Australia will reward energy-intensive aluminium smelters that use renewable electricity instead of coal, Prime Minister Anthony Albanese said as he unveiled a $1.2 billion green metals plan.
Officials say Australia is the world's sixth-largest producer of the sought-after metal, which is used in everything from airplane parts to soft-drink cans.
Analysts say aluminium ore is processed in huge smelters that consume almost 10% of Australia's electricity, a process that has long relied on polluting coal power.
Production credits worth $1.2 billion are earmarked for companies that instead produce "green" aluminium using renewable electricity, Albanese said.
"The world is increasingly looking to import clean and reliable metals such as aluminium produced in Australia," he said.
"This represents a huge opportunity for growth in a decarbonising global economy."
Companies will be able to claim an amount, to be determined, for every tonne of "pure" aluminium they produce over the next 10 years.
With almost all of Australia's coal-fired power stations set to close in the next decade, a number of steel mills have already begun to switch to renewable energy.
According to the World Economic Forum, aluminium is the world's second-largest metallurgical industry after steel, and demand is expected to grow 40 per cent by 2030. Globally, the aluminium industry accounts for about two per cent of greenhouse gas emissions, the forum said in September.
Mining giant Rio Tinto, which has a significant stake in Australian production, argued the plan would help the country become a "leader in green metals".
"As traditional energy sources for heavy industry become increasingly uncompetitive, today's announcement is an important part of helping the future of the industry," said the Australian company's CEO Kelly Parker.
Australia has vast reserves of coal, gas, metals and minerals, with mining and fossil fuels accounting for decades of almost uninterrupted economic growth. It has also begun to suffer more intense bushfires and increasingly severe droughts, which scientists link to climate change.
In recent years, it has stepped up its efforts to introduce renewable energy - pledging to reduce national emissions by 43% by 2030 and achieve zero emissions by 2050.
In 2022, more than 30% of Australia's total electricity generation is from solar and wind. | BGNES
