Federal Budget pledges $2 billion for large‑scale renewable hydrogen projects
The Albanese Government’s second Budget has committed $2 billion for a new Hydrogen Headstart program to scale up development of Australia’s renewable hydrogen industry.
Australia already has the largest pipeline of renewable hydrogen projects in the world, built on the resources, technical skills and key trade partnerships needed to drive growth in hydrogen and other clean industries, and create the jobs that come with it.
The $2 billion Hydrogen Headstart program commitment will accelerate large‑scale renewable hydrogen projects, bridging the commercial gap for early‑stage projects, and position Australia to be a world leading hydrogen producer and exporter.
Getting to net zero emissions will require renewable hydrogen. Analysis by ClimateWorks and ARENA found as much as 364,000 tonnes (44PJ) is required by 2030 and 2,230,000 tonnes (268PJ) required by 2050 for industrial decarbonisation.
Hydrogen will 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 key trading partners. Green hydrogen is also 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 Federal Budget contained the following commitments:
- $2 billion for Hydrogen Headstart, providing revenue support for large‑scale renewable hydrogen projects through competitive hydrogen production contracts. These will help bridge the commercial gap for early projects and put Australia on course for up to a gigawatt of electrolyser capacity by 2030 through 2 to 3 flagship projects.
- $38.2 million in funding for a Guarantee of Origin scheme, which will certify renewable energy and track and verify emissions from clean energy products – in particular hydrogen. This is critical funding to ensure Australia is seen as an attractive investment destination, to accelerate investment in an Australian hydrogen industry and to support access to future markets for verified renewable and clean products.
- $2.0 million to establish a fund to support First Nations people and businesses to engage with hydrogen project proponents, planning processes and program design.
Importantly, the Government will also provide $5.6 million to support further work on the best ways to leverage Australia’s competitive strengths in renewable energy, critical minerals and highly skilled workforce to accelerate our other clean industrial and manufacturing capabilities, with further actions to be identified by the end of 2023.
These commitments build on over half a billion dollars of investment by the Albanese Government in regional hydrogen hubs, which will drive investments in this new industry across regions including Gladstone, the Hunter, Bell Bay and the Pilbara.
The Hydrogen Headstart program will be developed over coming months in consultation with industry.
The program is expected to be open for expressions of interest in the first quarter of 2024. Following assessment, successful applicants will be awarded contracts and provided with ongoing payments over a 10 year period from 2026-27.
