Aluminium is an important material used in modern infrastructure and clean energy technologies. Its production is one of the world’s most energy and carbon intensive industrial processes.
The Green Aluminium Production Credit will position our aluminium industry as one of the greenest in the world. It will support aluminium smelters to decarbonise their production processes and produce green aluminium.
Green aluminium is a priority sector under the Future Made in Australia National Interest Framework. It is used in the construction, defence, transport and electronics sectors as well as solar panels, wind turbines and transmission lines. The sector is expected to have a sustained comparative advantage in our future net zero global economy. It can make a major contribution to decarbonising other areas of the economy.
Aluminium production is energy and carbon intensive. Aluminium smelters use more than 10% of a state’s electricity and contribute 3–4% of Australia’s total greenhouse gas emissions. The Green Aluminium Production Credit will help smelters decarbonise by offsetting some of the costs associated with switching to renewable energy sources and decarbonising production.
Supporting eligible Australian aluminium smelters to switch to renewable electricity will cut emissions. This will support the government’s 2035 net zero target to reduce emissions to 62–70% below 2005 levels.
Smelters must show greatly reduced carbon emissions before 2036 to negotiate an emissions-linked credit contract. This will be payable per tonne of green aluminium produced for up to 10 years or 2044 (whichever is sooner).
We are now consulting on the design settings of the credit.
Your feedback will help us understand:
- what eligibility criteria, credit rates and payment structures will encourage investment and carbon emissions reduction
- the challenges in emissions reduction for the industry and the administrative arrangements that should be considered.
We welcome feedback from interested stakeholders to inform advice to government on the final design settings and administration arrangements.