The Australian Government’s A Future Made in Australia: Unlocking Australia’s Green Iron, Steel, Alumina and Aluminium Opportunity consultation paper outlined the strategic opportunity establishing a green metals industry presents.
With targeted support, an Australian green metals industry has the potential to deliver a reduction in global emissions that is significantly greater than Australia’s current total domestic contribution to greenhouse gas emissions. The production of green iron, steel and alumina can also enable the capture of significantly more value from Australia’s natural resources. Establishing a green metals industry is therefore not just about mitigating climate risk, but seizing the economic opportunities global decarbonisation presents.
The viability of Australian iron ore with future low-carbon steelmaking is also a source of sovereign risk. Developing local solutions tailored to Australian ores through the establishment of an Australian green metals industry is likely to be important to mitigating this risk and future-proofing Australia’s largest source of export earnings.
Calix welcomed the opportunity to provide a comprehensive submission to the Australian Government’s consultation, outlining strategic and targeted measures to accelerate the nation’s transition towards a robust green metals industry.
Targeted support for hydrogen for green metals
Using hydrogen to produce green iron will likely create the greatest environmental and economic benefit from Australia’s green hydrogen, embodying the hydrogen in value-added, low-carbon products for export. Green hydrogen is also the most significant cost driver of H2-DRI technologies like Calix’s ZESTY. Access to enough cost competitive green hydrogen is therefore a pre-requisite to establishing an Australian green iron industry.
Calix recommends additional targeted support to produce green hydrogen in the form of a Green Metal Hydrogen Production Tax Incentive. This incentive would provide an increased tax credit when hydrogen is used for green metals above the existing Hydrogen Production Tax Incentive, providing a clear price signal to establish green metals as a priority use case for green hydrogen.
Alternatively, Calix recommends the Government consider contracts for difference for hydrogen produced for green metals. Such a market creation mechanism could cap green hydrogen costs for green metal projects – reducing risks and unlocking private investment – and create downward pressure on green hydrogen prices.
A Green Metals Production Tax Incentive
To incentivise domestic green metal production, Calix recommends that a Green Metals Production Tax Incentive is considered. Such a mechanism could either be at a flat rate for a given metal, or be structured such that a production tax incentive is earned for each tonne of green metal produced that is equal to the difference in emissions intensity of the green metal product versus benchmarked industry standard production, multiplied by the Australian Carbon Credit Unit fixed price under the Safeguard Mechanism.
Structuring a production tax incentive in this way would correlate the incentive provided with the global environmental benefit delivered and tie scope three emissions avoidance with existing pricing of scope one and two emissions domestically. By aligning incentives with emissions avoided – specifically targeting scope three emissions – this approach not only fosters new domestic economic activity but also reinforces Australia’s commitment to environmental stewardship.
Derisking Early Adoption
To catalyse industry transformation, the submission underscores the importance of derisking early demonstration and commercial projects. Leveraging initiatives like the National Reconstruction Fund and Future Made in Australia Innovation Fund, targeted investment into innovative projects can help unlock private sector co-investment. As such, Calix recommends the government provide project specific capital grant support for innovative demonstration and first-of-a-kind commercial green metal projects. Emphasizing collaboration, our submission also proposes the establishment of a ‘Powering Green Metals’ network to help establish innovative and collaborative projects.
Cross-cutting benefits
Much of the support needed to establish an Australian green metals industry is not sector specific, but cross-cutting, and many of the mechanisms outlined in Calix’s submission could equally apply to the sustainable downstream processing of other metals and critical minerals. Recognising this further strengthens the business case for supporting the fundamental building blocks required for Australia to become a renewable energy (and green metal and critical minerals) superpower.
Driving Demand for Green Metals
Addressing the demand side, Calix advocates for robust government procurement policies that prioritize low-embodied carbon products. This includes mechanisms like contracts for difference and federal, state-level procurement requirements, mirroring successful approaches in European markets. Such measures are crucial in establishing a predictable market for low-carbon products and stimulating industry confidence.
Calix’s green metals solutions
Calix’s mineral processing technology is designed to enable Australian producers move downstream and for green metals production to enter the electric age. Highly efficient electric heating, compatible with renewable generation and grid-load balancing applications; the minimum possible use of hydrogen; compatibility with Australian hematite/goethite ores; processing of fines at the mine site; and the elimination of costly additional processing steps and waste transport are all design features of the Calix’s Sustainable Processing technology. Furthermore, Calix’s Leilac technology can produce zero emissions lime – a crucial enabling material for green steel and aluminium.
Calix’s submission to the Australian government outlines ways in which targeted government support, coupled with Australia’s natural comparative advantages, skilled minerals industry, and enabling technology can help Australia realise its potential as a renewable energy and green metals superpower.
