The Australian Labor party's victory in the country's 3 May parliamentary election could support low-carbon iron and aluminium developers, providing policy clarity and public capital to the sectors.
Labor's victory provides more certainty around Australia's A$14bn ($9.06bn) green hydrogen subsidy scheme, which will help steel producers transition towards hydrogen-powered steel furnaces. The opposition Coalition during the election pledged to scrap the programme, which will allow producers to claim A$2/t of green hydrogen produced from 2027.
Australian steelmaker NeoSmelt and South Korean steelmaker Posco are developing electric iron smelters in Western Australia (WA) that produce hot-briquetted iron, which is used in the green steel process. Both projects will initially rely on natural gas but may transition to hydrogen-based processing as hydrogen production rises.
Australia's hydrogen tax credits may prove crucial given ongoing hydrogen production challenges. South Australia's state government closed its Office of Hydrogen Power SA on 2 May, following a funding cut earlier this year.
Labor can now also move forward with plans for A$2bn in low-emissions aluminium production credits, beginning in 2028-29.
Smelters will be able to claim credits per tonne of low-carbon aluminium produced, based on their Scope 2 emission reductions. The party's proposal does not include any blanket credit for producers.
Labor's aluminium production credits are aimed at supporting the Australian government's goal of doubling the country's share of renewable power from about 40pc to 82pc by 2030.
Australian producers export about 1.5mn t/yr of aluminium, according to industry body Australian Aluminium Council, from four smelters located around the country.
Green iron funding
Labor's election win also secures its A$1bn lower-emission iron support pledge, first announced in late February.
Half of the fund will go towards restarting and transitioning the 1.2mn t/yr Whyalla steelworks in South Australia into a green steel plant. The other half will support new and existing green iron and steel projects to overcome initial funding barriers.
Labor has not allocated any funding through the programme yet.
