Labor Pledges $2 Billion Credit Scheme to Help Decarbonise Aluminium Industry

A worker collects molten aluminium samples in Biesheim, eastern France, on Dec. 5, 2022. Sebastien Bozon/AFP via Getty Images

The Australian Labor government has unveiled a new credit scheme to fast-track the decarbonisation of the country’s aluminium industry.

On Jan. 20, Prime Minister Anthony Albanese announced that the government would invest $2 billion (US$1.24 billion) to help aluminium smelters transition to using renewable-generated electricity before 2036.

Under the Green Aluminium Production Credit scheme, Australian producers will receive a support payment for each tonne of “clean” aluminium they make over a 10-year period.

The government said the scheme would provide more confidence for aluminium producers to invest in renewable energy, offer more secure jobs, and reduce emissions.

The new credit scheme is part of the government’s Future Made in Australia initiative, an economic plan that mimics Biden’s Inflation Reduction Act.

The goal is to support Australia’s transition to a net zero economy via incentives—including tax breaks and grants—for certain designated projects.

A photo of the main website for the Albanese Labor government's Future Made in Australia initiative, which is aimed at competing with developed countries trying to encourage local advanced manufacturing independent of Chinese supply chains. The key areas of focus are critical mineral refinement and green technology for renewables. This photo is taken in Perth, Australia on Nov. 25, 2024. Wade Zhong/The Epoch Times

It is expected to cost taxpayers $22.7 billion.

The prime minister said the $2 billion investment would bring about a “massive opportunity.”

“We’ve got the resources, the workers, and the know-how. The only thing we don’t have is time to waste,” he said.

“We are building Australia’s future, not taking Australia backwards.”

Industry and Science Minister Ed Husic said Australia is well positioned to benefit from the global green energy transition.

“Jobs up, emissions down, and a secure future for our world-class aluminium industry–that’s what today’s announcement provides,” he said.

At present, Australia is the world’s sixth-largest aluminium producer, with an entire aluminium supply chain located on shore.

Australia is also the world’s largest producer of bauxite, a mineral with a high aluminium concentration.

It is worth noting that the aluminium industry is highly energy-intensive, and smelters need reliable, low-cost electricity.

Opposition’s Response

Opposition Leader Peter Dutton has questioned the feasibility of the government’s plan to decarbonise heavy industry.

“I can’t find anywhere in the world an aluminium smelter, a high-energy-use aluminium smelter, that is only run on wind and solar and batteries,” he said.

“If there’s an example the prime minister’s got, I’d be happy to hear it.”

At the same time, Dutton criticised Labor’s renewables policy, saying it would put the aluminium industry at risk.

“If we want to export those jobs and export that industry, well, that’s exactly what the prime minister’s promising to do with his policy,” he said.

Nationals Senator Matt Canavan wrote on X, “If renewable energy is so cheap, why do our ‘green’ aluminium smelters need energy subsidies to keep running?”

Renewables Not Suitable for the Manufacturing: Peak Body

During a recent parliamentary inquiry hearing, Rebecca Knol, the CEO of the peak SA Chamber of Mines and Energy, said renewables was only suitable for “mum and dad businesses.”

“Our sector is uptaking renewable power wherever they can, but it doesn’t drive smelters. It doesn’t drive glass works. It doesn’t drive furnaces. It just can’t, and it never will.”