Orica, a company that provides explosives, blasting systems, and other services to mining, quarrying, and construction firms globally, is planning to speed up two green hydrogen projects in Australia.
The announcement came after the Albanese government allocated $2 billion to bolster the nascent green hydrogen industry. The government revealed its “hydrogen headstart” program in the federal budget on Tuesday, which aims to give credits for each kilogram of green hydrogen produced.
Green hydrogen is produced by splitting water into hydrogen and oxygen using a renewable energy-powered electrolyser. It is viewed as a viable substitute for carbon-emitting fossil fuels in heavy transportation, heating, and power generation, as well as a range of other manufacturing processes. To decarbonize energy-intensive industries and accomplish the key objectives of the Biden administration’s massive $584 billion Inflation Reduction Act in the US, governments and businesses worldwide are scrambling to discover environmentally friendly hydrogen production techniques.
Orica intends to use green hydrogen as a feedstock to substitute natural gas in its manufacturing processes and sell the resulting carbon-light products to customers such as mining giants BHP and Rio Tinto, reducing their scope 3 climate emissions. The Hunter Valley hub is being examined for environmental impact, while the Gladstone project’s feasibility is under evaluation, but neither has received final investment clearance.
Sanjeev Gandhi, Orica’s CEO, expressed pleasure with the government’s recent interventions in the gas market to regulate energy prices, but stated that the company must renegotiate its long-term gas supply agreements in 2026 and that gas prices must stabilize before then. Despite the government’s hydrogen credits, there is still a significant difference between the cost of green hydrogen production and what the market can pay for it, Gandhi added. He believes that further support is required to close the gap, with the US leading the way by allocating $US350 billion ($516 billion) to help the hydrogen industry. In comparison, Australia’s initial allocation is $2 billion.
