Recent Hydrogen Policy Developments: "Energising" Australia's Position In The Hydrogen Economy

In recent months Commonwealth and State Governments have announced a number of funding and policy developments dedicated to "energising" Australia's position in the global hydrogen economy.
Australia Energy and Natural Resources
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In recent months Commonwealth and State Governments have announced a number of funding and policy developments dedicated to "energising" Australia's position in the global hydrogen economy. Of significance is the Clean Energy Finance Corporation's (CEFC) $300 million Advancing Hydrogen Fund, one of the largest commitments made to the hydrogen sector by any government in the world, which is aimed at building investor confidence in the Australian hydrogen industry. Those wanting to participate in the hydrogen market should be aware of the regulatory framework and closely observe the regulatory reform likely to take place as the Australian hydrogen industry starts to take shape. 

1. The CEFC's Advancing Hydrogen Fund 

On 4 May 2020, the Australian Government launched a $300 million Advancing Hydrogen Fund. The Government has mandated the CEFC to provide debt and/or equity finance to support hydrogen-powered projects that align with the National Hydrogen Strategy (see below), including projects which have State or Territory Government financial support.

CEFC Chief Executive Officer Ian Learmonth has noted: "CEFC finance remains central to filling market gaps, whether driven by technology, development or commercial challenges. We are confident we can use our capital to help build investor confidence in the emerging hydrogen sector, which is an exciting extension of our investment focus." 

1.1  Grant Funded Projects

As an early priority, the CEFC intends to invest in projects included in the Australian Renewable Energy Agency's (ARENA's) $70 million Renewable Hydrogen Deployment Funding Round (ARENA's Round). ARENA's Round will support the development of two large-scale renewable hydrogen projects.  To qualify for funding:

  • the projects must include an electrolyser to produce hydrogen with a minimum capacity of 5MW; and
  •  the hydrogen production must be powered by either on-site renewable generation, retirement of Renewable Energy Certificates or power contracted from renewable power purchase agreements.

Expressions of Interest for the funding round closed on 26 May 2020. ARENA is targeting a final announcement on the award of funding by 30 November 2020.

While subsequent project investments have not yet been detailed, the CEFC has indicated that projects seeking finance must be large-scale commercial projects, generally requiring at least $10 million in finance, combined with additional private sector funding.  In considering future investment proposals the CEFC will prioritise projects that focus on one or more of the following:

  • advancing hydrogen production projects;
    • developing export and domestic hydrogen supply chains, including hydrogen industry infrastructure;
    • establishing hydrogen hubs; or
    • assisting in building domestic demand for hydrogen.

2. Snapshot of funding – State by State

The following State based government funding and investment initiatives are also currently underway:

  • The Queensland Government has established a $15 million industry development fund to support hydrogen projects in Queensland.
    • Earlier this year, through its $10 million Renewable Hydrogen Fund the Western Australian Government invested $1.68 million across seven renewable hydrogen feasibility studies. This funding aligns with the Western Australian Government's Renewable Hydrogen Strategy, which was established in July last year to accelerate the advancement of the State's renewable hydrogen industry.
  • As part of a comprehensive $50 million package of support measures to 'kick start' the renewable hydrogen industry, the Tasmanian Government has allocated $20 million to the Tasmanian Renewable Hydrogen Fund.
  •  In March this year, the New South Wales Government announced that it will be allocating $15 million from its Regional Community Energy Fund across seven new energy projects, including the State's first hydrogen energy storage system.
  •  In a combined effort, the Victorian and Commonwealth Governments have allocated $150 million to supporting a world-first $500 million project to produce hydrogen in Victoria and export it to Japan. Also worthy of noting, the Victorian Hydrogen Investment Program released its Victorian Green Hydrogen Discussion Paper in November last year, which will assist the Victorian Government in developing a Victorian Green Hydrogen Industry Development Plan.
  • The South Australian Government has committed over $1 million as part of its Hydrogen Action Plan towards identifying locations for renewable hydrogen production and export infrastructure, and has allocated $4.9 million through its $150 Renewable Technology Fund towards the Australian Gas Network's demonstration project, 'Hydrogen Park South Australia'.

3. Related National Policy Developments

Other hydrogen related national policy developments that have taken place in recent years include the National Hydrogen Roadmap and Technology Investment Roadmap and the National Hydrogen Strategy.

3.1 National Hydrogen Roadmap

On 23 August 2018, the Commonwealth Scientific and Industrial Research Organisation, in consultation with industry and government, launched the National Hydrogen Roadmap (Hydrogen Roadmap). The Hydrogen Roadmap set out a plan for the development of the Australian hydrogen production and export industry, and identifies hydrogen's potential applications and the commercial viability of key component technologies.

3.2 Technology Investment Roadmap

On 21 May 2020, the Federal Government unveiled its Technology Investment Roadmap Discussion Paper (Technology Roadmap) outlining Australia's energy priorities.  According to the Technology Roadmap, the Australian Government will continue to invest in renewable projects and low emissions technologies that will decrease Australia's carbon emissions. This roadmap reinforces the Australian Government's previously announced goal of producing hydrogen at a competitive price (below $2 per kilogram), with the medium-term seeing an expansion of the domestic hydrogen industry and the long term, the development of an export industry, leveraging off Australia's expertise and infrastructure to develop strong supply chains in the global low emissions economy.

3.3 Australia's National Hydrogen Strategy

At the 22nd Energy Council meeting held on 22 November 2019, the Council of Australian Government's Energy Group endorsed the National Hydrogen Strategy (Hydrogen Strategy).  The Hydrogen Strategy reflects the Australian Government's policy shift from investment in hydrogen related projects (with over $146 million invested between 2015 and 2019), towards developing the regulatory and economic framework to make Australia a major global player in the global hydrogen industry by 2030.  It is estimated in the Hydrogen Strategy that, by 2050, the Australian hydrogen industry could generate approximately 7,600 jobs and add up to $11 billion a year in additional Gross Domestic Product.

4. Key Take-Aways

The significant financial and policy commitments by State and Federal Governments to 'energise' the Australian hydrogen industry have the potential to deliver the following developments:

  • accelerating the deployment of large-scale electrolyser and renewable energy hydrogen technologies, giving rise to reduced technology costs, improvements to supply chain and industry expertise, increased offtake opportunities, and environmental sustainability;

  • providing financial support to project proponents as they strive to accelerate hydrogen developments;

  • informing investment amongst various stakeholders including industry, government and research so that the hydrogen industry can continue to progress in a coordinated manner; and 

  • contributing to Australia's economic prosperity by creating well-paid jobs, particularly in regional areas.  

Those wanting to enter the hydrogen market should be aware of the regulatory framework and closely observe the regulatory reform likely to take place as the Australian hydrogen industry starts to take shape.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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