Australia to shift investment to clean energies like hydrogen from O&G and coal

Australia shows that renewable energies are outpacing fossil fuels, but not by much. The Office of the Chief Economist at the federal Department of Industry, Science, and Resources estimates that Australian resource and energy projects are worth A$702 billion ($471 billion).

Hydrogen projects contributed A$266 billion in potential investment, the most. The annual report on significant resource projects claimed new energy metals and minerals may generate A$42 billion in investment.

In 2022, proposed hydrogen and new energy projects will reach A$308 billion, up A$100 billion from 2021. Australia’s iron ore, LNG, and coal exports continue to draw investment. Western Australia, which supplies most super-chilled fuel, has A$127.2 billion in oil and gas projects.

Thermal and coking coal projects reach A$79.6 billion, while iron ore projects are up to A$76 billion. Australia is the world’s largest supplier of iron ore and coking coal, which are used to create steel, and second in thermal coal behind Indonesia.

Copper and gold, of which Australia is the world’s largest net exporter, have investment plans of up to A$9.7 billion and A$13.5 billion, respectively. The government report concludes that new energies are most promising, but with a major proviso.

The government categorizes investment plans into publicly stated, feasibility, committed, and completed throughout the year in review. Most hydrogen initiatives are in the publicly stated and feasibility stages, which implies they are several years from a final investment decision, if they proceed that far.

One A$100 million hydrogen project is committed, and one A$500 million project was completed in the year to Oct. 31. Five A$2.4 billion oil and gas projects were completed in the period under review, while 46 billion were committed. Oil and gas statistics would have been finished before the current disagreement between the industry and the federal government, which last week passed legislation to cap domestic natural gas and thermal coal prices.

Even though the price cap of A$12 a gigajoule is greater than the domestic market price before Russia’s invasion of Ukraine in February, which sent international LNG prices soaring, the sector was furious. The industry has threatened to freeze investment in gas projects in Australia’s populous eastern states, but most new investment is going to LNG projects in Western Australia. Three A$2.5 billion initiatives and seven A$7.6 billion coal projects were committed by Oct. 31.

The figures demonstrate that oil, gas, and coal are where the money is now being spent, but that over time, investment will shift toward renewable and clean energies like hydrogen and metals like lithium and nickel. The pipeline of hydrogen projects depends on state and federal policies, purchasing agreements with domestic and international buyers, and investors’ desire to participate in a new industry.