Australia's fledgling renewable hydrogen sector has breathed a sigh of relief following the Labor Party's victory at the general election on 3 May as project developers will be able to count on continued government support.
This support includes billions of dollars in tax credits that the Liberal-National Coalition had vowed to scrap if elected.
Incumbent prime minister Anthony Albanese and the Labor Party won a comfortable majority in the house of representatives, even substantially increasing its number of seats.
This followed a remarkable turnaround in recent months. Labor had been trailing in most polls at the start of 2025 in a campaign which focused heavily on cost-of-living issues.
In his first term that started in 2022, Albanese's government had introduced several measures to boost Australia's renewable hydrogen ambitions. This included the Hydrogen Headstart programme, which for now has been bankrolled with A$4bn ($2bn), and hydrogen production tax credits worth over A$14bn.
Coalition leader Peter Dutton had pledged to axe the tax credit plans if elected. The programme "is not going to work," Dutton said, dismissing Labor's renewable hydrogen plans as a "hoax" and "fantasy projects". Renewable hydrogen is not commercially viable at the moment and the focus should be on immediate relief for households from high energy costs, he argued. The Coalition's plans envisaged removing a ban on nuclear power and more support for domestic natural gas production.
Industry body the Australian Hydrogen Council viewed the election results as "welcome news", which affirm supportive policies for renewable hydrogen. Chief executive Fiona Simon was relieved given that support for the sector was at risk, she said. "We are not political, and needed to stay out of politics, which was very hard when hydrogen was used politically," Simon said.
The election result "sends a clear and unequivocal message" that Australians will back and support policies that recognise the economic opportunities that come from acting on the existential threat of climate change, said Andrew Forrest, chairman of mining and energy firm Fortescue, one of the most fervent advocates of renewable hydrogen. The hydrogen production tax credits will "provide a strong foundation for a green energy future," Forrest said.
More to be done
But the continued subsidy promise alone will not be enough to revitalise Australia's renewable hydrogen hopes and Albanese's government will have to tackle a myriad of issues in its second term. Constraints on renewable power supply, high electricity costs and long permitting procedures, among other challenges, have held back or derailed projects, resulting in a seemingly never-ending stream of setbacks.
Funds allocated under Hydrogen Headstart have remained far below the first round's A$2bn budget, possibly because several shortlisted projects have been shelved.
Meanwhile, Albanese and the Labor Party were forced to shift some funding promised for renewable hydrogen to more urgent economic priorities. Development of a flagship project in Whyalla in the state of South Australia was halted as the government redirected public funds to rescue the nearby steelworks and keep it in operation.
The government tacitly acknowledged that many of Australia's planned hydrogen projects will not be realised as indicated in its hydrogen strategy from September 2024. The strategy's production targets were relatively modest compared with the large pipeline of announced projects and other country's goals.
But progress is not entirely in Australia's hands. The country's renewable hydrogen fortunes will also depend on developments in key offtake countries, especially Japan and South Korea.
