Budget 2023: ARENA to shape green hydrogen future

ARENA will help develop a $2 billion revenue support program to scale up green hydrogen production. Hydrogen Headstart aims to position Australia as an early mover and global leader in this field.

Announcing the Hydrogen Headstart measure as part of the 2023 Budget, Treasurer Jim Chalmers in his Budget Speech said: “By acting now, our resources, our researchers and our regions can help power the world. Seizing these kinds of industrial and economic opportunities will be the biggest driver and determinant of our future prosperity.

The program will likely support two to three of the biggest hydrogen projects yet built and operated in Australia. The Government envisages these flagship projects could deliver up to a gigawatt of electrolyser capacity by as early as 2030. The funding will provide revenue support in the form of a production offset. It will cover the commercial gap between the cost of renewable hydrogen production and the market price. Expressions of interest are expected to open in early 2024 for project selection through a competitive process.

What is ARENA’s role?

Brisbane’s Gibson Island is already home to an ammonia plant which could utilise renewable hydrogen (Image: ARENA)

The 2023 Federal Budget allocated $4.2 million to ARENA to support the development and operation of Hydrogen Headstart. ARENA will design the program in consultation with Department of Climate Change Energy Environment and Water (DCCEEW), Australian industry and communities.

“With this funding, we are looking to incentivise green hydrogen production in Australia by backing early projects that will be among the largest in the world,” ARENA CEO Darren Miller said. “This funding will reduce the cost of green hydrogen produced via renewable electricity and will scale up our hydrogen sector. These projects will create thousands of regional jobs and will help reduce emissions in industry in line with our climate targets,” he said.

How has ARENA supported renewable hydrogen?

ARENA already has a proven track record in stimulating innovation in the green hydrogen sector. ARENA recently announced $25 million for Hydrogen Research & Development (R&D) funding. This R&D funding round is still open, with a closing date for applications set for June 1 2023. In January, ARENA allocated another $50 million to four hydrogen projects, supported as part of the joint Australian-German HyGATE initiative.

Last year, ARENA provided a grant of $13.7 million towards a $38 million front-end engineering and design (FEED) study into the feasibility of plans to build one of the world’s largest renewable energy powered electrolysers on Gibson Island in Queensland. ARENA also in 2022 conditionally approved $47.5 million for the first 10 MW electrolyser plant in the Pilbara. That funding is part of a $103 million Renewable Hydrogen Deployment Round.

All told, ARENA has provided $236 million to 43 renewable hydrogen projects from early-stage research to deployment projects and studies. Projects have included hydrogen refuelling and hydrogen trucks, hydrogen for producing green ammonia, hydrogen for use in alumina refining, gas blending and remote power.

“Australia has an unparalleled opportunity to become a global green hydrogen leader, but we can’t afford to lose our momentum as other competing countries step up their ambitions and support,” Mr Miller said. “ARENA is delighted to be involved in the design of this game-changing hydrogen funding initiative,” he said.