Australian Industry Group welcomed the chance to make a short submission on the design of the Green Aluminium Production Credit (GAPC). Our members are businesses of all sizes across many sectors in Australia. Some are directly involved in the aluminium supply chain. Many more have an interest in the effective and efficient design of Australia’s industry and energy transition policies.

In our July 2024 submission to the Government's Green Metals consultation, we conveyed the support of our members for the broad outlines of a push to retain and grow metals production while transitioning to low, zero and negative emissions technologies. We also noted challenges including the need for much faster, cheaper and larger-scale deployment of clean electricity generation; and the need for policies, on the supply or demand sides, to bridge the 'green premium' for cleaner production technologies.

The Government is responding to these and other challenges with a suite of policies, including the proposed GAPC. Directionally these are sensible. It is not yet clear whether they will be enough, however. There are many factors buffeting the metals industries at present, with energy costs prominent but economic and trade policies of major economies even more important. The proposed GAPC can, at most, address issues around energy recontracting for aluminium smelting. The broader Australian policy response will shape the survival of this sector.

Other sectors of the economy have also been concerned by the increase in their electricity prices. While prices have fallen since the global energy crisis of 2022, they remain elevated by any prior standard and the futures markets show little relief. Many businesses outside aluminium would welcome the Commonwealth covering a share of these price increases too, though we recognise that such arrangements would be too expensive and cumbersome to extend beyond a narrow set of the most electricity-intensive activities. The best overall response should not be to subsidise the gap between old power prices and new, but to take steps on the supply and demand sides to cut the underlying cost of providing the energy services that support Australia’s prosperity.

Answers to selected questions from the consultation follow in our submission.