In a significant move towards reducing carbon emissions and boosting the country’s renewable energy sector, the Australian Labor government has announced a pledge of A$2 billion ($1.24 billion) in production credits to assist the nation’s aluminium smelters in transitioning to renewable energy sources. This initiative aims to support the shift of Australia's four aluminium smelters—operated by major companies Rio Tinto and Alcoa—towards using solar, wind, or hydropower before 2036, reducing their reliance on coal-fired energy.

Aluminium production is one of the most energy-intensive and polluting industrial processes, with the current smelting operations in Australia largely powered by coal. Green aluminium, which refers to aluminium produced using renewable energy, has become an important part of the global shift towards more sustainable manufacturing practices. This pledge is a significant step for Australia, which is the sixth-largest aluminium producer in the world.

The production credits will provide financial incentives for the smelters, offering support for each metric ton of low-carbon aluminium produced. Prime Minister Anthony Albanese emphasized the government’s commitment to renewable energy and its potential to position Australia as a leader in green metals production. “We want Australian workers to make more things here,” Albanese said in a statement, underscoring the nation’s potential to leverage its abundant solar and wind resources, as well as its access to critical minerals, to drive a world-class metals industry.

This policy is part of the Labor government's broader agenda to transition the Australian energy sector towards cleaner energy sources. The government has set a target for 82% of the nation’s power to come from renewable sources by 2030, a goal that remains ambitious given that renewables currently account for about 40% of Australia’s electricity supply. Despite the gap, the government has pledged over A$40 billion to support new wind, solar, and battery projects to meet this target.

Albanese’s announcement aligns with his government's focus on climate action ahead of the upcoming national elections, which must be held by May. By promoting green aluminium, the government aims to support both climate goals and domestic manufacturing.

The Australian Aluminium Council, which represents the sector, welcomed the production credits, noting that they would help attract private investment and ensure the industry remains globally competitive. Council CEO Marghanita Johnson highlighted the transitional support these credits would provide as Australia develops its energy infrastructure and works to make energy pricing more competitive in the future.