Australia and Germany offer $125m to hydrogen start-ups
Updated: Mar 11
Australia and Germany are offering funding totalling about $125 million to hydrogen start-ups to expand, the latest in a flurry of investment in the nascent technology widely tipped to lead the global energy transition.
Global interest in hydrogen has grown substantially as countries make plans to move away from fossil fuels after pledging to reach net zero emissions by 2050 or earlier.
Hydrogen is a key component of Australia's plan, which aims to be at the forefront of a global race to profit from increased demand for the energy source.
With Australia looking to grow its budding hydrogen production and Germany looking to source new zero emission energy sources, the two countries last year agreed to partner to develop the industry.
Under the terms of the partnership, Canberra would contribute $50 million and Berlin an additional €50 million ($73 million) to develop the technology, which Energy Minister Angus Taylor will on Tuesday announce is now available.
The funding will be attractive to a growing number of Australian companies looking to commercialise hydrogen, the development of which has been hampered by high costs of production.
"It is through these important partnerships and attracting international investment that we will reduce the costs of the low emissions technologies and accelerate their widespread deployment in industry," Mr Taylor will say.
Commercialisation of the technology is widely seen as possible once hydrogen can be produced for less than $2 a kilogram - H2 under $2, which remains some way off despite significant research and investment.
Many expect the milestone will be reached within the next decade, led by soaring rates of investment.
The two largest components of producing hydrogen are electrolysers and the cost of energy. The cost of electrolysers - units where electricity is used to split water into hydrogen and oxygen - is falling, a trend expected to rapidly increase as production is industrialised.
Companies including Fortescue Future Industries have committed to building electrolyser factories to meet the growing demand.
FFI has begun construction on its $1 billion manufacturing plant in Queensland, which it expects to produce its first electrolysers in early 2023.
Australia has been pushing hydrogen as an energy source as it looks to extend the lifespan of some fossil fuel power generators.
The viability of hydrogen exports was highlighted earlier this year, when Australia shipped the world's first cargo of liquid hydrogen in a small pilot project, produced by brown coal mined in Victoria's Latrobe Valley. The project is relying on Australian carbon offset units to nullify its emissions impact.
The shipment was praised by Prime Minister Scott Morrison, but critics including Fortescue chairman Andrew Forrest have said Australia should focus on so-called green hydrogen, which is made with renewable energy.
Mr Forrest said Australia enjoyed a comparative advantage in renewable energy, and the cost of production would fall substantially as new projects came online.
Some Australian states and territories have hugely ambitious targets for renewable energy generation to replace retiring coal power generation. Victoria last week announced plans to generate the equivalent of 20 per cent of its energy needs from offshore wind within the next decade.
Both green hydrogen and CCS are on the federal government's priority list of technologies that are expected to be critical to drive Australia towards its goal of net zero emissions by 2050.