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Australia’s Hydrogen Headstart Initiative

The Australian Government has introduced a budget measure called Hydrogen Headstart in the May 2023 Federal Budget. This initiative, with funding of AU$ 2 billion, is aimed at accelerating the development of large-scale green hydrogen projects and technologies in Australia.

Hydrogen Headstart will support the construction of the most significant green hydrogen ventures in the country through a competitive process. It will provide financial backing for ongoing operational expenses in the form of production credit.

The funding will help bridge the financial gap between the cost of producing hydrogen from renewable sources and its current market price, particularly for early-stage projects.

The primary objective of Hydrogen Headstart is to facilitate the establishment of two to three flagship projects that can collectively achieve up to a gigawatt of electrolyser capacity by 2030.

This program intends to spur the growth of the hydrogen industry, attract additional investments, and enhance the competitiveness of green hydrogen and its related products in Australia. By implementing this initiative, Australia aims to position itself as an early adopter and a global leader in the field of hydrogen.

The Australian Renewable Energy Agency (ARENA) expressed its approval of the funding provided through Hydrogen Headstart, which was announced in the 2023-24 Federal Budget.

This funding aims to support investment in renewable hydrogen production by offering competitive production contracts. It will address the financial disparity between the cost of producing hydrogen from renewable sources and its current market value.

This year, an allocation of AU$ 4.2 million has been granted to the Australian Renewable Energy Agency (ARENA) to facilitate the development and operation of the program in collaboration with the Department of Climate Change Energy Environment and Water (DCCEEW). The funds will be used to support and oversee the implementation of the program, ensuring effective coordination between ARENA and the DCCEEW.

Hydrogen Headstart is expected to accelerate the growth of Australia’s hydrogen industry and other clean energy sectors, ultimately positioning the country as a global leader in the field, according to ARENA CEO. He noted that Australia has a remarkable opportunity to establish itself as a global leader in the green hydrogen sector. However, it is crucial to maintain momentum and not lag behind other countries that are increasing their ambitions and support.

The funding provided aims to incentivise the production of green hydrogen in Australia by supporting early projects that will be among the largest worldwide. This financial support will help reduce the cost of green hydrogen production using renewable electricity and technologies as well as facilitate the scaling up of the hydrogen industry in Australia. Furthermore, these projects are expected to create numerous job opportunities in regional areas and contribute to emissions reduction in industries, aligning with the country’s climate targets.

Recent analysis indicates that Australia’s hydrogen industry has the potential to contribute an additional $50 billion to the country’s GDP. Moreover, it could create over 13,000 regional jobs, alongside another 13,000 jobs associated with the construction of new renewable energy infrastructure, all by the year 2050.

This program is a continuation of ARENA’s ongoing efforts in the field of hydrogen and its commitment to implementing transformative projects that contribute to the energy transition towards achieving net-zero emissions.

To date, ARENA has allocated AU$ 236 million towards 43 renewable hydrogen projects. These projects encompass a range of stages, from early-stage research initiatives to deployment projects such as hydrogen refuelling and hydrogen-powered trucks. Additionally, funding has been provided for projects involving hydrogen production for green ammonia, use in alumina refining, gas blending, and remote power applications.


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