plans to abandon coal-fired power in favour of lower-cost renewables.

Australia’s four main aluminium smelters collectively consume around 10% of total electricity in the National Electricity Market and Kellie Parker, chief executive of Rio in Australia, said with traditional energy sources for heavy industry becoming increasingly uncompetitive, the introduction of production credits would help future-proof the industry.

“As global industrial customers and consumers increasingly focus on low-carbon products, this support signals Australia’s potential to be a major supplier of the aluminium needed for the global energy transition, creating a foundation for local businesses and manufacturing to thrive,” she said.

Innes Willox, chief executive of national employer association the Australian Industry Group, also welcomed the announcement but said it is important support is maintained and improved to enable the efficient rollout of renewables.

“Important as it is, the significant funding announced will not do the job alone,” he said. “For aluminium and other energy-intensive industries, we have to be able to permit and efficiently build the wind, solar, transmission, storage and gas peakers to enable smelters’ long-term plans.”

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