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Aus to invest A$2bn on hydrogen future

10th May 2023

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – The Australian government has unveiled a A$2-billion investment into a new Hydrogen Headstart programme to scale up development of Australia’s renewable hydrogen industry.

Climate Change and Energy Minister Chris Bowen said that the investment, which was revealed in the federal Budget, was aimed at making Australia a global leader in green hydrogen, as competition for clean energy investment accelerates around the world.

“The net zero transformation is the largest change to both Australia and the world’s economy since the industrial revolution. After a decade of policy inaction, Hydrogen Headstart contributes to the over A$40-billion of investment by the government to make Australia a renewable energy superpower.

“Australia already has the largest pipeline of renewable hydrogen projects in the world. Our regions have the resources, technical skills and key trade partnerships to drive growth in hydrogen and other clean industries, as well as the jobs that come with it.

Getting to net zero emissions will require renewable hydrogen,” the Minister said.

Analysis by ClimateWorks and Australian Renewable Energy Agency (Arena) found as much as 364 000 t (44 PJ) is required by 2030 and 2.23-million tonnes (268 PJ) is required by 2050 for industrial decarbonisation.

Bowen noted that hydrogen could be combusted for industrial heat, used as a chemical input for green manufacturing, a fuel for heavy transport, or liquified and compressed for export to the country's key trading partners.

Green hydrogen is also a critical enabler for future manufacturing of green metals and other products the world needs as the transformation to net zero by 2050 gathers pace.

The government is helping to unlock clean industry growth through the A$2-billion for Hydrogen Headstart, providing revenue support for large-scale renewable hydrogen projects through competitive hydrogen production contracts. These will help bridge the commercial gap for early projects and put Australia on course for up to a gigawatt of electrolyser capacity by 2030 through two to three flagship projects.

A further A$38.2-million in funding will be provided for a Guarantee of Origin scheme, which will certify renewable energy and track and verify emissions from clean energy products, in particular hydrogen. This is critical funding to ensure Australia is seen as an attractive investment destination, to accelerate investment in an Australian hydrogen industry and to support access to future markets for verified renewable and clean products.

Furthermore, A$2-million will go to establish a fund to support First Nations people and businesses to engage with hydrogen project proponents, planning processes and programme design.

Importantly, the government will also provide A$5.6-million to support further work on the best ways to leverage Australia’s competitive strengths in renewable energy, critical minerals and highly skilled workforce to accelerate its other clean industrial and manufacturing capabilities, with further actions to be identified by the end of 2023.

“These commitments build on over half a billion dollars of investment by the Albanese government in regional hydrogen hubs, which will drive investments in this new industry across regions including Gladstone, the Hunter, Bell Bay and the Pilbara.

“Developing Australia’s hydrogen industry will help ensure Australia remains a reliable energy partner to our key regional trading partners through the energy transformation,” Bowen said.

“This investment will build critical domestic experience and expertise, and help Australia connect to global supply chains to take advantage of the immense jobs and investment potential of green hydrogen.

“These commitments will build on Australia’s established hydrogen strengths and ensure the regions that have always powered Australia are well positioned in the global race for clean energy investment and jobs, securing Australia’s future as a renewable energy superpower.”

Arena said in a statement that the funding provided for the Hydrogen Headstart initiative would provide revenue support for investment in renewable hydrogen production through competitive production contracts. Funding will cover the commercial gap between the cost of hydrogen production from renewables and its current market price.

“Hydrogen Headstart will catalyse Australia’s hydrogen industry and other clean energy industries, and help position Australia as a global hydrogen leader,” Arena CEO Darren Miller said.

Miller said the Hydrogen Headstart initiative would ensure large-scale hydrogen projects already in development can get off the ground in Australia.

“Australia has an unparalleled opportunity to become a global green hydrogen leader, but we can’t afford to lose our momentum as other competing countries step up their ambitions and support,” he said.

“With this funding, we are looking to incentivise green hydrogen production in Australia by backing early projects that will be among the largest in the world.

“This funding will reduce the cost of green hydrogen produced via renewable electricity and will scale up our hydrogen sector. These projects will create thousands of regional jobs and will help reduce emissions in industry in line with our climate targets,” Miller said.

The Australian Petroleum Production & Exploration Association (Appea) concurred, with CEO Samantha McCulloch saying low-carbon hydrogen had a critical role to play in reaching net zero, in particular in hard-to-abate industries and manufacturing.

“The oil and gas sector is pivotal in scaling up and rolling out low-carbon hydrogen in Australia and globally, with natural gas combined with carbon capture representing the most developed and lowest cost pathway to low-carbon hydrogen available today.”

The Clean Energy Council has welcomed the Budget announcements, saying the A$2-billion in production incentives for renewable hydrogen would leverage many billions in private investment and would be a boon for Australian jobs.

“This is a substantial down-payment on Australia’s response to the United States' Inflation Reduction Act, ensuring Australia remains in the race to become a global clean energy superpower,” the Council said in a statement.

“The Clean Energy Council has advocated for work to begin on a Clean Energy Superpower Masterplan, and the federal government has listened,” said Clean Energy Council CEO Kane Thornton. 

“For the first time in years, we have a federal government that listens to industry and deeply understands what is required, taking commendable action since coming to power and in this Budget.

“When clean energy wins, families, communities and businesses win. This is good news for industry, but also for all Australians.”

Iron-ore major and green energy developer Fortescue has also welcomed the Budget, saying the Hydrogen Headstart demonstrated how seriously the government was taking the green hydrogen industry and its critical role in Australia’s future.

“This is a great first step. We look forward to working with the government on the broader response over the rest of this year which will catalyse the whole industry in Australia. Fortescue has the green hydrogen projects in the pipeline ready to go to help drive the Australian industry forward. Green energy will create significant economic growth and prosperity for Australia in the years ahead,” the company said in a statement.

“Green hydrogen will lower emissions, create greater energy security for Australia and create new jobs. It is an important part of the decarbonisation of the Australian economy. Over the years ahead the hydrogen industry in Australia will create tens of thousands of jobs according to independent modelling from Deloitte.”

Edited by Creamer Media Reporter

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