The 2023 Australian federal budget has allocated more than $2 billion to bolster the nation’s emerging hydrogen industry, with subsidies aimed at combating growing international competition in the sector.
$2 billion has been committed for Hydrogen Headstart, a new program to provide 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 will also be made available 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 the Australian hydrogen industry and to support access to future markets for verified renewable and clean products.
Companies including green hydrogen developers Provaris Energy Ltd (ASX:PV1) and Frontier Energy Ltd (ASX:FHE, OTCQB:FRHYF) are expected to benefit from the government’s initiatives to position Australia as a renewable energy superpower.
Read: Provaris Energy progresses hydrogen development activities to serve markets in Asia and Europe
Provaris is advancing its Tiwi H2 Project centred on the Tiwi Islands off the Northern Territory coast.
The company’s concept design study in August 2022 confirmed feasibility for a compressed hydrogen export project with production of 100,000 tonnes per annum.
Permitting is advancing with Federal and Territory EIS submission scheduled for Q4 2023.
Read: Frontier Energy DFS positions Bristol Springs as “one of Australia's lowest-cost near-term green hydrogen producers”
In March, Frontier Energy wrapped up a definitive feasibility study (DFS) for stage one of its Bristol Springs Renewable Energy Project, some 120 kilometres from Perth in Western Australia.
The DFS confirms the company as one of Australia’s lowest-cost, near-term, early-mover green hydrogen producers and reaffirms the potential for the project to be a leader in the Australian low-carbon hydrogen industry.
Backing for green industries
Australia’s budget funding for hydrogen is a direct reaction to the US, which signalled hundreds of billions of forecast spending last year through a US$3 per kilogram tax rebate for hydrogen production under President Joe Biden's Inflation Reduction Act.
This is anticipated to position the US as the global leader in low-cost green hydrogen production.
According to Australian budget documents, government funding is required to remain competitive with the US and other regions including Canada and the European Union that provide substantial backing for green industries.