Renewable hydrogen: Superpower, or green mask for fossil super villains?

My children are aged three and four. They love anything with super powers – Spiderman, vampires, Paw Patrol, everything. 

As a parent, I’m always careful to remind them that super powers are fun for pretending, but they are not real. 

Unfortunately, it’s hard to teach this to kids when federal government ministers say things like “green hydrogen is at the heart of our vision for Australia as a…renewable energy superpower.” 

SOCK! POW! KAZAAM!

As much as kids and ministers might like to play green hydrogen superpowers they should not be used when crossing the road or formulating tax and energy policy.

Which brings us to the federal government’s Hydrogen Production Tax Incentive, which was open for consultation until last Friday.

This program will see the Government subsidise eligible hydrogen production by $2 per kilogram. Budget documents (p68) give an estimated cost of “$6.7 billion over ten years from 2024–25 (and an average of $1.1 billion per year from 2034–35 to 2040–41).”

Dividing these annual costs by the $2/kg subsidy gives an estimate of the quantity of green hydrogen that the federal government thinks will be produced. On average, the government is budgeting for 335,000 tonnes per year to 2033-34, and then a slight increase to 550,000 tonnes per year.

The problem is that Australia currently uses 500,000 tonnes of hydrogen each year for industrial processes, mainly for making mining explosives and fertilisers – uses that are unlikely to decline.

Green hydrogen should go first to decarbonising these existing uses, given that they have the demand, equipment and experience to use it. Everyone says this is what’s going to happen, from the Institute for Energy Economics and Financial Analysis to the Minerals Council of Australia. 

So if Australia produces and uses 500,000 tonnes of green hydrogen each year, it doesn’t take a super-genius to work out that there isn’t much left over. There is no hydrogen to export to Japan. There is none for a boom in green metals, or vast hydrogen bus fleets, or anything else.

So what would green hydrogen production look like in a renewable superpower Australia? While there is no clear definition, the government could aim for 30% of global production, similar to Australia’s share of global iron ore (38%) and bauxite (28%) production.

Under the International Energy Agency’s Net Zero Emissions scenario, global hydrogen production from low-emissions electricity will reach 51 million tonnes in 2030 and 116 million tonnes in 2035.

This means a superpowered Australia would aim for 15 million tonnes in 2030 and 35 million tonnes of hydrogen in 2035. It also means the cost of the hydrogen subsidy would blow out to $30 billion and $70 billion in those years, rather than the $1 billion or so included in the Commonwealth Budget.

To be clear, either the Commonwealth government needs to revise the cost of hydrogen subsidies by tens of billions each year, or its claims of wanting to become a green hydrogen superpower are just greenwash.

Spoiler alert – it’s the latter. Hydrogen projects are not being used to generate Australian super powers, but as a mild-mannered disguise for the super villains – fossil fuel exporters. 

It’s not even a very good disguise. Minister Madeline King’s Forward in the Government’s Future Gas Strategy says it straight up: 

“Australia is and will remain a reliable and trusted trade and investment partner, including for liquified natural gas (LNG). Our trade partners … are relying on Australian [fossil] gas to transition their economies to net zero.

“Australia is broadening and deepening our existing energy partnerships into emerging industries like critical minerals, hydrogen, carbon capture and storage, and other clean energy exports.”

The hydrogen subsidy costings show that this is nonsense. Hydrogen is being used to greenwash and prolong fossil fuel use, just like carbon capture and storage (CCS) and “other clean energy exports,” whatever they might be.

This will come as no surprise to many who have watched hydrogen policy over the years, and watched it fail time and time again. 

Knowing that hydrogen exports, CCS, etc aren’t real doesn’t seem to diminish ministers’ enthusiasm for them, just as knowing super powers aren’t real doesn’t to stop children from watching cartoons.

And while children grow up, it seems Australian energy and resource ministers never do.

Rod Campbell is research director at The Australia Institute