Budget provides $2b to scale up renewable hydrogen industry

The federal budget contains $2 billion for a new hydrogen program which the government says will help drive the green energy transition.

Treasurer Jim Chalmers delivers the federal budget on May 9, 2023 (ABC screenshot)

Budget papers released on Tuesday contain the measures, designed to accelerate the development of Australia’s hydrogen industry and connect to new supply chains around the globe.

The Hydrogen Headstart program, to be operated by the AREA and the Department of Climate Change, Energy, the Environment and Water, will provide revenue support for investment in renewable hydrogen production through competitive production contracts for large scale projects.

The budget also contains $38.2 million over four years, and $6.5 million per year after that, for a Guarantee of Origin schemewhich will certify renewable energy and track and verify emissions from clean energy products – in particular hydrogen.

There’s also $2 million over two years to establish a fund to support First Nations communities to engage with hydrogen project proponents and planning processes.

Budget papers also revealed the government will provide $83 million over four years for a net zero authority to oversee the transition to a clean energy economy.

Shift to clean energy

In his budget speech on Tuesday night, Treasurer Jim Chalmers said the nation’s biggest opportunity for growth and prosperity lay in the global shift to clean energy.

“Australia’s regions can help power the world,” he said. “Hydrogen power means Wollongong, Gladstone and Whyalla, can make and export everything from renewable energy to green steel.

“Seizing these kinds of industrial and economic opportunities will be the biggest driver and determinant of our future prosperity.”

Hydrogen can be combusted for industrial heat, used as a chemical input for green manufacturing, a fuel for heavy transport, or liquified and compressed for export to our key trading partners.

 “Green hydrogen is a critical enabler for future manufacturing of green metals and other products the world needs as the transformation to net zero by 2050 gathers pace,” the Treasurer said.

Regions well placed to drive growth

Climate Change and energy minister Chris Bowen said Australia already has the largest pipeline of renewable hydrogen projects in the world and its regions have the resources, technical skills and trade partnerships to drive growth. 

The budget commitments announced on Tuesday would build on Australia’s established hydrogen strengths and ensure the regions that have traditionally powered Australia are well positioned in the global race for clean energy investment, Mr Bowen said.

“Australia’s great opportunity lies not just in extracting and exporting the resources that we have and that the world needs, but in moving our way up and along the value chain through processing, refining, manufacturing and recycling – all powered by renewable energy,” Mr Bowen said.

He said the government was making the biggest ever investment in Australia’s energy transformation, with $40 billion allocated to renewable energy including a new Capacity Investment Scheme that would unlock over $10 billion of investment in renewable energy projects along the east coast.

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