Australia to cut renewable and electric vehicle funding
Sydney (12 May)
The Australian Government will cut funding for battery, solar cell, and renewable hydrogen development schemes by A$1.3 billion over a decade, and limit Australia’s Electric Car Discount from 2029, it said on 12 May.
The Australian Renewable Energy Agency (ARENA) will halve funding for the second round of its Hydrogen Headstart program, from A$2 billion to A$1 billion, the Government said in its 2026-27 Budget. Hydrogen Headstart provides decade-long bespoke production subsidies to large renewable hydrogen producers.
But the Government has not adjusted funding for its Hydrogen Production Tax Incentive. From 2027, producers will be able to claim tax credits worth A$2/kg of renewable hydrogen produced for a decade under the scheme.
ARENA also plans to cut funding for its Solar Sunshot and Battery Breakthrough Initiative (BBI) schemes, the Government said. The agency provides grants to solar cell developers through Solar Sunshot and offers tailored support to battery developers through the BBI.
The Australian Government’s development funding cuts come alongside changes to its Electric Car Discount (ECD), which should improve the scheme’s financial sustainability.
Electric cars worth up to the luxury car tax threshold are currently exempt from Australia’s fringe benefit tax (FBT). But, from 2029, new electric vehicles will only be eligible for a 25% FBT discount, the Government said.
The Australian Conservation Fund (ACF) has supported the Government’s discount changes and other consumer-facing budget measures, while opposing continued fossil fuel spending.
“While we welcome measures to ensure the longevity of the electric vehicle FBT exemption and the successful cheaper home batteries program, these are modest measures,” ACF’s National Climate Policy Advisor Annika Reynolds said.
Changes to the ECD are expected to raise A$1.6 billion in 2029-2030, Treasury forecasts show.
The Government’s 2026-27 Budget includes new funding for green manufacturing, alongside development funding cuts. The Government will spend A$1 billion on energy subsidies between 2029-2030 and 2039-2040 to support green aluminium production at Rio Tinto’s Boyne smelter in Queensland.
By Avinash Govind