Australia’s future is becoming increasingly entwined with the promise of hydrogen as a renewable energy source. However, as this fledgling industry begins to take flight, taxpayers are asked to bear the burden of long-term tax breaks without a clear timeline for the sector to become self-sustainable.
Jo Evans, the deputy secretary at the Department of Climate Change, Energy, the Environment and Water, acknowledged this uncertainty during a federal inquiry, “We don’t know at what point they’ll be able to make a profit.” Nevertheless, she highlighted that the aim isn’t to create an industry perpetually reliant on subsidies, but rather to reduce costs and ensure viability in the long run.
According to Peter Mayfield, CSIRO’s executive director, the path to lowering production costs lies in achieving more affordable electricity and improving the efficiency of electrolyzers, the core technology in low-emission hydrogen production. The scientific community is also investigating concentrated solar power or solar thermal, as a potential source of high temperatures necessary for industrial processes.
While Australia is entering a race already featuring strong competition from the United States and Europe, its recent budget earmarked $2 billion for green hydrogen production, free from constraints on whether it’s intended for domestic use or export. The Hydrogen Headstart program, set to support two or three flagship projects requiring up to 1000 megawatts of electrolyzer capacity by 2030, positions Australia as an early bird in this alternative fuel space.
The program aims to bridge the gap between the production cost of alternative fuel and the price the market is willing to pay. Importantly, officials have confirmed that the focus remains on green hydrogen and its derivatives such as ammonia, despite voices advocating for gas-derived hydrogen.
As global heavy industries strive to decarbonize, partnerships have been forged with Japan, South Korea, Singapore, Germany, India, and the United States. Sam Lowe, the project director, highlighted the potential for a domestic market for hydrogen use in industrial processes and transportation, embracing a “use it where you make it” approach.
While plans for the plants are still on paper, once operational, they will receive taxpayer-funded production credits. These payments, set to span a decade from 2026/27 to 2036/37, indicate a significant investment in the sector’s future.
The department also confirmed ongoing efforts for hydrogen production from other sources, such as blue hydrogen derived from gas and brown hydrogen from coal. This will involve a certificate of origin verifying the fuel source, emissions intensity, and production methods.
State governments are also backing the emerging industry, supporting all types of hydrogen – green, blue, and brown – through network concessions and streamlined approvals.
In conclusion, Australia is making strategic strides in embracing hydrogen as part of its energy landscape. However, with the costs currently borne by taxpayers, the challenge lies in balancing financial burdens with the urgent need for renewable energy solutions.
