BlueScope and other large emitters in the steel, cement and aluminium industries will have access to $400 million in grants to enable the transition to net zero.
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As part of the government's safeguard mechanism, which will now pass the Parliament following a deal with The Greens, large emitters in industries where there is limited potential to decarbonise with current technology will have access to the grants.
These grants are on top of other finance mechanisms such as those available from the Australian Renewable Energy Agency and the Clean Energy Finance Corporation, which offer loans to businesses to implement green technologies, and the $1 billion for manufacturers in the Powering the Regions Fund and $15 billion available through the National Reconstruction Fund.
Emitters in these sectors will also not have to meet the 4.9 per cent emissions reduction threshold each year, with the government offering a "discount" on the decline rate, down to a reduction of one per cent of their annual emissions.
Assistant Treasurer and Member for Whitlam Stephen Jones said the measures were a result of consultation with the industry.
"We're asking some of these hard to abate areas that they reduce their carbon emissions, and they're all saying it's going to be very difficult," he said.
"We know, but we want you to do it, and we'll assist you by providing this transitional funding assistance."
The specific guidelines for the grants will be drawn up shortly, ahead of the implementation of the safeguard mechanism from July 1 this year.
In its half yearly results presentation, BlueScope indicated that the safeguard mechanism that was proposed at that time would have a "material impact" on its plans to spend $1 billion on relining a mothballed blast furnace at the Port Kembla steelworks.
BlueScope has said that nascent technology to produce "green steel" that is being trialled in Europe is not yet able to be scaled up to meet its production requirements on a commercially competitive basis.
"The argument that is put by industries such as aluminium, cement and steel is that the technologies just don't exist for ambitious reduction," Mr Jones said.
While other heavy emitters in sectors such as the oil and gas industry will have to either reduce or offset their emissions, Mr Jones said the carve out for the steel, cement and aluminium industry was to ensure that local products were not undercut by imports.
"We don't want to close down an industry," he said.
BlueScope intends to reduce its steelmaking emissions intensity by 12 per cent by 2030 and reach net zero across its operations by 2050.
Mr Jones said the hard to abate industries would need to meet the same targets as the rest of the economy in the next decade.
"What we have in front of us is what we do between now and 2030. If new technology emerges and it is commercially viable, then obviously that sort of stuff changes the landscape, but what we know is for the remainder of this decade, that technology is not here with us," he said.
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