Australia has allocated A$2bn ($1.35bn) for its ‘Hydrogen Headstart’ programme of renewable hydrogen incentives in its federal budget.

The Australian Renewable Energy Agency (Arena) will be responsible for the programme, which will “provide revenue support for investment in renewable hydrogen production through competitive production contracts”, according to budget documents.

While the country was an early mover in hydrogen, publishing a national hydrogen strategy geared towards exports, it has lagged behind other nations when it comes to FID on projects above 10MW in size. The US and the EU in particular are considered high priority for investment and development, owing to generous subsidy schemes. In February, Australia’s federal government announced it would review its hydrogen strategy.

The government also plans to provide A$38.2mn towards a guarantee-of-origin scheme for green energy markets, including hydrogen. It has also budgeted $80.5mn over four years to support its domestic critical minerals sector in building diverse supply chains, attracting international investment and reducing emissions.

Arena has confirmed that funding will cover the cost gap between renewable hydrogen and the current market price.

The Hydrogen Headstart programme is expected to support 2–3 largescale projects with up to 1GW of combined capacity.

BP, which is developing three large-scale projects in the country, has lauded the new incentives.

“This announcement signals Australia’s intention to be a global leader in renewable hydrogen by attracting investment and giving potential customers assurance of Australia’s commitment to a new industry,” says Lucy Nation, BP’s vice-president, hydrogen for its Australia and Asia Pacific business. “The Albanese government has provided a much-needed response that gives industry increased confidence to invest.” 

This story was updated on Tuesday 10 May at 1.49pm to reflect recent developments.

 

“This program of competitive production contracts assists producers by helping to de-risk significant investments in an important new industry, as well as attract global capital to Australia,” she adds. 

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Author: Polly Martin