Australia unveils new green hydrogen subsidy for every kilo of H2 produced over a ten-year period


Leigh Collins

The Australian government has today announced a new Hydrogen Production Tax Incentive (HTPI) that will pay developers A$2 (US$1.32) per kilo of green H2 over a ten-year period, starting from 2027.


This is less than half as generous as the similar US hydrogen production tax credit, which offers up to US$3/kg depending on lifecycle greenhouse gas emissions — but more than twice as high as the subsidies given to green H2 producers in the first European Hydrogen Bank auction last month.


The new Australian tax-credit subsidy — part of a multi-faceted “Future Made in Australia” budget programme — will cost the government A$6.7bn (US$4.44bn) “over the medium term”, said a statement posted on the Prime Minister Anthony Albanese’s official website.


The HTPI will be available for up to ten years per project between 1 July 2027 and 30 June 2040 “for projects that reach final investment decision by 2030”, according to the Australian Taxation Office (ATO).


The ATO also says, in a statement published today, that the subsidy will be available to “eligible Australian resident corporations with a time-limited and uncapped refundable tax offset”.


It also adds that “the incentive amount will be informed by consultation prior to implementation” and points out that “these changes are not yet law”.


Albanese’s statement also says that a further A$1.3bn has been allocated to the Hydrogen Headstart programme for renewable H2 projects over ten years “for an additional round... to bridge the green premium for early-mover renewable hydrogen projects”.


A further A$17.1m has been set aside “to implement our National Hydrogen Strategy”, an additional A$32.3m to support the expansion of green metals and low-carbon liquid fuels, and a further A$15.4m for “foundational activities to support the development of green metals production”.


A separate budget document also states that a further A$1.7bn will be set aside for the “Future Made in Australia Innovation Fund”, which would be administered by the Australian Renewable Energy Agency.


This money will “support innovation, commercialisation, pilot and demonstration projects and early stage development in priority sectors, including renewable hydrogen, green metals, low carbon liquid fuels and clean energy technology manufacturing such as batteries”.


It adds that a further A$11.4m will be made available over four years from 2024-25 (and A$1.1m per year ongoing) “to fast track the initial phase of the Guarantee of Origin Scheme for green hydrogen and bring forward work on green metals, including iron, steel and aluminium”.


Another A$10m has been set aside in 2025-26 to establish a National Hydrogen Technology Skills Training Centre, in partnership with the Victoria state government, “to promote hydrogen workforce development to support the skilled workforce needs of the growing domestic hydrogen industry”.


Hydrogen Insight had reported earlier this month that a new cash injection into green hydrogen production was expected to be announced today as part of the government’s 2024-25 Budget.


Andrew Forrest, executive chairman of green hydrogen developer Fortescue, said the new tax credit “is crucial to getting green hydrogen projects off the ground fast and at a scale to build a major domestic industry and market”.


“Prime Minister Albanese and his Government had a one-shot-in-the-barrel opportunity to ensure Australia fulfilled its potential to become the Saudi Arabia of energy production. Through the $2 per kilo tax credit for green hydrogen production, the Government has seized this opportunity for the Australian people.


“Green hydrogen, green ammonia and green iron will create economic opportunities of historical scale into the long-term and help lower power prices permanently.”



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