Federal Labor targets renewable hydrogen with $1bn energy policy play

The federal Labor opposition has unveiled a $1 billion dollar plan to “supercharge” Australia’s renewable-based hydrogen industry, firing a first shot in what is bound to be a fierce energy policy battle in the lead up to this year’s federal election.

The policy, called the National Hydrogen Plan would allocate $1 billion of funding from the Clean Energy Finance Corporation to support clean hydrogen development, as part of Labor’s commitment to double the CEFC’s capital by $10 billion.

It would also build on extensive work being led by the Australian Renewable Energy Agency, by adding up to $90 million of unallocated ARENA funding to further research, demonstration and pre-commercial deployment of hydrogen technologies.

The policy would also establish a $10 million ARENA funding round for hydrogen refuelling infrastructure, again using ARENA’s unallocated funding; and use $40 million of funding from the CEFC Clean Energy Innovation Fund to target technologies and businesses that have passed the research and development stage.

“Hydrogen gas is an energy source that can be produced through the process of electrolysis using renewable energy, meaning it can leverage Australia’s world-class renewable energy to make much cleaner hydrogen competitively,” a joint statement from Labor lead Bill Shorten and various cabinet ministers said.

“Developing a hydrogen industry will deliver new opportunities for manufacturing, transport and electricity generation.”

The Plan sets the ball rolling for Labor on energy in 2019, after a strong finish to 2018, which included promises to part subsidise 100,000 household batteries, and to use the CEFC to run reverse auctions to procure low carbon energy to meet its 50 per cent renewable target.

It comes in a week where the federal Coalition has renewed its push to add new “baseload” power generation to the national grid – and its support for proposals for new coal-fired power plants – at a time of record breaking renewable energy investment and installation.

Labor’s backing of green hydrogen follows the publication of two major reports last year – one from ANREA and another from a group led by chief scientist Alan Finkel – highlighting the enormous opportunities for Australia in pursuing “green” hydrogen exports, based around the country’s enormous potential for wind and solar power.

As Giles Parkinson reported here in August, both those reports focused on big-picture goals, such as replacing Australia’s massive LNG export business with “green gas”, and satisfying the emerging huge demand in east Asia in particular for emissions free fuels.

The ARENA report, prepared by consultants ACIL Allen – the same outfit that had to do the NEG modelling based on the sorry inputs of the Energy Security Board – highlighted that this was a long-term play, but with enormous potential, including $10 billion in exports over 20 years, and 16,000 new blue-collar jobs, mainly in regional areas.

Labor’s hydrogen plan would also aim to deliver regulatory changes for hydrogen use, including the establishment of a ‘Guarantee of Origin’ scheme to certify carbon neutral hydrogen.

And it wouls seek to have the AEMC (Australian Energy Market Commission) examine rule changes to allow for compensation for grid firming by electrolysers, pursuing international export agreements on hydrogen, and work with states on regulations for hydrogen vehicles.

It would also put $3 million towards the establishment of a National Hydrogen Innovation Hub in Gladstone, the regional Queensland coal hub and port town that is rapidly transforming into a centre for cutting edge renewable energy development.

In an interview with ABC Radio’s Fran Kelly on Tuesday morning, shadow energy minister Mark Butler added some detail to the hydrogen plan, noting that extensive research from the CSIRO had forecast that by 2025 at the latest, hydrogen electrolysis technology would be “very cost competitive”.

“Around the world, using renewable energy to power this in a clean way is seen as the future, the way of the future,” he said.

“This really dovetails very neatly into Labor’s focus on making Australia a renewable energy powerhouse for the future because, for example, Japan, which is leading this, has said by 2030 any hydrogen sourced from around the world must be zero emissions.”

As noted above, the Labor policy comes just one day ahead of industry submissions to the Morrison government, in response to its plan to underwrite new “dispatchable” generation, potentially including new so-called “high efficiency, low emissions” (HELE) coal plants in Victoria and NSW.

Does Butler think these HELE plants are worth backing?

“They would provide very expensive power to the system. They would provide relatively high levels of pollution, particularly if it is using brown coal from Victoria. It would be completely inconsistent with our climate change commitments and it would require billions and billions of support from taxpayers,” he told ABC RN’s Kelly.

But would Labor – if it was elected – uphold a contract entered into before the election?

“Labor has a long standing position, as any responsible party of government should have, to respect any contracts that are in place at the time of taking government,” he told Kelly.

“But it is hard to see how a government could responsibly enter into contracts over such a short period of time involving such an extraordinary use of taxpayers’ money.

“Our position on this is pretty clear; I’ve indicated this over a matter of months. I can’t see how the government could possibly propose to finalise contracts on this matter when there is a questionable legislative basis – just to take one point – a questionable legislative basis for those contracts and instead start to put the brakes on this and get a focus back on the real potential in the future, and that is renewable energy.”

But Labor’s focus was questioned by environmental NGO Greenpeace Australia on Tuesday, which said that while it welcomed the party’s commitment to making Australia a renewable hydrogen exporter, it should not lose sight of its energy policy priorities.

“It makes sense for the sunniest state of this sunburnt country to export liquid sunshine,” Greenpeace spokesperson Nicky Ison said in a statement.

“It’s good to see the ALP’s looking to the future while the Coalition’s energy policies remain stuck in the past.

“Replacing dirty fossil fuels with hydrogen is a key step in Australia’s energy transition but any future Australian government must prioritise making the hydrogen boom clean,” Ison said.

“This needs to go hand in hand with a rapid acceleration in clean energy investment, including upgrading the grid to handle all the rooftop solar and electricity from new large scale renewable projects coming online.”

Ison also called on the ALP to return the $1 billion of funding that had been cut from ARENA’s budget since it was set up, so ARENA could “continue to drive research, development and commercialisation of new clean energy technologies which in turn present huge economic opportunities for Australia.”