Australia earmarks $1.35bn to subsidise H2 production

The Australian government has set aside A$2bn ($1.35bn) of its 2023 federal budget to subsidise renewable hydrogen production.

The government will use the funding under what it calls the ‘Hydrogen Headstart’ programme to provide “revenue support for large-scale renewable hydrogen projects through competitive hydrogen production contracts.”

The funding is intended to help “bridge the commercial gap” between the cost of renewable hydrogen production and what buyers are willing to pay, the government said. It could support two to three “flagship projects” that could provide a combined 1GW of electrolyser capacity by 2030, it said.

Canberra will separately provide A$38.2mn to develop a guarantee of origin scheme to certify renewable energy, especially hydrogen. This will help establish a policy framework to attract investment in the hydrogen industry, the government said.

Industry participants such as the Australian Hydrogen Council have long called on the government to introduce operating support for projects, in order to keep up with efforts elsewhere. The US is planning to support clean hydrogen production with up to $3/kg, depending on lifecycle emissions, the EU wants to support projects through the European hydrogen bank, and Canada has announced investment tax credits for projects.

This has triggered concerns that Australia losing its edge in the sector. The government’s Department of climate change, energy, environment and Water (DCCEEW) said last month that the country is no longer a global policy leader, despite accounting for around 40pc of all clean hydrogen projects announced around the world.

In response to developments elsewhere, Canberra is planning to revise its national hydrogen strategy from 2019, and last week said it will set up a Net Zero Authority to oversee the transformation to cleaner energy use, especially in industrial processes.