In the recent budget update released on the 10th of May, a major new area of investment looks towards environmentally friendly hydrogen production in Australia, with a total of $127 billion in funding allocated over the coming years. This comes as part of Australia’s move towards becoming a major hydrogen exporter and decarbonising the economy, where the government aims to decrease reliance on carbon-based energies to allow for a phase out in efforts to reach a carbon net-zero status by 2050, among other benefits.
Hydrogen, the most common element in the universe, shows high promise as a fuel source for a variety of reasons, in addition to its abundance.
Where fossil fuels emit carbon dioxide (CO2) and a multitude of other pollutants when used, hydrogen emits only water vapour. Its use as a fuel source could therefore drastically reduce CO2 emissions and help Australia reach its goal to be carbon net-zero by 2050.
It is highly versatile; hydrogen can be directly used through fuel cells in a variety of industrial, transportation, and residential applications, it can be blended with or replace instances where natural gas is currently used, and it can provide an easily established energy source in remote areas, such as mining sites and remote communities. Further, hydrogen is a major raw material input for industrial production of iron, steel, fertiliser, ammonia, and more.
Energy storage forms another main draw due to the element’s high energy density, meaning that a relatively small volume of hydrogen can store a large amount of energy. Hydrogen’s ability to store energy, which in addition to helping fulfil energy storage needs in-country, enables energy trade between Australia and other countries.
Despite these highly promising characteristics, there are barriers to its usability at present. There are questions around the best methods for production, storage, and transportation, especially considering that many current production technologies use fossil fuel inputs to separate hydrogen from bonded molecules, undermining the potential environmental benefits. Additionally, there is a need for significant infrastructure to be built across Australia to support the relatively nascent industry.
Research Reveals Strong Potential for Investment and Growth
Research undertaken to predict the potential benefits of Australian investment into hydrogen show significant promise. Australia has been deemed to have especially strong potential regarding hydrogen production due to high levels of related resources and skill in-country, with researchers seeing Australia as well-placed to become a global hydrogen powerhouse in the face of a global economy which is predicted to become more and more hydrogen reliant. Research indicates that hydrogen could generate up to $50 billion in additional GDP by 2050; another estimate is that by 2040, Australia could be exporting over 3 million tonnes of hydrogen each year, worth up to $10 billion annually.
It is from this background that the Australian Government has put aside $127 billion towards investing in hydrogen. This funding will go to over 110 (current total, this number will increase) different programs with various aims, such as building infrastructure for the production, storage, and transport of hydrogen, research and development activities, and a credit system to ensure low prices for consumers. In addition to reaching decarbonisation targets and becoming a major international hydrogen exporter, the investment aims to revitalise manufacturing, support regional economies, create jobs, keep energy prices low, and boost investment opportunities.
Hydrogen Headstart Program
The Australian Government, through the Australian Renewable Energy Agency (ARENA), is investing $2 billion into the Hydrogen Headstart program, a new program aimed to support the development of 2 or 3 flagship projects. These projects, chosen through a competitive bidding process, will be able to receive funding as a production credit to bridge the gap between production costs and a commercially viable price point in order to encourage consumers to switch to the green energy source. As of 2020, costs for the production of environmentally friendly hydrogen ranged between $6-9 per kilogram, while hydrogen produced using fossil fuel inputs were between $2-3 per kilogram. The aim is to bring down the price of green hydrogen to $2 per kilogram through this program, while at the same time supporting the development of massive green hydrogen production facilities through this revenue support. The flagship projects, set to be among the largest of their kind in the world, are expected to have up to 1,000 MW of production capacity and are critical to Australia’s realisation of becoming a global hydrogen superpower.
Advancing Hydrogen Fund
The Clean Energy Finance Corporation (CEFC) is working to support the growth of the Australian hydrogen industry with $300 million in funding. Eligible projects for this fund include those which produce hydrogen, develop export and domestic hydrogen supply chains and infrastructure, establish hydrogen hubs, and other projects which build domestic demand for green hydrogen. Hydrogen hubs, a main point of both this funding and others within the larger $127 billion pool, focus on creating clusters of high demand, thus making the infrastructure more cost-effective and efficient while also fostering innovation within these hubs.
Hydrogen Related Research and Development Support
Various programs within the overall funding pool are set to promote research and development around fossil-free hydrogen production, storage, and transportation. The Hydrogen Research and Development program, run by ARENA, has $25 million to support R&D endeavours in this field and is currently accepting applications from companies undertaking relevant research. Other projects include CEFR’s Clean Energy Innovation Fund, CSIRO’s Hydrogen Energy Systems Future Science Platform, and more.
Opportunities for Hydrogen Production Development
The funding in coming years to support Australia’s development into a global superpower for hydrogen production and exports is extensive, with billions in funding spread over numerous individual programs and new ones announced regularly.
As experts in government grants and funding, Avant Group can connect your organisation to the relevant programs and undertake the grant writing process for you, taking away the complications and confusion from the government grant process.
If your organisation is undertaking activities related to hydrogen, contact our team at [email protected] to discover what funding may be available for you.