Federal Labor has set out a plan for Australia to produce at least 15 millions tonnes of renewable hydrogen a year by 2050, and at least 0.5 million tonnes a year by 2030, as part of a new national strategy published on Friday.
The 2024 National Hydrogen Strategy provides a framework to establish Australia as a world leader in the production and export of the green fuel, underpinned by the estimated $8 billion in funds allocated in this year’s federal budget.
Federal energy minister Chris Bowen says the comprehensive formal review and update of the Alan Finkel-designed 2019 National Hydrogen Strategy was put together in collaboration with industry and state and territory governments.
The 2024 plan identifies four objectives, supported by 34 actions to underpin delivery of Australia’s hydrogen industry at scale, and – unlike the 2019 version, which then energy minister Angus Taylor described as “technology neutral,” leaving the door open for coal – has solid green foundations.
These foundations are largely set by the terms of the $2 per kilogram Hydrogen Production Tax Incentive, which forms the basis of government support to the sector out to 2040 by providing time-limited, demand-driven production support to eligible producers of “renewable hydrogen.”
They are also backed by the introduction on Thursday of bill for the federal Guarantee of Origin scheme, an internationally aligned scheme to measure and verify the emissions intensity of the hydrogen Australia produces.
But the colour of Australia’s hydrogen ambitions are also communicated throughout the new strategy, which frames the opportunity as one built on cheap wind and solar and driven by the global race to decarbonise and minimise the fallout from climate change.
“In a few short years, the world has committed to monumental investments in hydrogen through national plans designed to take advantage of the global shift to net zero,” Bowen said in a speech delivered to the APAC Hydrogen Summit in Brisbane on Friday morning.
“We’re seeing it with the US Inflation Reduction Act, the European Green Deal, the Made in Canada Plan, the Make In India policy and many more.
“We weren’t going to leave Australia’s green hydrogen potential to drift behind in this environment,” Bowen said.
“Industry called for long term production incentives. So we’ve put in place about $8 billion over the next decade for exactly that.
“We expect this to unlock at least $50 billion in private investment. We anticipate it will help sustain 10 to 20 large projects – both export and for domestic manufacturing.
“And collectively this could support at least 5GW of electrolyser capacity by 2030, producing over 1 million tonnes of hydrogen annually.”
The four objectives of the 2024 national strategy start with settling up a globally competitive green hydrogen production industry in Australia, a goal that is underpinned by a target to produce at least 15 million tonnes of hydrogen a year, with a stretch potential of 30 million tonnes annually, by 2050.
This progress towards this long-term target will be tracked against five-yearly milestones, the first being set for 0.5 million tonnes of production a year by 2030, with a stretch potential milestone of producing 1.5 million tonnes a year.
Objectives two and three deal with identifying and supporting the most prospective hydrogen demand sectors and, on the social licence side, ensuring communities are aware of and realise the benefits of producing the green fuel.
The final objective focuses on the establishment of trade at scale and the leveraging of purposeful partnerships.
“Our renewable resources alone will not be enough with other countries also possessing solar and wind resources moving to compete for global hydrogen opportunities,” a summary of the strategy says.
“The key to realising significant economic benefit from our hydrogen industry will be establishing large-scale and enduring trade relationships. In parallel, strategic international engagement will help ensure Australia remains competitive in the next phase of global market development.”
To this end, Bowen has also announced a deal to collaborate with Germany to guarantee European buyers for Australia’s renewable hydrogen producers.
Bowen and German State Secretary for climate Anja Hajduk on Friday signed a Joint Declaration of Intent to negotiate the $660 million deal, equally funded by the governments of both countries, that will form part of the German Government’s H2Global auction mechanism.
On exports, the strategy says Australia will work towards a base export target of 0.2 million tonnes of renewable hydrogen per year with a stretch potential of 1.2 million tonnes per year. It says setting an early export target provides a strong signal of Australia’s intention to continue supplying energy to the global market.
Key to Australia’s ability to compete, of course, will be the costs. On this subject, the government says analysis conducted for the preparation of the 2024 Strategy indicates hydrogen production costs will fall substantially over the coming decades, from their current range of $A5-10/kg (equivalent to around $US3-7/kg).
“As more projects come online, lower production costs will be driven by falling costs for the major elements of the hydrogen cost stack, namely renewable energy and electrolysers,” the strategy says.
“By 2050, renewable energy costs are expected to fall by 40-60%, while electrolyser costs could fall by 88-94%.
“These expectations accord with other analyses which indicate hydrogen production costs at the ‘farmgate’ are projected to fall below $US2/kg by 2050 in many locations, positioning Australian projects among global leaders,” the strategy says.
“Green hydrogen, and the industries it can support, will help grow our national income, and add to our prosperity, not threaten it,” Bowen said in his speech on Friday morning.
“The transformation is a once-in-a-generation opportunity we can’t afford to miss – an industry that could generate almost $30 billion per year and over 30,000 jobs.
“That’s before we consider the jobs and national income in downstream industries – like green steel and green chemicals.
“We can, and will, solidify our place as a key trading partner for global friends, making the most of the advantages Australia has as the world shifts to its net zero future.”
