The Coalition's poll lead suggests its doubts about ‘green hydrogen fantasy projects' might chime with voters, writes Tom Major
The apparent stalling of two state government-backed renewable hydrogen projects has blunted Australia's messaging on the fuel's prospects, with upcoming federal elections likely to test voter patience with the Labor party's approach to the energy transition and management of energy costs.
Australia will continue to invest in renewable hydrogen if the Labor government is re-elected, prime minister Anthony Albanese said late last month. This followed a double blow to the country's hydrogen ambitions in February, with the South Australia (SA) government reallocating A$593mn ($370mn) earmarked for constructing a 250MW electrolysis plant in Whyalla to save the nearby steelworks, and Queensland's government deciding not to provide further support for the 2.9GW CQ-H2 renewable hydrogen project, led by state-owned Stanwell.
The Whyalla project had been a flagship project for both the Labor government in Canberra and SA's Labor premier, Peter Malinauskas, who had made it a major promise ahead of the 2022 state election. But with polls supporting government action on the steelworks, the cancellation of the hydrogen plant barely made national headlines and has since faded from SA's media.
Australia's election is due by 17 May and the issue of energy costs is expected to figure prominently. The conservative Coalition, which is polling ahead of Labor, has pledged to dump hydrogen subsidies to focus on what it says would be more cost-efficient energy options. "I want to make sure that we can support the workers and... a sustainable industry, but we're not going to do that through government ownership and through green hydrogen fantasy projects," Liberal Party leader Peter Dutton said shortly after SA's decision to redirect the Whyalla funding.
Meanwhile, Labor is sticking to its guns on hydrogen, despite the setbacks. Hydrogen features strongly in its Future Made in Australia policy, which envisages a revitalised, low-emissions manufacturing sector based on iron, steel, aluminium and critical minerals processing. And SA taxpayers will continue to fund the state's hydrogen power office, albeit on a smaller scale. The state government intends to continue work on a 200MW hydrogen-ready gas-fired power plant using turbines it ordered in November — even though there will not be any hydrogen to feed it for the foreseeable future.
Another flagship Labor initiative is the Hydrogen Headstart scheme, the first round of which is supposed to support 1GW of electrolyser capacity with A$2bn of funding. But a final selection is still pending, having initially been targeted for late 2024. Six projects were initially shortlisted in late 2023, but several of these face an uncertain future.
Utility Origin called off development of the 55MW Hunter Valley hydrogen hublast year. CQ-H2 is now under review, alongside Stanwell's other hydrogen initiatives, according to the company. And BP's 105MW H2Kwinana plant in Western Australia is in doubt following the firm's decision to pause development of its adjacent renewable fuels plant.
The Port of Newcastle green hydrogen project is now filed in the archived section of the HyResource website, which is run by a federal agency. An initial feasibility study published in August 2023 found costs had risen significantly and sponsors decided not to progress to the next stage, although this was before the Hydrogen Headstart scheme was announced. No updates have been provided.
