GOT GAS: Albanese's funding for hydrogen? A mere trickle

The Albanese Government’s first budget has been taken apart extensively on the energy front with the rather predictable result of not pleasing… anyone.

While the investment into renewables was pretty much expected and somewhat welcome to green groups, they bemoaned the ongoing fossil fuel subsidies – including the diesel fuel excise exemption for the mining sector that’s worth up to $5bn.

Meanwhile, CO2CRC blasted the effective end of financial support for carbon capture utilisation and storage after the government ‘realigned’ investment in this area to hard-to-abate sectors such as cement manufacturing.

APPEA also expressed disappointment about the reduced support for CCS but welcomed continued funding for the Middle Arm Sustainable Development Precinct in the Northern Territory, which will focus on low emission hydrocarbons, green hydrogen, carbon capture storage and minerals processing.

What about hydrogen?

With the focus on renewable energy, you would think then that green hydrogen (or just hydrogen more broadly) could be a major beneficiary of the government’s largesse.

The budget sets aside $89.5m over six years towards the Hydrogen Highways Initiative that will help create hydrogen refuelling stations on Australia’s busiest freight routes and include $5.5m for the George Town green hydrogen heavy transport project.

Another $71.9m will go towards building a hydrogen hub in Townsville, which will take total planned investments in regional hydrogen hubs to over $525m.

It can also be argued that at least part of the funding for Middle Arm would also go towards hydrogen though exactly how much of the $1.5bn over seven years will be earmarked for the clean gas?

Is this enough? Maybe – if we were just looking at building up a domestic market to support the transportation sector and other areas where electrification simply isn’t an option, like green steel.

But if we are looking to achieve the Hydrogen Superpower scenario – the most optimistic of the five presented by the Australian Energy Market Operator under its 2022 Integrated System Plan – then the answer would be probably not.

That scenario, which calls for the rapid uptake of new technologies like green hydrogen and green steel as well as the policies to support them, will require a greater level of commitment from the Federal Government above and beyond the steps that the various states and industry are already taking.

It certainly will require more than the relatively miniscule amounts set aside in the Budget.

More needs doing

To give a little bit of an idea of what kind of numbers we should be talking, the Australian Hydrogen Council had noted in its Unlocking Australia’s Hydrogen Opportunity white paper last year that a Net Zero Fund with an initial allocation of $10bn and a top-up of $1bn each year to 2030 would be needed.

Even the Morrisson Government was planning to invest more than $1.2bn into the sector, though it should be clear that the previous government liked to use the term ‘Clean Hydrogen’ to hide that it was talking about hydrogen produced from gas or coal with emissions sequestered or utilised.

While the Hydrogen Council’s proposal undoubtedly comes with a healthy dose of self-interest, it is right that considerably more investment would be required from the Federal Government if we are going to see Australia be a first mover in hydrogen and develop it as an export commodity to replace natural gas.

With that said, it has to be pointed out that industry is moving ahead with its own plans.

This is highlighted by Fortescue’s plans to build a major 500MW electrolyser on Brisbane’s Gibson Island that will be capable of producing 70,000tpa of green hydrogen to help decarbonise existing ammonia production on the island.

Even Woodside is getting in on the act, though its plans still need to be taken with a healthy pinch of salt – looking at you H2Perth.