More than $1 billion of Federal funding earmarked for green hydrogen has been yanked in a major policy U-turn.
The Albanese Government is significantly scaling back its ambitions for an Australian green hydrogen-powered energy industry after vastly overestimating industry uptake for new projects.
Many energy experts had long warned that green hydrogen, which is generated via solar or wind farms, is highly uneconomical to produce and transport under current technological constraints.
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Budget papers show the Government has slashed funding for its hydrogen headstart, solar sunshot and battery breakthrough initiative programs by $1.3 billion over the next 10 years.
Forecasts for a hydrogen production tax incentive, which comes into effect in 2027, have also been significantly scaled back.
About $6.7 billion of tax credits were expected to be claimed between 2027 and 2040 when the program was announced two years ago.
That forecast has now been slashed by $1.9 billion over the five years to June 30, 2030, which “largely” reflects “lower-than-expected production forecasts from the renewable hydrogen industry”.
Green hydrogen was touted as a centrepiece of Prime Minister Anthony Albanese’s Future Made in Australia policy to onshore manufacturing and minerals processing.
Andrew Forrest’s Fortescue, the private sector’s most prominent pioneer of green hydrogen, has over the past two years scrapped numerous projects to develop the energy source.
