Ruqayyah Snyder
Australia is well-positioned to become a major producer and exporter of hydrogen fuel, with its vast renewable energy resources, space, and land. The Australian government has set ambitious targets to position the country as a global leader in hydrogen by 2030 through its National Hydrogen Strategy and Future Made in Australia plan. The government is incentivizing the development of large-scale renewable hydrogen projects and investing in hydrogen hubs, aiming to decarbonize the economy and contribute to achieving net-zero emissions. With its world-class resources and strategic location near key export markets, Australia is poised to play a significant role in the global hydrogen market.
| Characteristics | Values |
|---|---|
| Hydrogen fuel production methods | Using renewable energy sources such as solar and wind power to split hydrogen from water using electrolysis; through a thermochemical reaction using water and fossil fuel feedstocks such as coal or natural gas with carbon capture and storage |
| Hydrogen fuel usage | Fuel for transport, heating, electricity storage, raw material in industrial processes, chemical and fertiliser production, other heavy industries, transport sectors, and grid firming |
| Australia's role in hydrogen fuel | Australia aims to be a global leader in hydrogen production and export by 2030; the government is investing in renewable hydrogen production through the Hydrogen Production Tax Incentive and the $4 billion Hydrogen Headstart Program |
| Benefits of hydrogen fuel | Hydrogen is a clean fuel, emitting only water vapour and heat when combusted, helping to reduce CO2 emissions; it can be stored and transported easily, and has a growing global market |
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What You'll Learn
Australia's hydrogen production potential
Australia has the potential to become a major global producer of hydrogen fuel. The country has abundant renewable and non-renewable energy resources, such as solar and wind power, that can be used to produce hydrogen through electrolysis. Additionally, Australia has the largest pipeline of hydrogen projects of any country, valued at over $225 billion, with more green hydrogen projects under development than any other nation.
The Australian government has demonstrated strong support for the growth of the hydrogen industry, as evidenced by its National Hydrogen Strategy, Future Made in Australia plan, and various investment programs. The National Hydrogen Strategy, which was reviewed in 2023, aims to position Australia as a global hydrogen leader by 2030. The Future Made in Australia plan includes the Hydrogen Production Tax Incentive, which encourages renewable hydrogen production by offering a $2 incentive per kilogram of eligible renewable hydrogen produced for up to 10 years. The government is also investing $4 billion in the Hydrogen Headstart Program to support large-scale renewable hydrogen production projects.
The development of hydrogen hubs in regional Australia is being facilitated by the Australian Regional Hydrogen Hubs Program, which is investing over $500 million. This program includes funding for hydrogen electrolysers and fuel switching, as well as the development of markets and product standards for green products. The Australian Renewable Energy Agency (ARENA) is also playing a key role in the development of a domestic green hydrogen industry, with a focus on renewable energy sources and the reduction of carbon emissions.
The demand for hydrogen in Australia is currently low, but interest in this commodity is increasing. Hydrogen has the potential to become a significant tradable energy commodity, as demonstrated by the successful shipping of liquefied hydrogen from Australia to Japan in 2022. Australia's proximity to key export markets, such as Korea and Japan, which are expected to account for 40% of global hydrogen imports by 2050, further enhances its potential as a major exporter of hydrogen fuel.
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Hydrogen from renewable energy sources
Australia has abundant renewable energy resources, such as solar and wind power, that can be used to produce hydrogen fuel. The Australian government has expressed its ambition to become a global leader in hydrogen production and exports by 2030, as outlined in its National Hydrogen Strategy.
One method of producing hydrogen fuel from renewable energy sources is through electrolysis, where renewable electricity is used to split water molecules (H2O) into hydrogen (H2) and oxygen (O2). This process is currently being utilised by Hydrogen Fuels Australia (H2FA), which aims to generate hydrogen from on-site solar energy.
Another approach is through thermochemical reactions, where hydrogen can be produced from water and certain fossil fuel feedstocks, such as coal or natural gas, with the resulting CO2 emissions captured and stored underground. This method, known as carbon capture and storage (CCS), is still a developing technology and is not yet widely implemented.
The Australian government is actively promoting the development of renewable hydrogen projects through various initiatives. The Hydrogen Production Tax Incentive, for example, offers a $2 incentive for every kilogram of renewable hydrogen produced over a 10-year period. Additionally, the $4 billion Hydrogen Headstart Program aims to support large-scale renewable hydrogen production projects, accelerating the growth of Australia's hydrogen industry.
The utilisation of hydrogen is seen as a crucial pathway for decarbonising Australia's economy, especially in sectors that are challenging to abate, such as iron, steel, and heavy road freight. Hydrogen can also be used as a feedstock to produce zero-carbon chemicals and low-carbon liquid fuels, further contributing to the country's transition to cleaner energy sources.
With its vast renewable energy resources and supportive government policies, Australia is well-positioned to become a major producer and exporter of hydrogen fuel, contributing to the global transition towards a more sustainable energy landscape.
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Hydrogen as a clean fuel
Hydrogen is the most common chemical element in the universe. It can be stored as a gas or liquid, or made part of other molecules, and has many uses, including fuel for transport, a way to store electricity, or a raw material in industrial processes.
When produced using renewable energy sources such as solar and wind power, hydrogen is an emissions-free fuel. This makes it a way of storing renewable energy for use when it is needed. Hydrogen energy can be stored as a gas and delivered through existing natural gas pipelines. It can also be converted to a liquid or used to produce another suitable material such as ammonia or alumina, allowing it to be transported on trucks and ships and exported overseas.
Clean hydrogen as an energy source is gaining momentum in Australia, with the country aiming to become a global leader in hydrogen production. The Australian government has released its 2024 National Hydrogen Strategy, which provides a framework to achieve this goal by 2030. The strategy includes production and export targets, economic incentives, and policy support.
The government is also legislating the Hydrogen Production Tax Incentive, which encourages renewable hydrogen production by providing a $2 incentive per kilogram of eligible renewable hydrogen produced for up to 10 years. Additionally, the $4 billion Hydrogen Headstart Program will support large-scale renewable hydrogen production projects, accelerating the scaling of Australia's hydrogen industry.
Australia has several advantages in the global hydrogen market, including its vast renewable energy resources, space, and land. These advantages allow the country to competitively manufacture clean hydrogen and its derivative products for domestic use and export. The demand for hydrogen in Australia is still low, but interest in this commodity is increasing, with over $200 billion in the investment pipeline for hydrogen and its derivatives.
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Hydrogen hubs in regional Australia
Australia has set its sights on becoming a global leader in hydrogen production. The country has the largest pipeline of hydrogen projects of any country, with an estimated value of over $225 billion. The Australian government has released its 2024 National Hydrogen Strategy, which aims to position the country as a world leader in hydrogen production by 2030.
A key element of this strategy is the development of hydrogen hubs in regional Australia. The government has committed around $500 million to support the creation of these hubs, which will serve as centres where producers, users, and exporters of hydrogen can collaborate and share resources and knowledge. These hubs will be located in areas with high demand for hydrogen, such as ports and cities, as well as regional and remote areas. The development of these hubs will help to reduce infrastructure costs, promote innovation, and foster synergies between sectors.
Several hydrogen hub projects have already been announced, with funding allocated to various regions across Australia. For example, the NSW Government has committed $70 million to support the establishment and growth of hydrogen industries in the state. The Tasmanian Government has also secured up to $70 million for its Tasmanian Green Hydrogen Hub. Other hubs receiving funding include the Western Australian Government’s Pilbara Hydrogen Hub, bp Australia’s H2Kwinana Clean Hydrogen Industrial Hub, and the South Australian Government’s Port Bonython Hydrogen Hub.
The development of these hydrogen hubs is a crucial step towards Australia's transition to a low-carbon economy and achieving its net-zero emissions targets. These hubs will not only help to scale up the hydrogen industry but also unlock new opportunities for regional economies, create jobs, and improve energy security.
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Hydrogen industry growth
Australia has set its sights on becoming a global leader in the hydrogen industry by 2030. The country has the largest pipeline of hydrogen projects of any country, valued at over $225 billion, and more green hydrogen projects under development than anywhere else. Hydrogen is central to the Australian Government's vision for a "'Future Made in Australia' plan, which includes the $4 billion Hydrogen Headstart Program to support large-scale renewable hydrogen production projects.
The Hydrogen Headstart Program will accelerate the scaling of Australia's hydrogen industry, delivering large-scale clean hydrogen projects and providing industry learning and experience. The government has also invested more than $500 million in the development of hydrogen hubs in regional Australia, co-hosting producers, users, and potential exporters of hydrogen across industrial, transport, export, and energy markets.
The Australian government is also legislating the Hydrogen Production Tax Incentive, which will encourage renewable hydrogen production by eligible Australian resident corporations with a time-limited and uncapped refundable tax offset. The incentive will provide $2 for every kilogram of eligible renewable hydrogen produced for up to 10 years, between 1 July 2027 and 30 June 2040.
The National Hydrogen Strategy, released in 2024, provides the framework for Australia's ambition to become a global hydrogen leader. It sets a growth trajectory through production and export targets with progress milestones, and identifies the most prospective hydrogen use cases that will receive ongoing government economic incentives and policy support.
The Australian government is also funding the development of a domestic green hydrogen industry. The Clean Energy Finance Corporation operates a $300 million Advancing Hydrogen Fund, and the Australian Renewable Energy Agency (ARENA) is administering the Hydrogen Headstart program.
Australia has a range of comparative advantages in the global hydrogen market, including vast renewable energy resources, space, and land. These advantages allow Australia to competitively manufacture clean hydrogen and its derivative products for domestic use and export.
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Frequently asked questions
Hydrogen fuel can be produced as a gas or liquid, or made part of other materials. There are two primary methods for producing clean hydrogen: using renewable energy sources such as solar and wind power to split hydrogen from water using electrolysis; and through a thermochemical reaction using water and fossil fuel feedstocks such as coal or natural gas, with the CO2 emissions created as a by-product captured and stored.
Australia has world-class renewable energy resources, which make it well-placed to produce hydrogen at internationally competitive prices. The Australian government is also incentivising the production of hydrogen fuel with the Hydrogen Production Tax Incentive, which will provide $2 for every kilogram of eligible renewable hydrogen produced for up to 10 years.
Hydrogen fuel is used for transport, heating, storing electricity, and as a raw material in industrial processes.
