STATE OF HYDROGEN
2021

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ISBN: 978-1-922125-99-6

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STATE OF HYDROGENMESSAGE FROM THE MINISTER
In 2019, Australian energy ministers shared our vision for a clean, innovative, safe and competitive Australianhydrogen industry that is a major global player by 2030 through the release of the National Hydrogen Strategy.
Aligned with the adaptive approach to the strategy, energy ministers committed to regular reporting on the
progress of Australia’s hydrogen industry. I am pleased to release the inaugural State of Hydrogen report where
we recognise the collaborative effort of industry and Australian governments in advancing our clean hydrogensector. The report shows the great success of this effort to date, particularly in the areas of project scale,investment and export potential.
As 1 of 6 priority low emissions technologies under Australia’s Technology Investment Roadmap, cleanhydrogen is critical to Australia’s technology-led approach to reducing emissions while creating jobs andachieving economic growth. The Australian Government has so far committed over $1 billion to clean hydrogen,and this scale of investment is gaining increasing global attention, cementing Australia’s role as a world leader.
Widespread global adoption of clean hydrogen will require sustained effort to mitigate the 3 biggest barriers
facing industry globally – not just in Australia – including building demand, achieving low-cost hydrogenproduction at scale and reducing delivery costs.
Like any nascent industry there will be challenges, and it is to be expected that demand-side indicators haveslower progress than the supply side. It will take time to lower costs and to build export supply chains.
Australian governments are next focusing on how to build up Australia’s demand for hydrogen products, withthe strategy laying out the pathway to achieve our vision.
All levels of the government in Australia are undertaking the early actions identified in the National Hydrogen
Strategy to capitalise on our nation’s natural resources and expertise and provide certainty for industry. For
example, energy ministers have agreed to an expedited process to allow hydrogen and biogases to be brought
within the existing regulatory framework for natural gas.
The National Hydrogen Strategy identifies hydrogen hubs as an effective means to create demand, build scaleand reduce production costs by co-locating producers, exporters and users. The Australian Government isdelivering on this action and investing $464 million to develop up to 7 hydrogen hubs in regional Australia.
These Clean Hydrogen Industrial Hubs will create economies of scale and support the existing industrial
infrastructure and workforces in these regions.
These hubs also offer an opportunity to showcase key trading partners’ technologies, with collaboration on
research and development essential to building a global hydrogen industry.
The Australian Government is supporting this through our commitment of $565.8 million to international
technology partnerships through the 2021–22 Budget. Five new low emissions technology partnerships havebeen announced to date, with Singapore, Germany, Japan, the United Kingdom and the Republic of Korea.
These partnerships complement bilateral cooperation on hydrogen with the United States, as well as Australia’s
involvement in multinational bodies.
Building a successful hydrogen industry for Australia can only be done through a genuine partnership between
governments, industry, investors, researchers and our community. As this report shows, Australia’s cleanhydrogen potential is undeniable. I would like to extend my thanks to the cooperation from industry, state andterritory governments and international governments that has seen the Australian hydrogen industry set thepace for this global momentum.

The Hon Angus Taylor MP
Minister for Energy and Emissions Reduction

X | CHAPTER

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Three Sisters, Katoomba NSW. Image attribution: Gettyimages mollypix

iv

STATE OF HYDROGENSTATE OF HYDROGEN AT A GLANCE
Purpose of this report
To track Australia’s progress against global developments, Australian governments have committed to
publishing an annual State of Hydrogen report. This report explains how we measure the progress of Australia’shydrogen industry and provides a snapshot of industry’s progress.

Australia’s hydrogen opportunity
Clean hydrogen is gaining increasing attention as a clean fuel to decarbonise economies. It is a flexible, safe,
transportable and storable fuel that produces no carbon emissions when used.
Hydrogen can be used:• to power vehicles• to generate heat and electricity• as an industrial chemical feedstock for products such as ammonia and steel• to globally trade clean energy.
Australia has all the ingredients needed to be a major hydrogen producer and exporter, including:• abundant and cheap renewable energy resources• geological storage resources• a proven track record as an energy exporter.
Australia’s National Hydrogen Strategy supports all production pathways and technologies that are capable ofproducing clean hydrogen. Clean hydrogen is hydrogen produced using renewable energy or using fossil fuelswith substantial carbon capture and storage (CCS). This gives our emerging hydrogen industry flexibility to
pursue the pathways that best meet customer preferences as global markets emerge.

Global trends and opportunities
Australian energy ministers share a vision for a clean, innovative, safe and competitive hydrogen industry that
benefits all Australians and is a major global player by 2030.
Australia’s National Hydrogen Strategy provides a framework for governments and industry to work together
to build Australia’s hydrogen industry. It starts with 57 nationally coordinated government actions.
The strategy takes an adaptive approach, ensuring Australia’s hydrogen industry can scale up quickly without
over-committing in an industry that is still maturing. To do this, we will keep a close eye on the internationalhydrogen industry to ensure our actions keep pace with the rest of the world.
Since we released our strategy in 2019, the global hydrogen industry has developed in line with our most
optimistic estimates for growth. Many countries have released hydrogen or low emissions strategies, withhydrogen a central part of plans to reach net zero and move to low-carbon fuels.
Australia’s small but rapidly growing hydrogen industry can take advantage of this global momentum. If ourcurrent pipeline of clean hydrogen projects is completed on time, Australia could be one of the world’s largest
hydrogen suppliers by 2030.
Governments will continue to work with industry to overcome any barriers to development. This work focuseson 3 areas:• building demand• achieving low-cost hydrogen production at scale• reducing hydrogen delivery costs.
Following global momentum, the Australian hydrogen industry has seen substantial developments in 2020
and 2021.

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The Department of Industry, Science, Energy and Resources engaged KPMG to compare the Australian industry
with global developments. KPMG assessed where Australia is likely to be in 2025 and 2030 against each of the
13 industry development signals outlined in Chapter 6 of the National Hydrogen Strategy (Table 1). For eachsignal, KPMG rated the industry’s development as either:• advancing quickly• advancing• advancing slowly.

Table 1: Overview of Australia’s progress across the industry development signals
INDUSTRY
DEVELOPMENT
SIGNAL2025 PACE

2030 PACE

CURRENT STATUS

Investment

Advancingquickly

Advancing• Private sector investment is growing with committed investment exceeding A$1.6 billion.
• Public sector investment reached $1.27 billion in June 2021.

Project scale

Advancingquickly

Advancingquickly• Project announcements indicate scale could reach over 100 MW by 2025.
• Gigawatt-scale projects have been announced and are expected to start operating inthe second half of the decade. However, a final investment decision on these projects
has not been made.

Costcompetitiveness

Advancingquickly

Advancing• Clean hydrogen costs are expected to decline to between A$2 and A$4 by 2030.1

Australia’s
exports

Advancing

Advancing• Investment is being directed to hydrogen supply chains. Front end engineering anddesign studies are underway.
• Supply chains still require development for Australia to be a major global supplier.
• To support supply chain development, supply chain studies are underway withinternational partners like HySupply.
• The government has supported hydrogen hubs to stimulate demand and produce cleanhydrogen for domestic and export markets.

Chemicalfeedstock

Advancingquickly

Advancingquickly• Projects to use clean hydrogen in existing facilities have been announced.
• Current announcements account for 20% of total electrolyser capacity.

Steel making

AdvancingslowlyAdvancingslowly• Limited activity in this area. However, several announcements from steel producers
indicate an intent in this sector.
• Clean steel is a priority technology under Australia’s Technology Investment Roadmap.

Electricity gridsupportAdvancingslowlyAdvancingslowly• Limited trials are underway to test whether hydrogen can provide frequency control
ancillary services (FCAS).

Mining andoff-grid

Advancing

Advancingslowly• A few projects are exploring hydrogen for microgrid applications. However, there are noplans for either small-scale or wide-scale rollout at this stage. Fortescue and ATCO are
exploring hydrogen mobility at a mine site.
• $103.6 million in government funding has supported microgrid pilots and deployment.

Powergeneration*

Advancingquickly

Advancing• Two new hydrogen-ready gas generators reached final investment decision in New
South Wales: Snowy Hydro’s 660 MW Kurri Kurri gas generator and Energy Australia’s
316 MW Tallawarra B gas generator. Additional projects are also in the pipeline,
specifically AIP’s Port Kembla gas generator.

Light transport

AdvancingslowlyAdvancingslowly• Limited deployments or infrastructure to support hydrogen use in light transport.
• Four refuelling stations and approximately 30 vehicles are in operation. Some
additional projects are targeting operations in 2025.
• The Australian Government has launched its Future Fuels Fund to take advantage ofopportunities offered by electric, hydrogen and bio-fuelled vehicles. This includes support
for electric vehicle refuelling infrastructure, including hydrogen fuel cell vehicles.

Heavy transport

AdvancingslowlyAdvancingslowly• Hyzon Motors and Fortescue Metals are collaborating on hydrogen-powered buses formining applications.
• The Australian Government’s Future Fuels Fund and Freight Productivity Program will
support further heavy transport uptake.

Gas networks

Advancing

Advancing• Activity is underway to trial hydrogen blending. Nine projects are expected to be
operational by 2025.
• Gas networks are targeting 100% hydrogen in regions of the network by 2030.
• Australian Governments have agreed to national gas regulatory framework
amendments to bring hydrogen, bio-methane and other renewable gas blends within
its scope. Reforms are expected to initially focus on gases and blends that can be usedin existing natural gas appliances.

Industrial heat

Advancing

Advancing• Limited activity. However, Grange Resources (Tasmania) Pty Ltd is undertaking afeasibility study looking at hydrogen for industrial heat.

Note: *Power generation refers to global progress as the indicator explicitly relates to international electricity demand
Source: Adapted from KPMG analysis, June 2021.

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Analysis from CSIRO National Hydrogen Roadmap (2018), IEA cost data, SA hydrogen export study and ANU Green hydrogen cost report (2020).

STATE OF HYDROGEN

This assessment shows that Australia is progressing well on:• activities that will support efficient scale-up of the industry by 2030
• the supply-side factors that will let Australia meet increasing demand for hydrogen.
As is to be anticipated as a new industry develops, progress has been slower on demand-side indicators. This is
expected given the early state of the industry and the higher cost of clean hydrogen compared to chemicals
and fuels currently being used.
Many of hydrogen’s expected future uses (such as hydrogen blending in gas networks and fuels for vehicles)
have only recently begun trials. Like any new industry, it will take some time to build export supply chains anddeliver activities to help scale up the industry. For some uses of hydrogen, it will also take time for demand forhydrogen to build. Progress is expected to be slow at first, but will increase as costs decrease and markets
increasingly adopt new technologies. This is a natural part of industry development globally, but will be
accelerated through government support.
For example, use of hydrogen for transport applications is dependent on uptake of hydrogen vehicles by
consumers. These vehicles are currently expensive, as the technology is new, but are expected to come downin cost over time as technologies continue to improve and production volumes increase. Use of hydrogen will
increase in line with uptake of vehicles by consumers. Similarly, large industrial users of hydrogen, such as
existing ammonia producers, may not switch to using clean hydrogen until their existing production plants
reach their end of their asset lives.
The Australian Government is helping industry to accelerate these demand-side indicators through a variety offunding programs discussed later in this report. For example, through the Australian Renewable Energy
Agency, the Australian Government is funding Yara Pilbara Fertilisers and ENGIE Renewables to develop a 10
MW electrolyser project to produce renewable hydrogen at Yara’s existing ammonia facility in Karratha,
Western Australia. This project will see clean hydrogen used to make clean ammonia for global export. Projects
like these, and the Australian Government’s $464 million Clean Hydrogen Industrial Hubs program, will help
drive the costs of hydrogen down faster, which will increase demand and improve these indictors.

vii

Government actions
All levels of government are delivering the strategy and taking early actions to overcome barriers facing theindustry. So far, the Australian Government has:• built international relationships, including partnership agreements with Germany, Singapore, Japan,
Republic of Korea and the United Kingdom to build hydrogen supply chains and advance technology
research• developed a proposed approach for a domestic hydrogen Guarantee of Origin scheme and helped shapethe design of an international methodology• announced hydrogen funding programs, including $464 million for the ‘Activating a Regional Hydrogen
Industry: Clean Hydrogen Industrial Hubs’ program• invested over $300 million to support development of carbon capture and storage (CCS) and carbon
capture, use and storage (CCUS) projects• awarded over $100 million to three 10 MW hydrogen electrolyser projects through the Australian Renewable
Energy Agency (ARENA)• fostered industry innovation, collaboration and knowledge sharing• provided more than $300 million in funding for research, development and demonstration activities.
Direct Australian Government support for the hydrogen industry is now over $1.2 billion.
State and territory governments are helping develop the industry by implementing the National Hydrogen
Strategy and their own hydrogen strategies. Together, the federal, state and territory governments have:• started a review of legal and regulatory frameworks• agreed to amend the national gas regulatory framework• started the National Hydrogen Infrastructure Assessment• commenced work on industry development, including skills and training• supported analysis to understand community attitudes towards hydrogen.
State and territory governments are undertaking activities to support the hydrogen industry in theirjurisdictions, including:• announcing funding for pilots, trials and demonstrations• engaging with communities• committing funding for hydrogen hubs
• supporting industry development• participating in regional hydrogen technology clusters in partnership with National Energy Resources
Australia (NERA)• supporting trials for hydrogen vehicles and blending hydrogen into gas networks.
Australia is progressing well towards the vision in the strategy. But we will need to remain ambitious to keep
pace with the global hydrogen industry’s rapid development.

Hydrogen hubs
To keep our position as an industry leader, Australia needs to quickly develop end-to-end hydrogen supply
chains. We need to increase domestic demand for hydrogen to help our industry scale up and reach ourpotential as a major supplier.
Hydrogen hubs are regions where various producers, users and potential exporters of hydrogen acrossindustrial, transport, export and energy markets are co-located.
Hydrogen hubs will create economies of scale to drive down costs of production, unlocking further demand forhydrogen as costs fall. Hubs will also create efficiencies by leveraging and supporting the existing industrial
capabilities and workforces in relevant regions. Hubs will stimulate innovation and increase workforce skills
development, as well as support other existing industrial sectors in these regions to lower both emissions andcosts in doing business.
Demonstrating hydrogen hubs will develop domestic demand and provide the revenue certainty needed forlarge-scale supply. Hubs could take advantage of co-investment with:• state and territory governments• the private sector• international governments.
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STATE OF HYDROGEN

The Australian Government has opened the $464 million ‘Activating a Regional Hydrogen Industry: Clean
Hydrogen Industrial Hubs’ program to fund up to 7 hydrogen hubs. State and territory governments havebacked this approach by providing funding to develop hydrogen hubs in their jurisdictions.
Hubs will help us scale up the industry as we work towards the Technology Investment Roadmap’s goal ofhydrogen production for under $2 per kilogram.

International partnerships
Strengthening our international relationships is equally important for building the industry. Australia’s federal,state and territory governments are building international partnerships with other governments and privatecompanies.
The Australian Government has committed $565.8 million through the 2021–22 federal Budget to developinternational partnerships on low emissions technology. The Special Adviser to the Australian Government on
Low Emissions Technology, Dr Alan Finkel AO, is playing a key role in brokering these partnerships.
These international partnerships will help develop Australia’s clean hydrogen industry by:••••advancing the goals of the government’s Technology Investment Roadmap
driving investment in Australian-based projects and helping deploy low emissions technologies and energy
accelerating supply chain growth, including for clean hydrogen
fostering international collaboration on the development of practical low emissions technology pathways.

As a priority technology identified in the government’s first Low Emissions Technology Statement, thesepartnerships are expected to support development of the clean hydrogen industry.
In 2021 the Australian Government announced 5 new international partnerships:• Australia and Germany will work together under a new Hydrogen Accord. The accord includes several new
initiatives to accelerate the development of a hydrogen industry. Australia will contribute $50 million andGermany €50 million• Australia and Singapore will establish a $30 million partnership to accelerate deployment of low emissions
fuels and technologies (like clean hydrogen) in maritime and port operations• The Japan–Australia Partnership on Decarbonisation through Technology will increase our shared focus onpriority low emissions technologies, including clean fuel ammonia and clean hydrogen• The Republic of Korea and Australia will work together to drive increased adoption of low and zero
emissions technologies• Australia and the United Kingdom have agreed to collaborate on research and development acrosstechnologies crucial to decarbonising the global economy, including clean hydrogen.
State and territory governments are also building international partnerships to support projects in their regions:• the South Australian Government signed a memorandum of understanding to investigate clean hydrogen
exports with the Port of Rotterdam in the Netherlands• Tasmania is exploring ways to collaborate and cooperate with international partners• the Victorian Government is a partnering with the Australian Government, the Japanese Government andAustralian and Japanese industry to develop the $500 million Hydrogen Energy Supply Chain project in the
Latrobe Valley.

Other activities
Governments will continue working on other activities to help the industry flourish. Priorities for the coming
year include:• accelerating pilots, trials and demonstrations of hydrogen technologies• continuing to develop an international approach to hydrogen certification, moving from design to triallinghydrogen certification methodologies on real projects• ensuring a fit-for purpose regulatory environment by implementing findings from current reviews of legal
and regulatory barriers for the industry• identifying the industry’s future infrastructure needs by considering findings from the infrastructure assessment• progressing the Victorian and Australian Governments' CarbonNet project to establish a multi-user CCS hub
in Gippsland.
Success will rely on industry, governments, researchers and the community working together. If we get this right,
we can realise our vision to establish a new clean hydrogen export industry in Australia. Clean hydrogen exports
could directly support 16,000 jobs, plus an additional 13,000 from related construction work, by 2050. Australianhydrogen production for export and domestic use could generate more than $50 billion in additional GDP by 2050.

ix

xx

STATE OF HYDROGENCONTENTS
Copyright
Disclaimer

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MESSAGE FROM THE MINISTERIII

STATE OF HYDROGEN AT A GLANCE
Purpose of this report
Australia’s hydrogen opportunity
Global trends and opportunities
Government actions

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CONTENTSXICHAPTER 1: AUSTRALIA’S PATHWAY FOR A CLEAN HYDROGEN FUTURE

1

PURPOSE OF THE STATE OF HYDROGEN REPORTDefinitions
Australia’s hydrogen opportunity
An adaptive approach

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3
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7

CHAPTER 2: HYDROGEN INDUSTRY DEVELOPMENT
Global hydrogen industry development
Australia’s industry development

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13

CHAPTER 3: GOVERNMENT ACTIONS TO ADVANCE THE INDUSTRY
Australian Government activities
ARENA unlocking hydrogen potential in research and development
Mapping Australia’s Hydrogen Future – the Hydrogen Economic Fairways Tool
Austrade support for the hydrogen industry
Activities delivered jointly by governments

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STATE AND TERRITORY GOVERNMENT ACTIVITIESNew South Wales
Australia’s first hydrogen refueller for heavy transport.
Victoria
Queensland
Hydrogen Industry Development Fund
Western Australia
Horizon Power’s Denham Hydrogen Demonstration Plant
South Australia
Hydrogen Park South Australia (HyP SA)
Tasmania
Blue Economy CRC – development of an offshore hydrogen microgrid
Australian Capital Territory
Hydrogen projects in the Australian Capital Territory
Northern Territory
Middle Arm Sustainable Development Precinct, Darwin

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CHAPTER 4: NEXT STEPS
Accelerating enabling activities
Future areas of work
Collaboration will deliver the vision in the strategy

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STATE OF HYDROGEN

1

AUSTRALIA’SPATHWAY
FOR A CLEAN
HYDROGEN
FUTURE

Australia’s National Hydrogen Strategy takes anadaptive approach, requiring frequent assessment of
the industry to ensure its actions are aligned withinternational progress.

1 | AUSTRALIA'S PATHWAY FOR A CLEAN HYDROGEN FUTURE

1

PURPOSE OF THE STATE OF HYDROGEN REPORTTo track Australia’s progress against global developments, Australian governments have committed to
publishing an annual State of Hydrogen report. This report monitors and tracks the measures of success andindustry development signals outlined in the National Hydrogen Strategy.
Australia’s National Hydrogen Strategy supports all production pathways and technologies that are capable ofproducing clean hydrogen. Clean hydrogen is hydrogen produced using renewable energy or using fossil fuelswith substantial carbon capture and storage (CCS). This gives our emerging hydrogen industry flexibility to
pursue the pathways that best meet customer preferences as global markets emerge.
While the industry has already made progress against many of these measures and signals, others will become
more relevant as the industry matures. This report sets out our approach to measuring progress and gives asnapshot of where we are up to.
Thirteen industry development signals are defined in the strategy to indicate whether aspects of the hydrogen
industry are advancing quickly or slowly by 2025 and 2030. These industry development signals are:• investment• heavy transport• project scale• light transport• cost-competitiveness• gas networks• Australia’s exports• electricity generation• chemical feedstock• steel making• electricity grid support• industrial heat.

• mining and off-grid
The strategy also outlined measures of success across 3 categories. These measures will guide decision-making
as the strategy is implemented.
1. Australia has a clean, innovative, safe and competitive hydrogen industry• Clean:– Carbon intensity of the Australian hydrogen production meets community, customer and consumer
expectation and is decreasing over time
– Australia has a robust certification scheme that is internationally accepted• Innovative:– Australia is regarded as having a highly innovative hydrogen industry and a supportive research anddevelopment environment– The sustainability of water use for Australian hydrogen production continues to improve• Safe:– Australia has an excellent hydrogen-related safety track record• Competitive:– Australian hydrogen is cost-competitive domestically and internationally– Australia has a ‘hydrogen-ready’ workforce that is responsive to industry’s needs.
2. Australia’s hydrogen industry benefits all Australians• Jobs and prosperity:– Hydrogen is providing economic benefits and jobs
• Supported communities:– Benefits are flowing back to communities where hydrogen industries are located• Domestic use:
– The cost of clean hydrogen continues to decrease in part due to technology developments and in partdue to scale achieved in the development of a hydrogen export industry– Hydrogen production and use is integrated into energy market structures.

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STATE OF HYDROGEN

3. Australia is a major global player• Hydrogen exports:– Australia is among the top 3 exporters of hydrogen to Asian markets• Investor confidence:– Australia is seen as a destination of choice for international investors in hydrogen– Australia has major offtake or supply chain agreements in place with importing countries• Hydrogen capability:– Australia has demonstrated hydrogen capability in all links of the supply chain.

How we track progress
In 2020, the Department of Industry, Science, Energy and Resources commissioned CSIRO to develop a data
framework to facilitate consistent, repeatable measurement of hydrogen industry progress. The department
then commissioned KPMG to analyse the Australian and global hydrogen industries using CSIRO’s data
framework. Using the information available in 2021, the industry was assessed against each of the 13
development signals to determine whether each development signal is:• advancing quickly• advancing• advancing slowly.

Definitions
In this report:• ‘hydrogen’ means hydrogen and its derivatives, such as ammonia• ‘clean hydrogen’, means hydrogen produced with either:– renewable energy– fossil fuels with substantial carbon capture and storage (CCS)• ‘high-carbon hydrogen’ means hydrogen produced from fossil fuels without CCS.

Australia’s hydrogen opportunity
Hydrogen is a versatile and clean fuel that produces no carbon emissions when used. It has been identified as
an important technology to reduce global emissions by many countries including Australia, the United States,
Germany, Japan and Korea.
Hydrogen is a flexible, safe, transportable and storable fuel. It is currently used:• for oil refining• in chemical and fertiliser production• as an industrial chemical feedstock for products such as ammonia and steel.
Emerging uses for hydrogen include:• powering vehicles• generating heat• trading clean energy between countries.
The main methods used to produce hydrogen in Australia are:• electrolysis (extracting hydrogen from water using electricity)• thermochemical reactions using coal (coal gasification) or natural gas (steam methane reforming).
Approximately 87 million tonnes of high-carbon hydrogen was produced globally in 2020.2 Carbon emissions
from thermochemical production using fossil fuels can be greatly reduced by capturing and storing the carbon
emissions.
Producing hydrogen from electrolysis powered by renewable electricity does not create any carbon emissions.

2International Energy Agency (IEA), Net Zero by 2050—A Roadmap for the Global Energy Sector, May 2021.

1 | AUSTRALIA'S PATHWAY FOR A CLEAN HYDROGEN FUTURE

3

Australia has abundant renewable energy resources. The National Hydrogen Strategy estimates that Australia
has 262,000 square kilometres of land that is highly suitable for hydrogen production using renewableelectricity. This is about 3% of Australia’s total land area and is larger than the average European Union nation.
This amount of land could theoretically support tens of thousands of gigawatts of renewable energy projects.
Australia also has substantial resources of coal, both black and brown. The most significant black coalresources are located in the Bowen and Surat basins (Queensland) and the Sydney basin (New South Wales).
Coal is Australia’s largest commodity export, with our annual thermal and metallurgical coal exports worth
more than $40 billion, mainly to Japan, India, the European Union, the Republic of Korea and Taiwan. Economic
demonstrated resources (EDR) of black coal are adequate for about 90 years at current rates of production.3
Australia’s brown coal resources are located mostly in the Gippsland Basin in Victoria, where it is used forelectricity production. At current rates of production, there are nearly 500 years of brown coal resources
remaining.4
Australia’s gas reserves include large conventional gas resources located mostly in the Carnarvon, Browse andBonaparte basins off the northwest coast, with smaller resources in the Gippsland Basin (offshore Victoria) andthe onshore Cooper–Eromanga Basin in South Australia. EDR of conventional gas are adequate at current
levels of production for around 60 years.5
Substantial resources of coal seam gas (CSG) are associated with the major coal basins of eastern Australia.
CSG resources are being rapidly increased by exploration, with significant economic demonstrated resources of
CSG now identified in the Bowen, Surat and Sydney basins.
Australia has extensive geological sites for carbon capture and storage (CCS). In the near term, the best CCS
opportunities are:• the Carnarvon Basin• offshore Western Australia (the site of one of the world’s largest carbon capture and storage projects on
Barrow Island)• the Gippsland Basin, in offshore Victoria (site of the CarbonNet project)• onshore regions near the Cooper Basin (Queensland and South Australia) and Surat Basin (Queensland).
Australia also has a long-standing track record as a trusted global energy exporter. This means we are wellplaced to produce clean hydrogen at a large scale. We can use Australian-made clean hydrogen to help
decarbonise our own economy, as well as supply it to other countries.
Australia’s goal is to be a major supplier of clean hydrogen by 2030. This could see the Australian hydrogen
industry reach the scale of our current liquefied natural gas (LNG) industry. The value of our LNG exports in the
2019–20 financial year totalled $48 billion, 16% of Australia’s total resource and energy exports.6
Realising this opportunity for hydrogen could provide enormous growth in domestic manufacturing. It would
also create ongoing jobs in project financing, management, operation and maintenance.

Areas for action
For the Australian hydrogen industry to realise this opportunity, we need to keep taking action in 3 main areas:

Building domestic demand
The National Hydrogen Strategy identifies that building domestic demand for hydrogen is important to help
the Australian industry achieve export scale.
Increasing domestic demand for hydrogen could unlock new industries to drive economic growth. It could also
reduce emissions in hard-to-abate areas of the economy.

Low-cost hydrogen production at scale
Clean hydrogen is currently more expensive than conventional fuels for most end-use applications. Production
costs need to fall before clean hydrogen can compete with these fuels on price.
Efficiencies of scale and lower electricity and gas costs will play a significant role in reducing the cost of
producing hydrogen.

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5
6

4

Geoscience Australia, Energy Overview, September 2021.
Geoscience Australia, Energy Overview, September 2021.
Geoscience Australia, Energy Overview, September 2021.
Office of the Chief Economist, Resources and Energy Quarterly, March 2021.

STATE OF HYDROGEN

Reducing hydrogen delivery costs
Australia’s Technology Investment Roadmap sets a stretch goal for hydrogen production of under$2 per kilogram – the point where hydrogen becomes competitive with conventional fuels. Compressing,storing and transporting hydrogen could add up to $2 per kilogram to the cost of hydrogen.7
To build a hydrogen export industry, the costs of hydrogen storage and transport need to fall. This will reducethe cost of hydrogen delivered to domestic and international consumers.
Clean hydrogen: hydrogen produced using renewable energy,
Figure 1 Production pathways
cleanhydrogenor fossil for
fuels
with
carbon capture and storage (CCS)O2

H2ELECTROLYSIS

H20

STEAM METHANE
REFORMING

ELECTROLYSER

H20

GASIFIERGASIFICATION
NATURAL GAS

RENEWABLEGASIFIER

CO2
COAL

7

H20

CO2

Advisian, Australian hydrogen market study, May 2021.

1 | AUSTRALIA'S PATHWAY FOR A CLEAN HYDROGEN FUTURE

5

Australia’s National Hydrogen Strategy
To take advantage of the hydrogen opportunity, Australia’s governments worked together to develop
Australia’s National Hydrogen Strategy in 2019. One of the world’s first hydrogen strategies, it provides aframework for governments and industry to work together to build Australia’s hydrogen industry.
The strategy describes a vision of a clean, innovative, safe and competitive industry – an industry that benefits
all Australians and where Australia is a major global player by 2030.
The strategy enables choice of clean hydrogen production technologies, supporting all production pathways
that can create clean hydrogen.
While renewables are essential for decarbonising industries, there is growing recognition that carbon captureand storage (CCS) also needs to play a role. CCS can be used to reduce emissions from industrial processes
that cannot be decarbonised with renewables alone. It can drastically reduce the emissions from cement
production and fugitive emissions from liquefied natural gas.
Large international organisations such as the United Nations Framework Convention on Climate Change(UNFCCC) and the International Energy Agency (IEA) recognise that achieving many net zero ambitions will bedifficult without CCS.
The Australian Government has provided over $300 million help develop CCS and carbon capture, use andstorage (CCUS) hubs and technologies, and also has developed an Emissions Reduction Fund method to credit
abatement from new CCS projects.
The National Hydrogen Strategy includes 57 nationally coordinated government actions. These actions are thefirst steps Australia needs to make to capture its hydrogen opportunity. They are grouped into themes:• national coordination• developing production capacity, supported by local demand• responsive regulation• international engagement• innovation, research and development• skills and workforce development• building community confidence.

A stretch goal for hydrogen
The Australian Government released its first Low Emissions Technology Statement under the Technology
Investment Roadmap in September 2020. The statement provides an approach to quickly deploy low emissions
technologies with the highest abatement and economic potential for Australia.
The statement sets economic stretch goals for priority low emissions technologies. These stretch goals will help
priority technologies reach economic parity with existing technologies and enable wide-scale uptake.
Clean hydrogen is identified as a priority technology under the Technology Investment Roadmap. Its economic
stretch goal is a production cost under $2 per kilogram of hydrogen. This is the cost where hydrogen becomescompetitive with conventional fuels.

6

STATE OF HYDROGENAn adaptive approach
Australia’s natural advantages are not enough to create a successful hydrogen industry. We also need to ensure
the scale and timing of Australia’s industry development aligns with international market growth.
The National Hydrogen Strategy takes an adaptive approach to industry development. It lets Australia scale up
quickly as the hydrogen market grows, but doesn’t overcommit to an industry that is still maturing. This means
taking action now, but accepting that we need to keep refining what we do as markets and technologies
change.

NATIONAL HYDROGEN STRATEGY

A clean, innovative, safe and competitive Australian hydrogen industry
that benefits all Australians and is a major global player by 2030

Figure 2: Adaptive approach to industry development

TAKINGACTIONSETTINGOUR VISIONREALISINGOUR VISIONREVIEW,REVISE, ADAPT

WATCH
SIGNALS

The adaptive approach has 2 main phases:• Foundations and demonstrations (2020 to 2025). This phase focuses on creating, testing and demonstrating
supply chains, as well as building capability• Large-scale market activation (2025 to 2030). This phase builds on and broadens the work in the firstphase. It focuses on scaling up the industry and developing markets to underpin it.

1 | AUSTRALIA'S PATHWAY FOR A CLEAN HYDROGEN FUTURE

78STATE OF HYDROGEN2

HYDROGENINDUSTRY
DEVELOPMENT

A purpose of this report is to compare Australia’shydrogen industry with the industry development
signals set out in the National Hydrogen Strategy.
The indicators cover both supply-side anddemand‑side sectors. They look at domestic andinternational progress from 2020 to 2025 and from2025 to 2030.
Australia’s progress is assessed in the context of our2030 goal to be a major supplier in the global cleanhydrogen industry.

2 | HYDROGEN INDUSTRY DEVELOPMENT

9Global hydrogen industry development
Australia was one of the first countries to publish a strategy outlining a path to clean hydrogen industry
growth.
Other governments have followed, releasing strategies and announcing commitments to develop their own
hydrogen industries. Ten countries and the European Union released hydrogen strategies in 2020 and the firsthalf of 2021.
Countries have different focuses for their hydrogen strategies. Resource-rich countries such as Australia, Chile,
Canada and Saudi Arabia are focusing on establishing export industries for clean hydrogen. Resource-poor
countries with ambitious net zero emission targets, such as Japan and South Korea, want to import cleanhydrogen to provide a source of clean energy.
Global trade is an important part of most hydrogen strategies, regardless of whether they focus on imports orexports. Nations are already building relationships to enable future large-scale hydrogen supply. Already 18
memorandums of understanding (MoUs) have been signed for clean hydrogen export.8
These MoUs are usually between regions targeting export (such as South America, Saudi Arabia and Australia)
and potential import markets, mostly in Asia and Europe. They establish the trading relationships and supply
chains to benefit both nations.

ATCO’s hydrogen fuelled Toyota Mirai. Image attribution: ATCO.

810

KPMG analysis of government and private media announcements.

STATE OF HYDROGEN

Investment and supply
Global investment in hydrogen demonstrates the momentum of the industry. At the end of 2020, total global
investment in clean hydrogen projects that have reached financial decision was estimated at US$38 billion(A$54 billion). Another US$45 billion (A$64 billion) was committed to projects in the planning phase. 9 According
to the International Energy Agency (IEA), 10 investment has already delivered over 400 operational projects.
Governments are rapidly developing their hydrogen industries by supplementing their strategies withsignificant funding. Demand for Australian clean hydrogen could increase if our export markets make large
funding commitments to develop hydrogen demand in their regions.
To help the hydrogen industry grow, a lot of early investment has gone towards research, development anddemonstration (RD&D). In the last 5 years, OECD counties have invested A$3.8 billion in hydrogen and fuel cells
RD&D. This represents 2.1% of total global RD&D investment, up from 1.1% 5 years ago.11
This early investment in RD&D has helped technologies mature and become commercially viable for earlymovers in the industry. It has addressed initial production barriers and let public and private spending expand
beyond RD&D.
Hydrogen is also one of the largest growth areas for venture capital funding, indicating a growing interest in
scaling up the sector.12
Private industries are shifting to hydrogen as countries start transitioning to low-carbon fuels. Some of theworld’s largest organisations, from oil and gas giants to technology companies, are announcing interests in orcommitments to invest in hydrogen. Large-scale projects have already been announced in Europe, Saudi
Arabia, Australia and the United States.
Global production of clean hydrogen is low, at around 390,000 tonnes a year. However, the strong ambitions ofgovernments and private industries have produced an exponential increase in the number of announced
projects. Clean hydrogen project pipelines suggest that global supply could grow to about 17 Mt by 2030. 13

Supply costs
Early RD&D funding for hydrogen production will drive innovation and economies of scale. As a result, thecosts of producing clean hydrogen are expected to fall significantly over the next decade.
In the short term, hydrogen from coal or gas with carbon capture and storage is expected to cost less thanrenewable hydrogen in most parts of the world.14 These production methods use mature technologies forhydrogen production, so costs are expected to remain relatively stable. There are fewer estimates for the costof hydrogen from fossil fuels with carbon capture and storage than for the cost of hydrogen from renewables,with the global average around $2.90 per kilogram15.
Gas prices affect the cost of hydrogen produced from natural gas with carbon capture and storage. Australia,
the United States, the United Kingdom and Russia all have access to natural gas and options for carbon captureand storage, which lowers estimated production costs.
The cost of hydrogen produced from electrolysis is currently over $5 per kilogram. 16 The main cost drivers arecapital costs and electricity costs. Renewable hydrogen production costs could fall below $2 per kilogram after
2030 if electrolysers and renewable energy become cheap enough.17,18
In 2020 the average size of operating electrolysers around the world was approximately 1.1 MW. In early 2021,
the 20 MW Air Liquide Plant in Canada commenced operation with a 4-module polymer electrolyte membrane(PEM) electrolyser. The largest single stack electrolyser project is the 10 MW Fukushima Hydrogen Energy
Research Field in Japan.
Australia’s largest operating electrolyser is the 1.25 MW project at Hydrogen Park in South Australia. The
Australian Government has funded 3 electrolyser projects of 10 MW each, which are expected to be operationalin the near future.
Electrolyser size is expected to keep increasing. This will likely unlock a 50-fold increase in total renewablehydrogen production in the next 5 years. It could also reduce electrolyser costs by up to 75%19.

9
10
11
12
13
14
15
16
17
18
19

Hydrogen Council, Hydrogen Insights 2021, February 2021.
IEA, Hydrogen Project Database FY21Q1, 202013.
IEA, “RD&D Budget.” IEA Energy Technology RD&D Statistics (database), accessed April 7, 2021, in 2019 values.
IEA, Energy Technology Perspectives 2020, 2020.
KPMG analysis of the IEA and HyResource hydrogen project databases.
IEA, The Future of Hydrogen, June 2019.
IEA, Hydrogen Tracking Report, June 2020.
Hydrogen Council and McKinsey & Company (2021) Hydrogen Insights Report January 2021.
Deloitte, Investing in hydrogen: Ready, set, set zero, November 2020.
Advisian, Australian hydrogen market study, May 2021.
ReCharge News, Nel to slash cost of electrolysers by 75%, with green hydrogen at same price as fossil H2 by 2025, January 2021 and ReCharge
News, Green hydrogen: ITM Power’s new gigafactory will cut costs of electrolysers by almost 40%, January 2021.

2 | HYDROGEN INDUSTRY DEVELOPMENT

11

Demand
The growth in clean hydrogen supply will be driven by a growing demand for clean hydrogen.
Applications for using hydrogen are increasing, particularly in importing countries where hydrogen is a majorpart of emission reduction strategies. Some of these countries have set targets for using hydrogen in specificapplications.
When and where hydrogen will become cost competitive for particular applications depends on:• the cost of alternatives• existing technology and markets for using hydrogen.

Industrial applications
Ammonia is expected to become one of the largest sources of demand for clean hydrogen. Using cleanhydrogen in place of high-carbon hydrogen to meet existing demand for ammonia is a key opportunity for theindustry.
Ammonia made from clean hydrogen can also be used to reduce emissions from electricity production. It canbe blended with coal to reduce the amount burned to produce each megawatt-hour of electricity. Countries
are considering using clean ammonia to lower emissions from co-fired coal generation plants. For example,
Japan has an ambitious target to increase ammonia use in existing coal plants to 20% by 2030.
Clean hydrogen for chemical feedstock is currently at demonstration and pilot scale, with approximately 38
projects focused on chemical production operating around the world.20
The first quarter of 2021 saw numerous announcements on using hydrogen for steel making. Some of theworld’s largest steel producers (HBIS21, ArcelorMittal22, JFE Steels and BHP23) have announced decarbonisationplans and targets to reduce emissions over the next 30 years.
In June 2021, SSAB, LKAB and Vattenfall commenced operations at the world’s first hydrogen-reduced sponge
iron pilot plant. The HYBRIT plant in Luleå, Sweden, has tested the production of sponge iron, demonstratingthat clean hydrogen gas can be used instead of coal or coke to reduce iron ore.24
The use of hydrogen for industrial applications will accelerate over the next decade. An additional 30 projects
are due to start around the world by 2025.25

Transport
Using clean hydrogen in transport is part of many countries’ decarbonisation goals. It is a particular focus forcountries with large automobile manufacturing sectors such as Japan and South Korea.
The United States and China deployed the most hydrogen fuel cell electric vehicles (FCEV) in 2019. However
Japan, Korea and the Netherlands are also expected to be leading producers in the coming years.
Hydrogen technologies are well advanced for some transport applications. The difference in cost compared toother fuels is small, however new infrastructure will be needed for refuelling. Hydrogen-powered fuel cells havealready been developed for many forms of transport, including cars, trucks, buses, trains, ferries and forklifts.
Hydrogen-powered vehicles currently cost more than battery electric vehicles. But they have 2 main
advantages over battery vehicles: faster refuelling times and the ability to travel longer distances with larger
loads before refuelling.
Road transport

Heavy transport applications such as line haul and back-to-base are the most economical to convert tohydrogen. These vehicles need a lot of diesel for long-distance travel, which will make hydrogen-powered
alternatives more affordable as clean hydrogen becomes cheaper. Transitioning heavy vehicle fleets tohydrogen first will reduce capital costs quickly through economies of scale. However, this will depend on
sufficient demand.
General Motors, Honda, Hyundai, Hyzon, Kenworth and Toyota are manufacturing or planning to manufacture
medium and heavy hydrogen fuel cell trucks.

20
21
22
23
24
25

12

KPMG, Hydrogen State of the Nation, June 2021.
HBIS Group, HBIS Announces its Low-carbon & Green Development Action Plan, 12 March 2021.
ArcelorMittal, ArcelorMittal launches XCarb™, signalling its commitment to producing carbon neutral steel, 17 March 2021.
JFE Steel Corporation, FE Steels and BHP to address decarbonization in steelmaking process, 10 February 2021.
https://www.ssab.com/news/2021/06/hybrit-ssab-lkab-and-vattenfall-first-in-the-world-with-hydrogenreduced-sponge-iron.
KPMG analysis of IEA Project Database FY21Q1 supplemented with large scale announcements to April 2021.

STATE OF HYDROGEN

Hydrogen for light passenger vehicles may not become cost competitive with existing technologies for sometime. This is due to:• high upfront costs• competition with electric vehicles• a need for significant new infrastructure.
The IEA expect global hydrogen demand from road transport to exceed 1.6 Mt per year in 2030. By 2050 roadtransport will likely consume more hydrogen than any other sector, at 66.5 Mt per year.26 This will be driven by:• changing regulatory requirements in many countries• the expectation that hydrogen will be cheaper than diesel for buses, trains, trucks and SUVs by 2030.27
By 2030, there could be more than 10,500 FCEV refuelling stations supporting 4.5 million on-road FCEVs
globally.28
Shipping

Cargo and container ships currently produce a significant proportion of global emissions.
Reducing emissions in the shipping sector is a priority for the International Maritime Organisation. The
organisation has a goal to halve emissions by 2050 compared to 2008 levels.29
This is driving innovation in alternative marine fuels. Clean ammonia is a potential source of low-emissions
maritime fuel, particularly for vessels that spend a long time at sea, such as cargo ships.

Gas networks
Forty projects around the world are blending hydrogen into natural gas networks. These projects are all small,with fewer than 1,000 connected buildings.30
The use of hydrogen in gas networks is developing quickly, with the biggest advances in countries where gas isused mostly for heating.
The United Kingdom, the Netherlands, Australia and the United States have several demonstration projects.
These pilots are testing blends of 5% to 20% hydrogen as well as 100% hydrogen.

Electricity
Hydrogen can be used to generate electricity and support the power grid. Countries with more limited
resources, such as Japan and the Republic of Korea, have large targets for using hydrogen for baseload power
via hydrogen turbines and ammonia co-firing in coal-fired power plants. Three new Australian gas generators
have announced plans to install hydrogen-ready gas turbines at their plants.
Major turbine manufacturers, such as Siemens and General Electric, have also started to produce and sell 100%hydrogen-ready gas turbines.

Australia’s industry development
The Australian hydrogen industry has followed global momentum and seen substantial developments in 2020
and 2021.
To compare the Australian industry with global developments, an assessment was completed on where
Australia is likely to be in 2025 against each of the 13 indicators in the National Hydrogen Strategy.
Each of the 13 indicators was rated as either:• advancing slowly• advancing quickly• advancing.

26
27
28
29
30

IEA, Hydrogen, June 2020.
Hydrogen Council, 2020.
Hydrogen Council, Hydrogen Insights, 2021.
International Maritime Organisation, IMO Action to Reduce Greenhouse Gas Emissions.
IEA, Hydrogen Project Database FY21Q1, 2020.

2 | HYDROGEN INDUSTRY DEVELOPMENT

13

Table1: Overview of Australia’s progress across the industry development signals
INDUSTRY
DEVELOPMENT
SIGNAL
Investment

2025 PACE

2030 PACE

CURRENT STATUS

Advancingquickly

Advancing• Private sector investment is growing with committed investment exceeding
A$1.6 billion.
• Public sector investment reached $1.27 billion in June 2021.

Project scale

Advancingquickly

Advancingquickly• Project announcements indicate scale could reach over 100 MW by 2025.
• Gigawatt-scale projects have been announced and are expected to start operating inthe second half of the decade. However, a final investment decision on these projects
has not been made.
• Gigawatt-scale projects have been announced and are expected to start operating inthe second half of the decade. However, a final investment decision on these projects
has not been made.

Costcompetitiveness

Advancingquickly

Advancing• Gigawatt-scale projects have been announced and are expected to start operating inthe second half of the decade. However, a final investment decision on these projects
has not been made.Clean hydrogen costs are expected to decline to between A$2 andA$4 by 2030.31

Australia’s
exports

Advancing

Advancing• Investment is being directed to hydrogen supply chains. Front end engineering anddesign studies are underway.
• Supply chains still require development for Australia to be a major global supplier.
• To support supply chain development, supply chain studies are underway withinternational partners like HySupply.
• The government has supported hydrogen hubs to stimulate demand and produce cleanhydrogen for domestic and export markets.

Chemicalfeedstock

Advancingquickly

Advancingquickly• Projects to use clean hydrogen in existing facilities have been announced.
• Current announcements account for 20% of total electrolyser capacity.

Steel making

AdvancingslowlyAdvancingslowly• Limited activity in this area. However, several announcements from steel producers
indicate an intent in this sector.
• Clean steel is a priority technology under Australia’s Technology Investment Roadmap.

Electricity gridsupportAdvancingslowlyAdvancingslowly• Limited trials are underway to test whether hydrogen can provide frequency control
ancillary services (FCAS).

Mining andoff-grid

Advancing

Advancingslowly• A few projects are exploring hydrogen for microgrid applications. However, there are noplans for either small-scale or wide-scale rollout at this stage. Fortescue and ATCO are
exploring hydrogen mobility at a mine site.
• $103.6 million in government funding has supported microgrid pilots and deployment.

Powergeneration*

Advancingquickly

Advancing• Two new hydrogen-ready gas generators reached final investment decision in New
South Wales: Snowy Hydro’s 660 MW Kurri Kurri gas generator and Energy Australia’s
316 MW Tallawarra B gas generator. Additional projects are also in the pipeline,
specifically AIP’s Port Kembla gas generator.

Light transport

AdvancingslowlyAdvancingslowly• Limited deployments or infrastructure to support hydrogen use in light transport.
• Four refuelling stations and approximately 30 vehicles are in operation. Some additional
projects are targeting operations in 2025.
• The Australian Government has launched its Future Fuels Fund to take advantage ofopportunities offered by electric, hydrogen and bio-fuelled vehicles. This includes support
for electric vehicle refuelling infrastructure, including hydrogen fuel cell vehicles.

Heavy transport

AdvancingslowlyAdvancingslowly• Hyzon Motors and Fortescue Metals are collaborating on hydrogen-powered buses formining applications.
• The Australian Government’s Future Fuels Fund and Freight Productivity Program will
support further heavy transport uptake.

Gas networks

Advancing

Advancing• Activity is underway to trial hydrogen blending. Nine projects are expected to be
operational by 2025.
• Gas networks are targeting 100% hydrogen in regions of the network by 2030.
• Australian Governments have agreed to national gas regulatory framework
amendments to bring hydrogen, bio-methane and other renewable gas blends within
its scope. Reforms are expected to initially focus on gases and blends that can be usedin existing natural gas appliances.

Industrial heat

Advancing

Advancing• Limited activity. However, Grange Resources (Tasmania) Pty Ltd are undertaking afeasibility study looking at hydrogen for industrial heat.

Note: *Power generation refers to global progress as the indicator explicitly relates to international electricity demand
Source: KPMG analysis, June 2021.

This assessment shows that Australia is progressing well on:• the indicators that will support efficient scale-up of the industry by 2030
• the supply-side factors that will let Australia meet increasing demand for hydrogen.

31

14

Analysis from CSIRO National Hydrogen Roadmap (2018), IEA cost data, SA hydrogen export study and ANU Green hydrogen cost report (2020).

STATE OF HYDROGENAs is to be anticipated as a new industry develops, progress has been slower on demand-side indicators. This is
expected given the early state of the industry and the higher cost of clean hydrogen compared to chemicals
and fuels currently being used.
Many of hydrogen’s expected future uses (such as hydrogen blending in gas networks and fuels for vehicles)
have only recently begun trials. Like any new industry, it will take some time to build export supply chains anddeliver activities to help scale up the industry. For some uses of hydrogen, it will also take time for demand forhydrogen to build. Progress will be slow at first, but will increase as costs decrease and markets increasingly
adopt new technologies. This is a natural part of industry development and will be accelerated throughgovernment support.
For example, use of hydrogen for transport applications is dependent on uptake of hydrogen vehicles by
consumers. These vehicles are currently expensive as the technology is new, but are expected to come down incost over time, as technologies continue to improve and production volumes increase. Use of hydrogen will
increase in line with uptake of vehicles by consumers. Similarly, large industrial users of hydrogen, such as
existing ammonia producers, may not switch to using clean hydrogen until their existing hydrogen production
plants reach their end of their asset lives.
The Australian Government is helping industry to accelerate these demand-side indicators through a variety offunding programs discussed later in this report. For example, through the Australian Renewable Energy
Agency, the Australian Government is funding Yara Pilbara Fertilisers and ENGIE Renewables to develop a 10
MW electrolyser project to produce renewable hydrogen at Yara’s existing ammonia facility in Karratha,
Western Australia. This project will see clean hydrogen used to make clean ammonia for global export. Projects
like these, and the Australian Government’s $464 million Clean Hydrogen Industrial Hubs program, will help
drive the costs of hydrogen down faster, which will increase demand and improve these indictors.
As highlighted in the National Hydrogen Strategy, hydrogen hubs will grow Australian demand in the next few
years as the Clean Hydrogen Industrial Hubs program is rolled out. Bringing hydrogen users together will also:• reduce infrastructure costs• focus innovation efforts• develop and share workforce skills.
Locating hydrogen hubs at export sites will provide access to international demand, which is expected to be alarge source of offtake for many hydrogen projects.

2 | HYDROGEN INDUSTRY DEVELOPMENT

15

Investment and supply
Investment in the Australian hydrogen industry has increased since the release of the National Hydrogen
Strategy. This is largely due to government spending to support the strategy’s pathway and priorities.
At the end of June 2021, Australian Government support directly targeting the hydrogen industry was over
$1 billion. State and territory governments had committed another $325 million specifically for hydrogen.32
Government investment is targeted at:• research, development and demonstration (RD&D) projects• early enabling actions• developing hydrogen hubs as demand sources and as part of export supply chains.
This targeted investment will help the Australian clean hydrogen industry scale up and meet expected global
demand by 2030. It is a useful and necessary early step to establish the industry in Australia.
Like the rest of the world, Australia currently produces a small amount of clean hydrogen – 55 tonnes in 2020.33
The industry is expected to grow significantly. In June 2021, Australia had the world’s largest pipeline ofannounced hydrogen projects. If all these projects are completed Australia could be one of the world’s largest
hydrogen producers by 2030.

Production costs
In 2025 the cost of producing clean hydrogen in Australia is expected to be between A$2.30 and
A$5 per kilogram, depending on the production method. In 2030 it will cost an estimated A$2 to
A$4 per kilogram34. These are some of the cheapest estimates in the world.
Bringing the cost of clean hydrogen below $2 a kilogram (the stretch goal under the Technology Investment
Roadmap) will require:• cheaper and more abundant clean energy• significant development and deployment of technologies such as electrolysers.
Electrolysers and other clean hydrogen production technologies are still at an early stage of scaling up.
Australian projects could increase demand for these technologies, which would help reduce costs.

Shipping hydrogen
Hydrogen cannot be shipped as a gas. To transport it, the gas must be either:• liquefied• converted to ammonia or some other low emissions product (for example, clean steel)• bound to a liquid organic hydrogen carrier.
The best carrier will depend on how the hydrogen is used. Liquid hydrogen has a lower energy density thanammonia, which means less hydrogen can be carried per ship. However, it doesn’t require any cracking toconvert back to gaseous hydrogen. This makes liquid hydrogen best for end uses that require liquid or
high‑purity hydrogen.
Shipping hydrogen as ammonia is easy, but converting to ammonia and back into hydrogen is energy intensive
and adds cost. This means shipping as ammonia will likely be the best option only if ammonia is needed for theend use.35
Australia is developing both ammonia and liquefied hydrogen supply chain projects:• Yara Pilbara and ENGIE are working together on a plant for renewable ammonia production• The Hydrogen Energy Supply Chain (HESC) project aims to deliver liquefied hydrogen from
Victoria’s Latrobe Valley to Japan.

32
33
34
35

16

https://research.csiro.au/hyresource/a-short-report-on-hydrogen-industry-policy-initiatives-and-the-status-of-hydrogen-projects-may-2021/.
KPMG analysis of CSIRO HyResource project list and individual project analysis.
Analysis from CSIRO National Hydrogen Roadmap (2018), IEA cost data, SA hydrogen export study and ANU Green hydrogen cost report (2020).
Hydrogen Council, Hydrogen Insights Report February 2021.

STATE OF HYDROGEN

Figure 3: Announced Australian projects by year of operation and output (2019 to 2030)36
12

0.4

1

0.3

# of projects

8

6

0.2
9

4

8

7

0.1

2

Announced capacity (Mtpa)

1

10

Renewable
Low-carbon
Other
Cumulative
announce
capcity

2
1

0
2020

2021

2022

2023

2024

2025

2026

1

1

2027

2028

1
2029

2030

Despite these encouraging early signs, Australia’s project pipeline is made up of a small number of very large
projects (Figure 3). The activities of the next few years will determine if these projects can be delivered.
To deliver these projects on time, Australian governments must keep working together to create a productive
regulatory environment supported by necessary infrastructure. This work is already underway. Delivery also
depends on technology advancements across the supply chain reducing production costs.

International partnerships
Australia is developing international partnerships to establish ourselves as a preferred supplier of hydrogen.
Since 2018, federal and state governments have entered into various international agreements on hydrogen.
These include agreements with Republic of Korea, Japan, Singapore and Germany, all of which are expected tobe net importers of hydrogen.37 These agreements will:• share industry knowledge• reduce technology costs• explore the development of international hydrogen supply chains.
Growing our already strong international relationships in this area will position Australia as a partner of choicefor exporting low emissions energy, including clean hydrogen.
In 2021, the Australian Government announced new partnerships with Germany, Singapore, Japan,
Republic of Korea and the United Kingdom.
Australia and Germany will work together on a series of new initiatives to accelerate the development of ahydrogen industry under a new Hydrogen Accord. The accord builds on Australia’s existing collaboration withGermany on low emissions technologies including hydrogen, with a 2-year supply chain study between the 2
countries already underway.
Australia and Singapore will establish a $30 million partnership to accelerate deployment of low emissions
fuels and technologies (like clean hydrogen) in maritime and port operations.
The Japan–Australia Partnership on Decarbonisation through Technology will increase our shared focus onpriority low emissions technologies, including clean fuel ammonia and clean hydrogen.
The Republic of Korea and Australia will work together to drive increased adoption of low and zero emissions
technologies.
Australia and the United Kingdom have agreed to collaborate on research and development acrosstechnologies crucial to decarbonising the global economy, including clean hydrogen.
The private sector is also building international partnerships. Some of Australia’s largest organisations havesigned memorandums of understanding (MoUs) with supply chain partners. These MoUs will secure traderoutes for hydrogen and other low-carbon exports, including low-carbon steel.
For example, Origin Energy has signed an MoU with POSCO, one of Korea’s largest steelmakers and trading
and resource companies. The companies will cooperate to produce and supply renewable hydrogen to Korea38.

36
37
38

KPMG Analysis of HyResource project database as at September 2020, supplemented by additional research to fill data gaps where possible.
Hydrogen Council, Hydrogen Insights, 2021.
https://fuelcellsworks.com/news/origin-energy-and-posco-to-cooperate-on-green-hydrogen/.

2 | HYDROGEN INDUSTRY DEVELOPMENT

17

Demand
Australia’s most developed areas of hydrogen demand are:• ammonia production, where clean hydrogen can replace the existing use of high-carbon hydrogen• blending into gas networks.
Other areas where hydrogen is likely to become cost-competitive early are:• heavy transport• remote power generation• mining vehicles.
Hydrogen for industrial applications and heating is unlikely to reach cost parity with existing fuels anywhere in
the world before 2030.
Battery electric vehicles may be more cost competitive for passenger cars such as urban vehicles andmid‑range vehicles. However, customer preferences will drive the choice of vehicle.39

Clean ammonia
The largest current use for hydrogen in Australia is as a chemical feedstock for ammonia production.
This ammonia is used to manufacture products such as:• fertilisers• industrial chemicals• explosives• plastics.
Clean ammonia is also the most developed application for clean hydrogen in Australia. Clean ammonia could
also be used to export clean hydrogen and as a new type of fuel for shipping.
Nine clean ammonia production projects are being developed in Australia.40 These projects range fromsmall‑scale pilot and demonstration studies to large-scale developments. Some of the larger projects willproduce ammonia for export.
For example, the Australian Government, through ARENA, is providing up to $42.5 million to Engie Renewables
Australia for a 10 MW electrolyser project. The project will produce renewable hydrogen at Yara Pilbara
Fertilisers’ ammonia facility in Karratha, Western Australia.

Clean steel
Clean steel is a great opportunity for Australia thanks to our extensive iron ore resources and competitive
advantage in producing hydrogen. Low emissions steel and aluminium are priority technologies under theTechnology Investment Roadmap because of their economic and emissions reduction benefits.
Clean steel production in Australia is at an early stage. However, Fortescue Metals, Rio Tinto and GFG Alliance
have all made recent announcements on clean steel. In 2021, Fortescue began constructing a pilot low
emissions steel plant alongside a commercial renewable power plant in the Pilbara in WA.

39
40

18

Hydrogen Council, Hydrogen Insights Report, February 2021.
KPMG, Hydrogen State of the Nation, June 2021.

STATE OF HYDROGENElectricity
Hydrogen could provide long-duration storage for firming Australia’s electricity grid. It could also help
decarbonise power generation in remote areas of Australia.
Using hydrogen for power generation can facilitate sector coupling. For example, hydrogen production and use
will more closely link the electricity grid, the gas distribution network and the infrastructure supplying fuel forvehicles. This will see multiple sectors benefit from a rapidly growing clean hydrogen industry.
Like most of the world, hydrogen for electricity is in its early stages in Australia. However, 8 trials withgrid‑support components are being developed. For example:• Horizon Power is developing a hydrogen demonstration plant in the small coastal town of Denham. The
plant will provide renewable energy for a microgrid power station• The Clean Energy Innovation Hub in Perth operates a microgrid hybrid energy system that produces, storesand uses hydrogen. This includes blending hydrogen with natural gas and using it to generate power41• Three new Australia gas generators have announced plans to install hydrogen-ready gas turbines at theirplants (including the Hunter Power Project, Tallawarra B and Port Kembla gas generator), with theAustralian Government announcing a $24.9 million to support new gas generators to be hydrogen-ready.
The use of hydrogen for mining and off-grid applications is currently limited in Australia and around the world.
However, several major mining companies, including Australian companies, are exploring hydrogen-related
opportunities.

Transport
Transport shows promise as an early use for hydrogen, particularly line-haul and back-to-base vehicles.
However, hydrogen for transport is at an early stage in Australia. Various challenges need to be overcome tomake hydrogen in transport a reality.
Refuelling infrastructure needs to be deployed, vehicles need to become cheaper and more widely available,
and we need low-cost hydrogen supply. Consumer choice will also play an important role in deciding which
vehicle technologies become popular.
The uptake of hydrogen fuel cell vehicles is dependent on the rollout of hydrogen refuelling stations. However,Hyundai and Toyota have introduced their hydrogen fuel cell vehicles to the Australian market for fleets andearly adopters, with special arrangements being made for refuelling. The government’s Future Fuels Fund will
also consider funding for hydrogen refuelling infrastructure across Australia.
Twelve Australian projects in development will focus on hydrogen use in transport. Another 12 projects havepotential for hydrogen transport along with other uses. Fifteen of these 24 projects are scheduled to start
operating before 2025.
Most of these projects focus on developing refuelling infrastructure:42• In March 2021, ActewAGL opened Australia’s first public hydrogen refuelling station in Canberra. The station
will service a fleet of 20 Hyundai Nexos being trialled by the ACT Government• Toyota Australia is converting its decommissioned car manufacturing plant in Altona into a renewableenergy hub. The hub will produce renewable hydrogen for use in both transport and stationary applications.
The project has received $3.07 million in funding from the Australian Government and is expected to be fully
operational in 2021.
To date, the Australian Government has provided around $1.4 billion to support low and zero emissions vehicle
technologies, including for hydrogen-fuelled vehicles.
The National Hydrogen Strategy identifies several early opportunities for hydrogen vehicles:• industrial users such as ports or remote industrial sites• ‘back to base’ transport applications such as fleet vehicles and metropolitan public transport• freight transport.
Hydrogen hubs will provide an opportunity to bring vehicle manufacturers, hydrogen producers and fuelsuppliers together, particularly for back-to-base applications. Hubs will provide a platform to coordinate rollout
and share risks.

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HyResource project database.
KPMG analysis of HyResource project database.

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Gas networks
Hydrogen can be used in Australia’s gas networks for residential, commercial and industrial applications. Using
existing gas infrastructure could:• maximise the use of this critical infrastructure• reduce costs for end users by lowering capital costs for transport.
Australia’s activities in this area are beginning to outpace other countries. Three projects are already testing
the blending of hydrogen into gas networks, and 11 more are under development.
One of the most advanced projects is AGIG’s Hydrogen Park South Australia in Adelaide. The project has been
supplying 700 houses with 5% blended hydrogen since May 2021.
Figure 4: Current hydrogen blending projects in Australia43
Clean Energy Innovation Hub
Demonstration of gas blending on a small
scale to a display home, studying home
appliance performance at various H2
blending rates.

Clean Energy Innovation Park
Feasibility study examining potential for
a commercial hydrogen production
facility for end use in gas networks,transport and industry.

Dampier to Bunbury Natural Gas
Pipeline
Feasibility study examining thecompatibility of the transmission pipeline
with blended hydrogen.

APA Renewable Methane Demonstration
Project
Demonstration end-to-end hydrogensystem including electrolysis from solar
power, fuel cell power and injection into
gas networks.

Hydrogen Park South Australia (HyPSA)
HyPSA is an innovative project that willproduce renewable hydrogen to be
blended with natural gas to be supplied
to nearby homes via the existing gas
networks.

Utilitas-Recarbon Organic Waste to H2
Repurposing of a wastewater treatment
plant into an industrial park focussing on
production of renewable natural gas andhydrogen for blending into local gas
networks.

Murchison Renewable Hydrogen
Alongside hydrogen export, the facility
is anticipated to blend hydrogen into
natural gas pipeline connecting Dampierand Bunbury.
Australian Hydrogen Centre
Centre Assessing feasibility of hydrogen
blending into gas networks of VIC/SA
regional towns.
Portland Green Hydrogen ProjectWind or solar powered hydrogenproduction facility near Portland in
Victoria for export and gas blending.

AGN Hydrogen Park Gladstone
Australia’s first renewable hydrogenproduction facility plant will deliver up to
10% blended hydrogen across the city’s
residential, small, commercial and industrial
customer base.

Jemena Western Sydney Green Gas
Project
Project is exploring a power to gas piloton their gas network, complemented bya refuelling station. Injecting expected to
begin in early 2021.
Hydrogen Park Murray Valley
Regional town hydrogen blending
initiative, testing up to 10% blendedhydrogen to decarbonise gas supply in
Albury (NSW) and Wodonga (VIC).

Hydrogen Test Facility – ACT Gas Network
Demonstration gas blending project toenhance understanding of the impact of
blending hydrogen into the gas network
supplying the ACT and Queanbeyan (NSW).

ARENA’s Renewable Hydrogen Deployment Funding Round is funding 2 gas blending projects:• $28.7 million for a 10 MW electrolyser for gas blending at ATCO’s Clean Energy Innovation Park in
Warradarge, Western Australia• $32.1 million for a 10 MW electrolyser for gas blending at AGIG’s Murray Valley Hydrogen Park in Wodonga,
Victoria.
Several of these small pilot projects are also exploring how hydrogen could be integrated into the electricity
system. For example, ATCO’s Clean Energy Innovation Hub uses solar-powered electrolysis to producehydrogen that is stored and injected into a micro-grid as a blended fuel. Although small, this trial shows how
different uses of hydrogen can be intelligently combined and optimised.
Energy ministers have agreed to an expedited process to allow hydrogen and biogases to be brought within
the existing regulatory framework for natural gas, which will allow for more industry development.

Supporting further progress
Australia has made a promising start on the pathway set out in the National Hydrogen Strategy. Continuing thispace is crucial for Australia to remain a world leader in hydrogen.
The rest of this report describes the actions of Australian governments since the strategy was released, as well
as future opportunities for Australia.

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KPMG, Hydrogen State of the Nation, June 2021.

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Wind farm, Blayney, NSW. Image attribution: Gettyimages Andrew Merry

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3

GOVERNMENTACTIONS TOADVANCE THE
INDUSTRY

Governments in Australia are working on activities toimplement the National Hydrogen Strategy. Activities
are delivered either by the Australian Government, bystate and territory governments, or by the AustralianGovernment and state and territory governments
together.

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Australian Government activities
Supporting research, pilots, trials and demonstrations
Pilots, trials and demonstrations are essential for new industries to evolve. The Australian Government is
helping the industry develop demonstration and pilot hydrogen projects through a wide variety of initiatives.
Australian Government funding for hydrogen includes:• $1.78 billion through the Australian Renewable Energy Agency (ARENA)44• $300 million through the Clean Energy Finance Corporation (CEFC)• $464 million through the Activating a Regional Hydrogen Industry: Clean Hydrogen Industrial Hubs program• Over $300 million to develop carbon capture, use and storage (CCUS) projects and hubs, and advancetechnologies.
Hydrogen research, knowledge sharing and collaboration is supported by work at:• CSIRO• Geoscience Australia• National Energy Resources Australia (NERA), an industry growth centre funded by the AustralianGovernment.
Hydrogen also features in a number of cooperative research centres (CRCs) including:• Future Fuels CRC• Blue Economy CRC• RACE for 2030 CRC• Future Energy Exports CRC• Heavy Industry Low-Carbon Transition CRC
The Australian Research Council (ARC) has also provided around $33 million in grants for hydrogen research.

Activating a Regional Hydrogen Industry: Clean Hydrogen Industrial Hubs program
The National Hydrogen Strategy identifies hydrogen hubs as the best way for the Australian industry to achieve
scale.
Hydrogen hubs are regions where multiple hydrogen producers, user and potential exporters are colocated.
This minimises the cost of infrastructure such as powerlines, pipelines, storage tanks and refuelling stations.
The hub model will also build domestic demand by:• supporting economies of scale to deliver hydrogen to end users• sharing early movers’ risk across sectors.
Hydrogen hubs will create economies of scale to drive down costs of production, unlocking further demand forhydrogen as costs fall. Hubs will also create efficiencies by leveraging and supporting the existing industrial
capabilities and workforces in relevant regions. Hubs will stimulate innovation and increase workforce skills
development, as well as support other existing industrial sectors in these regions to lower both emissions andcosts in doing business.
The Australian Government has announced $464 million from 2021–22 over 5 years for the Activating a
Regional Hydrogen Industry: Clean Hydrogen Industrial Hubs program. This includes funding to support theearly design works of hydrogen hubs, of which an estimated $30 million is available for Hydrogen Hub
Development and Design Grants.
The Australian Government will provide over $300 million to fund carbon capture, use and storage (CCUS)
projects and advance technologies. This includes establishing CCUS hubs near high-emitting industrial areas.
CCUS hubs may complement the hydrogen hubs by enabling the production of clean hydrogen from fossil fuelswith CCS. The government has also developed an Emissions Reduction Fund method to credit abatement fromnew CCS projects.

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ARENA has committed over $160 million to hydrogen projects, and has $1.62 billion available to support the next generation of energy technologies.

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Regional hydrogen technology clusters
In February 2021, NERA announced a $1.85 million investment in 13 regional hydrogen technology clusters
across all Australian states and territories.
The clusters will accelerate and optimise the development of hydrogen technology and expertise in Australia.
The clusters also benefit from state and territory government funding and industry financial support.

ARENA unlocking hydrogen potential in research anddevelopment
In 2018, ARENA, on behalf of the Australian Government, set out to turn the potential of renewablehydrogen into a productive industry. ARENA awarded $22.1 million in funding to 16 hydrogen-related
research teams across 9 universities and research institutions.
This work aims to unlock innovations at each point of the hydrogen export and supply chain, including
production, energy carriers and end use.
Two and half years on, the projects are showing some remarkable results.
Hydrogen research – ammonia from renewables ($913,000 grant)
One project set out to produce ammonia from renewable energy at ambient temperatures andpressures. The project is led by Monash University in collaboration with the University of Wollongong.
The process uses renewable energy to power an electrolyser that splits water into hydrogen andoxygen. Hydrogen can also be sourced from the atmospheric nitrogen using an air separation unit. Thishydrogen can then be converted to ammonia using a non-Haber-Bosch process.
The team has achieved their milestones to date. They are also improving the performance of producing
ammonia from atmospheric nitrogen at ambient conditions.
Reversible storage of hydrogen in carbons ($805,000 grant)
RMIT University is developing a system to store and transport renewable hydrogen in a dry
carbon‑based powder or slurry.
This would be cheaper to manage than liquid hydrogen, allowing more hydrogen to be exported. The
technology is environmentally friendly and does not produce any emissions.
Testing of the novel ‘proton flow reactor’ system shows it can recover 60% of the hydrogen stored inthe ‘wet to dry’ electrodes created for the project.
Hydrogen from efficient solar ($1.72 million grant)
Researchers from the Australian National University (ANU) set out to simplify the process of
converting solar energy into hydrogen.
Existing systems use separate solar and electrolyser technologies, but ANU is developing an integrated
solar hydrogen cell. This will boost efficiency and reduce infrastructure costs by eliminating the needfor transmission lines, inverters and electrolysers.
The team has demonstrated efficiencies of 16% using perovskite-silicon tandem cells and low-costcatalysts. Their work has received international recognition, including being named a global top 10
innovation by the Innovation for Cool Earth Forum (ICEF) in 2020.
For a full list of hydrogen projects funded by ARENA, visit arena.gov.au/renewable-energy/hydrogen.

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ARENA Renewable Hydrogen Deployment Funding Round
Reducing the cost of renewable hydrogen will be vital to achieving the potential of the technology. Achieving
the Australian Government’s target of $2 per kilogram of hydrogen will require cost reductions across the
supply chain.
To support this, ARENA has conditionally approved $103.3 million towards 3 commercial-scale renewablehydrogen projects as part of its Renewable Hydrogen Deployment Funding Round.
Engie Renewables, ATCO Australia and Australian Gas Networks (AGIG) were selected to install 10 MW
electrolysers at sites in Western Australia and Victoria. These 10 MW electrolysers would match the biggest
built in the world so far, such as the REFHYNE project in Germany45 and the Fukushima Hydrogen Energy
Research Field at Namie town in Fukushima.46
Engie’s project will use renewable hydrogen to produce ammonia at the Yara Pilbara Fertilisers site. ATCO’s andAGIG’s projects will use renewable energy to produce renewable hydrogen for gas blending into existing
natural gas pipelines.
Australia’s hydrogen industry is in its infancy. The lessons learned from these projects will help shape ourhydrogen economy and support commercial-scale renewable hydrogen deployment in future.

CEFC Advancing Hydrogen Fund
The CEFC has made up to $300 million available to support the growth of the Australian hydrogen industry.
The Advancing Hydrogen Fund focuses on projects that align with the National Hydrogen Strategy. It includes
projects with financial support from state or territory governments.
Eligible projects will:• advance hydrogen production• develop export and domestic hydrogen supply chains, including infrastructure for hydrogen export• establish hydrogen hubs
• help build domestic demand for hydrogen.

45
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European Commission: Clean Refinery Hydrogen for Europe, accessed September 2021.
Toshiba Energy Systems Press Release, accessed September 2021.

STATE OF HYDROGEN

Mapping Australia’s Hydrogen Future – the Hydrogen
Economic Fairways Tool
Geoscience Australia, in collaboration with Monash University, has developed a tool mapping the
economic viability of hydrogen operations across Australia.
The Hydrogen Economic Fairways Tool (HEFT) helps policymakers and investors make decisions about
the location of new infrastructure and the development of hydrogen hubs.
The tool conducts detailed geospatial-financial analysis of future large-scale hydrogen projects. It
assesses the quality of energy resources required to produce hydrogen, such as:• wind• solar• concentrated solar power• hybrid wind and solar• fossil fuels with carbon capture and storage.
HEFT also assesses rail and road transportation infrastructure, pipelines to export ports and readyaccess to water.
Preliminary results show that economically viable regions for hydrogen production are located acrossAustralia. All states and territories have regions with high potential.
The interactive tool lets users explore economic relationships within the hydrogen supply chain anddetermine the variables that will drive the cost of hydrogen production in Australia.
Geoscience Australia and Monash University are building an updated version of HEFT through theAustralian Government’s Exploring for the Future program. The new version will add energy inputs forrenewable hydrogen production, including hydropower, pumped hydro, and hybrid wind and hydro. It
will also include underground options for large-scale hydrogen storage such as salt and depleted gas
reservoirs.
You can access HEFT through Geoscience Australia’s hydrogen data portal at AusH2.ga.gov.au. The
portal has over 7,000 additional geospatial datasets (including Geoscience Australia’s newly released
renewable energy capacity factor maps).

Hydrogen Energy Supply Chain Project
The $500 million Hydrogen Energy Supply Chain (HESC) Project is a world-first collaboration involving
Japanese and Australian industry and the Victorian, Australian and Japanese Governments.
The project will safely produce and transport clean liquid hydrogen from the Larrobe Valley in Victoria to Kobe
in Japan. This will be the first time that liquefied hydrogen has been transported between 2 continents.
The pilot will develop a complete hydrogen supply chain by:• creating hydrogen gas by gasifying Latrobe Valley brown coal
• transporting it to the Port of Hastings to be converted into liquid hydrogen• shipping it to Kobe.
The Australian facilities commenced operations in March 2021. The first shipment of hydrogen from Australia toJapan is expected to occur between October 2021 and March 2022.
The decision to progress to a commercialisation phase, which will produce clean hydrogen from coal with CCS,
will be made after the pilot project is completed. A commercial HESC could reduce greenhouse gas emissions
by 1.8 million tonnes a year and would require carbon capture and storage to store CO₂ emissions. The
Victorian and Commonwealth's CarbonNet project is developing a multi-user CCS hub network in Gippsland as
a key enabler of new decarbonised industries, including clean hydrogen production.

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Carbon capture, use and storage (CCUS)
Ongoing investments in CCUS are critical to reducing the costs of clean hydrogen produced from steam
methane reforming and coal gasification. These cost reductions are needed for a competitive clean hydrogen
industry in Australia.
The Australian Government will provide over $300 million to:• fund carbon CCUS projects• help establish CCUS hubs near high-emitting industrial areas• support research, development and commercialisation efforts.
This includes establishing a $250 million CCUS Hubs and Technologies Program. The program will funddemonstration and commercial-scale CCUS projects and hubs, as well as accelerate the development of CO₂
utilisation technologies with export potential.
The government will also develop a National CCUS Technology Emissions Abatement Strategy. This strategy
will:• signal government priorities for CCUS
• improve policy frameworks• guide coordination to deploy CCUS hubs.
This new funding builds on the $50 million CCUS Development Fund announced in the 2020–21 Budget. The
CCUS Development Fund supports pilot and pre-commercial CCUS projects. Grant recipients were announced
in June 2021.
The government has also announced the development of an Emissions Reduction Fund method to credit
abatement from new CCS projects.

Hydrogen-ready generators
The Australian Government is providing $24.9 million for hydrogen-ready turbines and associatedinfrastructure in new gas generators.
The first gas generator to receive funding under this program is EnergyAustralia’s 316 MW Tallawarra B dual
fuel capable power station, currently under development in New South Wales. The government will provide$5 million to complement support being provided by New South Wales to support the plant being madehydrogen ready.
The Australian Government has also committed up to $600 million for Snowy Hydro Limited to construct a 660
MW open cycle gas turbine at Kurri Kurri in the Hunter Valley, which will be hydrogen-ready.
Hydrogen-ready turbines can use natural gas and clean hydrogen in varying blends. A number of gas
manufacturers are already manufacturing and selling these turbines around the world.
Demonstrating hydrogen-ready turbines in Australia will prove their technical capability and enable their use
around the world. This will increase the demand for Australian clean hydrogen domestically and internationallyand ensure these generators remain commercially competitive.

Future Fuels Strategy and Future Fuels Fund
In November 2021 the Australian Government released the first national Future Fuels and Vehicles Strategy,
which is backed by an expanded $250 million Future Fuels Fund investment.
This technology-led strategy will see the government work with industry to:• enhance consumer choice• create jobs
• reduce emissions in Australia’s transport sector.
The strategy also puts practical action behind the Low Emissions Technology Statement 2021 priority forenabling infrastructure. Public electric vehicle charging and hydrogen refuelling infrastructure is a priority forinvestment under the Future Fuels Fund.
The Future Fuels Fund will support the assessment of deployment needs and opportunities to roll outhydrogen refuelling infrastructure to meet demand. The fund will also support demonstration of hydrogen
refuelling stations for hydrogen hubs, major freight routes and passenger road corridors in Australia.

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Hydrogen research collaborations and knowledge sharing
The Department of Industry, Science, Energy and Resources and CSIRO have established the Australian
Hydrogen Researcher Network.
The network brings together stakeholders from across Australia’s hydrogen research and development
community. It identifies research gaps and enables collaborative research to help develop Australia’s hydrogen
industry.
The network will deliver the department’s $5 million researcher mobility and research collaborations program,with CSIRO as a partner.

CSIRO Hydrogen Industry Mission
CSIRO’s Hydrogen Industry Mission will help achieve the National Hydrogen Strategy’s vision of a globallycompetitive Australian hydrogen industry.
Through research, development and demonstration (RD&D) partnerships and projects, the mission will help:• increase demand for hydrogen• drive down hydrogen costs• create jobs
• achieve lower emissions energy systems.
Formally launched on 26 May 2021, the mission is founded on CSIRO’s existing long-term research capability
and effort in hydrogen energy RD&D.
Hydrogen knowledge centre

One important mission initiative is developing a Hydrogen Knowledge Centre as a national resource forindustry, government and the research community.
The knowledge centre will highlight developments in Australia’s hydrogen industry and provide tools andresources for new entrants to the industry. The first module, HyResource, was launched in September 2020
with NERA, the Future Fuels Cooperative Research Centre and the Australian Hydrogen Council.
Feasibility and strategy studies

The mission will provide analysis and independent advice on hydrogen opportunities to government, industry
and the community.
CSIRO has already made contributions including:• the 2018 National Hydrogen Roadmap• hydrogen cost modelling and barrier analysis for the National Hydrogen Strategy• a report (with long-term partner Boeing) on the contribution that clean hydrogen-based technologies canmake to emissions reduction in the aviation sector.
Demonstration projects

The mission is developing demonstration projects that validate hydrogen value chains and reduce risks forenabling technologies.
One example is the hydrogen refuelling station and hydrogen technology demonstration facility at theVictorian Hydrogen Hub. Located at CSIRO’s Clayton campus in Melbourne, the project is a collaboration with
Swinburne University of Technology and the Victorian Government.
Enabling science and technology solutions

The mission is working with partners to deliver enabling science and technology solutions and socio-economic
analysis to help the hydrogen industry scale up.
This includes CSIRO’s Hydrogen Energy Systems Future Science Platform. It also includes a major partnershipwith Fortescue Metals Group focusing on the development and commercialisation of new hydrogentechnologies.
Hydrogen Industry Mission partners

CSIRO and its partners will invest more than $68 million in the development of Australia’s industry-relevanthydrogen RD&D capabilities.
As Australia’s national science agency, CSIRO is in a unique position to bring research, government andindustry together.

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Hydrogen Industry Mission partners include:• Department of Industry, Science, Energy
and Resources• Future Fuels CRC• ARENA• Australian Hydrogen Council• Fortescue Metals Group• Swinburne University• NERA• other collaborators such as Toyota, Hyundai
and Boeing.

• Victorian Government

International engagement
As countries look to decarbonise their economies, the Australian Government is working closely with trading
and strategic partners to deliver on our commitments and goals.
The Special Adviser to the Australian Government on Low Emissions Technology, Dr Alan Finkel, plays a keyrole in brokering international low emissions technology partnerships. These partnerships will deliver projects
that advance the goals of the Technology Investment Roadmap, including clean hydrogen.
The Australian Government committed $565.8 million to international partnerships through the 2021–22 federal
Budget. Partnerships will use a co-investment model, recognising the different roles that export and importmarkets play in the industry.
These partnerships will build on existing collaboration with strategic trading partners including Germany,
Japan, Korea, Singapore, the United States and the United Kingdom.

Bilateral engagement
Bilateral agreements are crucial to making Australia a hydrogen partner of choice. They can include
commitments to:• promote trade and investment• prove the feasibility of supply chains• build technical collaborations to support research and development.
Japan

Australia signed the Joint Statement of Cooperation on Hydrogen and Fuel Cells with Japan in January 2020.
This builds on our countries’ collaboration on the HESC pilot project.
In June 2021 the Australian and Japanese Governments announced a new partnership. The Japan–Australia
Partnership on Decarbonisation through Technology will increase our shared focus on priority low emissions
technologies, including clean fuel ammonia and clean hydrogen.
Germany

In September 2020, Australia and Germany signed a joint declaration of intent to study the feasibility of a
supply chain for renewable hydrogen. Known as HySupply, the feasibility study started in December 2020. A
consortium led by the University of New South Wales, Deloitte and Baringa Partners are the Australian partners
for the study.
In June 2021 the Australian and German governments announced a series of new initiatives to accelerate thedevelopment of a hydrogen industry under a new Hydrogen Accord.
Under the accord, Australia and Germany will:• establish HyGATE, the German-Australian Hydrogen Innovation and Technology Incubator. HyGATE will
co-fund pilot, trial, demonstration and research projects along the renewable hydrogen supply chain.
Australia will contribute $50 million and Germany €50 million• facilitate industry-to-industry cooperation on demonstration projects in Australian hydrogen hubs
• explore options to export renewable hydrogen and ammonia from Australia to Germany.
Korea

Australia signed a letter of intent with the Republic of Korea on 27 September 2019. The countries agreed todevelop a hydrogen action plan and cooperate on hydrogen development.
A new low and zero emissions partnership with the Republic of Korea was signed on 31 October 2021. Thispartnership will support research on hydrogen supply chains between the countries.

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STATE OF HYDROGENSingapore

Australia and Singapore developed a Memorandum of Understanding on Low Emissions Technologies, which
includes cooperation on hydrogen. The memorandum was signed by Australia’s Minister for Energy andEmissions Reduction on 26 October 2020.
In June 2021 the Australian Government announced a new $30 million partnership with Singapore. Thispartnership will accelerate the deployment of low emissions fuels and technologies (like clean hydrogen) inmaritime and port operations. The partnership recognises Singapore’s role as a major shipping hub andAustralia’s ambition to be a leader in the use of clean hydrogen and clean ammonia.
Each country will commit up to $10 million over 5 years to fund industry-led pilot and demonstration projects.
Industry is expected to provide at least $10 million of additional investment.

Multilateral engagement
Australia is engaging in international forums to:• shape the rules for hydrogen trade and investment• share best practices for RD&D and community engagement• encourage private sector investment.
Our influence in these forums ensures Australian hydrogen will be accepted around the world.
Australia led the Mission Innovation Renewable and Clean Hydrogen Challenge along with Germany and theEuropean Commission. We are co-leading a new Mission Innovation initiative on hydrogen with Chile, theEuropean Union, Saudi Arabia, the United States of America and the United Kingdom. The initiative will speed
up clean hydrogen innovation to achieve performance breakthroughs and lower costs.
Australia is a member of the Center for Hydrogen Safety, a global non-profit dedicated to promoting hydrogensafety and best practices. This is informing the development of domestic skills and training for the hydrogen
industry.
Other multilateral forums on hydrogen Australia is part of include:• G20 energy ministers meetings• G20 working groups on climate sustainability and energy transition• International Partnership for Hydrogen and Fuel Cells in the Economy• Clean Energy Ministerial Hydrogen Initiative.

Austrade support for the hydrogen industry
Austrade is helping position Australia as a reliable producer of clean hydrogen to meet future global
demand. It is attracting international project developers and technology providers to develop the
global hydrogen industry with Australian partners.
This includes:• engaging with foreign governments and industry to promote Australia as a preferred partner tosupply hydrogen• helping connect Australian projects with investors, leading to offtake agreements• promoting Australia to global energy companies, technology companies and fund managers as aplace to invest• building a global hydrogen industry with long-term economic opportunities for Australians.
Austrade helped Kawasaki Heavy Industries and its partners launch the $496 million Hydrogen Energy
Supply Chain (HESC) pilot project in Victoria’s Latrobe Valley. Austrade provided assistance including:• coordinating meetings with Australian Government ministers• providing advice on Australian Government funding programs• intergovernmental coordination.
Austrade introduced Origin Energy to POSCO, one of South Korea’s biggest steelmakers. The
companies are investigating exports of renewable hydrogen made in Tasmania and Queensland.
Austrade introduced Stanwell Corporation to Japanese company Iwatani and Singapore’s Keppel DC.
The companies are developing Gladstone’s green hydrogen export hub.

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Hydrogen Guarantee of Origin scheme
Australia’s National Hydrogen Strategy identified a Guarantee of Origin or certification scheme for hydrogen as
an early priority.
A Guarantee of Origin scheme will offer transparency to consumers on how and where the hydrogen theychoose to buy is produced. This includes identifying the energy source and technology used to produce it, as
well as associated carbon emissions. The scheme is a vital step towards global trade in this new clean energy.
The Australian Government is developing the Guarantee of Origin scheme for hydrogen. In June 2021 theDepartment of Industry, Science, Energy and Resources released a discussion paper outlining the proposed
design of a domestic hydrogen Guarantee of Origin scheme.
The department is taking a lead role in the Production Analysis Taskforce of the International Partnership for
Hydrogen and Fuel Cells in the Economy (IPHE). The taskforce is developing a methodology to determine thegreenhouse gas emissions of different hydrogen production pathways. The proposed scheme aligns with
Australia’s requirements and our work through IPHE.
The Australian Government has announced $9.7 million to support trials of the Guarantee of Origin scheme inAustralia. We are to conduct these trials with the Clean Energy Regulator.

Activities delivered jointly by governments
Australia’s federal, state and territory governments are working together on activities under the National
Hydrogen Strategy.
The Hydrogen Project Team is a group of federal and state and territory officials that shares information acrossjurisdictions and oversees these joint projects.

National Hydrogen Infrastructure Assessment
The Australian Government is leading a National Hydrogen Infrastructure Assessment in consultation with thestates and territories. It is due for completion by 2022.
This assessment will:• consider the infrastructure needs, availability and gaps in hydrogen supply chains across Australia• support future decisions to invest in hydrogen• be an essential step in developing hydrogen hubs
• help enable hydrogen export.

Hydrogen gas reforms
On 20 August 2021, Energy Ministers agreed that the national gas regulatory framework should be amended tobring hydrogen, bio-methane and other renewable gas blends within its scope. This will include amendments to:• the National Gas Law (NGL), the National Gas Regulations, the National Gas Rules (NGR), procedures andother subordinate instruments made under the NGL and/or NGR• the National Energy Retail Law (NERL), the National Energy Retail Regulations and the National Energy
Retail Rules (NERR).
Jurisdictional officials, the Australian Energy Market Commission (AEMC) and the Australian Energy Market
Operator (AEMO) have each been tasked with progressing different aspects of the reforms.
Officials will identify and develop amendments to the NGL, NERL and regulations, the AEMC will identify anddevelop amendments to the NGR and NERR, and AEMO will identify and develop amendments to theprocedures and other AEMO-made instruments required for settlement and metering in the facilitated andregulated retail gas markets.
Energy Ministers agreed to an expedited process to complete these reforms. A draft legislative package is tobe presented to Ministers for approval by mid-2022 and draft rules in the latter half of 2022.

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Hydrogen gas review
The Australian Government is also undertaking work to complete the review of hydrogen in gas networks
under Action 3.12 of the National Hydrogen Strategy.
This included a review of the National Gas Law, which informed Energy Ministers’ decision to expedite theseamendments.
The review also is also considering:• options for a framework to set and update the volume of hydrogen that can be blended in gas networks• the economics of blending and the eventual use of 100% hydrogen in Australian gas networks.

Legal frameworks review
The Australian Government is reviewing legal frameworks and standards relevant to hydrogen industry
development and safety.
The review will determine:• if existing regulatory frameworks will enable industry development and ensure safety• any amendments required to ensure appropriate regulation.
We are working with states and territories to coordinate this review and develop a work program for therequired regulatory reforms.

Skills and training
South Australian members of the Hydrogen Project Team are leading work on skills, training and emergency
services for hydrogen industry development. This project will support future development of nationallyconsistent training materials and guidelines for producing, handling, using and transporting hydrogen. It will
use resources available through Australia’s membership of the US-based Center for Hydrogen Safety.
In 2020, the Australian Government made a commitment to subsidise Australian emergency services workers
to participate in hands-on training courses from the Center for Hydrogen Safety. These courses could not bedelivered as planned due to the COVID-19 pandemic. The Australian Government is working with theAustralasian Fire and Emergency Services Authorities Council on how to best deliver this and other training toemergency services workers.

Community engagement
Engaging the community is vital to developing a hydrogen industry that benefits all Australians. Tasmanian
members of the Hydrogen Project Team are laying the groundwork for a community education program thatwill provide clear and accessible information about the risks, benefits and safe use of hydrogen. The program
will also support best-practice for community engagement with an interjurisdictional communications andengagement working group overseeing this work stream.

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STATE AND TERRITORY GOVERNMENTACTIVITIESNew South WalesThe NSW Hydrogen Strategy
In October 2021, the NSW Government released the NSW Hydrogen
Strategy, the State’s bold vision and pathway to enable NSW to be a global
first mover in the hydrogen industry, with ambitious policies that capitaliseon NSW’s natural strengths.
The policies set out in the Strategy aim to:• reduce the cost of green hydrogen by $5.80 per kg in the next decadeto reach under $2.80 per kg• provide up to $3 billion of incentives to support industry development
to deliver NSW’s 2030 stretch targets of 110,000 tonnes of greenhydrogen production per annum and 10,000 hydrogen heavy vehicles.
A total of 60 key actions will be implemented under the Strategy, which
will enable industry development and drive rapid scale. In addition todelivering an already committed $70 million to develop the State’shydrogen hubs in the Illawarra and the Hunter regions, the Strategy
includes:• exemptions for green hydrogen production from government scheme charges• a 90% exemption from electricity network charges for green hydrogen producers who connect to parts of
the network with spare capacity• a hydrogen refuelling station network to be rolled out across the State.

Hydrogen hubs
A key action of the NSW Hydrogen Strategy is the development of hydrogen hubs, initially in the Hunter andIllawarra regions. NSW has committed at least $70 million to the hydrogen hub initiative, which is targeting
opening for expressions of interest in late October 2021.
The hydrogen hub initiative focuses on developing new demand and scaling up hydrogen production for
multiple end uses, particularly heavy transport and industrial sectors. The initiative also enables other uses ofhydrogen such as gas blending, export and electricity.
In addition, the initiative aims to foster collaboration and connections between larger, more developed projects
and potential new hydrogen consumers. The NSW Government has launched a platform to drive collaboration
between stakeholders and accelerate the growth of NSW’s green hydrogen industry.

Net Zero Industry and Innovation program
The $750 million Net Zero Industry and Innovation Program is the NSW Government’s plan to support andpartner with industry to reduce emissions and help NSW businesses prosper in a low carbon world. There are 3
areas of funding, all of which are available to hydrogen projects:• $380 million to help existing industries transition to low-emissions alternatives• $175 million to set up new low-carbon industries such as green hydrogen• $195 million to research and develop new clean technologies.

Tallawarra B – Australia’s first green hydrogen and gas power plant
In May 2021 the NSW Government announced it would provide $78 million in funding to support developmentof EnergyAustralia’s Tallawarra B 316 MW open cycle gas turbine. The Commonwealth also committed toprovide $5 million in additional funding to support the plant being hydrogenready. The plant will be Australia’s
first dual-fuel power plant using both green hydrogen and gas.
Under the funding agreement, EnergyAustralia will offer to buy green hydrogen equivalent to over 5% of theplant’s fuel use (about 200 tonnes of green hydrogen per year) from 2025. EnergyAustralia will offset direct
carbon emissions from the plant over its operational life. EnergyAustralia will also invest in engineering studies
investigating if the plant can be upgraded to use more green hydrogen in future.

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Australia’s first hydrogen refueller for heavy transport.
Coregas is the largest Australian owned gases company. It is helping develop Australia’s hydrogentransport sector by investing in refuelling infrastructure at its Port Kembla industrial gas plant.
Coregas received funding through the NSW Government’s Port Kembla Community Investment Fundto build a hydrogen refuelling station at its Port Kembla site. The refueller will be able to dispense 450
kg of fuel cell–quality hydrogen per day at 350 bar pressure.
This project will:• deploy Australia’s first fleet of hydrogen fuel cell trucks• improve the environmental footprint of transport in the region• show that fuel cell vehicles are commercially viable for Australian fleets• showcase the technology’s potential to improve energy security, create jobs and investment, anddecarbonise the transport sector.
The hydrogen refueller is expected to be operational by mid-2022. Hydrogen will be sourced from
Coregas’s adjacent hydrogen production facility, which produces hydrogen from natural gas. This will
reduce emissions by approximately 50% compared to the diesel trucks currently in use. Emissions
could be eliminated entirely once the refueller is supplied with renewable hydrogen.
The project is a key step in building on the existing hydrogen ecosystem in Port Kembla and theIllawarra–Shoalhaven area. This area has the potential to become a thriving domestic and exporthydrogen hub.

Port Kembla Gas Terminal. Image attribution: Squadron Energy

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Victoria
The Victorian Government launched its Renewable Hydrogen Industry Development Plan in February 2021,
establishing a blueprint for an emerging renewable hydrogen industry in Victoria.
Over the next 2 years Victoria will scale up, skill up and build a strong supply chain to foster a renewablehydrogen economy. This will stimulate investment, employment, innovation and economic growth, as well as
support Victoria’s clean energy transition.

Accelerating Victoria’s Hydrogen Industry Program
The Victorian Government announced the Accelerating Victoria’s Hydrogen Industry Program to support policy
development, industry development and research. The program includes funding for 2 competitive grant
programs:• The $6.2 million Renewable Hydrogen Commercialisation Pathways Fund to support renewable hydrogenpilots, trials, and demonstrations in Victoria• The $1 million Renewable Hydrogen Business Ready Fund, to support Victorian businesses to take the firststeps to transition to renewable hydrogen through business cases and feasibility studies.

Regional hydrogen technology clusters
The Victorian Government has partnered with National Energy Resources Australia (NERA) to co-fund regionalhydrogen technology clusters in:• Gippsland• Greater Geelong• the Mallee• Clayton, Melbourne.
A Victorian Hydrogen Cluster Network will support the growth and coordination of these clusters.

Gas blending studies
The Victorian Government is a founding member of the Australian Hydrogen Centre, which is supporting aseries of feasibility studies examining hydrogen blending in the natural gas network.
The centre’s regional towns report will investigate the feasibility of a 10% hydrogen blend in Ballarat andWodonga. The centre will also investigate a 10% state-wide hydrogen blend and a 100% hydrogen network.

Hydrogen Park Murray Valley
On 5 May 2021, the Australian Government, through ARENA, committed $32.1 million from its Renewable
Hydrogen Deployment Fund to a hydrogen park at Murray Valley.
Led by Australian Gas Infrastructure Group and ENGIE, the project will develop a 10 MW electrolyser at North
East Water’s wastewater treatment plant in Wodonga. The Victorian Government is working with the project
proponents to progress the proposal.

Zero Emissions Vehicle (ZEV) Roadmap
In May 2021, the Victorian Government launched its Zero Emissions Vehicle (ZEV) Roadmap. The roadmap is
supported by a $100 million support package to fast track the transition to battery and hydrogen-powered
electric vehicles.
Several programs in the ZEV support package are open to hydrogen:• $46 million for Australia’s first public ZEV subsidy program. The program will help Victorian residents andbusinesses purchase new ZEVs, including hydrogen fuel cell electric vehicles• $20 million for a ZEV public transport bus trial. The government wants all public transport bus purchases tobe ZEVs from 2025
• $10 million to replace the Victorian Government fleet with ZEVs
• $5 million to establish a ZEV innovation fund for the commercial sector.

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Victorian Hydrogen Hub
Through the Victorian Higher Education State Investment Fund, the Victorian Government is providing$10 million for the Victorian Hydrogen Hub (VH2). The project is led by Swinburne University of Technology inpartnership with CSIRO and Germany’s ARENA 2036.
VH2 will:• support sustainable manufacturing practices• enable storage of clean energy from renewable sources• help create a sustainable future by testing, trialling and demonstrating new and emerging hydrogentechnologies.
The project includes funding for:• a hydrogen refuelling station at CSIRO’s Clayton campus• implementation of a Victorian Hydrogen Industry Capability Program• large-scale hydrogen engagement programs to generate active partnerships with Victorian industry.

Hycel Technology Hub
The Victorian Government is providing $9 million to Deakin University’s Hycel Technology Hub through theVictorian Higher Education State Investment Fund.
The Hycel Technology Hub will develop and manufacture hydrogen fuel technology with a focus on transport,
heavy vehicles and industry applications.
As part of the project, Deakin University aims to transition its Warrnambool campus from gas to hydrogen. It
also aims to convert the Warrnambool Bus Lines fleet to clean energy.

Zero Emissions Energy Laboratory
The Victorian Government is providing $4.7 million to the University of Melbourne’s Zero Emissions Energy(ZEE) Lab through the Victorian Higher Education State Investment Fund.
Located in the Melbourne Connect Precinct, the lab will see Melbourne University work with industry todevelop a range of clean energy products across the hydrogen and solar fields.
The ZEE Lab will focus on creating new products and innovations for the commercial market, including new
methods for hydrogen gas processing and fuel systems.

Hydrogen testbed and training precinct. Image attribution: Deakin University.

Other government funding
Eligible renewable hydrogen projects may be supported through the second round of the Victorian
Government’s Energy Innovation Fund. Hydrogen projects were also eligible for the now-closed Business
Recovery Energy Efficiency Fund.
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Queensland
On 30 May 2019, the Queensland Government released the Queensland Hydrogen Industry Strategy
2019–2024. The strategy is a 5-year plan to grow a sustainable hydrogen industry that:• supports renewable resources• creates jobs
• strengthens our economy.
The strategy includes 17 actions across 5 focus areas. It will allow Queensland to take advantage of emerging
domestic and international renewable hydrogen opportunities.
The Queensland Government has already invested over $60 million to support the development of thehydrogen industry. This includes:• support for industry development activities• investment in education, training and skills to provide a pathway to the highly skilled jobs of the future• financial assistance for private sector projects through the Hydrogen Industry Development Fund.
The skills and training portion of this funding includes:• $20 million towards a Queensland Apprenticeships Centre, which will include a Hydrogen Training Centre of
Excellence• $10.6 million towards a hydrogen and renewable energy training facility in Townsville• $2 million to upgrade training facilities at Gladstone State High School to prepare students for jobs in thehydrogen industry• $23 million towards the Pinkenba Renewable Energy Training Facility.

Major Projects
Fortescue Future Industries
Queensland was selected for one of the world’s largest hydrogen-equipment manufacturing facilities in apartnership between the Queensland Government and Fortescue Future Industries in Gladstone. Stage one of
the multi-stage project will establish Australia’s first multi-gigawatt-scale electrolyser factory, with an initial
capacity of 2 GW per year.

Stanwell Corporation
Stanwell Corporation and Iwatani Corporation of Japan have secured a land site west of Gladstone for a
proposed 3 GW hydrogen export facility. Japanese companies Kawasaki Heavy Industries, Kansai ElectricPower Company and Marubeni, and Australian energy infrastructure business APA Group, have joined theconsortium with Stanwell and Iwatani.

CS Energy
CS Energy, in partnership with IHI Corporation Japan, is undertaking a feasibility study to establish a hydrogendemonstration plant next to the Kogan Creek Power Station near Chinchilla.
The project concept includes co-location of a:• 2 MW solar farm which will provide behind-the-meter power to the hydrogen plant• 2 MW battery• 1 MW hydrogen electrolyser• hydrogen fuel cell producing up to 50,000 kg of hydrogen a year.

Edify Energy
Townsville City Council formally approved the first development application over land within the Lansdown
Eco-Industrial Precinct (46 kilometres south of Townsville) by Edify Energy.
Edify Energy proposes to build and operate a renewable hydrogen production facility as well as a behind-themeter solar photovoltaic and battery storage facility at the precinct.
A memorandum of understanding was also signed between Edify Energy and the Port of Townsville to explore
exporting hydrogen at the port.

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Queensland Hydrogen Investor Toolkit
In May 2020 the Queensland Government released the Queensland Hydrogen Investor Toolkit as part of the strategy.
This toolkit gives investors intending to develop hydrogen projects in Queensland an overview of planning andother regulatory approvals.

Hydrogen vehicle trial
Queensland is supporting industry in the state with a 3-year trial of hydrogen fuel cell vehicles in its fleet. Five
Hyundai Nexos will be part of the government fleet by the end of 2021.
This commitment was important in gas company BOC’s decision to develop its $4.18 million end-to-end
renewable hydrogen project in Queensland.
The project will supply BOC’s industrial customers with renewable hydrogen and create Queensland’s firstpermanent hydrogen vehicle refuelling station. This will replace the brown hydrogen currently transported from
BOC’s production facility in Victoria.

Ministerial appointments
In November 2020, Queensland appointed a Minister for Energy, Renewables and Hydrogen and an AssistantMinister for Hydrogen Development.
In March 2021, the Minister appointed an expert taskforce to fast track a sustainable hydrogen supply chain andaccelerate the growth of the hydrogen industry in Queensland.47

Hydrogen Industry Development Fund
The $15 million Hydrogen Industry Development Fund was announced in 2019 as part of the
Queensland Hydrogen Industry Strategy.
After significant interest in the fund, the government committed another $10 million in late 2020 for asecond funding round. The second round will focus on projects related to transport and integratinghydrogen into wastewater treatment plants.
The first round of the Hydrogen Industry Development invested in 4 renewable hydrogen projects.
Australian Gas Networks – Hydrogen Park Gladstone
The Queensland government will contribute up to $1.78 million to the Australian Gas Networks (AGN)
gas injection project.
This project is the first in Australia to blend renewable hydrogen into a gas network with residential,commercial and industrial customers.
AGN will partner with Central Queensland University to create educational, training and research
opportunities for local workers.
Sun Metals – SunHQ
Sun Metals will receive funding of up to $5 million to build North Queensland’s first renewablehydrogen facility and heavy vehicle refuelling station. The SunHQ project will be located at Sun Metals’
zinc refinery in Townsville.
Renewable hydrogen from SunHQ will be used for a range of applications. This includes 5 hydrogenfuel cell electric prime-movers in the Sun Metals fleet that operates between the refinery and the Portof Townsville.
Spicers Retreats – Scenic Rim Trail ecotourism demonstration using low pressure hydrogen
The Queensland Government will provide up to $943,000 to Spicers Retreats to build a renewablehydrogen plant. The project will demonstrate low-pressure hydride remote power systems at ecocamps on the Spicers Retreats Scenic Rim Trail.
The University of Queensland – Renewable hydrogen-powered intercampus public transport
The Queensland Government will contribute up to $4.8 million to the University of Queensland’s$16.2 million project to replace 2 diesel-powered intercampus buses. The buses will be replaced withhydrogen fuel cell electric buses, creating a sustainable transport solution for staff and students.
The intercampus shuttles make the 162-kilometre round trip between Gatton and St Lucia 4 times aday, 5 days a week.

47

https://statements.qld.gov.au/statements/91665.

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Western Australia
In July 2019 the Western Australian Government released the Western Australian Renewable Hydrogen Strategy
The strategy sets out 4 priority strategic focus areas:• export• remote applications• hydrogen blending in natural gas networks• transport.
Goals to 2030 include:• WA's market share in global hydrogen exports is similar to its share in LNG today• WA's gas pipelines and networks contain up to 10% renewable hydrogen blend• Renewable hydrogen is used in mining haulage vehicles• Renewable hydrogen is a large fuel source for transportation in regional WA.
In March 2021, Western Australia appointed the state’s first Minister for Hydrogen Industry.
To date, the WA Government has allocated around $90 million to support the establishment of the renewablehydrogen industry in Western Australia.
Already 10 feasibility studies and 5 capital works projects have been supported through the Western Australian
Renewable Hydrogen Fund (see case study of Horizon Power’s Denham Hydrogen Demonstration Plant)delivering demand stimulation and project activation. A series of public knowledge sharing reports have beendeveloped from completed feasibility studies.
The state government is also developing hydrogen hubs in the Mid-West and Pilbara regions, including a $47.5
million commitment to upgrade infrastructure in the Oakajee Strategic Industrial area in the Mid-West.
In October 2021, the state government opened $10 million of funding opportunities through theHydrogen Fuelled Transport Program. The program is aimed at stimulating local demand for green hydrogenand to kick start take-up of hydrogen-fuelled commercial vehicles. Projects will be assessed in the first quarterof 2022.
The Western Australian Government is currently working with private sector proponents on more than 6
gigawatt scale production sites. Many of these have been granted special project lead agency status and/or
special access arrangement, and are on tenure pathways. More land tenure options for proponents are being
developed.
The Western Australian Government is also investigating opportunities in upstream and downstream
manufacturing including:• using hydrogen in the Collie area for the production of green products such as green aluminium and green
cement• supporting research into the viability of local environmentally sustainable production of green products
including aluminium, cement and green steel, and have made a $1 million allocation to support this work
• building components required for renewable hydrogen projects such as electrolysers and wind turbines. $10
million is committed towards wind turbine manufacturing. This includes the development of a full feasibility
study which is likely to be completed in mid-2022.
The state government is also delivering regulatory work to address potential barriers to industry:• A gas blending study will consider the technical, economic and regulatory impacts of hydrogen on the
distributed gas network• Development of a supply chain model for large scale hydrogen exports• Investigating potential hydrogen storage locations, to assist with large scale export.
More broadly, the WA Government has committed funding to stimulate local demand for renewable hydrogen,to support the establishment of local manufacturing, and to drive international investment attraction forrenewable hydrogen through:• $206 million for renewable energy initiatives• $118 million to invest in future climate related initiatives• $100 million for a New Industries Fund
• $50 million Industrial Land Fund to help unlock strategic industrial sites.
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Horizon Power’s Denham Hydrogen Demonstration
Plant
Horizon Power is developing a hydrogen demonstration plant in Denham, Western Australia. It will beAustralia’s first project testing the technical capability of hydrogen as a power source in remote
microgrids.
Denham’s power supply assets are approaching the end of their useful life. So Horizon Power used theopportunity to upgrade Denham’s existing diesel power station to support more renewable energy andgreen hydrogen.
The project received $2.6 million funding from the Australian Government as part of ARENA’s
Advancing Renewables Program. The Western Australian Government provided another $5.7 million(including $1 million from the Renewable Hydrogen Fund) as part of its WA Recovery Plan.
The demonstration plant will use solar and renewable hydrogen generation and storage to provide 526
MWh of renewable energy every year. This is equivalent to the energy needed to power 100 homes.
The project will reduce Denham’s reliance on diesel power, lowering carbon emissions and helping
preserve the region’s pristine World Heritage coastline.
The hydrogen plant will consist of:• a 704 kW solar farm
• a 348 kW electrolyser• hydrogen compression and storage• a 100 kW fuel cell.
Horizon Power will further increase the renewable energy produced in Denham by building another
640 kW solar farm alongside the hydrogen plant’s solar farm.
The project will let Horizon Power explore if hydrogen can be used in other regional microgrid powersystems across Western Australia. It will also help advance hydrogen development across Australia.

Compressed hydrogen storage tank and gas blending pipes at ATCO's Clean Energy Innovation Hub in Jandakot.
Image attribution: ATCO.

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South Australia
South Australia is accelerating the hydrogen economy, having released its Hydrogen Roadmap in September
2017. This was followed by South Australia’s Hydrogen Action Plan in September 2019 and the Hydrogen
Export Modelling Tool and Prospectus in October 2020.
South Australia’s strong renewable energy sector will underpin its hydrogen economy. The state is well placed
to be a major producer and exporter of clean hydrogen thanks to its:
• cheap renewable energy• extensive natural gas and carbon capture and storage resources• supportive regulatory regime.
South Australia has a $20 billion development pipeline of renewable generation projects and is at the forefrontof the international transition to variable renewable energy.

Hydrogen funding
South Australia has already awarded around $40 million in grants and loans to 3 megawatt-scale hydrogenprojects:• Australian Gas Networks (AGN) HyP SA – AGN (part of Australian Gas Infrastructure Group) recently
launched its $14.5 million demonstration project at the Tonsley Innovation District in Adelaide’s southern
suburbs (see case study below)• The Hydrogen Utility (H2U) Eyre Peninsula Gateway – H2U is developing a worldleading $240 millionhydrogen project near Whyalla. The project will boast a 75 MW electrolyser, which can produce enoughhydrogen to make 40,000 tonnes of ammonia each year
• Neoen Australia Hydrogen Superhub – Neoen is investigating constructing a renewable hydrogenproduction facility powered by its Crystal Brook Energy Park.

Port Bonython infrastructureSouth Australia’s Hydrogen Export Modelling Tool has identified Port Bonython as a prospective hydrogen hubthat can export clean hydrogen to national and global markets.
Infrastructure investment in Port Bonython so far includes a $37 million upgrade of the Port Bonython jetty.

International engagement
In July 2019, South Australia joined the Japanese-led Green Ammonia Consortium.
In March 2021, the state signed a memorandum of understanding to investigate clean hydrogen exports to thePort of Rotterdam in the Netherlands.
South Australia will continue engaging with international parties on project development and technology
adoption.

Legislative reform
In 2021 the South Australian Petroleum and Geothermal Energy Act 2000 was amended to allow hydrogen andits derivatives to be transported though pipelines. Further potential changes will enable green hydrogen thesame efficient regulatory framework afforded to the oil and gas industry.

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Hydrogen Park South Australia (HyP SA)
Located just south of Adelaide in the Tonsley Innovation District, HyP SA was officially opened on 19
May 2021.
Supported by a $4.9 million grant from the South Australia Government, the $14.5 million project
houses Australia’s largest electrolyser. The 1.25 MW electrolyser is powered by solar and wind energy
and produces renewable hydrogen.
HyP SA’s parent company, Australian Gas Networks, is blending approximately 5% renewable hydrogen
into its natural gas network to supply more than 700 homes. They are some of the first homes in theworld to use renewable gas from a mains network.

Australian Gas Networks – Hydrogen Park South Australia (HyP SA). Image attribution: Australian Gas
Infrastructure Group.

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Tasmania
The Tasmanian Renewable Hydrogen Action Plan was released on 2 March 2020. It has 4 pillars covering 25
actions.

Tasmanian Renewable Hydrogen Industry Development Funding Program
The Tasmanian Government’s 2020–21 Budget included $50 million to implement the Tasmanian Renewable
Hydrogen Industry Development Funding Program. The funding will support feasibility studies andinfrastructure project proposals.
$2.6 million from the first funding round will be used to support 4 feasibility studies:• Origin Energy is looking at developing a large-scale green hydrogen and ammonia plant• ABEL Energy will investigate deploying a 100 MW electrolyser plant to produce green hydrogen andmethanol• Grange Resources will explore using hydrogen to replace natural gas for industrial heating.
Also announced was Fortescue Future Industries’ potential development of a 250 MW hydrogen and green
ammonia production facility.

Industry activation study
Tasmania has completed an industry activation study. This study investigated offtake opportunities to support
the first phase of hydrogen production in Tasmania. An overview of the outcomes of the study, including
funding towards a hydrogen fuel cell bus trial, is available on the Renewables Tasmania website. This and otherinitial demonstration projects will help provide a pathway to large-scale production projects.

International engagement
Tasmania is exploring areas for collaboration and cooperation with key international partners.
The state will sign memorandums of understanding where there is mutual benefit for:• research, development and demonstration• innovative and advanced manufacturing technologies• future export.

Bell Bay hydrogen production hub
The Tasmanian Government is developing a proposal for a green hydrogen export hub at Bell Bay, a key
industrial hub.
The government has announced another $200,000 to support the hydrogen technology cluster led by Bell Bay
Advanced Manufacturing Zone. This funding will contribute to community engagement on hydrogen and link
emerging industry participants with skills development.

H2TAS
The H2TAS project, led by Woodside Energy and Countrywide Renewable Energy, was not successful through
ARENA’s Hydrogen Funding Round. However, Woodside is still committed to the 10 MW project.
The Tasmanian Government has signed a memorandum of understanding with Woodside to support the
project proposal.

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Blue Economy CRC – development of an offshorehydrogen microgrid
The Blue Economy Cooperative Research Centre (CRC) is working with Optimal Group, Macquarie
Group and University of Tasmania to develop an offshore hydrogen microgrid in Tasmania.
The demonstration project will be one of the first hydrogen microgrids in the world to be installed
offshore. It will contribute to the CRC’s research as part of a multipurpose zone to develop the blue
economy.
The CRC will bring the aquaculture and renewable energy sectors together for the first time. This willaddress the challenges of offshore food and energy production by taking advantage of co-location,
vertical integration, infrastructure and shared services.
Phase 1 of the project involves testing the hydrogen microgrid onshore while connected to the grid
and Tasmania’s abundant renewable energy resources.
A 700 kW electrolyser from ITM Power will be installed in early 2022, making it the first industrial‑scalehydrogen production source in Tasmania.
The Tasmanian Government is working with the Blue Economy CRC to determine how the hydrogenproduced during Phase 1 can be used to support an early-stage hydrogen demonstration project.
Following onshore testing, the microgrid will be deployed offshore. This phase will enable
world‑leading research into using hydrogen offshore to firm microgrids that are not suited to direct
grid connection.
The microgrid technology can be co-located with renewable generation. Hydrogen generation can
provide backup storage and grid firming at times of low power generation. Meanwhile, oxygen
produced in the electrolysis process benefits associated aquaculture activities.
The development of the offshore hydrogen microgrid builds upon current R&D in the Blue Economy
CRC including:• hydrogen storage and distribution• offshore/high energy sustainable hybrid power systems• DC microgrids for offshore applications.

Gordan Dam, Tasmania. Image attribution: Gettyimages Steve Daggar Photography.

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Australian Capital Territory
Zero emissions vehicles
In April 2018, the ACT Government released its Transition to Zero Emissions Vehicles Action Plan 2018–21.48
The plan will accelerate the use of zero-emissions vehicles, including:• battery electric vehicles• hydrogen fuel cell vehicles• electric bikes.
The plan calls for all newly leased ACT Government fleet passenger vehicles to be zero-emissions vehicles(where fit for purpose) from the 2020–21 financial year.
The ACT Government offers a stamp duty exemption for new zero-emissions vehicles, including hydrogen fuelcell vehicles. It also waives registration fees on newly registered zero-emissions vehicles for the first 2 years ofregistration. These initiatives are aimed at encouraging more Canberrans to purchase zero-emissions vehicles.

Natural gas transition
In September 2019, the ACT Government released the ACT Climate Change Strategy 2019–25.49 The strategy
outlines how the ACT will reduce its greenhouse gas emissions beyond the 100% renewable electricity
generation target achieved in 2020.
One action in the strategy is developing a plan for zero emissions from natural gas use by 2045. The transition
plan will be released by 2024, letting the ACT Government develop a policy that:• accounts for potential developments in zero emissions technologies and green alternatives to natural gas(including biogas and hydrogen)• phases out fossil fuel gas in the ACT by 2045
• supports energy grid stability• supports vulnerable households.

Funding support for a renewable hydrogen knowledge economy
The ACT is well positioned to play a role in the renewable hydrogen knowledge economy. The ACT
Government’s renewables reverse auctions and Renewable Energy Innovation Fund have supported several
cutting-edge renewable hydrogen research, development, and demonstration activities.
These activities demonstrate the ACT’s commitment to achieving a net zero emissions economy while
supporting economic development in Australia’s renewable hydrogen knowledge economy for the future.

48
49

46

ACT Government, ACT’s Transition to Zero Emissions Vehicles Action Plan 2018–2152.
ACT Government, ACT Climate Change Strategy 2019–25.

STATE OF HYDROGEN

Hydrogen projects in the Australian Capital Territory
Australia’s first publicly available hydrogen refuelling station
The ACT Government delivered Australia’s first public hydrogen refuelling station in partnership with
Neoen, Hyundai, ActewAGL and SG Fleet.
The refuelling station was officially launched on 26 March 2021. The project also saw 20 hydrogen fuelcell vehicles integrated into the ACT Government fleet.
This pilot project will give
Canberra-based industry andresearchers firsthand insights
into hydrogen refuelling
operating models, transport
supply chains and consumer
refuelling patterns.
The project came out of the
ACT Government’s reverse
auctions to achieve 100%
renewable electricity.
Australian Capital Territory
Refuelling Station.
Image attribution: ACT
Government
Evoenergy hydrogen test facility
Evoenergy and Canberra Institute of Technology (CIT) have partnered to build a hydrogen test facility
at CIT Fyshwick. Opened in December 2018, it is Australia’s first facility testing 100% hydrogen on
existing materials, equipment and work practices in preparation for hydrogen use in gas networks.
CIT has also used the facility to train gas-fitting students in piping and appliance installation forhydrogen, as well as for ongoing training of apprentices.
The Australian National University (ANU) has used the facility for undergraduate projects and is now
incorporating it into further materials and hydrogen research.
Hydrogen research and development
The ANU is partnering with research and industry stakeholders in various hydrogen research andeducational activities.
Through the ACT’s 100% renewables reverse auction, Global Power Generation Australia is supportinga 20-year investment worth $1.5 million. The funding will help boost Australia’s hydrogen economy andpower new hydrogen research.
ANU researchers have demonstrated unprecedented solar-to-hydrogen conversion efficiency. The
technology has been voted a top 10 innovation with the potential to transform society by adistinguished forum established by the Japanese Government.
Through the ARC Linkage funding, the ANU is developing the liquid organic hydrogen storage,
together with a regulatory study on removing barriers to commercialise the technology in future.
The ANU’s Zero-Carbon Energy for the Asia-Pacific Grand Challenge is undertaking research onhydrogen fuels and hydrogen certification.
ACT Renewable Hydrogen Technology Cluster
In February 2021, Canberra became one of the 13 regional hydrogen clusters across the country toreceive seed funding from National Energy Resources Australia’s $1.85m investment.
The ACT Renewable Hydrogen Cluster will work closely with industry and government on:• renewable hydrogen technology development• policy pilots• coordinated hydrogen education and training.

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Northern Territory
The Northern Territory Renewable Hydrogen Strategy was released in July 2020. The strategy outlines theNorthern Territory’s approach of:• taking advantage of current and emerging opportunities• playing to its strengths• adapting its approach as technology and market conditions evolve.

Renewable remote power
The Northern Territory Government is seeking to partner with external investors to advance renewable energy
in remote areas.
This includes developing a framework for external investment to supply renewable energy to the Northern
Territory’s 72 remote communities. The framework will target on average 70% renewables and the use ofinnovative technologies like renewable hydrogen. Current work is mapping the best renewables pathway foreach community based on:• existing energy assets• community aspirations• electricity demand• predicted growth.
In addition, the Aqua Aerem renewable hydrogen pilot project uses innovative technology to capture waterfrom the atmosphere, securing a clean and sustainable water source to produce renewable hydrogen. The nextstage of the project will produce renewable hydrogen for blending in gas generators at Tennant Creek.

Renewable Hydrogen Master Plan
The Northern Territory Renewable Hydrogen Master Plan is being developed to:• identify foundation actions to reduce risk for investment in renewable hydrogen• provide an adaptive pathway to guide future growth and industry development• provide a framework for an export-scale renewable hydrogen industry in the Northern Territory• focus on the enabling activities needed to secure external investment and ensure benefits are accessible to
all Territorians.

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Middle Arm Sustainable Development Precinct, Darwin
The Northern Territory Government is transforming Darwin’s Middle Arm Peninsula into a globallycompetitive sustainable development precinct. The precinct will focus on:• low emission petrochemicals• renewable hydrogen• carbon capture, use and storage• minerals processing.
Middle Arm will support a large-scale hydrogen export industry and other advanced gasbased andcritical minerals manufacturing projects.
Development of the precinct is being accelerated by:• mapping the industrial ecologies that will create the greatest value• performing project finance assessments including demand analysis, revenue forecasting andeconomic benefit models• supporting ecosystem readiness through precinct master planning• supporting investment decisions by identifying the right partners, funding and incentive
opportunities• delivering service level supports to welcome investment and demonstrate the Northern Territory is
prepared, engaged and ready to support the development of Middle Arm• leading commercial activation to enable downstream investment.
The outcomes of these planning activities will be detailed in the Middle Arm Sustainable Development
Precinct Masterplan, expected to be released in 2022.

Uterne solar power station near Alice Springs. Image attribution: Gettyimages Christopher Groenhout

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50

STATE OF HYDROGEN

4

NEXT STEPSThe National Hydrogen Strategy sets out the pathway
to develop Australia’s hydrogen industry.
Early activities are already helping the industry grow,and we will build on this foundation. Ongoingcollaborative and coordinated effort is required totake these activities to the next level and give theindustry the best chance of success.
Australia’s emerging and promising hydrogen
industry is off to a good start. We are keeping pacewith other fast-moving countries as the global
industry emerges. To keep up with potential
international competition, Australia must continue tobuild on the work already underway and keep
implementing the adaptive pathway set out in thestrategy.

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Accelerating enabling activities
Becoming a major hydrogen exporter relies on building international partnerships and reducing costs acrossthe supply chain.
Future activities will build on work that is currently underway. Australian Government priorities for coming
years include the following measures that will help to drive down the cost of hydrogen production towards the$2/kg goal:• continuing to engage internationally to build export relationships• building domestic demand for hydrogen by implementing the Activating a Regional Hydrogen Industry
Program and state and territory hydrogen hubs programs• continuing to contribute to international efforts to design an international methodology for hydrogencertification. This includes trialling hydrogen certification methodologies on real-world projects and using
the results to inform domestic and international methodologies.
The federal, state and territory governments will collectively focus on:• implementing a program of legal and regulatory reform, informed by the current review of legal frameworks• reforming National Gas Laws to accommodate gas blending in distribution networks• completing the National Hydrogen Infrastructure Assessment and considering its findings• enhancing and expanding community engagement, particularly for hydrogen hubs development• continuing work around industry development, including skills and training• implementing funding programs to demonstrate applications across the hydrogen supply chain.
These crucial activities will help create an investment environment in which the Australian industry can movefrom ambition to achievement. The accelerated growth of the industry will be vital in driving down production
costs and further developing end-use technologies to build demand.

Continuing international engagement
The Australian Government will continue engaging with other countries to build export relationships andcapture market share.
The work of the Special Adviser to the Australian Government on Low Emissions Technologies is enhancing
these relationships by co-investing in research and demonstration projects with international partners. These
projects will prove technology, demonstrate supply chains and foster innovation and collaboration.
International partnerships will drive investment in Australian projects and accelerate the development ofpractical technologies. They will help secure international offtake for Australian hydrogen to reduce costs inenergy carriers and exports and bridge the gap in delivered costs.
State governments are also collaborating with international partners:• The South Australian Government signed a memorandum of understanding to investigate green hydrogen
exports to the Port of Rotterdam in the Netherlands• Tasmania is exploring areas for collaboration and cooperation with key international partners.

Building domestic demand for hydrogen
While export markets are emerging, Australia needs to keep building domestic demand for hydrogen. This will
help the industry achieve scale, which is critical for bringing costs down and becoming a globally competitive
supplier.
Creating domestic demand remains a challenge, but is also a large opportunity. Reaching the Technology
Investment Roadmap’s stretch goal of hydrogen production for $2 a kilogram will allow hydrogen to becomecompetitive with some alternative fuels. Some applications for hydrogen will become economically viable
sooner than others, and these present opportunities for early adoption.
Industry is acting thanks to government support. Demonstration projects are underway or being developed formost major uses of hydrogen. Ammonia production is the most mature, and progress is also being made on
trials to blend hydrogen into gas.
There are opportunities for governments and industry to develop more end-use applications. This includes
using hydrogen to develop a clean steel industry – another priority technology of the Technology Investment
Roadmap. Although clean steel is not expected to reach cost parity until after 2030, Australia’s mineral
resources offer an opportunity for domestic clean steel manufacturing.

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The federal, state and territory governments are responding with significant support to help the hydrogen
industry develop. This includes the Australian Government’s $464 million in funding for hydrogen hubs andpilot, trial and demonstration projects.
Hydrogen hubs will significantly boost clean hydrogen demand for a range of applications. Colocatinghydrogen users, producers and exporters in hubs will:• create economies of scale for larger hydrogen supply chains• provide opportunities for shared infrastructure• create focal points for innovation and skills development.
In addition, the Australian Government’s Future Fuels Strategy and Fund will support the rollout of hydrogen
refuelling stations, enabling greater use of hydrogen in transport applications.

Future areas of work
Work has started on most of the actions identified in the National Hydrogen Strategy. However, some actions
rely on current actions being completed, while others will need to wait until the industry is more developed.
Areas of work that will be commencing in coming years are outlined below.

Energy market reforms
In the medium term, electricity and gas costs are the biggest driver of if and when we will bring hydrogenproduction costs under $2.
The choice of on-grid or off-grid hydrogen production will depend on how close to end users the hydrogen canbe produced, as well as strategic application of sector coupling. Future energy market planning and reforms
need to consider both on-grid and off-grid applications. Governments are doing substantial work to reduce
costs, including designing the post-2025 energy market.
The National Hydrogen Strategy recommends reviewing energy market reforms in 2024 to improve theintegration of hydrogen into energy markets and ensure it is cost effective. By 2024, the review will be able todraw on the results of pilots, trials and demonstration projects.

Energy security
Domestic hydrogen production and use could improve Australia’s energy security where hydrogen is stored inpipelines or dedicated storage. Security benefits may include:• better integration of variable wind and solar generation into the electricity supply• improved electricity system resilience to generation and transmission disturbances• a more diverse energy supply• less reliance on fuel imports.
To capture these benefits, Australian governments will examine the role of hydrogen in energy security by 2025.

Infrastructure
The National Hydrogen Infrastructure Assessment is currently underway. It will:• identify infrastructure needs for the emerging industry• prompt a need to consider, fund and develop common infrastructure in an efficient and cost-effective way• consider the inputs from other relevant sector assessments, including the National Gas Infrastructure Plan.
The assessment will be repeated at least once every 5 years to highlight future infrastructure needs forcompetitive hydrogen supply chains. Governments will need to consider how to implement the findings of theinfrastructure assessment.

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Skills and training
The South Australian Government and the Department of Education, Skills and Employment are developing
nationally consistent training materials and guidelines for producing, transporting and using hydrogen. Thesematerials and guidelines will be the first step towards a robust framework of skills and training activities that
support a hydrogen-ready workforce.
From 2025 to 2030, Australian governments will work with industry to:• establish clear pathways between hydrogen-related education and training and hydrogen-related
employment• ensure industry reference committees review, update and develop units of competency and qualifications ashydrogen becomes more relevant to industry training packages.

Collaboration will deliver the vision in the strategy
Australian energy ministers share a vision for a clean, innovative, safe and competitive hydrogen industry that
benefits all Australians and is a major global player by 2030. The National Hydrogen Strategy provides aframework for Australian governments and industry to work together to build Australia’s hydrogen industry
and achieve that vision.
The future for hydrogen is bright, and there is immense opportunity for future prosperity. We can work
together to build lasting partnerships between industry, investors, researchers, governments and the broader
community to take advantage of these opportunities. Future areas for mutual collaboration include:• removing barriers identified by legal frameworks and gas networks reviews• coordinated infrastructure investment between governments and industry to deliver on infrastructure review
findings• accelerating hydrogen skills development and training to build domestic capability and provide jobs forAustralians• building hydrogen hubs to concentrate investment and create domestic demand and export opportunities• working with communities to build public trust and confidence around hydrogen. Public trust is vital for any
new industry or technology.
As projects move from planning to development, more community engagement will be needed, particularly inareas with regional hydrogen hubs and infrastructure. This will ensure that regional Australians directly benefit
from the growth of the hydrogen industry in their area.
We are on track to deliver the National Hydrogen Strategy’s vision. The rapid global growth of hydrogen means
we must continue with our collaborated and coordinated effort. We look forward to meeting this challenge andreinforcing Australia’s position as a world leader in hydrogen.

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