I'm calling on the government to act now to increase Australia's international competitiveness for new energy industries. We cannot overestimate the scale and impact of the United States Inflation Reduction Act, which broke new ground with its A$1 trillion investment in green and renewable energy. This is the most significant climate legislation in US history. Approximately two-thirds of this IRA budget is allocated to uncapped tax incentives for different stages of production within clean energy industries. These tax incentives deliver a deafeningly loud signal to investors doing new energy business in the US.

But what about us? Investors are looking for reasons to choose Australia over other countries. Companies are actively looking to develop and grow their renewable operations in Australia but they need this government to give them tangible confirmation of Australia's energy transition vision and to give them the confidence and certainty that Australia will welcome and incentivise the new energy opportunities currently knocking on our door.

There is much discussion about Australia's natural advantages—our abundance of sun, wind and critical minerals. Australia is one of the few countries in the world with all the input minerals and materials required for lithium batteries. But we face a very real risk of remaining a country that digs and ships rather than being a serious and competitive producer of new energy, unless we make sure downstream processing projects are established onshore. We need to accelerate Australia's response to the IRA by incentivising value-adding projects onshore or we will miss out.

Independent research from Mandala Partners found that the key driver for financial close for downstream projects is incentives that help mitigate total operating costs throughout production cycles—not loans and not upfront grants but long-term, embedded incentives that encourage advantages in production.

Production tax credits are a proven mechanism that are now being used prolifically under the IRA. A production tax credit means you pay less tax when you actually produce something. Instead of money paid upfront for something that may or may not turn into something tangible, production tax credits are payable only when you deliver, so taxpayers are paying for results.

The introduction of a production tax credit in Australia would provide a clear signal that Australia is ready and willing to invest in value-adding downstream projects. It would allow global companies to be rewarded for value adding in Australia without losing out on manufacturing credits elsewhere.

The way production tax credits usually work is to attach the credit to phases of manufacturing and production for a set period. In the US, the manufacturing of batteries, solar panels and wind turbines, as well as the processing of critical minerals, attracts production tax credits, as well as further bonus tax credits for components made in the US. The US package has also committed tax credits for any investments in zero-emissions electricity generation facilities or energy storage technology.

The Smart Energy Council has reported that, due to the attractive US incentives, many of its member companies are moving their facilities to the US or proactively considering the IRA incentives. This isn't a potential risk; this is already happening.

In Australia there have been calls to apply production tax credits to the processing and value-add phases of critical minerals, as well as more broadly to secure the development of the renewable energy production and manufacturing industry.

As we know, critical minerals such as lithium, nickel, cobalt, silicon and rare earth elements are essential components in many rapidly growing clean energy technologies. They're critical because they can't be easily or cost-effectively substituted. The supply of these minerals is concentrated in a small number of places. Western Australia accounts for around half of global lithium production and is a major exporter of nickel, cobalt, manganese and rare earth elements. This government has already put nickel on the official Critical Minerals List and in February announced a 50 per cent royalty discount for 18 months to address serious competition in that market, which was a positive step.

It's essential that we accelerate opportunities in WA's critical minerals sector and capitalise now on the position that critical and battery minerals will play in decarbonising the global economy. The Chamber of Minerals and Energy of Western Australia believes that the window of opportunity is narrow to unlock Australia's potential as a major participant—