Australia’s minister for energy and emissions reduction Angus Taylor has told Infrastructure Investor that private capital will play a crucial role in realising the government’s plans to develop a world-leading green hydrogen industry.
“We see hydrogen as an enormous opportunity for Australia to continue our strong position as an energy exporter and an energy superpower,” Taylor said.
“We realise that some early-stage plants will be sub-economic, but we want to get them to commercially attractive economic outcomes as fast as possible, and that means having private sector investment. A good sign for a technology that is coming of age is that the private sector wants to invest – and it’s very clear to us that there’s enormous excitement in this area.”
The Australian government is pushing to position itself as a world leader in the fast-growing green hydrogen space.
Last year it altered the mandate of the Clean Energy Finance Corporation to make hydrogen one of its main investment priorities and announced the creation of a A$300 million ($221 million; €186 million) Advancing Hydrogen Fund to support new projects.
It has also committed A$70 million in grant funding for projects through the Australian Renewable Energy Agency and signed memorandums of understanding with Japan, South Korea, Singapore and Germany to share technology and explore the creation of hydrogen supply chains.
Taylor said that Australia was “extremely well-positioned” to create a new green hydrogen industry thanks to its abundance of natural renewable resources in the form of wind and solar power. He said that the federal government was “putting our money where our mouth is on hydrogen”.
“We want to see a lot of private capital. The CEFC’s goal is to leverage private capital – for every A$1 they put in, they’ll typically see A$3 of private capital,” Taylor said.
“Across our total technology roadmap, we’re investing A$18 billion and we’re expecting a total investment, including the state governments and the private sector, of A$70 billion.”
The government hopes to turn hydrogen into a major export industry, as it has done with liquefied natural gas over the past few decades.
“We think that Asian countries – Japan in particular, also Vietnam, Singapore and China – will lead the way in buying hydrogen but have challenges in producing it themselves. The industry has the potential to deliver over A$10 billion a year in a reasonable timeframe,” Taylor said.
He added that the government would not rule out the use of fossil fuels, in particular traditional gas, to produce hydrogen. This is in contrast to many investors who view green hydrogen produced solely from renewable energy sources as a crucial component to reaching net-zero emissions in the near future.
“I think that’s part of the attraction to customer countries – we can do this faster than others. In other countries it can’t happen overnight because it’s too expensive … but our capacity to do it is part of our attraction as a source of supply of hydrogen for countries like Japan and Korea,” he said.
The federal government launched its National Hydrogen Strategy in 2019 and has set a target of reducing the cost of hydrogen to less than A$2 per kilogram, a target called ‘H2 under $2’.
Angus Taylor was speaking to Infrastructure Investor as part of our upcoming Deep Dive into the hydrogen sector, which will be published on Monday.