Australia Unveils $2 Billion Hydrogen Headstart Program to Boost Renewable Energy Industry

The Australian Government has unveiled a new $2 billion Hydrogen Headstart program as part of its 2023-24 Federal Budget, aimed at scaling up the development of Australia’s renewable hydrogen industry and capitalising on the country’s competitive advantages.

The program aims to provide revenue support for large-scale renewable hydrogen projects through competitive hydrogen production contracts.

The contracts, designed to bridge commercial gaps, will pave the way for up to a gigawatt of electrolyser capacity by 2030, through two to three flagship projects. Additionally, the program will support First Nations communities to engage with proponents and planning processes through a $2 million program.

The Hydrogen Headstart program also includes $38.2 million for the creation of a Guarantee of Origin (GO) scheme, which will certify renewable energy and track and verify emissions from clean energy products. This low-cost enabling measure is essential for the international trade of hydrogen and will help new projects secure finance. It will also improve the effectiveness of other Commonwealth efforts to scale up renewables and the hydrogen industry.

The GO scheme will commence with hydrogen and will be extended to other products over time. It will offer transparency to end users in Australia and overseas by providing information about the carbon emissions of the products they are buying.

Furthermore, the budget funding includes $5.6 million to analyse the implications of intensifying global competition for clean energy industries on Australia. This will help identify actions before the end of 2023 to catalyse clean energy industries, ensure Australian manufacturing competitiveness, and attract capital investment. The ultimate goal is to fully capitalise on Australia’s potential as a renewable energy superpower.

The commitments outlined in the Hydrogen Headstart program are designed to build on Australia’s established hydrogen strengths and ensure the regions that have always powered Australia are well-positioned for clean energy investment and jobs.

Potential Impact

The Hydrogen Headstart program is expected to have a significant impact on Australia’s renewable hydrogen industry. By providing revenue support for large-scale renewable hydrogen projects, the program will encourage investment and development in this area. This, in turn, will create jobs and boost economic growth, particularly in regional areas.

The Guarantee of Origin scheme will also play a crucial role in facilitating the international trade of hydrogen and other clean energy products, further strengthening Australia’s position in the global market.

Moreover, the Hydrogen Headstart program’s commitment to supporting First Nations communities to engage with proponents and planning processes is a significant step forward in ensuring the equitable distribution of benefits from renewable energy development.

Challenges

One potential challenge of the Hydrogen Headstart program is the need for significant investment in infrastructure. Large-scale renewable hydrogen projects require extensive infrastructure, such as electrolysis plants and transportation and storage facilities, which can be expensive to develop and maintain.

Additionally, the success of the program is dependent on securing private investment in renewable hydrogen projects. While revenue support through competitive hydrogen production contracts will encourage investment, it may not be sufficient on its own. The government will need to work closely with the private sector to ensure the viability of renewable hydrogen projects.

Flat-footed on green hydrogen

Andrew Forrest, who owns Fortescue Futures Industry (FFI), says the funding rise will show the world that Australia is no longer “flat-footed” on green hydrogen. Mr. Forrest’s FFI subsidiary has aggressively courted governments worldwide, including the Biden administration, to unlock hydrogen’s industrial fuel potential. The magnate thinks he can abolish the fossil fuel business.

The Australian government’s green hydrogen promise advances climate change efforts. Green hydrogen, generated from wind, water, or solar energy, can replace fossil fuels in many industrial operations. It powers automobiles, trucks, ships, and generators.

The green hydrogen industry faces hurdles. Green hydrogen costs more than fossil fuels. Subsidies will be needed to offset the higher production costs of green hydrogen until the business grows. Building infrastructure to transport and store green hydrogen will require enormous investment.

Despite these hurdles, the Australian government’s commitment to green hydrogen is a major step toward combating climate change and ensuring a sustainable future. The green hydrogen industry might alter the energy sector and create a cleaner, more sustainable future with greater investment and innovative technologies.

Energy Minister rules out “blue hydrogen” in Labor’s hydrogen scheme

Energy Minister Chris Bowen says Labor’s $2 billion hydrogen headstart scheme will not fund “blue” energy from fossil fuels and carbon capture technology. Bowen said the headstart scheme would offer a “substantial down payment” to keep Australia’s green hydrogen industry “in the game”. Labor introduced its hydrogen plan in Tuesday’s budget amid rising concerns over US incentives, which have sparked a global “subsidy arms race”. Bowen said the government wasn’t ready to announce an economy-wide industry policy intervention like Joe Biden’s Inflation Reduction Act.

“Until the IRA came along and put a bit of a spanner in the works,” Bowen said, the Australian government was “quite well advanced” in green hydrogen development. Joe Biden’s Inflation Reduction Act (IRA) gives $US85 every tonne of emissions caught and permanently stored. Industry sources believe that a comparable Australian climate manufacturing package would cost $50 billion.

Bowen said his idea did not include “blue hydrogen” like the US scheme. Carbon capture reduces the carbon footprint of “blue hydrogen” from fossil fuels like natural gas. Due to its carbon burden, “blue hydrogen” is just a transitional fuel. Bowen’s statements suggest that Labor’s hydrogen strategy will rely solely on “green hydrogen,” which is created using renewable energy, mostly solar and wind power, and emits no carbon.

Hydrogen fuel’s ability to minimize carbon emissions and combat climate change has made it popular. Hydrogen replaces fossil fuels in transportation, heating, and industry, reducing greenhouse gas emissions. The Australian government wants to dominate the world in hydrogen production and export it by 2030. The hydrogen sector will generate billions of dollars and tens of thousands of jobs in Australia.

Australia’s hydrogen sector development faces various obstacles. Hydrogen production utilizing renewable energy sources is expensive, and the sector may struggle without a home market. Hydrogen transport, storage, and distribution infrastructure is lacking, which could limit the industry’s potential.

In conclusion, Energy Minister Chris Bowen stated that Labor’s hydrogen scheme will only fund “green hydrogen” and not fossil fuels or carbon capture technology. Australia’s economic growth and greenhouse gas reduction depend on a hydrogen sector. The industry has substantial obstacles, including the high cost of manufacturing hydrogen utilizing renewable energy sources and the lack of infrastructure needed for large-scale production. However, the hydrogen business offers Australia a chance to lead renewable energy production, create jobs, and mitigate climate change.