Australia outlines details of hydrogen subsidy scheme

Market: Hydrogen
07/07/23

Australia's federal government has outlined more details of the A$2bn ($1.33bn) Hydrogen Headstart programme first announced in May, revealing it will target 1000MW of electrolyser capacity by 2030 by paying a production subsidy to a select number of large-scale projects.

The minister for climate change and energy Chris Bowen released the scheme's consultation paper on 7 July with submissions to close on 3 August, identifying the government's preference for the money to go to at least two large-scale projects of at least 50MW electrolyser capacity. The largest Australian project to have reached a final investment decision (FID) so far is for 10MW.

Hydrogen Headstart will choose Australia-based projects producing hydrogen or derivative products made from hydrogen, such as ammonia, which must be produced using renewable energy and without carbon capture and storage. The scheme was first announced on 9 May with an aim to help the industry bridge the commercial gap between the cost of production and competitive pricing.

Successful applicants will gain a production credit on a per kilogramme basis, paid over 10 years to cover the price gap between production costs and sales price, with the final guidelines on applications to be released in late 2023 or early 2024. If the sales price "materially exceeds" required support within the decade, recipients must pay back an amount of the subsidy received in previous years.

"Hydrogen Headstart is an important priority that will keep Australia competitive and we must get the design right. This will help shape future policies and incentives," said the chief executive of peak representative body the Australian Hydrogen Council Fiona Simon.

Consultations for the review of the National Hydrogen Strategy, initially developed by the previous government in 2019, also opened on 7 July and close on 18 August. The review will examine actions implemented in the original strategy, as well as new opportunities not previously adopted.

Australia's plentiful solar and wind power sources have so far failed to materialise into commercial development of green hydrogen. Many in the industry have called for subsidies and incentives, concerned the country could fall behind other countries in the hydrogen export race.

Australia has around 40pc of all announced global hydrogen projects, with the Australian pipeline valued between A$230bn-300bn. But the government said by the end of 2022, only a single Australian project with a capacity of at least 10MW had reached a FID, while the EU boasts 1,400MW and the US 300MW of FID-approved capacity.

By Tom Major

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Viewpoint: EU at crossroad on H2 rules, competitiveness

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Splitwaters electrolysers heading for US e-fuel makers

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Splitwaters electrolysers heading for US e-fuel makers

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UK government underlines its commitment to net zero

18/12/24

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18/12/24

UK government underlines its commitment to net zero

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Nordic Electrofuel expands e-SAF plans to Middle East

18/12/24

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18/12/24

Nordic Electrofuel expands e-SAF plans to Middle East

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Viewpoint: Japan eyes methanol as marine bridging fuel

18/12/24

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18/12/24

Viewpoint: Japan eyes methanol as marine bridging fuel

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Japanese firms have invested in more than 10 e-methanol production projects both in and outside of Japan ( see table ), with the number of projects likely to increase, according to the ministry of economy, trade and industry. Japanese firms are developing new carriers, but at the same time are also trying to modify existing vessels — which currently use fuel oil, LNG, LPG and methanol — to be able to burn renewable fuels such as biofuels, e-methane and e-methanol. It would be easy to increase the number of methanol-fuelled ships, given their relatively low initial or modification costs compared with LNG-fed vessels, according to Mol. Methanol is also a stable liquid at room temperature and atmosphere pressure, making it easy to transport and store compared to other alternative fuels, Mol added. Fellow shipping company Nippon Yusen Kaisha (NYK line) is also mulling the development of smaller methanol-fuelled handymax ships that are unable to be equipped with large ammonia fuel tanks, to aid with decarbonisation. Methanol a temporary solution But Japanese firms see methanol mostly as a "bridging fuel" rather than a zero-emission fuel, as methanol can reduce GHG emissions only by 15pc compared to traditional bunker fuel, although it can curb sulphur oxide and nitrogen oxide emissions by up to 99pc and 80pc, respectively. It would be vital to begin introducing much cleaner marine fuels, such as ammonia and hydrogen, to meet the maritime sector's net-zero goal. Tokyo is trying to promote the development of ammonia and hydrogen-fuelled ships by providing financial support, while the utilisation of such clean vessels could materialise from around 2030, the ministry of land, infrastructure, transport and tourism (Mlit) said. Japan's state-owned research institute Nedo plans to provide ¥35bn ($229mn) to support the development of engines, fuel tanks, fuel supply systems and other core technologies for zero-emission ships that use hydrogen and ammonia, as well as LNG and e-methane, under its ¥2.76 trillion green innovation fund. But the grants are much larger than those for the development of methanol-fuelled ships, which are currently available only from Mlit and the environment ministry, with the amount of ¥100mn per vessel over two to three years. The scheme has been open for application every year since 2023. But the ministries' scheme also targets LNG-fuelled ships, with a breakdown of allotment for methanol-powered vessels unclear. By Reina Maeda and Nanami Oki Japanese firms' methanol projects Methanol-fuelled ships Company # of vessel Type Target commercialisation Announcement Mitsubishi Gas Chemical, Mitsui OSK Line 1 Ocean-going methanol carrier Jul-05 May-23 Toyofuji Shipping, Mitsubishi Heavy Industries 2 Ro-Ro vessel 2027-28 fiscal year Jun-24 Mitsui OSK Line 1 Coastal methanol carrier Dec-24 Jul-24 NS United Kaiun, Nihon Shipyard, Jaman Marine United, Imabari Shipbuilding Multiple Bulk carrier After 2027-28 fiscal year May-24 Orix, Tsuneishi Shipbuilding 2 Bulk carrier Jul-24 Production Company Product Country Target commercialisation Target capacity (t/yr) Mitsui E-methanol US Jan-24 1630000 Mitsubishi Gas Chemical Bio-methanol Japan Jun-24 Small amount Mitsubishi Gas Chemical, Kobelco E-methanol Japan NA NA Cosmo, Toyo Engineering E-methanol Japan NA NA Sumitomo Chemical E-methanol Japan 2030s NA Mitsui, Asahi Kasei Bio-methanol US Jun-23 NA Toyo Engineering E-methanol India 2030 NA Investment Company Product Country Target commercialisation Target capacity (t/yr) Mitsui E-methanol Denmark NA 42,000 Idemitsu E-methanol Brazil, US, Chile, Uruguay, Australia 2,030 4,000,000 JOGMEC E-methanol Brazil, US, Chile, Uruguay, Australia 2,030 4,000,000 Mitsu OSK Line E-methanol Brazil, US, Chile, Uruguay, Australia 2,030 4,000,000 Table source: Firm's company releases Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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