Australia introduces tax incentive to drive investment in renewable hydrogen

The Australian Government has introduced the Future Made in Australia (Production Tax Credits and Other Measures) Bill 2024. This Bill would establish the Hydrogen Production Tax Incentive (HPTI).

The HPTI is intended to:

• bring forward project development

• make renewable hydrogen available sooner

• build scale to reduce production costs over time.

The HPTI will be delivered through Australia’s tax system as a refundable tax offset. The HPTI will provide a $2 incentive per kilogram of renewable hydrogen to eligible producers for up to 10 years, between 1 July 2027 and 30 June 2040.

Developing a renewable hydrogen industry represents a significant economic opportunity for Australia for export and domestic use. This is through value-added manufacturing of green ammonia and fertilisers, iron and alumina.

The HPTI is a component of the $22.7 billion Future Made in Australia plan. It supports the 2024 National Hydrogen Strategy.