Australia

Australian Government – Hydrogen Industry Policy Initiatives

The National Hydrogen Strategy

In November 2019, the COAG Energy Council endorsed Australia’s National Hydrogen Strategy (‘Strategy’). The Strategy was informed by an extensive series of COAG Energy Council commissioned studies and research reports and analyses.

Aus hydrogen reportThe Strategy describes an adaptive approach to industry development (being ready to move quickly to scale up as signs of large-scale markets emerge) using a ‘review-revise-adapt’ feedback loop that would support and refine actions as technology and markets change.

The adaptive approach is focused on actions that remove market barriers, efficiently build supply and demand, and accelerate the global cost-competitiveness of Australia’s hydrogen industry. The approach is guided by four principles:

  • Take an adaptive and nationally coordinated approach to support industry development, including regular reviews.
  • Prioritise regulatory consistency and a coordinated approach to project approvals.
  • Support partnerships to activate the market.
  • Put safety, environmental sustainability and benefits to Australia at the forefront.

A key element of the approach is the creation of hydrogen hubs – clusters of large-scale demand. The Strategy notes:

“These may be at ports, in cities, or in regional or remote areas, and will provide the industry with its springboard to scale. Hubs will make the development of infrastructure more cost-effective, promote efficiencies from economies of scale, foster innovation, and promote synergies from sector coupling. These will be complemented and enhanced by other early steps to use hydrogen in transport, industry and gas distribution networks, and integrate hydrogen technologies into our electricity systems in a way that enhances reliability.”

The Strategy document concludes with 57 strategic ‘nationally coordinated government actions’ focused on streamlining regulation, skills and training, community engagement, supporting research, pilots, trials and demonstrations, using clean hydrogen in gas networks and transport, opening international markets, developing a certification scheme, and encouraging commercial investment.

For more information visit https://www.dcceew.gov.au/energy/hydrogen

In February 2023, the Energy and Climate Change Ministerial Council included, in its meeting communique, that “Ministers agreed the Commonwealth would lead jurisdictions in a Review of the National Hydrogen Strategy to ensure the national strategy positions Australia on a path to be a global hydrogen leader by 2030 on both an export basis and for the decarbonization of Australian industries. The review of the Strategy will take account of developments globally and in Australia since the original strategy was developed, including the impact of the Inflation Reduction Act in the United States and policies by other countries to support a hydrogen industry.” Consultations on the review of national hydrogen strategy occurred in mid-2023.

In the 2024-25 Federal Budget (released May 2024) the Australian Government announced an allocation of the AUD$17.1 million over four years from 2024–25 (and an additional AUD$2.5 million in 2028–29) to deliver the 2024 National Hydrogen Strategy, including hydrogen infrastructure planning, social license and industry safety training and regulation.

State of Hydrogen Report

The Australian Government has published two State of Hydrogen reports as part of delivering Australia’s National Hydrogen Strategy. In April 2022, the Government released the State of Hydrogen 2021 report. The second iteration, the State of Hydrogen 2022, was released in April 2023. The report covers, amongst other things, the development of Australia’s hydrogen industry so far and how it compares to the rest of the world and what governments around Australia are doing to advance the industry.

Future Made in Australia National Interest Framework

In the 2024-25 Federal Budget, the Government announced it would create a Future Made in Australia Act and establish a National Interest Framework to guide the identification of priority industries and investments in the national interest. In the 2024–25 Budget, five industries are identified as aligned with the National Interest Framework:

  • Renewable hydrogen
  • Critical minerals processing
  • Green metals
  • Low carbon liquid fuels
  • Clean energy manufacturing, including battery and solar panel supply chains

Funding and Support (not inclusive of all programs)

Several major funding programs are supporting hydrogen industry development, including:

Hydrogen Headstart Program

In the 2023-24 Federal Budget (released May 2023) the Australian Government announced an allocation of AUD$2 billion for the Hydrogen Headstart Program. The Program would provide revenue support for large-scale renewable hydrogen projects through competitive hydrogen production contracts. This investment is intended to help bridge the commercial gap for early projects. After an Expressions of Interest application process, in December 2023, ARENA (as the program administrator) announced that six applicants have been shortlisted and invited to submit a full application in the next stage of the Hydrogen Headstart Program.

In the 2024-25 Federal Budget, the Australian Government announced a further AUD$2 billion for an additional round of the Hydrogen Headstart Program (comprising AUD$1.3 billion over ten years from 2024–25, and an average of AUD$151.6 million per year from 2034–35 to 2038–39).

Hydrogen Production Tax Incentive

In the 2024-25 Federal Budget, the Australian Government announced changes to accelerate investment in Future Made in Australia priority industries, including the establishment of a (temporary) Hydrogen Production Tax Incentive to support renewable hydrogen production for eligible Australian resident corporations. It is to be available for hydrogen production for a maximum of 10 years, between 1 July 2027 and 30 June 2040 for projects that reach final investment decisions by 2030. The incentive amount will be informed by consultation prior to implementation. The value of the production tax incentive is put at AUD$6.7 billion.

Regional Hydrogen Hubs Program

The Australian Government has announced planned investments of over AUD$500 million to support the rollout and development of regional hydrogen hubs across Australia.

Funding allocated under the Hubs Implementation scheme has been announced for the following areas:

As well as funding allocated under the Hubs Implementation stream, the Program also included support for nine feasibility studies under the Development and Design Stream.

Australian Renewable Energy Agency (ARENA)

Under its own funding programs, ARENA has committed over AUD$300 million to hydrogen R&D projects, feasibility studies, pilot and demonstration plants (including grants funding made available as part of its Renewable Hydrogen Deployment Funding Round).

ARENA administered the Australian portion of the German-Australian Hydrogen Innovation and Technology Incubator (HyGATE) initiative. Australia and Germany have respectively committed up to AUD$50 million and €50 million to establish HyGATE. In January 2023, ARENA announced funding for four jointly funded projects under the HyGATE initiative.

Future Made in Australia Innovation Fund

In the 2024-25 Federal Budget, the Australian Government announced the establishment of a AUD$1.7 billion Future Made in Australia Innovation Fund to fund the deployment of innovative technologies and facilities linked directly to priority industries. The Fund is to be administered by ARENA.

Clean Energy Finance Corporation (CEFC)

The CEFC invests in hydrogen through its dedicated AUD$300 million Advancing Hydrogen Fund as well as in hydrogen-related climate technology opportunities. Equity and debt finance are used to support projects that align with the National Hydrogen Strategy. CEFC financing for hydrogen projects has totalled in excess of AUD$40 million, including the CEFC investment of AUD$15 million in Hysata’s most recent Series B financing round (announced May 2024).

Other Programs and Allocations

Recent Federal Budgets, as well as committing funds directly in support of hydrogen projects and associated enabling measures, have also included several funding allocations of relevance to wider hydrogen industry development (e.g., the allocation of AUD$1.5 billion in planned equity to support the construction of common user marine infrastructure within the Middle Arm Sustainable Development Precinct at Darwin in the Northern Territory.)

A fuller listing of both hydrogen specific support and hydrogen eligible support for all key Australian jurisdictions can be found on the Funding page of HyResource. (Note: the published information is current as of December 2023 and an update will be published once the annual cycle of budget releases is completed, expected in June 2024).

Guarantee of Origin Hydrogen Scheme

The establishment of a domestic hydrogen Guarantee of Origin scheme is a priority task under Australia’s National Hydrogen Strategy.

The proposed design of the scheme provides:

  • a mechanism to track and verify emissions associated with hydrogen, hydrogen derivatives and other products made in Australia.
  • an enduring mechanism for renewable electricity certification which could support a variety of renewable energy claims.

Building on earlier consultation efforts, in December 2022, the Government released two consultation papers that form the proposed Guarantee of Origin Scheme:

  • the Guarantee of Origin scheme
  • Renewable electricity certification

In the 2023-24 Federal Budget, AUD$38.2 million was provided for the creation of a Guarantee of Origin scheme to certify renewable energy and track and verify emissions from clean energy products.

In the 2024-25 Federal Budget, funding for development of the Guarantee of Origin scheme included:

  • AUD$20.9 million over four years from 2024–25 (and $1.2 million per year ongoing) to undertake further consultation on incentives to support the production of, and demand for, low carbon liquid fuels, as well as the development of a low carbon liquid fuels certification scheme through the Guarantee of Origin Scheme.
  • AUD$11.4 million over four years from 2024–25 (and $1.1 million per year ongoing) to fast track the initial phase of the Guarantee of Origin Scheme for green hydrogen and bring forward work on green metals, including iron, steel and aluminium

National Hydrogen Regulatory Review

The National Hydrogen Regulatory Review is a cross jurisdictional process led by the Commonwealth to identify barriers in the regulation of hydrogen through a review of existing hydrogen regulation and provide recommendations to Energy Ministers on how to improve the regulation of Australia’s hydrogen industry and support its safe and efficient development.

The first phase of the regulatory review was conducted during 2022, culminating in industry and regulator consultations in December 2022.  The outcomes of these consultations informed the identification of priority reform measures announced in early 2023, including the development of the 5 National Hydrogen Codes of Best Practice.

  • National Code of Best Practice Hydrogen Production
  • National Code of Best Practice Ammonia Production
  • National Code of Best Practice Hydrogen Refuelling
  • National Code of Best Practice Hydrogen Appliances
  • National Code of Best Practice Ammonia Appliances.

The development of the codes of best practice is occurring with industry and regulator support, through co-design workshops (hosted over October-November 2023).

A Hydrogen Regulatory Map includes key commonwealth legislation of relevance to hydrogen industry development in Australia.

International Partnerships

The Australian Government is pursuing opportunities to collaborate internationally on low emissions technologies. These partnerships co-fund research and demonstration projects aimed at reducing the costs of low emissions technologies such as hydrogen and facilitating their deployment and export.

Complementary announcements that form part of the commitment to build new international technology partnerships include:

  • The announcement, in June 2021, of a AUD$30 million partnership between Australia and Singapore to accelerate deployment of low emission fuels and technologies like clean hydrogen to reduce emissions in maritime and port operations.
  • The announcement, in June 2021, of the Declaration of Intent between the Government of Australia and the Government of Germany on the Australia-Germany Hydrogen Accord; the Accord included three major initiatives:
    • Establishment of the HyGATE initiative to support real-world pilot, trial, demonstration and research projects along the hydrogen supply chain (see earlier ‘Funding and Support’ section).
    • Facilitating industry-to-industry cooperation on demonstration projects in Australian hydrogen hubs.
    • Exploring options to facilitate the trade of hydrogen and its derivatives produced from renewables (such as ammonia) from Australia to Germany, including through Germany’s H2Global Initiative.
  • The announcement, in June 2021, of a Japan-Australia Partnership on Decarbonisation through Technology; the announcement includes a commitment to jointly support initiatives to help drive the transition to net zero emissions, including, amongst other measures, a joint focus on clean hydrogen and derivatives produced from renewable energy or from fossil fuels with substantial carbon capture, utilisation and storage (as well as a focus on low emissions steel and iron ore).
  • The announcement, in July 2021, that the United Kingdom and Australian Governments signed a Letter of Intent between the two countries to establish a partnership on low emissions solutions; cooperation will focus on research and development across six key technologies, including clean hydrogen.
  • The announcement, in October 2021, of an Australia-Republic of Korea Low and Zero Emissions Technology Partnership; collaboration would occur on a range of technologies, including, amongst other things, clean hydrogen and clean ammonia supply; low emissions iron ore and steel; hydrogen fuel cell electric vehicles; hydrogen power generation.
  • The announcement, in January 2022, of the AUD$150 million Australian Clean Hydrogen Trade Program (ACHTP), will support Australian-based hydrogen supply chain projects that secure overseas public or private sector investment. The first round of the Program will focus on the export of clean hydrogen to Japan under the above-noted Japan-Australia Partnership on Decarbonisation through Technology.
  • The announcement, in January 2023, of the signing of a Memorandum of Understanding (MoU) with the Netherlands to support the development of a renewable hydrogen supply chain from Australia to Europe.
  • In May 2023, Australia and the United States commit to enhance bilateral cooperation under a Climate, Critical Minerals and Clean Energy Transformation Compact, establishing climate and clean energy as a central pillar of the Australia-United States Alliance. In particular, it refers to supporting the development of emerging markets for clean hydrogen and its derivatives.
  • in May 2023, the signing of the Terms of Reference of the Australia-India Green Hydrogen Taskforce was announced. The Taskforce is to comprise Australian and Indian experts in renewable hydrogen and report to the Australian-Indian Ministerial Energy Dialogue on the opportunities for Australia and India to cooperate in the area of renewable hydrogen.

Training and Skills Development

The 2024-25 Federal budget, released in May 2024, includes a AUD$10 million allocation in 2025–26 to establish a National Hydrogen Technology Skills Training Centre, in partnership with the Victorian Government, to promote hydrogen workforce development. (Note: this funding builds on the AUD$10 million funding committed in the 2023-24 Victorian State budget to develop a Hydrogen Worker Training Centre in the state.)

In June 2024, in a joint release, the Australian and Western Australian Governments announced a joint investment of AUD$70.5 million over five years to establish a Clean Energy Skills National Centre of Excellence in Western Australia. Amongst other things, the Centre will include training in clean energy technologies, including solar, wind, hydrogen, batteries and grid integration.

 

Updated: June 2024