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13 min ago 3 min read
Australia’s hydrogen lobby is praising government plans to offer billions in funding for fuel and fertiliser security, which it believes could anchor demand for domestic hydrogen projects.
Canberra has proposed an AUD $10bn ($7.2bn) package to support Australia’s near-term fuel and fertiliser security amid price shocks due to the ongoing Middle East conflict.
AUD $7.5bn ($5.4bn) of the package will be used to establish a “fuel and fertiliser security facility” to increase supply and storage through loans, equity guarantees, insurance, and price support.
It also provides AUD $3.2bn ($2.3bn) for a state-owned fuel reserve and feasibility funding to expand refineries.
CEO of trade group Australian Hydrogen Council (AHC), Dr Fiona Simon, said the package could help pivot government support for hydrogen from production toward integrating it with products and supply chains.
She explained policy support, like Australia’s programme, has focused on subsidising green hydrogen production.
“The next phase is about connecting that production capability with the products Australia needs, including fertilisers, low-carbon liquid fuels, methanol, ammonia, refining inputs, and industrial feedstocks,” she said.
It comes after various government-backed hydrogen projects were or delayed over a lack of visibility on offtake due to higher production costs.
Simon said the new package could help “close the loop” between production, demand, storage, logistics, and domestic supply chains, “if designed well.”
Details of the package’s mechanism have not yet been revealed. But Simon said AHC would be looking at how it could support demand-side measures, offtake structures, and end-use market development for hydrogen.
With fuel and fertiliser trade disrupted by the closure of the Strait of Hormuz, analysts say the cost gap between conventional and green hydrogen-based products is narrowing.
During its Q2 earnings call, industrial gas major Air Products said grey ammonia prices were getting to $1,000 per tonne, with green ammonia output from its 2.2GW NEOM green hydrogen project previously estimated at $700 per tonne.
However, some have warned that the price shocks will be temporary.
“Investing in a green hydrogen project is a 10-to-20-year bet on high oil and gas prices,” said Martin Tengler, Head of Hydrogen Research at BloombergNEF.
The durability of hydrogen’s “energy resilience” argument may ultimately depend on whether governments treat recent fuel disruptions as a temporary shock or a lasting shift in global energy security risk.
