Australia renews H2 leadership aim with fresh strategy

Australia’s green hydrogen pipeline is “alive and healthy,” the country’s energy minister, Chris Bowen, reiterated as he launched Australia’s new national hydrogen strategy.

An updated version of the strategy, initially released in 2019, was launched earlier this month during the Asia-Pacific Hydrogen Summit 2024 in Brisbane.

“Australia, and the world have changed a lot when it comes to green hydrogen, and the strategy was in pretty desperate need of a refresh,” Bowen told the summit. The minister added that the new national hydrogen strategy “is a critical step in providing a framework for the long-term certainty needed to support industry to make Australia a global hydrogen leader.”

The strategy sets out a green hydrogen production target of 15 million tonnes per year by 2050, with a “stretch potential” of 30m t/y by mid-century. The progress for this target will be tracked through five yearly milestones, starting with 0.5 to 1.5m t/y by 2030. It has also set a “base export target” of 200,000 t/y of green hydrogen by 2030, with a stretch potential of 1.2m t/y.

“In a few short years, the world has committed to monumental investments in hydrogen through national plans designed to take advantage of the global shift to net zero,” Bowen added. “We weren’t going to leave Australia’s green hydrogen potential to drift behind in this environment.”

AUSTRALIA’S BASE AND STRETCH PRODUCTION MILESTONES

The document seen by Kallanish outlines four objectives, supported by 34 “actions.” The four objectives are: supply; demand and decarbonisation; community benefit; and trade, investment and partnerships.

Under supply, Australia aims to produce “sufficient volumes of hydrogen at a price that will attract demand from domestic and international buyers.” With renewable energy being the biggest cost component of hydrogen, the country plans to reduce the cost of renewables.

Actions to support this objective include previously announced initiatives such as the hydrogen production tax incentive, which will provide AUD 2/kilogram in production support to green hydrogen producers. Meanwhile, the government will provide up to AUD 2 billion in revenue support to large-scale renewable hydrogen production projects through the Hydrogen Headstart program. The government is now finalising winners of the program’s first round after shortlisting six projects.

The strategy also aims to streamline and prioritise approval processes. “Other actions targeted at hubs and infrastructure, workforce, supply chains and innovation will also reduce project costs and enable the industry to grow,” the document notes.

While hydrogen has many applications, the strategy focuses on “use-cases that are currently most prospective” under the demand and decarbonisation objective. These demand sectors include green metals (iron and alumina); ammonia; long-haul transport (heavy road, aviation, and shipping); and power generation and grid support.

“These use-cases align with priority industries in the Future Made in Australia agenda and will create new jobs and opportunities for our country,” the strategy reads.

Under the third objective, the strategy aims to ensure community benefits, with the hydrogen industry expected to provide jobs and economic benefits to Australia. The sector can also help “diversify regional economies affected by the global energy transition,” it says.

Finally, the strategy stresses the importance of establishing trade and international partnerships, and exporting green hydrogen from Australia.

“The key to realising significant economic benefit from our hydrogen industry will be establishing large-scale and enduring trade relationships,” the document says.

As such, during the strategy’s launch, the government also announced an AUD 660m green hydrogen funding agreement with Germany. The “historic deal” is expected to guarantee European buyers for Australia’s green hydrogen producers. Under the deal, the nations will commit €200m ($222.5m) each to hold a bilateral H2Global auction. Set up by the German government, the H2Global scheme enables the purchase of hydrogen and its derivatives at competitive global prices, before selling it to the highest bidders in Germany or the EU.

“Australia aspires to be Germany’s indispensable partner when it comes to green hydrogen,” adds the Australian energy minister.

The strategy also presents potential opportunities for collaboration with other countries such as Oman. According to the non-profit organisation Australian Business Group Oman (ABGO), the strategy opens up “exciting opportunities” for collaboration between the two countries in the hydrogen sector.

“Australia is seen by many countries as a leader in renewables and green hydrogen,” notes Mac Thomson, chair of ABGO. “This updated strategy positions Australia well to attract further international interest.”

Early this year, for instance, IDO Investments, the venture capital arm of Oman Investment Authority (OIA), invested in Australian electrolyser company Hysata, as part of a $111.3 million Series B funding round.

The strategy was welcomed by the hydrogen industry, with the Australian Hydrogen Council praising the government for matching the strategy with “strong investment” through new bilateral agreements.

“Over the past two days, we have heard from hydrogen developers about the barriers to progressing hydrogen projects in Australia, and one challenge is demand,” says the council ceo Fiona Simon. “Participation in the H2Global scheme formally secures a place for Australian producers to be part of the EU’s targets for import of clean molecules.”

Anna Freeman, the policy director for decarbonisation at the Clean Energy Council, comments: “Renewable hydrogen is key to unlocking new industrial growth opportunities for Australia across a range of sectors, from green metals through to clean fuel production, all of which will be critical solutions in the global race to net zero emissions.”

Praising the strategy’s release, Zero Carbon Hydrogen Australia (ZCHA) called it a “clear roadmap” for decarbonising existing and new industries. Joanna Kay, general manager of ZCHA, says it will be “critical” to make Australia a “global hydrogen powerhouse.”

“This will unlock more of the country’s world-class hydrogen potential and pave the way for new, large-scale clean energy exports,” Kay adds.

Meanwhile, green hydrogen project developer InterContinental Energy (ICE) calls both the strategy and the bilateral agreement with Germany a “pivotal moment” for the hydrogen industry. “This initiative will not only bolster commercial supply but also enhance access to the European market through guaranteed offtake agreements,” it adds.

The fresh strategy comes as Australian miner Fortescue announced in July it would scale back its green hydrogen focus as part of its measure to maximise value for shareholders. It also announced 700 job cuts.

Similarly, in late August, Province Resources shelved plans for a 550,000-tonne-per-year HyEnergy green hydrogen project in Western Australia, blaming the regional government for the lack of support.

Despite the industrial backstep, Bowen defends his government’s support and interest in hydrogen development.

“In recent months, some commentators and some politicians have declared Australia’s green hydrogen industry dead,” the minister said. “In fact, they’ve celebrated in it. Gloated about any delay any setback. This says more about them and their climate inactivism than it does about Australia’s green hydrogen pipeline.”

“With any big economic change, there’s going to be some delays, some changes to expectations, some projects which ultimately don’t proceed,” he told the summit.

At present, the announced pipeline of hydrogen projects in the country is valued at over AUD 200 billion, with more than 50 companies on the ground. A quarter of the over 100 projects are currently under construction or operational, the government claims.

“The transformation is a once-in-a-generation opportunity we can’t afford to miss – an industry that could generate almost AUD 30 billion per year and over 30,000 jobs,” Bowen concludes. “Today is a good day for Australia’s energy future, and it’s a good day for Australia’s export future.”