The Australian government is gearing up to announce a new cash injection into domestic green hydrogen development, most likely via the country’s existing A$2bn (US$1.3bn) Hydrogen Headstart subsidy programme, according to reports yesterday (Tuesday).
Prime minister Anthony Albanese is expected to make the pledge as part of the federal government’s budget, due to be announced on 14 May, said The Australian newspaper, citing lobbyists in the hydrogen and clean energy sector.
Albanese’s ministers are said to be weighing up two possible approaches, the first of which would be a fixed-rate subsidy administered via a tax credit, to mirror that adopted by the US in its Inflation Reduction Act.
The framework for this is already partially in place in the Hydrogen Headstart programme, in which bidders nominate their own subsidies (“hydrogen production credits”, or HPCs”) to be delivered as quarterly grants, as part of an application process to the federal government.
Fiona Simon, chief executive of the Australian Hydrogen Council, told the newspaper that she expected a major announcement from the government, with at least some cash funnelled through Hydrogen Headstart.
“What we need to see from government is a really long-term plan with a serious set of investments, because we know government needs to step in and de-risk new industry development while industry is not commercial,” she said. “There needs to be a means of closing the commercial gap — that only government can do — and then the private sector can come in and do the heavy lifting.”
But the industry needs funding “far in excess of A$2bn”, she said, and would also favour a fixed-rate subsidy to allow Australia to compete with US rivals.
“If we don’t see something fundamental announced that goes to the heart of what’s required, if we don’t see it in this budget, then Australia being any kind of leader in the hydrogen industry in the near future would seem unlikely,” she continued.
“It has to be a self-evident Australian response to the Inflation Reduction Act that people in the future hydrogen industry can see themselves in.”
The head of Australia’s renewable energy trade body, the Clean Energy Council, Kane Thornton, also threw his weight behind the view that Hydrogen Headstart would get a budget boost in the upcoming announcement.
“The Treasurer [Australia’s finance minister Jim Chalmers], when he announced [Hydrogen Headstart], used language that this was a ‘down payment’,” Thornton told the newspaper. “That was a recognition that $2bn was a good start, but there’d need to be more, given the scale of investment required and the competitive landscape with the US and almost every other country in the world.
“We’re now a year on. Hydrogen Headstart has been designed, they’ve got six short-listed projects, government is really pleased with the shortlist in terms of quality projects and proponents. They’re going through a process to select — my understanding is — two or three of those six.”
“All of that leaves me to have an expectation government will push ahead with Hydrogen Headstart.”
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