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Hydrogen Production Tax Incentive

Hydrogen Production Tax Incentive

  • Eligible hydrogen must be produced from 1 July 2027 to 30 June 2040.
  • The incentive may be claimed for a maximum of 10 years.
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The Hydrogen Production Tax Incentive is a federal refundable tax offset supporting medium to large-scale renewable hydrogen production in Australia. Eligible companies may receive a tax offset of $2 per kilogram of eligible low-emissions hydrogen produced between 1 July 2027 and 30 June 2040. The incentive is available for a maximum of 10 years.

Companies must participate in the Product Guarantee of Origin scheme, hold a certified production profile and create certificates verifying eligible hydrogen production. Eligible hydrogen must be produced in Australia using an eligible production method and meet emissions intensity and grid-matching requirements.

The Clean Energy Regulator certifies production profiles, administers hydrogen production certification and conducts annual reconciliation checks. Eligible companies claim the offset through their company tax return, with claims administered by the Australian Taxation Office.

Key Requirements

  • Support renewable hydrogen production: The incentive supports medium to large-scale renewable hydrogen production in Australia while the market is developing.
  • Meet company eligibility requirements: The claimant must be an eligible Australian resident company with an ABN, or a foreign resident company with a permanent establishment in Australia and an ABN.
  • Meet Australian taxation requirements: The company must be subject to Australian tax on income generated through its hydrogen-producing activities.
  • Participate in the Product Guarantee of Origin scheme: The company must enrol as a registered participant and hold a certified production profile for its hydrogen production facility.
  • Meet the final investment decision requirement: For production profiles approved from 1 July 2030, the company must have reached final investment decision before 1 July 2030. This may relate to constructing a new facility or upgrading an existing facility.
  • Produce eligible renewable hydrogen: Hydrogen must be produced in Australia at a single facility with an electrolyser that has a nameplate capacity of 10 megawatts.
  • Meet emissions requirements: The hydrogen production emissions intensity must not exceed 0.6 kilograms of carbon dioxide equivalent per kilogram of hydrogen.
  • Meet grid-matching requirements: Where grid electricity is used, renewable electricity instruments must relate to generation connected to the electricity grid supplying the hydrogen production facility.
  • Complete annual reconciliation: Product Guarantee of Origin certificates must undergo an Annual Reconciliation Check. An audit is required at the first, fifth and every subsequent fifth Annual Reconciliation Check.
  • Comply with Community Benefit Principles: Eligible companies must comply with the Community Benefit Principles and associated reporting requirements. These requirements are under development.

 

What is eligible for funding?

  • Producing renewable hydrogen in Australia at a single eligible facility.
  • Producing hydrogen using an eligible production method.
  • Producing hydrogen using an electrolyser with a nameplate capacity of 10 megawatts.
  • Producing hydrogen with an emissions intensity not exceeding 0.6 kilograms of carbon dioxide equivalent per kilogram of hydrogen.
  • Producing eligible hydrogen for sale.
  • Producing eligible hydrogen for use onsite in production processes.
  • Creating and registering Product Guarantee of Origin certificates for eligible hydrogen production.
  • Meeting applicable grid-matching requirements where electricity is sourced from an external electricity grid.

What companies are eligible for funding?

Eligible entities include:

  • Australian resident companies with an ABN.
  • Foreign resident companies with a permanent establishment in Australia and an ABN.

Applicants must also:

  • Be subject to Australian tax on income from hydrogen-producing activities.
  • Hold a certified production profile under the Product Guarantee of Origin scheme.
  • Comply with the Community Benefit Principles.
  • Meet the final investment decision requirement where applicable.
  • Produce hydrogen that meets all applicable production, emissions, certification and grid-matching requirements.

Is this a competitive grant or an entitlement-based incentive?

This is a federal refundable production tax offset, not a competitive grant. Eligible companies claim the offset through their company income tax return, subject to meeting the applicable eligibility, certification and reporting requirements.

How can Avant Group help?

Avant Group can help your company assess its potential eligibility, understand the certification and reporting requirements, and prepare the supporting information needed for a claim.

How can I find out if my company may be eligible?

Avant Group offers a no-obligation initial assessment of your project against the available eligibility requirements. Contact Avant Group to discuss your eligibility and preparation requirements.