Greens call on state to end fossil fuel subsidies amid green hydrogen uncertainty

The South Australian Greens want the SA Labor government to ditch handouts for fossil fuel industry projects associated with hydrogen production and fund batteries for households and small businesses ahead of Thursday’s state budget.

Robert Sims, SA Greens MLC, described state government spending on projects that benefitted fossil fuel producers as “wasteful and reckless”, adding that “taxpayers should not subsidise the climate crisis”.

“Climate change is hurting our economy,” Sims said. “The Algae bloom crisis and the drought in SA have shown the impact that burning fossil fuels has on our economy and environment.”

“Scrapping fossil fuel subsidies is the responsible budget choice for SA.”

A research report published by The Australia Institute (TAI) examined last year’s state budget and found $98m was being provided by the state government to projects associated with fossil fuel producers.

“South Australia provided $37 million in assistance to fossil fuel industries in 2024–25, with longer-term commitments worth $98 million,” its report said. “The most significant spending relates to Port Bonython, a facility used by Santos that is in the vicinity of proposed hydrogen production and export projects.”

This sum includes a $77m jetty upgrade at Port Bonython, the site of a gas and diesel import hub. Santos leases the jetty which it uses to export LPG, crude oil and naphtha.

Work on the upgrade is expected to be completed in 2026, with the state government having already invested $16m, but the project has suffered from delays and cost overruns.

The report identified another $20.76m to support the Port Bonython Hydrogen Hub near Santos’ facility and as part of the state government’s broader plan to build a renewable energy export sector around the production of hydrogen.

As hydrogen can be produced from renewable energy, gas or coal, state support for creating the industry could be considered a subsidy to fossil fuel producers like Santos, particularly where the hydrogen is made using gas – commonly referred to as “blue hydrogen”.

TAI noted that the general focus of South Australia’s hydrogen plan was on renewable energy, but statements from the state government appeared to suggest the hub would play a role in the production and coordination of blue hydrogen exports.

Details about the direction of South Australia’s hydrogen push remain unclear and there are doubts about whether the state government can maintain the scale of its previous ambition. The Department for Mines and Energy was contacted for clarification but did not respond.

Earlier this year, the state government disbanded the Office of Hydrogen Power following the cancellation of what would have been a world-first green hydrogen power plant and large hydrogen electrolyser facility at Whyalla.

The funds previously earmarked for the hydrogen hub and other projects have since been redirected to support the Whyalla steelworks. In March, local news website, InDaily, reported that eight of 15 hydrogen projects previously promoted by the state government had been quietly “archived”.

The situation highlights the tensions in South Australia, a state which boasts the highest penetration of renewable energy in the country – projected to reach 85% by 2026 – and where Santos is headquartered.

Federal Greens senator Barbara Pocock said that with the state budget to be released on Thursday, the moment offered a chance for South Australia to end all fossil fuel subsidies.

“Bringing back an improved solar battery subsidy would make a real difference to household budgets and small businesses by cutting power bills. People could save thousands in the cost of living crisis,” she said.

“Labor is already doing this federally, this is an opportunity for the State Government to come to the party and plug the gaps with a policy to help low-and-middle income earners.”

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