InterContinental Energy CEO, Alex Tancock, says Australia’s hydrogen policies signal a shift towards clean energy leadership, but long-term success hinges on demand creation and integrated industries to drive costs down.
With the recent passage of landmark hydrogen legislation, Australia is positioning itself at the forefront of the clean energy shift. Approval of The Future Made in Australia (FMIA) Act and the Hydrogen Headstart programme marks a critical turning point, one that could define Australia’s role in the global clean energy economy for decades.
While Australia has long been known for its vast reserves of iron ore and natural gas, the country is now harnessing its wind and solar resources to meet the growing demand for green products.
Countries seeking to transition away from fossil fuels need sustainable alternatives, and Australia is uniquely placed to supply them, just as it built much of its economic prosperity on its role as a leading resource exporter, supplying coal, natural gas, and iron ore to markets across Asia and beyond.
The challenge is not just resources, it is about scaling production and reducing costs. This includes robust policy and investment frameworks to make hydrogen cost-competitive with fossil fuels. With new incentives, Australia is telling the world it is serious about hydrogen.
However, hydrogen must scale and cut costs to reach full potential. Past energy transitions in nuclear, LNG, wind and solar expanded at around 0.07% of global energy supply per year. This pattern normalises hydrogen’s current pace and highlights the need for a measured, long-term perspective rather than unrealistic expectations that lead to disappointment and disillusionment.
Australia is one of the best-placed nations to lead in green hydrogen. It has some of the world’s strongest wind and solar resources, and vast areas of unpopulated land can host large-scale renewable energy projects, which are not feasible in more densely populated regions. However, natural advantages mean little without strong policy, and Australia’s latest initiatives aim to change that.
The introduction of the Hydrogen Headstart programme and broader support measures under The Future Made in Australia Act are essential in this regard. The former provides direct funding to support early-stage green hydrogen projects, helping them to become cost-competitive with fossil fuel alternatives. The latter creates a broader policy framework that encourages investment in renewables and critical minerals, recognising the strategic importance of clean energy in Australia’s future economic growth.
Driving demand and onshoring industries
Hydrogen’s global supply chain makes policy coordination more complex than past energy shifts. While Australia’s incentives are critical, long-term success will depend on aligning its policies with key hydrogen-importing markets such as Japan, South Korea, and the European Union (EU), and major global sectors like shipping, aviation and steel. All are rapidly developing their own hydrogen strategies, subsidies, and certification frameworks. Ensuring consistency in safety standards, emissions tracking, and trade agreements will be essential to synchronising supply and demand across borders.
One key example is the EU’s Carbon Border Adjustment Mechanism (CBAM), which is set to impose carbon pricing on imported goods, incentivising cleaner energy sources. Aligning certification with global standards can secure Australia’s export market.
A centrepiece of Australia’s new hydrogen policy is the Hydrogen Production Tax Incentive (HPTI), which offers eligible companies a refundable tax offset of $2/kg of hydrogen produced between July 1, 2027, and June 30, 2040. Additionally, the Critical Minerals Production Tax Incentive (CMPTI) supports the development of materials essential for renewable energy technologies.
However, direct financial support alone is not enough. Early-stage policies must also drive demand by making non-compliance more expensive. This means implementing mechanisms such as penalty pricing, emissions caps, and fuel mandates that drive industries to transition to low emission solutions. This proven strategy, successfully used to scale up wind and solar, ensures that hydrogen can achieve cost reductions through scale and innovation, achieving long-term competitiveness.
An example of this is California’s Low Carbon Fuel Standard, which penalises high-carbon alternatives, pushing companies towards hydrogen and other renewables. These policies have successfully driven scale and cost reductions in wind and solar energy, and they could do the same for hydrogen.
While these initiatives represent progress, it is important to acknowledge recent challenges in the global hydrogen sector. Several high-profile projects have faced setbacks, from the US to Australia. This reflects the expected early struggles of any industry to establish viable commercial models amid higher-than-expected costs and slower than expected demand.
These challenges reinforce the need for continued policy stability, infrastructure investment, and industry collaboration. Learning from setbacks and ensuring clear long-term roadmaps will be crucial in maintaining momentum.
Localising industries for cost efficiency
Traditional models involve generating renewable electricity and transmitting it over long distances to centralised electrolysis facilities, leading to energy losses, expensive energy storage and high infrastructure costs.
A critical component of Australia’s hydrogen strategy is localising hydrogen-intensive industries near the projects, creating potential for new, diversified industries and jobs within Australia. Just as industrial hubs in Saudi Arabia and Houston have historically reduced costs by processing materials at the source, integrating hydrogen production close to renewable energy hubs will be key to cutting logistical and transportation expenses.
The hydrogen industry has also matured beyond its initial hype phase, where overly ambitious projections led to unrealistic expectations. Today, discussions are more grounded in real costs, risks, and achievable targets, reinforcing hydrogen’s credibility as a long-term energy solution.
Turning policy into action
The passage of Australia’s hydrogen incentives marks a historic moment in the global energy transition. By leveraging its world-class renewable resources and implementing well-designed policies, Australia has the potential to establish itself as a global leader in green hydrogen.
InterContinental Energy’s large-scale projects are an example of this. The Australian Renewable Energy Hub (AREH) in Western Australia, being developed in partnership with bp, aims to generate up to 26GW of renewable energy to produce millions of tonnes of green hydrogen for the emerging green iron industry in the Pilbara region.
Additionally, the company is leading Australia’s Strategic E-Fuels Initiative, the Western Green Energy Hub (WGEH). This ambitious multi-phase 70GW renewable energy project is designed to primarily supply e-fuels for the global shipping and aviation sectors. With the passage of the HPTI, these projects are now better positioned to scale, drive cost efficiency, and reinforce Australia’s role as a global leader in green hydrogen.
As a trusted partner in hydrogen, InterContinental Energy is committed to making large-scale green hydrogen a reality. With the right combination of policy support, investment, and innovation, Australia can build an industry that secures its energy future while helping to decarbonise the world.
