Federal budget channels $2 billion to green hydrogen fuel

The Albanese Government’s “Hydrogen Headstart” program has received cautious support from industry and academic experts.

The Australian government has diverted $2 billion towards developing hydrogen fuel and outlined part of its plan in the budget.

The Hydrogen Headstart program aims to fund large-scale green hydrogen projects. Green hydrogen is hydrogen made by electrolysis with renewable energy, a zero-emissions process.

The aim of the program, according to a statement by Treasurer Jim Chalmers, is have two or three flagship projects producing a gigawatt of electrolyser capacity by 2030.

Fortescue Future Industries, which says it has green hydrogen projects in the pipeline “ready to go,” says it’s looking forward to working with the government on the broader response over the rest of this year “which will catalyse the whole industry in Australia.”

The government has also slated $38.2 million for a guarantee of origin scheme, which will help to certify that energy products, particularly hydrogen, have come from renewable resources, and $2 million to support First Nations people and businesses to be involved with hydrogen projects.

Professor Francois Aguey-Zinsou, a chemist at the University of Sydney and director of the Australian Association for Hydrogen Energy, tells Cosmos that the program should have been preceded by a hydrogen strategy (the 2019 National Hydrogen Strategy is under review by the current government).

“Australia has a high level of ambition, which is great to see. But if you don’t have a plan to execute, and understand the priorities and how it’s going to be implemented, that’s very difficult,” says Aguey-Zinsou.

“Australia is a smaller economy, although there is a lot of money around, you need to prioritise and understand where are going to be your strategic priorities to return value for the Australian people.”

Green hydrogen is currently too expensive to be competitive with other energy sources, and the infrastructure to produce and transport it at scale does not yet exist.

“There are mature technologies already existing,” says Aguery-Zinsou.

“The problem is that those technologies have never been deployed at scale, so it’s expensive. This is why many governments are subsidising to try to fix that.”

Compared to subsidies being offered in the US and Asia, Aguey-Zinsou says that “$2 billion is not going to go very far, but it’s better than nothing”.

Professor Peter Newman, a researcher in sustainability at Curtin University in WA, says that, along with other green energy projects in the budget, the Hydrogen Headstart recognises that “the major heavy lifting for the next economy will come from the private sector and that government needs to be an enabler”.

“These indicate to me a much more mature kind of leadership that I don’t remember in previous governments of any persuasion, and help me feel as though the almost impossible climate goals may just be within reach,” says Newman.

Aguey-Zinsou, conversely, says that the funding may not be sufficient to attract private companies.

“For a company, there is nothing special about producing hydrogen in Australia. Everybody can produce hydrogen across the planet, as long as you have access to the technology,” he says.

“So the only differentiator is where it’s going to be the cheapest to do that.”