Australia’s Labor government has committed A$2 billion ($1.24 billion) in production credits to support the transition of the country’s aluminium smelters to renewable energy by 2036. The initiative, announced on Monday, aims to cut emissions from one of the most polluting industries while bolstering domestic manufacturing.
The credits will provide financial incentives for low-carbon aluminium production, supporting the country’s four aluminium smelters, operated by Rio Tinto and Alcoa, to adopt renewable energy sources such as solar, wind, and hydropower.
Aluminium production is highly carbon-intensive, as it currently relies on coal-fired power. Green aluminium—produced using renewable energy—offers a solution to reducing emissions from the sector.
Prime Minister Anthony Albanese highlighted the importance of clean energy in strengthening the local economy. “We want Australian workers to make more things here. We’ve got all the ingredients for a world-leading metals industry – from the best solar and wind resources to critical minerals and a highly skilled workforce,” he said.
The government has set an ambitious target for 82% of the nation’s energy to come from renewable sources by 2030, up from the current 40%. To achieve this, it has committed more than A$40 billion to new wind, solar, and battery projects.
Under the scheme, smelters will receive credits for each tonne of low-carbon aluminium produced. The measure is part of a broader effort to reduce emissions in heavy industry while maintaining Australia’s competitiveness in global markets.
The Australian Aluminium Council, representing the world’s sixth-largest producer of aluminium, welcomed the initiative.
“These new aluminium production credits should provide some of the transitional support needed as Australia’s energy infrastructure develops and energy pricing returns to competitive levels,” said Marghanita Johnson, CEO of the Council.
The credits are expected to attract private investment to the aluminium sector, helping smelters shift away from coal-powered operations. However, challenges remain in achieving the government’s renewable energy targets, with significant upgrades to energy infrastructure still required.
Australia’s aluminium industry plays a critical role in the global metals market, and this initiative positions the sector to lead in green production. The move underscores the government’s broader commitment to decarbonising heavy industry and meeting its climate goals.
