Head start or head wind: will the ‘Hydrogen Headstart’ Program be the promised springboard for the Australian hydrogen industry?

Snapshot

• ​In its 2023-2024 Budget, the Australian Government announced a $2 billion ‘Hydrogen Headstart’ program (the Program) to accelerate the development of large-scale green hydrogen projects by subsidising the cost of producing green hydrogen (hydrogen produced from renewable sources) through revenue support.
• Consultation for the Program opened on 7 July 2023 and will close on 3 August 2023. While the exact method of revenue support is yet to be finalised, the proposed model involves a Hydrogen Production Credit (HPC) which is similar to a UK/European Contract for Difference (CfD). The HPC will be provided to successful projects for a 10-year period.
• Selecting the optimal revenue model during Program development in 2023-2024 will be essential to ensure the $2 billion of federal funding best serves as a springboard for the creation of a globally competitive Australian hydrogen industry.
• The proposed HPC model offers the prospect of creating bankable projects and encouraging private sector investment. However, there are some elements of the model which could be refined to create a more sustainable industry.
• The consultation process offers an opportunity to suggest enhancements, and in doing so, maximise the Program’s impact as an accelerator of the Australian hydrogen industry.