How Australia is accelerating investment in hydrogen
Hailed as the 'hero' fuel by Australia's Chief Scientist Dr Alan Finkel1, hydrogen offers Australia a low-emissions, clean and storable energy solution for our future domestic energy needs. Hydrogen also presents a major export opportunity, as nearby countries like Japan, South Korea and Singapore intend to rely on imported hydrogen to decarbonise their economies.
The Federal Government is making a concerted effort to restimulate the domestic economy and encourage private investment in a number of sectors – including in new hydrogen technologies. The long-term goal is to create a competitive and leading hydrogen industry, with the Government setting an economic 'stretch' goal of 'H2 under 2' (ie hydrogen production under $2 per kilogram).
By 2050, it is anticipated that a hydrogen industry could create around 7,600 new jobs and billions of dollars in economic growth.2 To achieve these ambitions and position Australia as a global hydrogen player, the initiatives below have recently been put in place at the federal level. With strong policy and financial support by the Federal Government, not to mention a suite of funding and policy initiatives at a state and territory level across Australia, investors can proceed with more certainty as Australia pushes towards the development of an innovative and competitive hydrogen industry.
May 2021: Federal Budget funding to accelerate development of hydrogen hubs and CCUS
The 2021-22 Federal Budget includes $1.2b to be invested in a Technology Co-Investment Facility for low emission technology projects over the next decade. Of this $1.2b, $275.5m will support the development of four additional regional hydrogen hubs in key export regions such as the Latrobe Valley, Pilbara, the Hunter Valley and Gladstone, and implementation of a clean hydrogen certification scheme. Another $263.7m will be put towards advancing the development of carbon capture use and storage technologies.
Separately, the Budget also includes $24.9m to support the development of gas generation infrastructure which is hydrogen-ready.
The Government will seek expressions of interest from the private sector and state governments once the Budget legislation has been passed.
May 2021: ARENA invests $103.3m in three projects developing 10 MW electrolysers
Part of ARENA's Renewable Hydrogen Deployment Round, the three successful recipients (out of a shortlisted seven projects) are each commercial-scale renewable hydrogen projects involving electrolysers that will be amongst some of the largest built in the world so far:
- $28.7m towards a 10MW electrolyser for gas blending at ATCO's Clean Energy Innovation Park in Warradarge, Western Australia;
- $42.5m towards ENGIE's 10MW electrolyser project to produce renewable hydrogen in partnership with Yara Pilbara Fertilisers at the existing ammonia facility in Karratha, Western Australia; and
- $32.1m towards Australian Gas Networks' proposed 10MW electrolyser for gas blending at AGIG's Murray Valley Hydrogen Park in Wodonga, Victoria.
It is expected that these projects will play an important role in supporting the Government's goal to achieve 'H2 under $2'. Construction of the projects is expected to commence in 2022.
September 2020: Hydrogen identified as a priority technology for investment in Australia's Technology Investment Roadmap
As part of the Technology Investment Roadmap, the Government released its first Low Emissions Technology Statement (the LETS) in September 2020. This follows the release of the Technology Investment Roadmap discussion paper in May 2020, which confirmed the Government's commitment to working towards the 'H2 under 2' goal of producing hydrogen at below $2 a kilogram (the point at which large-scale deployment of hydrogen will be considered competitive with alternative fuels in our economy).
The LETS reaffirmed clean hydrogen as one of five priority low emissions technologies. The LETS identifies growth opportunities to stimulate domestic demand and reach the 'H2 under 2' goal, in turn enabling the industry to scale up for international export. ARENA will receive an additional $1.6b for investments in priority technologies such as clean hydrogen.3
For more information on the Technology Investment Roadmap Discussion Paper and ARENA and CEFC funding, read our Insight on the paper and its impact on public funding.
May 2020: To 'support the growth of a clean, innovative, safe and competitive Australian hydrogen industry4, CEFC launches a $300m Advancing Hydrogen Fund
The CEFC will prioritise projects that:
- promote the objectives of Australia's National Hydrogen Strategy;
- focus on hydrogen production, the development of export and domestic hydrogen supply chains (including export infrastructure);
- the establishment of hydrogen hubs and other projects that will help promote domestic hydrogen demand; and
- are included in the ARENA Renewable Hydrogen Deployment Funding Round.
The CEFC's funds will be given to eligible larger-scale commercial projects which require typically more than $10m or more of CEFC capital, which may also be financed in partnership with other co-financiers or equity partners. The CEFC has announced it will prioritise projects selected by ARENA under the Renewable Hydrogen Deployment Funding Round, which will be announced by mid-2021.
April 2020: To accelerate hydrogen electrolyser technology in Australia, ARENA releases a $70m Renewable Hydrogen Deployment Funding Round
ARENA launched a funding round to fund projects that:
- are aligned with Australia's National Hydrogen Strategy;
- involve feasibility studies into the development of 100+ MW electrolysers; and/or
- involve commercial-scale deployment of 10+ MW electrolyser technologies to drive the commercialisation of key electrolyser component technologies, which in turn will reduce the costs of producing green hydrogen.
November 2019: Australia releases its National Hydrogen Strategy to position the country as a major global player in the hydrogen industry by 20305.
The strategy developed by the hydrogen working group of the COAG Energy Council led by Dr Alan Finkel, identified 57 nationally coordinated government actions to be taken by the Federal Government, states and territories, with support from the private sector and research community. These actions focus on supporting the research and development of hydrogen production technologies, developing a responsive regulatory framework, encouraging international engagement and ensuring community confidence.
The strategy articulates 15 measures of success to track the nation's progress, which include6:
- Australia being in the top three hydrogen exporters to Asian markets;
- Australia holding an excellent hydrogen-related safety track record;
- hydrogen providing economic benefits and jobs to Australians; and
- Australia having a robust, internationally accepted certification scheme in place.
The strategy recognises that a key element to realising these goals will be to create 'hydrogen hubs', where hydrogen infrastructure development will be concentrated and economies of scale can be realised.
Other initiatives which are still at an early stage, but are worth watching:
- In June 2021, the Department of Industry, Science, Energy and Resources launched a consultation process on a proposed Guarantee of Origin Scheme for hydrogen to measure and track emissions from hydrogen production. The discussion paper provides that this will be imperative to facilitating international trade and ensuring Australia is positioned as a major player in the hydrogen export market. Submissions close on 30 July 2021.
- In May 2021, the Department of Industry, Science, Energy and Resources released proposed amendments to the National Greenhouse and Energy Reporting (NGER) legislation, which are intended to commence on 1 July 2021. The amendments provide explicit guidance for hydrogen producers on methods of calculating greenhouse gas emissions to meet their annual reporting obligations. Guidance for hydrogen facilities involved in carbon capture and storage is also provided.
- In August 2020 the Government introduced the Clean Energy Finance Corporation Amendment (Grid Reliability Fund) Bill 2020 which would establish a $1b fund to underwrite clean energy projects that provide reliable and affordable electricity. As of June 2021, passage of the legislation has been on hold.
- In June 2020, the Government tasked the Hydrogen Project Team with undertaking a review of the changes required to the regulatory framework to facilitate the development of a hydrogen industry, with input from Standards Australia and Safework Australia. Particular areas of focus are technical safety standards, production and transportation, integration into gas networks and regulatory approvals for hydrogen projects.
Dr Alan Finkel's address to the National Press Club in Canberra on 12 February 2020.
Australia's National Hydrogen Strategy, page 17.
ARENA, 'ARENA welcomes new funding' (17 September 2020) <https://arena.gov.au/news/arena-welcomes-new-funding/>
Section 14(5) of the Clean Energy Finance Corporation Investment Mandate Direction 2020.
Australia's National Hydrogen Strategy, 71.
Australia's National Hydrogen Strategy, pages 70-72.