H2 project on Australia’s busiest road hits rough patch

Spanish Market: Hydrogen
09/08/24

The government-backed project to develop hydrogen refuelling along Australia's busiest road freight route appears to have run into some difficulty as it has still not announced an "industry partner" and the two most likely companies to take on the role — BP and Ampol — appear to no longer be participating in the selection process.

The governments of New South Wales (NSW) and Victoria have offered a combined A$20mn ($13.2mn) to entice a private sector developer to take on the Hume Hydrogen Highway project and planned to announce their chosen partner by mid-2024, but have made no announcement to date.

BP and Australian refiner and retailer Ampol, who have existing road fuel outlets along the route, were participating in the selection process but are no longer in the running, a source with knowledge of the process has said. Government planners appeared to have cooled their interest in the project and had discouraged companies from advancing with it, they added.

A spokesperson for the project from the NSW government declined to comment on the status of the project or the exit of the companies from the process. "There are no updates we are able to provide on this project at this time," they said.

BP and Ampol have not responded to request for comment.

The Hume Hydrogen Highway initiative aims to build a network of at least four hydrogen refuelling stations on "Australia's busiest freight corridor" between the east coast cities of Sydney and Melbourne, the state governments announced in 2022. It is intended to support a fleet of at least 25 hydrogen-powered freight trucks starting from June 2025, and must dispense renewable hydrogen, they had said. The states had also outlined the possibility to expand to Queensland for a future east coast network.

The NSW government is considering changes to its renewable fuels policy, which could involve promoting other renewable fuels aside from hydrogen for short and medium-term CO2 abatement, while maintaining support for hydrogen as a longer-term option, it said last week.

By Aidan Lea

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

03/10/24

Australia’s Origin to exit Hunter Valley Hydrogen Hub

Sydney, 3 October (Argus) — Australian utility and upstream firm Origin Energy has decided not to proceed with its planned hydrogen development project, the Hunter Valley Hydrogen Hub (HVHH), in Australia's New South Wales. The decision to withdraw from the proposed 55MW HVHH and halt all hydrogen opportunities was made because of continuing uncertainty about the pace and timing of hydrogen market development, Origin said. The firm said the capital-intensive project, intended to progressively replace gas as a feedstock in a nearby ammonia manufacturing plant, carried substantial risks. Origin Energy had an initial agreement with Australian chemicals and explosives company Orica to take 80pc of the green hydrogen produced from the hub for Orica's 360,000 t/yr ammonia facility on Kooragang Island, near the city of Newcastle. Origin Energy and Orica in 2022 said they will study plans to develop the HHVH in Hunter Valley region of NSW, which is Australia's largest thermal coal-producing area. "It has become clear that the hydrogen market is developing more slowly than anticipated, and there remain risks and both input cost and technology advancements to overcome. The combination of these factors mean we are unable to see a current pathway to take a final investment decision on the project," said chief executive Frank Calabria on 3 October. Origin had planned to make a final investment decision on the project by late 2024. The hub, which was estimated to cost A$207.6mn ($143mn), had been allocated A$115mn in state and federal funding and was shortlisted for production credits under Canberra's Hydrogen Headstart programme. In July, Origin described the pace of development in the hydrogen industry as "slower than it had anticipated 12 months ago", said. The company expressed hopes that improved electrolysis efficiency would reduce the rising costs of production. The decision is a significant setback for Australia's green hydrogen ambitions, following the July decision by Australian miner and energy company Fortescue to postpone its target of 15mn t/yr green hydrogen output by 2030. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Clean fuel credit not on Treasury priority list

01/10/24

Clean fuel credit not on Treasury priority list

New York, 1 October (Argus) — The US Department of Treasury says it will prioritize issuing final guidance around qualifying for a handful of Inflation Reduction Act clean energy tax credits before the end of President Joe Biden's administration, though guidance around a new credit for low-carbon fuels will likely take longer. The agency's new timeline suggests that granular rules around how to qualify for the 2022 climate law's clean fuels incentive will ultimately be decided by the winner of this year's presidential election. Kicking off in January and lasting through 2027, the 45Z tax credit will replace a suite of expiring fuel-specific credits and offer up to $1/USG for low-carbon road fuels and up to $1.75/USG for low-carbon aviation fuels. Treasury is still "actively" working on guidance around the 45Z incentive, Treasury acting assistant secretary for tax policy Aviva Aron-Dine told reporters today. But unlike for other credits, officials have not provided any timeline for proposing or finalizing that guidance or any signal of whether they could issue any safe harbor assurances before final guidance is available. The Biden administration has not yet clarified how it will calculate greenhouse gas emissions or account for the benefits of "climate-smart" agricultural practices for fuels derived from crop feedstocks, potentially deterring investments until final guidance is available. The 45Z credit requires fuel to meet an initial carbon intensity threshold and then increases the subsidy as a fuel's greenhouse gas emissions fall. Policy clarity is essential, biofuel groups say, since fuel and feedstock offtake contracts are hashed out months in advance and the credit is relatively short-lived compared to other Inflation Reduction Act incentives. Some farm state lawmakers have also pushed for final guidance to bar refiners using foreign feedstocks — such as used cooking oil from China — from being able to claim the credit. The Biden administration still expects to finalize guidance for the 45V clean hydrogen tax credit by year-end out of recognition that the industry "needs certainty" to invest, Aron-Dine said. The final guidance will provide "appropriate adjustments and additional flexibilities" to help projects move forward, she said, while adhering to requirements to consider indirect greenhouse gas emissions caused by the production of clean hydrogen. Treasury also expects to issue final guidance by the end of the administration on the 45Y clean electricity production credit and clean electricity investment credit, a technology-neutral tax credit it proposed earlier this year. The final guidance will continue the "explosive growth" of wind and solar and also provide tax credits to emerging technologies that produce no net greenhouse gas emissions, Aron-Dine said. Other tax credits set to be finalized by the end of the administration include the section 48 investment tax credit and the 45X advanced manufacturing production credit that is supporting the buildout of domestic supply chains, Aron-Dine said. By Cole Martin and Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Brazil's hydrogen tax credit mechanism becomes law

01/10/24

Brazil's hydrogen tax credit mechanism becomes law

Hamburg, 1 October (Argus) — Brazil's planned hydrogen tax credit mechanism has officially become law after being approved by President Luiz Inacio Lula da Silva. Lula's bill approval followed green light from the senate in August. The law earmarks 18.3bn Brazilian reals ($3.36bn) in tax credits for companies producing or consuming "low-carbon" hydrogen in 2028-32. Brazil's definition of low-carbon hydrogen is open to a multitude of production pathways and sets an emissions threshold of 7kg of CO2 equivalent/kg of hydrogen, arguably the most lenient in the world . But tax credit beneficiaries will be selected through a competitive procedure that will prioritise projects with lower greenhouse gas (GHG) emissions and those with the most potential to boost economic development. The exact selection criteria will be determined by a committee yet to be set up by the government. The tax credit value will be set at a specific percentage of up to 100pc of the difference between the estimated price of low-carbon hydrogen and the price of fuel or feedstock it replaces. The exact percentage "may be inversely proportional" to the GHG emissions intensity of the hydrogen produced or consumed, with the specific rules also yet to be determined by the committee. The bill further sets out penalties for firms that are awarded tax credits but fail to implement their projects. Its passage into law brings a long procedure to an end during which Lula once vetoed the tax credits out of a broader regulatory framework for the sector because of a lack of clarity on governance terms. Lawmakers subsequently provided more specific details on the tax credit plans, which allowed the bill to get over the line. The wider regulatory framework, which includes the definition of low-carbon hydrogen and sets out other incentives such as tax and import duty exemptions, already entered into law in August and is now amended with the tax credit bill. By Stefan Krumpelmann Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US election could shift climate action to states

30/09/24

US election could shift climate action to states

Scottsdale, 30 September (Argus) — Significant policy shifts on market-based actions to address climate change could come from US states if former president Donald Trump is re-elected. A Trump administration is expected to be much less friendly to environmental markets, with the Republican nominee pledging on the campaign trail to repeal major tax incentives and other policies that support emissions-reduction efforts. That could open the door to more action by Democratic-led states, according to speakers Monday at the Environmental Markets Association (EMA) annual meeting in Scottsdale, Arizona. "When Republicans win the White House, you tend to see the blue and purple states lean more aggressively into getting in the driver's seat on climate action," said Eric Scheriff, Capstone senior managing director of sustainability practice. Scheriff highlighted eight states that increased their renewable portfolio standard (RPS) targets during the first Trump administration and said there is further potential for programs to expand and set more ambitious mandates in response to a second Trump presidency. A Republican-led White House would likely catalyze further development of New York's proposed cap-and-trade program, while spurring a more aggressive Low Carbon Fuel Standard program in California. Expectations are that vice president Kamala Harris, the Democratic nominee, would continue President Joe Biden's climate policies. But a Harris administration has the potential to create a more durable voluntary carbon market, according to Janet Peace, head of policy for Anew Climate. "You could have the enshrinement on a government principle of what is high quality carbon," Peace said. Action by the US Congress could give the Commodity Futures Trading Commission the authority needed to create a more transparent voluntary carbon market, Peace said. But the voluntary market could have the opportunity to expand under either administration, she said. Meanwhile, the fate of the Inflation Reduction Act (IRA) remains a point of contention under a Trump administration. Trump has pledged to repeal many of the energy tax credits in the IRA, while Harris has promised to create "America forward tax credits" that focus on growth for certain industries. While money from the IRA has flowed to Republican states, this is unlikely to stem appetites to go after the provisions in a Trump administration, according to Kevin Poloncarz, partner and co-chair of the environmental and energy practice group at the law firm Covington & Burling. "There's lots of ways it could be nibbled around the edges," Poloncarz said. This could come in the form of how the US Treasury and Internal Revenue Service go about implementing provisions of the IRA since the final rules for some have not yet been issued, such as what qualifies for the 45V clean hydrogen tax credit. A rush by the Biden administration to finalize the rules before the election would not necessarily remove any uncertainty, Poloncarz said. Congress under a Trump administration could pass a Congressional Review Act resolution, scuttling the rules and effectively prohibiting the agencies from adopting similar rules without the express permission of lawmakers. By Denise Cathey Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

French regulator proposes regional H2 transport fees

26/09/24

French regulator proposes regional H2 transport fees

Hamburg, 26 September (Argus) — French energy regulator CRE has proposed setting individual hydrogen transport tariffs for several regional clusters and separate fees for national infrastructure, an approach that reflects different expectations for the sector's development than in neighbouring Germany. CRE "is in favour of setting up a two-tier structure" for future hydrogen transport fees across the country, it said in a report on the regulatory framework for hydrogen and CO2 infrastructure. Each regional hub would have its own individual transport fees, while there would be separate "nationwide" tariffs for pipelines that connect the hubs with one another, links to storage sites and cross-border connections with neighbouring countries. CRE expects that an "ecosystem" for renewable and low-carbon hydrogen will "develop in localised hubs in the short-term" where electrolysis plants will supply nearby industrial consumers. Production and consumption sites will be connected through local transport networks, CRE said, noting that this approach "allows for rapid and no-regret development of the entire French low-carbon hydrogen value chain". Not all hubs will develop at the same pace and "users of local ecosystems must be able to build their business plans and make their investment decisions without being subject to the uncertainties linked to the development of other hubs," the regulator said. Transport tariffs must therefore differ depending on each hub's individual development so as to prioritise "transparency and price stability within local ecosystems," it said. As renewable and low-carbon hydrogen production and consumption expands, hubs will increasingly be connected with one another, while the importance of connections to storage sites and other countries will increase, CRE said. Developing a system that accommodates this expected transition over time is "the biggest challenge" that France faces in terms of establishing a regulatory framework for the hydrogen sector, according to the regulator. Key regional clusters could initially develop in heavily industrialised port areas which are home to existing or prospective hydrogen users, such as around Dunkirk, Fos-sur-Mer and Le Havre. Another major hub is expected at the so-called "Chemical Valley" south of Lyon. Nearest unlike neighbours CRE's proposal differs from the approach taken by neighbouring Germany, which is opting for uniform transport tariffs across its entire planned core hydrogen network of nearly 9,700km that is due to be largely completed by 2032 . Germany's expected development of the hydrogen sector is less heavily centred around the initial creation of individual hubs. It anticipates long-distance deliveries of renewable hydrogen from regions with favourable conditions — especially the North and Baltic Sea coastal areas — to industrial clusters further south from early on. A first 400km stretch of pipelines from Lubmin on the Baltic Sea coast to an industrial hub north of Leipzig is due to be ready for hydrogen transport by late 2025 . France's electricity mix is largely decarbonised — owing to the country's large nuclear fleet — and this will allow for low-carbon hydrogen production using grid-connected electrolysers as close as possible to consumers, CRE said. The low-carbon power mix means that "there is little point in concentrating production at very large, remote sites" in locations where conditions for renewable electricity generation are particularly favourable, the regulator said. By Stefan Krumpelmann Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more