Existing income tax law provides an immediate tax deduction for expenditure incurred when exploring or prospecting for minerals, petroleum or quarry minerals.
Updating the tax law by extending the definition of exploration, will ensure exploration for geothermal energy receives the same treatment as traditional hydrocarbon energy sources.
This is consistent with the advice provided by the Policy Transition Group’s exploration report which the Government also announced its acceptance of today.
“The amendment to the tax law is a win for the geothermal industry in Australia that will help remove barriers to investment in geothermal energy and improve the economics of geothermal exploration,” Minister Ferguson said.
“The potential importance of geothermal to Australia’s energy future mix is significant with estimates from Geoscience Australia suggesting that if we were able to extract just one percent of Australia’s geothermal energy, it would be equivalent to 26,000 times Australia’s total annual energy consumption.
“Geothermal has the possibility to provide baseload renewable energy in Australia, and could help reduce our greenhouse gas emissions.
“The Government has also given its in-principle support to provide a more sustainable stream of funding for Geoscience Australia.
“Through these measures the Government is helping the geothermal industry realise its potential and supporting exploration of Australia’s mineral and petroleum resources.”
As part of the Government’s $5 billion Clean Energy Initiative, the Australian Government currently provides significant support for the development of geothermal energy through the Australian Centre for Renewable Energy and has committed more than $200 million in direct funding to accelerate geothermal energy technology development, demonstration and deployment in Australia, and leverage investment of $720 million.
The tax deduction will provide an additional boost to encouraging the development of geothermal energy and help ensure Australia is at the forefront of geothermal energy development.