SYDNEY (Reuters) – Australia’s new plans to boost investment in renewable hydrogen production could be a catalyst for more clean energy projects, industry leaders and experts said, as the country races to cut carbon emissions and grow alternative power resources.
Prime Minister Anthony Albanese’s Labor government announced a A$2 billion ($1.4 billion) “Hydrogen Headstart” programme in its budget on Tuesday with the aim of accelerating the production and export of the fuel.
The investment would be used to provide revenue support for large-scale renewable hydrogen projects through competitive production contracts.
“Competitive hydrogen production contracts are a much-needed market mechanism to provide revenue support for flagship projects, and will help get more and more large hydrogen projects off the ground so we can scale up to gigawatt scale capacity as soon as possible,” Fiona Simon, CEO of the Australian Hydrogen Council, said in a statement.
Australia has been looking to build hydrogen production to cut its dependence on fossil fuels for energy and help meet the needs of its trading partners looking to cut emissions, but faces tough competition from the United States, Europe and the Middle East.
The new measures are a small effort to lure back investors who have flocked to the United States where President Joe Biden’s Inflation Reduction Act is offering tax credits for low-carbon hydrogen projects and cheap loans for renewable projects.
Energy minister Chris Bowen told parliament on Wednesday the investment was limited to green hydrogen, which is produced from renewable resources.
He said a potential A$300 billion pipeline of Australian green hydrogen projects had been at risk “because of policies internationally like the inflation reduction act.”
Fortescue Future Industries (FFI), the energy unit of the world’s fourth largest iron ore maker Fortescue Metals Group, called the budget announcement “a great first step”.
FFI is expanding production of green hydrogen and has announced dozens of early stage agreements with governments across the globe over the past few years.
“Green hydrogen will lower emissions, create greater energy security for Australia and create new jobs,” FFI said in a statement.
($1 = 1.4743 Australian dollars)
(Reporting by Praveen Menon and Lewis Jackson; Editing by Sam Holmes)
