The US Inflation Reduction Act (IRA) of 2022 may be “bad news” for Australia because the country’s superpower ambitions rely on green hydrogen exports.There is, however, a silver lining to it as it can supercharge minerals, raw materials, and rare earths industries.
Last week, Anthony Albanese discussed opportunities for the country to commercialise new clean technology with the US and how Australia can benefit from the Inflation Reduction Act.
“The Inflation Reduction Act envisages an enormous investment in clean technology. Australia has an opportunity through green hydrogen, through other innovations working to gain jobs and economic opportunity,” Albanese said.
A change in the landscape
The important question now is whether Australia is willing to play a role in US’ move in terms of the environmental impact of the minerals. Processing these minerals onshore will create a lot of jobs, but the processing itself will impact the environment.
Therefore, to process critical minerals, there is a need for plenty of protection that could cost more, but the US would likely go for it due to the credibility and security that comes from the Australian supply chain.
The refinement of mineral processes
The country can refine critical minerals and rare earths cleanly, but there need to be better regulations. Hence, this calls for the government to step up to make it happen.
In addition, there is a possibility for Australia to reduce refineries when there are better recycling practices from the beginning,
However, it should be noted that the process of refining will take a lot of energy. An example is Albermarle’s Kemerton lithium processing plant in the south of Perth that produces tanners of carbon. Should Australia implement better protections, the process will be impacted.
Hydrogen becomes challenging for AU
Australia continues to make breakthroughs in green hydrogen. As the numbers of energy coming from renewable sources in Australia increases, green hydrogen companies are doing more work to raise those numbers.
In fact, with these recent developments, the industry could generate 7,600-10,000 jobs and $11-26 billion every year. With that, it can help the country reach its net-zero carbon emissions goal.
Additionally, Australia has plenty of natural resources to produce clean hydrogen. So much so that the country is already known for its global supply chain partnerships. Undoubtedly, the country is leading the way in the global hydrogen industry.
However, with the IRA, the hydrogen supply chain will be subsidised in the US, resulting in an extreme challenge for Australia to compete with green ammonia exports from the US.
A lightbulb moment
Despite the hydrogen challenges due to the IRA, there is a huge opportunity for Australia to capitalise on rare minerals, especially considering that the US only has one rare earths processing facility.
Therefore, it highlights the importance of Australia, which continues to develop a processing facility that will ensure political partners have diverse supply chains. Aside from this, the government also plans to start processing minerals onshore.
This is a long-term vision that will bring a lot of opportunities and possibilities to the country. As of now, Western countries will still need China for rare earths and critical minerals. Still, Australia’s resources and developments, along with the US’ IRA may be the start of a change in direction that many countries, or even the world, will benefit from in the future.
Energy Matters has over 17 years of experience in the solar industry and has helped over 40,000 Australian households in their journey to energy independence.
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