You are using an outdated browser. Please upgrade your browser to improve your experience.
Welcome to the Knowledge Portal. You can browse, search or filter our publications, seminars and webinars, multimedia and collections of curated content from across our global network. Create an account and set your email alert preferences to receive the content relevant to you and your business, at your chosen frequency.
Explore our latest insights to keep abreast of key legal developments.
Keep up to speed on legal themes and developments through our curated collections of key content.
How would you like your page printed?
In Australia, hydrogen is viewed as having a use case for transportation, heat and industry, as well as for export.13 While hydrogen has, in Australia, historically served mainly as an input into various industrial processes, both federal and state governments have committed to expand the use of hydrogen to transportation and heat (among several other applications), including through a $300 million commitment from the Clean Energy Finance Corporation's 'Advancing Hydrogen Fund'14 and a $250 million commitment from the Australian Renewable Energy Agency's 'Future Fuels Fund'.15
In 2018, the CSIRO published the National Hydrogen Roadmap (the "Roadmap"), which analysed the economic opportunities associated with hydrogen and assesses how these opportunities can be realised in Australia.16 The Roadmap identifies hydrogen as having applicability and value in the areas of transport, remote area power systems, industrial feedstocks, for export, electricity generation, producing heat and synthetic fuels.17
While we note that export is not a use case as such, it is worth noting that Australia does consider the potential for hydrogen to become a major export as a significant motivator in developing its hydrogen capabilities.27 To this end, Australia has developed ties with Japan, Singapore, South Korea, the Netherlands and Germany to investigate international supply chain potential. 28
While Australia can leverage off of its experience as a major LNG exporter, the success of any large-scale export industry is largely dependent on the availability of technologies (such as storage and long-haul transport) and achieving a competitive production price.29
The Australian Government has indicated that it is technology neutral when it comes to hydrogen production. Australia's former Chief Scientist Dr Alan Finkel (who chaired the working group which developed Australia's National Hydrogen Strategy) has argued that it would be irresponsible not to investigate alternate fuel sources for hydrogen, as multiple sources would provide valuable diversification and opportunities for scale.30 There is significant support for blue hydrogen amongst certain key industry players, as it allows existing producers in Australia's well-developed oil and gas industry to leverage off their existing natural gas reserves. For example, Woodside and Santos are both focused on blue hydrogen developments with the former considering a $1 billion project for the production of hydrogen at scale in Western Australia.32 Further, there are a number of existing coal projects which are looking for opportunities to use their resources in a different way.33 The Australian Government's key aim has been to achieve "H2 under $2" (per kg) – this is the price where hydrogen is expected to become competitive with alternatives in large-scale deployment across Australian energy systems.34 Reducing the cost of renewable electricity, improved electrolyser design and construction and implementing efficient and flexible operational designs are some of the key strategies the Australian Government is pursuing to achieve this aim. 35
Various government funds and initiatives have been created to incentivise the development of hydrogen projects in Australia.41 For example, at the national level, there is the Clean Energy Finance Corporation's $300m Advancing Hydrogen Fund42 and a $250m Future Fuels Fund from the Australia Renewable Energy Agency.43 In April 2021, the Federal Government announced that the 2021-22 budget would include funding to accelerate the development of clean hydrogen hubs in regional Australia with further funding for regional hydrogen programs being included in the 2022-23 budget, bringing the Australian Government's planned investment in hydrogen hubs to $525 million.44 Accordingly, it is the taxpayer who pays to incentivise entrants into this industry.
State governments have also committed to supporting the development of the hydrogen industry by way of financial support, for example, up to $3 billion will be provided under New South Wales' Hydrogen Strategy, in the form of waiving government charges, providing exemptions on network charges, direct capital investments and other incentive programs.45
While this state and federal funding has resulted in the feasibility of a number of research and pilot programmes required for large-scale hydrogen production, it has been suggested that such financial support needs to be extended to encourage technological development and support existing pilot programmes transition to large-scale commercialisation.46 To stimulate the market, investors consider that government demand-side support in the form of CfDs and other offtake instruments that absorb price differences may provide more value as it would provide cashflow certainty. Cashflow certainty would also assist in securing external financing and broader private sector investment which is crucial to the success of the industry.
The current regulatory landscape does not explicitly accommodate the creation of a hydrogen market in Australia.49 While some existing legislative frameworks are likely to apply to the hydrogen industry, it is probable that further regulatory reform will be required to specifically target the needs of large-scale hydrogen production.50
A report commissioned by the Department of Industry, Innovation and Science identified 730 pieces of legislation and regulations, and a further 119 standards, that may be relevant to the development of an Australian hydrogen industry. These pieces of legislation principally relate to aspects addressing the safety, development and upscaling, environmental impacts and infrastructure needs (including transport and pipelines) of the hydrogen industry.51 A separate review would need to be undertaken to consider whether changes would be required to address hydrogen production, transport to market, use as fuel, use in gas networks, safety, project approvals, environmental protection. and economic effects on industry. The Federal Government included $2.4m in the 2021-22 budget to support hydrogen related legal reforms,52 and in 2022, Australian Energy Ministers agreed to extend the national gas regulatory framework to hydrogen, biomethane and other renewable gases.53
A further regulatory challenge facing the hydrogen industry is the inconsistent application of different policies and priorities across the states. In order to achieve relative uniformity among jurisdictions, the various state and territory governments committed to developing a nationally consistent approach to regulatory models applicable to the hydrogen industry. However, this has not been what has occurred to date.
We are now seeing some states propose hydrogen specific legislation (for example, South Australia), and New South Wales has introduced its own incentive mechanisms. Further, certain states have expressed clearer preferences for green, rather than blue, hydrogen projects (for example, Tasmania and the ACT). There have, however, been some key themes for reform across the states. For example, most states have developed Renewable Energy Zones (REZs) or strategic development precincts for renewable hydrogen production. Several state and territory governments have also established cross-government agency working groups to develop competency in, and awareness of, hydrogen across government, including identifying and addressing regulatory gaps and providing advice on compliance with existing requirements.54
Our integrated alliance with Allens enables us to work closely together for the benefit of clients around the world. While the two firms are independent, we have complementary practices that enable us to provide a fully integrated service to clients.
Now is the time to look for future global opportunities. Japan and Australia have begun initial collaborations, but we see significant potential in building this relationship and fostering a new wave of growth for both the Australian and Japanese markets.
Find out more
Linklaters user? Sign In
Information collected as part of the registration process will be used to set up and manage your account and record your contact preferences.
Further details about how we collect and use your personal data on the Knowledge Portal, including information on your rights, are set out in our Global Privacy Notice and Cookie Notice.
If you were registered to the previous version of our Knowledge Portal, you will need to re-register to access our content.