UK: Queensland's Hydrogen Laws Under Review

Queensland's hydrogen industry is developing rapidly. The demand for hydrogen produced from renewable energy sources has garnered interest from local and global markets, and Queensland is seeking to position itself at the forefront of hydrogen production.

According to the government, there are over 50 hydrogen projects currently underway across Queensland –from pilots of hydrogen powered trucks to the development of large-scale projects. Under the Queensland Energy and Jobs Plan, around 3GW of gas generation capacity will be needed to provide dispatchable power to the SuperGrid to meet electricity demand during peak times.

Against this setting, the Department of Energy and Climate has undertaken a review of the existing regulatory framework for hydrogen development. The resulting consultation paper identifies some of the challenges faced by hydrogen proponents and presents options for legislative reform to remove the barriers and support the development of a hydrogen industry in Queensland.

The consultation paper,  An effective regulatory framework for Queensland's hydrogen industry,  has been released for comment. The Department is inviting industry and broader community feedback on the consultation paper until 1 March 2024.

The hydrogen project approvals matrix

Under the existing policy settings, hydrogen energy proponents must navigate a complex patchwork of local, state and federal laws to establish hydrogen projects in Queensland. Planning approvals are required to construct hydrogen facilities, pipeline licences are required to transport hydrogen, and special permissions are required to consume and generate electricity.

The Department has identified that the complexity around obtaining approvals has the potential to delay project delivery and put investment at risk. As a result, the government is looking at several options for legislative reform.

Planning reform

Hydrogen developments are regulated by the Planning Act 2016  (Qld). Proponents generally need a development approval to construct hydrogen storage and conversion facilities and electrolysers. The assessment manager for the development will depend on the type of development application involved, but hydrogen facilities are usually classified as a hazardous chemical facility. The State Assessment and Referral Agency is the assessment manager for most hazardous chemical facilities.

Large projects may be declared a coordinated project under the State Development and Public Works Organisation Act 1971  (Qld) (SDPWO Act). Coordinated projects can offer an alternative for proponents who are seeking a whole-of-government assessment for complex or significant projects. The Coordinator-General is also responsible for assessing development in State Development Areas, where declared.

Local governments also have a role to play in hydrogen project planning approvals, either as referral agencies or as assessment managers for smaller projects. The planning rules applicable to hydrogen development will depend on the location, nature and scale of the development.

The government is looking at two potential options for reform:

1. Maintain the status quo, but provide updated guidance materials to support industry and local governments to navigate the approvals process; or
2. Establish a threshold for hydrogen projects to be assessed by the state.

The policy intent behind Option 2 is to provide for greater clarity on when projects will be assessed by the State. While this already happens to some degree (i.e., facilities that store 5 tonnes or more of hydrogen are captured by the hazardous chemical facility trigger), the consultation paper proposes that projects over a certain electrical load could also trigger state assessment.

As part of the hydrogen threshold, the government has flagged the development of a state code for hydrogen developments to promote consistency in assessment (as is the case for wind farms).

Environment

Hydrogen developments require an environmental authority (EA) under the Environmental Protection Act 1994  (Qld). Commonwealth environmental approval under the Environment Protection and Biodiversity Conservation Act 1999  (Cth) may also be required if the project is likely to impact Matters of National Environmental Significance.

Proponents can apply for an EA under the development application or apply for a stand-alone EA for environmentally relevant activities (ERA) through the Department of Environment, Science and Innovation.

Coordinated projects under the SDPWO Act require an environmental impact statement before an environmental authority will be given.

The Department has not put forward any specific proposals to reform the processes for obtaining environmental approvals for hydrogen development, but is seeking feedback on whether improvements to the current framework are needed, and whether the existing ERA framework adequately covers the risks associated with the development and production of hydrogen.

Renewable energy inputs

The Department has flagged that the energy demands associated with the scaling up hydrogen development could impact the availability of renewable energy for households and other energy users, which may undermine the achievement of renewable energy targets and decarbonisation.

The consultation paper proposes three options for dealing with the energy demands of hydrogen developments:

1. Maintaining the status quo;
2. Require hydrogen proponents to demonstrate that they have considered and planned for their energy needs and obtain a hydrogen generation licence; or
3. Leverage the proposed Renewable Energy Zones and establish hydrogen-specific REZs to connect hydrogen facilities to renewable energy sources.

The Department is asking proponents for feedback on these options and the barriers to scaling-up hydrogen development, and whether an approvals or licensing regime is an effective way to preserve domestic renewable energy supply.

Community benefits

The Department notes that early engagement with communities and First Nations Peoples will be essential for proponents seeking to secure social licence for the development of a hydrogen industry. Recognising that not all development projects trigger a requirement to undertake a social impact assessment, the government is looking at ways to ensure community benefits are assessed in the planning process. Extending the Strong Sustainable Resource Communities Act 2017  (Qld) to hydrogen projects over a certain threshold or tying community impacts criteria to hydrogen generation licences (should that option proceed) are among the options under consideration.

Other areas of potential reform

The consultation paper identifies several other critical issues to hydrogen development which it canvasses in detail, including issues pertaining to safety, water use, and hydrogen storage. More information on what is under consideration can be found in the  consultation paper.

Next steps

The Queensland Government is inviting feedback on the consultation paper until 1 March 2024. To have your say or to register for the upcoming information session visit the Queensland Department of Energy and Climate's consultation page.

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