Australia to review national hydrogen strategy: Update

Spanish Market: Hydrogen
27/02/23

Adds info on response from the Australian Hydrogen Council in paragraphs 4 and 5.

Australia will review its national hydrogen strategy, partly in response to the US' Inflation Reduction Act (IRA) and efforts by other countries to build up a hydrogen economy.

The government's Energy and Climate Change Ministerial Council agreed late last week that the strategy should be reviewed to support Australia "on a path to be a global hydrogen leader by 2030 on both an export basis and for the decarbonisation of Australian industries". The review is to factor in developments in Australia and elsewhere since the original strategy was drawn up in 2019, the council said. This will include "the impact of the Inflation Reduction Act… and policies by other countries to support a hydrogen industry".

The IRA will introduce tax credits of up to $3/kg for hydrogen production, with the exact amount of support to depend on lifecycle greenhouse gas (GHG) emissions. It has been widely regarded as a gamechanger for the low-carbon hydrogen industry and other countries have scrambled to follow suit. The EU earlier this month announced specific provisions for hydrogen as part of its Green Deal Industrial plan, including auctions through which it will grant fixed premiums on renewable hydrogen production, and said this would have "a similar impact as the production tax credit". India earlier this year also earmarked substantial funds for production-linked incentives to stimulate hydrogen production.

Industry body the Australian Hydrogen Council said it welcomes plans for reviewing the strategy and that more far-reaching support for the sector is crucial in order to keep up with other countries' efforts. "We are already hearing that Australian projects are being de-prioritised where there are choices", the association's chief executive Fiona Simon said. "Competition for hydrogen projects is fierce" and countries are "jostling for first mover advantage", she said. Simon called on the government to develop a new strategy that "will reconsider the best range and combination of long-term economic mechanisms to develop the hydrogen industry, including grants, debt and underwriting".

The industry body said that according to a report by consultancy Deloitte, failure to respond to the IRA could lead to significant hydrogen production in Australia being delayed into the 2030s. This would leave Australian exports 65pc lower in 2050 than if the US bill had not been introduced. Deloitte suggests that the Australian government should introduce a production credit of A$2/kg for 10 years for hydrogen projects, the Australian Hydrogen Council said.

Australian industry participants have previously warned that the country risks losing its edge unless there is more political support. The country has many of the key components for cost competitive renewable hydrogen production — especially ample solar and wind resources and a vast land mass — and many projects are planned across the country, including giant sites such as the BP-led Asian Renewable Energy Hub (AREH). But few projects have progressed to final investment decisions and there are concerns around issues such as electricity generation and transmission infrastructure and water supply.

Australia's hydrogen strategy from 2019 set out removal of market barriers, the effective build-out of supply and demand and a drive for global cost competitiveness as key aims. The government sees the creation of hydrogen hubs — which combine all aspects of the value chain — as crucial for achieving these goals.

By Stefan Krümpelmann

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20/11/24

EU countries urged to align green H2 rules for refining

Brussels, 20 November (Argus) — EU member states must harmonise the incentives they offer refineries to switch to renewable hydrogen in order to simplify investment decisions and ensure a level playing field, delegates heard at the European Hydrogen Week event in Brussels. Frontrunner countries have diverged. Germany has proposed simpler and more lucrative incentives for its fuel producers compared with the neighbouring Netherlands, while Belgium has drafted its plans but is yet to cement them until its new government settles, industry participants said at the event. To stimulate demand, these governments are working on versions of a scheme sometimes called "the refinery route" which allows transport fuel producers to generate tradeable credits if they substitute renewable hydrogen into their processes. But implementation of the scheme has been put in the hands of each EU member, which has yielded different designs even between neighbours. Industry groups from Germany, Belgium and the Netherlands argued this week that aligning their hydrogen policies would have an outsized impact and could set a direction for others. The trio account for 30pc of Europe's industry and 40pc of its hydrogen consumption, according to Dutch industry group NLHydrogen's chairman Marcel Galjee. "If we can't find agreement even in these three countries, then it becomes impossible at the European level, so let's take these countries as a start and build from there," Galjee said. Having uniform rules would simplify the calculation of the value of the incentives which is "the only way to drive investment", according to Galjee. "If we would align Germany, Belgium [and] the Netherlands, it would be much easier to determine the value of a refinery route in your business case. That is currently very difficult and it's preventing progress," he said. The Netherlands' recent proposal to deploy a correction factor to curb the value of its credits angered some refiners and industry groups . The Dutch approach to deploy a correction factor to drive more renewable hydrogen use in refineries was good thinking but bad execution, according to Galjee. The Netherlands would be better copying Germany's policies without a correction factor and then increasing the size of the Dutch quota for renewable hydrogen use in transport as a simpler way to get the demand stimulus it wants, he argued. Boosting demand was not the only intention of the correction factor, however, as the Netherlands also wanted to stop the refinery route undermining direct use of hydrogen and derivatives in vehicles. Fully copying Germany may not be a "realistic option in the Dutch environment today", and while Galjee hopes the Netherlands can move closer to Germany's refinery route system, the top priority must be that some form of the Dutch refinery route starts on time in January 2026, he said. Belgian industry also wants its government to replicate the system devised by Germany, according to Belgium Hydrogen Council chair and Port of Antwerp-Bruges chief operations officer Tom Hautekiet. "Don't try to be smart, just copy and don't change anything from the German system. I want it exactly the same, with the same multipliers, the same objectives," he said. Belgium will likely confirm its plans publicly in a matter of months, and Hautekiet is hoping the government will hear the message from industry. There could even more divergence across the rest of the bloc. Industry participants said they have found it impossible to track every country. France has also proposed a version of the refinery route, but it differs from Germany in certain other areas of hydrogen policy, which has meant the other three have found it easier to present cohesive views as a trio. The issue of fragmentation may deepen in coming months as EU member states start to transpose into national law EU mandates relating to hydrogen in industry ahead of the May 2025 deadline. This will mean even more autonomy and room for divergence. By Aidan Lea Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Hong Kong unveils green maritime fuel action plan

18/11/24

Hong Kong unveils green maritime fuel action plan

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Cop: Parties back battery storage, grids and H2 pledges

15/11/24

Cop: Parties back battery storage, grids and H2 pledges

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Cop: Argentina pulls delegation from Baku

13/11/24

Cop: Argentina pulls delegation from Baku

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Cop: UK sets ambitious 2035 climate target

12/11/24

Cop: UK sets ambitious 2035 climate target

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