Australia plans tax credits to boost green hydrogen production
The Australian government has budgeted AUD 6.7 billion ($4.5 billion) over 10 years towards a temporary Hydrogen Production Tax Incentive program from 2027.
PHOTO: Aerial view of Port of Port Hedland. Pilbara Ports Authority
Australia has announced a subsidy scheme that will pay AUD 2/kg ($1.3/kg) to companies for producing green hydrogen over 10 years per eligible project between 2027-2040. The announcement is part of Australia's 2024-25 budget.
The government has further committed AUD 3.2 billion ($2.1 billion) over the next decade through its Australian Renewable Energy Agency to support the commercialisation of net-zero technologies.
This includes allocation of AUD 1.7 billion ($1.1 billion) that will be deployed through a new 'Future Made in Australia Innovation Fund'. The fund will focus on “technologies and facilities linked to priority sectors” including low carbon liquid fuels, the government announced.
The government has also earmarked AUD 1.3 billion ($871 million) to support the green hydrogen industry's first movers over the next decade.
Boost for green marine fuels
The funding will support “emerging green hydrogen and green methanol producers with a production tax credit,” renewable energy firm ABEL Energy said.
ABEL Energy is working on two green methanol production projects in Australia to meet bunkering demand. It will produce up to 200,000 mt/year of green methanol at its facility in Bell Bay, Tasmania and another 400,000 mt/year of green methanol in Townsville City.
Green methanol produced at the Bell Bay plant will be used for bunkering in Melbourne port, while production from its Townsville facility will be exported primarily to Singapore for bunkering. Bell Bay plant is scheduled to become operational in 2026 and Townsville plant in 2029.
Ammonia producer Yara Clean Ammonia has also lauded the government’s commitment to the green hydrogen sector. Yara already has an ammonia plant in Pilabara's Karratha region. It is also building a green hydrogen plant on the same site. It plans to use this green hydrogen to "inject green molecules" into its existing ammonia plant to produce green ammonia for bunkering in Pilbara.
Oil major and marine fuel producer BP is also building an integrated green hydrogen and green ammonia plant in the Pilbara region. The project aims to produce around 9 million mt/year of green ammonia. BP has not yet specified whether it will earmark any capacity for shipping.
“Hydrogen delivers comparative advantage to Australia not only as a molecule but as the critical pathway to decarbonise hard to abate sectors, and establish new high value exports in green steel, green iron and green ammonia,” Fiona Simon, chief executive of the Australian Hydrogen Council said.
“This budget reflects that production, technology and jobs are all essential parts of ensuring a future made in Australia for hydrogen,” she added.
The Australian Parliament will now have to approve the budget appropriation bill before it can become a law.
By Konica Bhatt
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