The Australian government’s plan to invest $15 billion in the local green hydrogen sector marks a significant step towards transitioning to cleaner energy sources.
This move aims to position Australia as a leading global producer and exporter of green hydrogen. However, the Institute for Energy Economics and Financial Analysis (IEEFA) suggests prioritizing local ammonia production as a foundational step for developing the green hydrogen industry.
IEEFA Australia CEO Amandine Denis-Ryan argues that Australia’s established ammonia industry is well-positioned to capitalize on the new funding measures. Ammonia, primarily used as fertilizer, is produced through a process that could be adapted to green hydrogen production. Transitioning to green ammonia, which is made from green hydrogen, could serve as a bridge, enabling the development of necessary infrastructure and expertise.
IEEFA’s emphasis on ammonia production is driven by economic and strategic considerations. The organization suggests that the new funding measures could bridge the cost premium for green hydrogen, making the transition to green ammonia economically viable. This approach could also stimulate the local market, reduce emissions, and provide a robust platform for the emerging green hydrogen industry.
Moreover, IEEFA guest contributor Cameron Butler points out that introducing progressive requirements for green explosives uptake by miners could further support the green hydrogen sector. This strategy would minimize financial impact and foster early project developments with government backing.
The projection that green ammonia production costs could reach parity with grey ammonia by 2030 in regions with existing ammonia plants is promising. This potential cost reduction underscores the importance of continued funding and support for green ammonia initiatives. The establishment of a large-scale green ammonia plant, such as the proposed project in Kwinana, could be pivotal for Australia’s energy transition.
However, it’s essential to critically evaluate these developments against industry benchmarks. While the government’s commitment to green hydrogen is commendable, the effectiveness of these initiatives will ultimately depend on addressing the associated challenges, including production costs, environmental impact, and the development of a robust supply chain.
