Is Australia gearing up to help the industry thrive?

In order to boost the economy and drive hydrogen forward in Australia, significant investments need to be made. At this stage, taking advantage of government support is decisive as to whether many projects are viable.

In Australia, development finance facilities such as the Australian Renewable Energy Agency (ARENA), Clean Energy Finance Corporation (CEFC), the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and the Northern Australia Infrastructure Fund can provide support for hydrogen-related investments and are available to both Australian and non-Australian developers.

In pursuit of its key objective to drive the cost of producing one kilogram of green hydrogen below $2, as of April 2020, ARENA has provided more than $55 million in funding to pre-commercial renewable hydrogen projects and has announced its $70 million funding round for electrolyser projects, with the aim of awarding funds before the end of 2020[6] . In addition, CEFC's Advancing Hydrogen Fund was launched on 4 May 2020, making available up to $300 million in concessional finance to promote the Australian Hydrogen Industry. The Federal Government is making a concerted effort to restimulate the domestic economy and encourage private investment in a number of sectors – including in new hydrogen technologies. State-based governments in Australia also have a number of different funds available for hydrogen-based projects to support aggressive expansion policies, in addition to the debt financing set above. Investors can proceed with more certainty as Australia pushes towards the development of an innovative and competitive hydrogen industry.

ARENA has provided more than $55 million in funding to pre-commercial renewable hydrogen projects and has announced its $70 million funding round for electrolyser projects, with the aim of awarding funds before the end of 2020.

How can we strategically position Australia to be a major developer and exporter of hydrogen?

The strategy is now set for Australia to be a major player in the hydrogen industry by 2030. It opens up doors for new market entrants, empowers companies to diversify their offerings and fosters growth in the industry overall. However, there remain a number of challenges to the development of hydrogen infrastructure and projects in Australia:

1. Regulatory changes

Different policies and priorities currently apply depending on the state in which a project is intended to be developed. As the main application of hydrogen in Australia shifts from use in the gas pipeline network, use as peaking energy storage and use in industrial process to support hydrogen fuel cells in vehicles, a number of regulatory changes will need to be implemented. Identifying and addressing these challenges will be critical to ensure that projects are successful.

2. Developing a nationally consistent approach

Each of the Australian governments has committed to develop (as far as practicable) a nationally consistent approach to regulatory models supporting the hydrogen industry. Several state and territory governments have also established cross-government 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. Despite the challenges, Australian governments have set universally ambitious targets. Currently, the WA Government has targeted a renewable hydrogen export project by 2022, and the New South Wales Government has set an aspirational target of up to 10% hydrogen in the gas network by 2030[7]. 

3. Creating global advantage

An important part of Australia's strategy in ensuring international competition is the development of a universal approach to guarantees of origin, leveraging our natural advantage in the production of renewable energy. Although global jurisdictions currently use a wide variety of certification schemes, if a global standard emerges, the competitiveness of commercial facilities exporting hydrogen will depend on meeting the criteria of guarantees of origin to ensure that revenue for such hydrogen can be maximised. In addition to guarantees of origin, suitable export infrastructure will be important for the viability of such projects. In March 2019, Queensland delivered to Japan its first export of green hydrogen. This was extracted from water and produced at the solar-cell facility as a result of a collaboration between the Queensland University of Technology and the University of Tokyo, although more developed infrastructure will be required for commercial export. Australia is putting a significant amount of investment into ensuring we are ready to scale up our hydrogen production. The best way forward is to have a unified approach, consistent across the states, so that we can move from a conceptual hydrogen industry to a thriving one.

There is clear and considerable will, both commercially and politically, for hydrogen to play a key role in both Australia's future and Australian-Japanese relations. Those in touch with the emerging commercial and legal hydrogen landscape will be at forefront in capturing the opportunities available. Positioning for that future starts now.