Australia

Australian Government – Hydrogen Industry Policy Initiatives

2024 National Hydrogen Strategy

The 2024 National Hydrogen Strategy represents a comprehensive formal review and update of the 2019 National Hydrogen Strategy. The updated strategy focusses on accelerating clean hydrogen industry growth, with a focus on increasing global cost competitiveness by supporting industry development at scale.

The strategy has identified four Objectives, supported by 34 actions:

• Supply: the hydrogen industry supplies hydrogen that is globally cost competitive
• Demand and decarbonisation: activating the most prospective domestic demand sectors for hydrogen-based decarbonisation
• Community benefit: communities are aware of and can realise the benefits of hydrogen
• Trade, investment and partnerships: establish trade at scale and leverage purposeful partnerships.

The strategy sets a national hydrogen production target of 15 million tonnes by 2050, supported by five-yearly milestones. This will help guide infrastructure planning and provide a long-term signal to investors about the role hydrogen will play in the Australian economy.

Central to delivery of the strategy is the Hydrogen Production Tax Incentive and the expanded Hydrogen Headstart Program, as announced in the 2024-25 Federal Budget (see below ‘Funding and Support’ section). These will help bridge the commercial gap and enable the sector to achieve scale by supporting early movers and building familiarity within the hydrogen and finance sectors with large scale projects.

The updated Strategy identifies the most prospective use cases for hydrogen, including large scale export-facing industries such as green iron, ammonia and alumina, as well as heavy road and long-haul transport and power, that will be the focus for ongoing policy support.

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

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, which will enable ongoing work to build the enabling environment for industry growth, including hydrogen infrastructure planning, social license and industry safety training and regulation.

The updated National Hydrogen Strategy is aligned with the Australian Government’s Future Made in Australia plan announced through the 2024-25 Federal Budget. Five industries were identified as aligned with the Future Made in Australia National Interest Framework, including renewable hydrogen and industries for which hydrogen is expected to be a key input, such as green metals and low carbon liquid fuels.

State of Hydrogen Report

The Australian Government has published two State of Hydrogen reports as part of delivering Australia’s National Hydrogen Strategy. In December 2021, 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 and how it compares to the rest of the world and what governments around Australia are doing to advance the industry.

Funding and Support (not inclusive of all programs)

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

Hydrogen Headstart Program

The Australian Government has announced a total of AUD$4 billion for the Hydrogen Headstart Program. The Program will 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.

An initial allocation of AUD$2 billion for the program was announced in the 2023-24 Federal Budget (released May 2023). 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 the 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 measures to accelerate investment in Future Made in Australia priority industries, including the establishment of a Hydrogen Production Tax Incentive to support renewable hydrogen production for eligible Australian resident corporations. The value of the production tax incentive has been estimated at AUD$6.7 billion over 10 years.

On 25 November 2024, the Treasurer, in a joint media release, announced that the Australian Government had introduced the Future Made in Australia (Production Tax Credit and Other Measures) Bill 2024 to Parliament. The legislation establishes two tax incentives:

• A Hydrogen Production Tax Incentive (HPTI) worth AUD$2 per kilogram of renewable hydrogen produced between 2027–2028 and 2039–40 for up to ten years per project.
• A Critical Minerals Production Tax Incentive worth ten per cent of relevant processing and refining costs for Australia’s 31 critical minerals, for critical minerals processed and refined between 2027–28 and 2039–40, for up to ten years per project.

Specific details that apply to the HPTI can be found in the above link to the Bill presented to Parliament.

Regional Hydrogen Hubs Program

The Australian Government is providing around $500 million in support for Regional Hydrogen Hubs across the country.

The Regional Hydrogen Hubs Implementation Grants support the establishment of 6 hydrogen hubs located in the Pilbara and Kwinana in Western Australia, the Hunter in New South Wales, Bell Bay in Tasmania, Gladstone in Queensland and Port Bonython in South Australia. An additional hydrogen hub will be supported in the Townsville Region.

The Regional Hydrogen Hubs Design and Development Grants provide support for studies exploring the development of future hydrogen hubs and hydrogen industries in specific regions.

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.

Through the 2024-25 Federal Budget, the Australian Government announced an increase to ARENA’s baseline funding of $1.9 billion to support its investments in developing, commercialising, manufacturing and deploying new renewable energy technologies, including renewable hydrogen.

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).

H2Global

In September 2024, Australia and Germany signed a Joint Declaration of Intent to negotiate an AUD$660 million deal (€400 million), equally funded by the governments of both countries, which would form part of the German Government’s H2Global auction mechanism.

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 (current as of August 2024).

Guarantee of Origin Hydrogen Scheme

In September 2024, the Australian Government introduced the Future Made in Australia (Guarantee of Origin) Bill to Parliament. The Guarantee of Origin (GO) scheme is a voluntary program for industry and is designed to track and verify the emissions of low-emissions products, such as hydrogen.

The scheme will issue two types of digital certificates: Product GO certificates and Renewable Electricity Guarantee of Origin (REGO) certificates.

Product GO certificates will allow producers, exporters and users to prove where a product was made, and the emissions associated with its production, transport and storage. Product GO certificates will commence with hydrogen. The scheme will then expand to other low emissions industries such as green metals and low-carbon liquid fuels.

REGO certificates will prove when, where and how renewable electricity was produced. The REGO certification mechanism will operate alongside and then replace the Large-scale Generation Certificate (LGC) framework under the Renewable Energy Target (RET) when it ends in 2030.

The Guarantee of Origin (GO) scheme will be overseen by the Clean Energy Regulator.

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 National Hydrogen Codes of Best Practice to support the safe and efficient growth of Australia’s hydrogen industry. The first two Codes being developed are hydrogen production and refuelling.

The Codes will deliver improved regulatory transparency and certainty for hydrogen projects in each Australian jurisdiction by identifying:

• Relevant regulatory obligations including both existing legal obligations and obligations which do not currently apply to the hydrogen industry but apply to analogous activities (e.g. to other gas or hazardous chemical industries).

• Regulators associated with the lifecycle activities of projects

• Regulatory guidance, including best practice based on existing Australian and international practice and precedence, technical specifications, case studies and standards.

There will be ongoing consultation and engagement as the drafting of the National Codes progresses.

International Engagement

Australia–United States Net Zero Technology Acceleration Partnership

• Established in July 2022. This is a formal partnership to accelerate the development and deployment of zero emissions technology and to cooperate on critical minerals supply chains to reduce greenhouse gas emissions while supercharging economic growth.
• The partnership establishes a framework for practical cooperation including support of applied research, development, pilot projects, and demonstration projects of mutual benefit with a focus on the development and deployment of technologies, including hydrogen towards zero or negative emissions.

Australia–Japan Partnership on Decarbonisation through Technology

• Established in June 2021. Australia and Japan are focussing on lower emissions liquefied natural gas (LNG) production, transport and use, clean fuel ammonia, clean hydrogen, carbon capture, use and storage (CCUS), carbon recycling, and low emissions steel and iron ore.

Australia–Singapore Partnership on Low Emissions Technologies in Maritime and Port Operations

• Established in June 2021. Australia and Singapore are accelerating the deployment of low emissions fuels and technologies like clean hydrogen, battery storage and electrification.
• Established in October 2020, the Australia-Singapore MoU on low emissions solutions includes collaboration on Hydrogen; CCUS; renewable energy trade; measurement; and reporting verification of emissions.

Australia–Republic of Korea Low and Zero Emissions Technology Partnership

• Established in November 2021. Australia and the Republic of Korea are advancing technologies and trade systems for hydrogen supply, low emissions steel and iron ore, and CCUS.

Australia-India Letter of Intent on New and Renewable Energy Technology

• Established February 2022. Australia and India have committed to work together on reducing the cost and scaling up the deployment of ultra-low-cost solar and clean hydrogen, including electrolysers.
• In May 2024, Australia and India established the India-Australia Green Hydrogen Taskforce which aims to identify opportunities to accelerate the manufacture and deployment of green hydrogen.

Australia-Germany Hydrogen Accord

• Established June 2021. Australia and Germany are working together to accelerate the development of a hydrogen industry under a new hydrogen accord by establishing the Australia-Germany Hydrogen Innovation and Technology Incubator (HyGATE) to support real-world pilot, trial, demonstration, and research projects along the hydrogen supply chain; facilitating industry-to-industry cooperation on demonstration projects in Australian hydrogen Hubs; and exploring options to facilitate trade of Australian hydrogen and its derivatives produced from renewable energy sources.

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.

 

Reviewed: November 2024