Australia’s recent green hydrogen agreements with the US and India begs the ever persistent question of whether the time has indeed come for the clean energy source.

The agreement with the US is part of a broader Climate, Critical Minerals and Clean Energy Transformation Compact, which effectively allows Australian green businesses to benefit from subsidies and protections provided to US companies under the Inflation Reduction Act if it passes Congress.

Both countries will seek to accelerate the growth of green energy supply chains and the development of green hydrogen technologies.

Meanwhile, Australia and India have agreed on terms of reference for a Green Hydrogen Task Force that will promote cooperation on the production of green hydrogen.

And to add further weight, Minister for Energy and Climate Chris Bowen noted that there is huge potential for export of the gas, noting that besides India, Germany had also expressed interest in buying Australian green hydrogen while there are already existing arrangements in place with Japan.

Plenty of funding required

The agreements seem to indicate that the demand case is, if not quite present yet, acknowledged and potentially set to grow substantially.

However, to be in position to supply the gas will require a great deal of funding and decisive action, the former of which is in somewhat short supply.

Energy research firm BloombergNEF has estimated in its latest outlook report that for Australia to support its net zero 2050 goals AND become a world-leading exporter of green hydrogen would require investment of almost $2.5 trillion between now and 2050.

This will increase Australia’s wind and solar capacity to 812 gigawatts – 21 times more than today’s levels – enough to both supply domestic needs and power enough electrolysers to account for 5.7% of the world’s green hydrogen consumption.

Needless to say, this will require strong commitments from both Federal and State governments to make it a reality, whether it be favourable policies and/or approvals.

Steps are already being taken by the various state governments to take a leading role in green hydrogen though there’s still potential for more to be done.

And while no one expects Australian governments to actually pony up the vast sums required to enable the green hydrogen revolution – indeed industry is likely to be the main spender here – the Federal Government’s $2bn Hydrogen Headstart fund seems miniscule by comparison.

Designed to provide funding to “bridge the commercial gap between the cost of hydrogen production from renewables and its current market price for early projects” by supporting “two to three flagship large scale projects”, the Fund has been welcomed as a “good start” by none other than Fortescue Future Industries boss Andrew Forrest.

However, he implied that more funding would be required, saying that $2bn just “kicks the can down the road”.

Others questioned the focus on large progress, noting that it left small-scale projects out in the dry and excludes companies developing new green hydrogen production technologies.

Emma Davies provides a look into what the funding means for industry here.

What needs to be done for green hydrogen?

As noted by others, the $2bn Hydrogen Headstart Fund is a good start where Government funding is concerned, but it is merely the first step on that front.

The Federal Government – and potentially the various state and territory governments – will need to provide additional funding aimed at facilitating new technologies as well as small-scale projects.

Australia simply does not have the ability to fund projects that other countries such as the US have, so it has to be smart about what it can fund.

This includes funding promising green hydrogen production technology projects that are preferably already in the demonstration stage and projects that can leverage existing infrastructure or other advantage (from location, etc) to drastically reduce costs.

Governments will also need to collaborate closely with each other and industry to fast track construction of projects.

This could be achieved through the establishment of hydrogen hubs, acceleration of approvals by for instance giving green hydrogen priority for assessment be it for environment or works, and developing the right supply chains.

None of this is easy and given the amount of competition, particularly from countries such as Qatar and Saudi Arabia who share many of our advantages – abundant sunlight and in Saudi Arabia’s case, plenty of spare land – and have oil dollars to get projects rolling, it is important that action is taken now.

Or even yesterday, if we can achieve that.