Mining magnate Andrew Forrest believes a $2 billion federal funding injection to help accelerate Australia's green hydrogen industry will be just the start, as his company positions to tap into the likely subsidy.
In what is being seen as a response to US President Joe Biden's massive $US370 billion ($547 billion) Inflation Reduction Act (IRA), Australia's Hydrogen Headstart program has been unveiled in the 2023 budget to support a small number of "large-scale projects" through "competitive production contracts".
The government said this would help "bridge the commercial gap for early projects" and put Australia on course to develop a gigawatt of electrolyser capacity by 2030 through "two to three flagship projects".
"For too long, Australians were left behind as the rest of the world moved to take advantage of the economic opportunities that come with action on cleaner, cheaper energy," Energy Minister Chris Bowen said.
"In the global race for new energy jobs and investment, we were falling behind the pack."
Green hydrogen is produced through clean sources of energy such as wind, hydro, or solar, and backers of the technology say it will grow to become a massive industry as the world transitions to net zero emissions by 2050.
There are no details yet about how the $2 billion will be spent, but industry insiders have been pushing for a subsidy of about $2 per kilogram of green hydrogen produced — half the size of the subsidy on offer under Mr Biden's stimulus package.
No longer 'flat footed'
Mr Forrest, whose company Fortescue Futures Industry (FFI) stands to benefit from the funding boost, said the intervention would send a signal to the world that Australia was no longer "flat-footed" on green hydrogen, which he believes is the key to decarbonising the globe.
"[Australia] was watching the massive investment taking place across the world and just doing nothing," he said.
"At least we've made a start now.
"Projects were stalling, but with a push like this, a bit of fuel in the tank, maybe but maybe projects will be dusted back off."
Through his FFI offshoot, Mr Forrest has been ambitiously courting governments around the globe, including the Biden administration, in his quest to unlock the potential of hydrogen as industry fuel source.
If his ambition is realised, the magnate believes it would signal the end of the fossil fuel industry.
When asked whether Mr Forrest would be one of the big winners from the budget, Treasurer Jim Chalmers said, "I don't want to pre-empt who will receive these production credits".
"There will be a competitive process when the scheme is designed and up and running, and it's all about encouraging more hydrogen production," he said.
"Hydrogen's going to be key to our future."
Project pipeline stalled
The 2022 State of Hydrogen report found Australia had more than 100 projects in the pipeline, but most were yet to reach final investment decisions.
BP, which is developing three green hydrogen projects in Western Australia, said the $2 billion on the table would make Australia globally competitive and "de-risk" the massive outlay of capital required to start up a new industry.
"This announcement signals Australia's intention to be a global leader in renewable hydrogen by attracting investment and giving potential customers assurance of Australia's commitment to a new industry," said BP's vice president of hydrogen, Lucy Nation, in a statement.
A spokesperson for energy company Engie also welcomed the government's commitment, saying it "has well advanced projects that would benefit from this scheme".
"The Hydrogen Headstart announcement is a step in the right direction toward making Australia competitive in this space," the Engie spokesperson said.
A recent report published Deloitte Access Economics report warned Australia "stands at a crossroads" and needed to invest $15 billion over the next decade or miss out on a potentially lucrative new industry.
"The competitive landscape has been radically altered by the comprehensiveness and aggressiveness of the Inflation Reduction Act on a scale and magnitude which cannot be ignored," the report said.
While hopes and ambitions are high, green hydrogen requires a huge amount of renewable energy, and there are doubts over whether it can be produced at a cost that makes it attractive compared to grey hydrogen which is produced from fossil fuels.
