The federal Industry department is advancing on plans for a significant green metals investment package with the release of a consultation paper weeks after receiving budget funding.
The green metals consultation paper, a priority industry under the government’s Future Made in Australia plan, was released on Friday by Industry minister Ed Husic at BlueScope Steel’s Port Kembla facility in New South Wales.
The paper outlines the industry’s need for large planning and capital investment support to develop improved green metals production technology and to develop the market. Currently, the cost of producing green iron is up to US$146 per tonne more expensive than traditional methods, and green steel up to US$205 per tonne more expensive.
However, Mr Husic said that there was a $122 billion annual economic opportunity on the cards by 2040, according to estimates from Accenture, and the potential for the industry to deliver an “outsized contribution to global emissions reductions”.
Green metals refers to the production of iron, steel, alumina, and aluminium, without greenhouse gas emissions. There are a variety of technology pathways for decarbonising metals production, with in initial frontrunners involving renewable energy powered electric furnaces or the use of renewable energy produced hydrogen as an input.
In the 2024-25 federal budget, the Industry department was handed $18.1 million to lead work on green metals industrial development.
The sector is identified as a priority industry under the Future Made in Australia National Interest Framework, developed by Treasury, which argues that “Australia has significant potential to become one of the lowest-cost producers of green metals”.
The Industry consultation paper says that “Australia has grounds for long term comparative advantages in the production of green metals” due to its plentiful iron ore and bauxite reserves, capacity for large-scale renewable production, and vertical integration of steel and aluminium production chains.
While there was a need to decarbonise existing production to reach net zero target and the safeguard mechanism creates an incentive to do so, the paper argues that Australia could develop a green metals export industry.
The consultation paper builds on initial engagement already undertaken by the department and asks 33 questions seeking “informed views, data and analysis from organisations and communities”.
These focus on identifying industry opportunities, facilitating investment, pathways and barriers to decarbonisation for different technologies, and what additional support is needed to facilitate investment and incentivise production.
Four policy levers for supporting the supply-side of the nascent green metals market are highlighted for consideration. These include production tax incentives, contract-based production incentives, tax-based investment incentives, and capital grants for capital investments.
The consultation paper also seeks feedback on potential demand-side interventions to “encourage domestic use of green metals and the maturation of markets which value and price in a green premium”.
It considers ratings tools and standards as well as the recent expansion of the guarantee of origin scheme, which seeks to “certify the emissions and sustainability profile of green metals”.
Support for early-stage green metals technologies would be delivered as a part of the $1.7 billion Future Made in Australia Innovation Fund, also a commitment in the 2024-25 federal budget, through the Australian Renewable Energy Agency.
The budget included funding to establish an international Green Metals Innovation Network to improve industry and research collaboration.
In conjunction with the government’s Net Zero Plan, underpinned by six sectoral decarbonisation plans, Mr Husic said local businesses, innovators and manufacturers could play a more significant role in decarbonisation and the energy transformation, both in Australia and internationally.
Consultation on the the opportunities for green metals production in Australia closes on July 14.
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