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Australian Hydrogen Council charts way forward with a refreshed national H2 strategy

The Australian Hydrogen Council (AHC) welcomes the Albanese Government’s review of the National H2 Strategy (NHS) and has offered a comprehensive position paper with 53 key recommendations and supplementary reports to chart a clear way forward.

The paper forms AHC’s response to the consultation paper released by the Department of Climate Change Energy Environment and Water on the Refreshed NHS published on July 7, 2023.

Much has changed since the original strategy from 2019. The effects of the pandemic and the war in Ukraine have forced a reassessment of how nations consider the strategic overlaps between decarbonization, national security and self-sufficiency. In Australia we have also had a change of government, with a new approach to climate change and net zero.

Importantly, and as a fundamental outcome of these factors, the U.S. Inflation Reduction Act (IRA)—also a response to these global issues—requires a form of policy response to ensure Australia can continue to attract capital in a competitive environment. Australia cannot match the IRA in terms of the quantum of support, but a targeted policy and funding approach is needed.

“All of this is much larger than the question of H2. However, clean and green H2 has a key role to play to decarbonize key sectors of the Australian economy, to support the decarbonization of our trading partners’ economies and to support our own fuel self-sufficiency.

“The lessons learned since 2019 have only amplified the need to focus our attention on how we can best effect the energy transition for Australia,” AHC’s CEO Dr Fiona Simon said.         

Overall, our position is that the revised National H2 Strategy must be viewed as a key element of the Australian Government’s net zero strategy. This is logical given that H2 is itself the means to decarbonize the parts of the Australian economy that are difficult to decarbonize with electricity and storage alone.

Significant planning and coordination is required at a national level to meet our objectives including:

  • Tasking stewardship of the NHS to the Net Zero Economy Agency. The energy and industry transition will connect complex systems and require fundamental change, planning and creativity across sector, state, departmental and political boundaries. We need cross departmental steering of net zero work which includes the refreshed NHS.

“Australia will not reach net zero without H2, and the infrastructure build to enable the H2 industry is not only massive, but also aligns with the Net Zero Economy Agency remit,” she said.

  • Setting priorities and targets, based on robust analysis. Within the overall net zero program, the Australian Government must set priorities and meaningful targets, and there needs to be a government commitment to fill current knowledge gaps to a reasonable degree. To date there has been a lack of an overarching framework or plan, including how to realize Australia’s ambitions to be an emerging renewable energy and/or H2 Many of the policy decisions that need to be taken rely on data that are not yet collected.
  • Committing to planning and financial support for shared physical and social infrastructure, including via H2 Economic Zones. Almost all the physical infrastructure required for a future H2 industry at scale is new, and it is long-lived with long planning lead times. There must be planning and co-optimizing of different assets to address a range of different markets and to also not over-burden consumers’ and taxpayers’ willingness to pay, or communities’ willingness to tolerate construction in their midst. This requires an extension of the current Renewable Energy Zones and H2 hubs concept to create zones that can support and be supported by local industries and communities.
  • Building scale and capability in the sectors and applications that will be hard to abate. This is the best no regrets approach that can be taken in an uncertain environment. Current evidence supports these industries as being chemicals (such as ammonia), low emissions metals (specifically iron and alumina), heavy road transport, high temperature process heating, marine and aviation, and grid support and storage in the electricity market.
  • Keeping export options open. For export, there are two main uses of H2: exporting H2 and its derivatives as an energy vector and using H2 to process ores that are then exported. Both options need to be pursued to grow our international relationships, support regional energy security and build Australia’s capability for the future, including paying for our own transition.
  • De-risking projects through public finance. Work closely with Clean Energy Finance Corporation (CEFC) and ARENA to deploy appropriately scaled public levers that will crowd in and de-risk investment in H2. This means more investment than the current $300 MM for the CEFC, and follow-up packages to the H2 Headstart announced in the May Federal Budget. Ideally, the current and future iterations of the $2-B H2 Headstart program will need to incentivize demand or assist project developers to manage demand side risk. The approach must also prioritize timeliness, both to build momentum and to align prospective projects with the timelines for regional offtake (and as a response to the investment challenge posed by the IRA).

The refreshed NHS needs to address all the above issues and clearly recognize the role for government to lead. It cannot be the last word from the Australian Government on H2 policy. It is imperative that this strategy provides a basis for actions to meet targets and milestones and to allocate responsibility. Detailed implementation plans may need to be by sector or ecosystem element but should be outlined in an overall plan to set expectations.

“Given H2 is our critical industrial solution, this is too important to be left to chance, or to the whims, complexities, and uncertainties of a nascent market,” Dr. Simon concluded.