The Government has announced a range of measures to reduce the cost of living. Key measures include a reduction in the fuel excise, focusing on lowering energy prices and maintaining energy security.
Will the energy and infrastructure initiatives provide an opportunity for longer term prosperity? We summarise two key themes that were announced.
Temporary reduction of fuel excise
The Government will reduce the excise and excise equivalent customs duty rate by 50%. This applies to petrol, diesel and all other fuel and petroleum-based products (excluding aviation fuels) for 6 months. For petrol and diesel, the rates will be reduced from 44.2 cents to 22.1 cents per litre.
The measure will commence from 30 March 2022 and will remain in place for 6 months, ending on 28 September 2022. Businesses will continue to receive fuel tax credits that match the rate of excise for eligible fuel use.
Reducing energy prices, emissions and maintaining energy security
The Budget includes $1.3 billion of new investments to maintain energy security. This will keep downward pressure on energy prices while reducing emissions. The key initiatives include:
- $300 million to support low emissions LNG and clean hydrogen production at Darwin, together with associated carbon capture and storage infrastructure. Darwin is positioned to become one of the world’s leading low-cost clean energy hubs, with access to excellent onshore and offshore natural gas and greenhouse gas storage resources, including the Beetaloo and Petrel basins and the Barossa and Bayu-Undan fields;
- $247.1 million to support increased private sector investment in low emissions technologies including hydrogen, the continued development of a hydrogen Guarantee of Origin scheme;
- $200 million to increase onshore processing and value-add of iron ore exports, to support low emissions steel production in Indo-Pacific customer countries like Japan and Korea;
- $200 million to enhance Australia’s supply chain security through new low emissions manufacturing facilities (using hydrogen and hydrogen-derivatives like ammonia, as well as carbon capture utilisation and storage) in the Pilbara region;
- $148.6 million to support more investment in affordable and reliable power, including the development of community microgrid projects in regional and rural Australia;
- $100 million to de-risk private sector investment in firm generation and grid infrastructure to increase system strength and capacity in the Pilbara region;
- $100 million to support pre-Final Investment Decision activities and early works to make the Port of Newcastle ‘hydrogen ready’; and
- $50.3 million to accelerate the development of priority gas infrastructure projects consistent with the Future Gas Infrastructure Investment Framework and support investment in carbon capture and storage pipeline infrastructure.
To support market confidence, the Clean Energy Regulator will streamline the process for existing Emissions Reduction Fund fixed delivery contract holders seeking to take advantage of higher voluntary private market prices, with no change to the quantum of funding available under the Emissions Reduction Fund or Climate Solutions Fund.
Energy supply chain
The Government will provide $8 million over 2 years from 2021-22 for the Clean Energy Supply Chain Forum (Sydney Energy Forum) in July 2022. Support will also be provided to the Hydrogen Energy Supply Chain (HESC) pilot project to produce and transport liquid hydrogen from Australia to Japan. Funding from 2022-23 will support the pre-commercialisation phase of the project.
The Government will support new gas generation projects to be hydrogen ready. Funding will support hydrogen-ready capability through grants for hydrogen-ready turbines or associated hydrogen supply infrastructure. Under this measure, the Australian Government will provide $5 million to the New South Wales Government to support the new Tallawara B power plant to be hydrogen ready.
The Government will also release Australian crude oil stocks held in the United States Strategic Petroleum Reserve in response to an International Energy Agency declared collective action, and seek to replenish storage of refined product (petrol, diesel and jet fuel) and purchase replacement oil stocks at a later date.