The Australian Government has committed AUD $500m ($313m) through Future Made in Australia (FMIA) for the steelmaking and manufacturing sectors, which could support hydrogen electrolyser technologies.
This marks the first funding allocation from the AUD $1.75bn ($1bn) FMIA Innovation Fund, introduced in last year’s Federal Budget. Grants will be awarded on merits like energy goal alignment, job creation, and economic resilience, supporting manufacturers in scaling up.
While the Albanese Labor Government has indicated that the funding could support hydrogen electrolysers or battery and storage technologies, the press release suggests a stronger emphasis on domestic wind tower steel fabrication.
“Through ARENA, the $500m allocation from the Innovation Fund will provide merit-based grants for manufacturing opportunities, including projects which build new capacity in wind tower steel fabrication and related sectors,” the online statement said.
Additionally, the government has implemented strong local content requirements to ensure projects utilise Australian-made materials and employ local workers.
“Our Labor Government has made it clear – we will always stand up for Australian steel and aluminium,” claimed Prime Minister, Anthony Albanese.
Chris Bowen, Minister for Climate Change and Energy, added, “The energy transition is driving a manufacturing jobs boom.
“We’re ensuring Australian manufacturers directly benefit from the renewable energy investment boom Labor is delivering, by investing in local industry to manufacture the technology we need for the transition, right here.
“This is what FMIA is all about – securing our place in the world, from our critical minerals in the ground, to harnessing the sun in the sky – and building the infrastructure we need to unlock it all here on our shores.”
This comes after last week’s announcement of the AUD $1bn ($637 million) Green Iron Investment Fund, with half allocated to the Whyalla steelworks – a site initially set for a green hydrogen project before the South Australian Government redirected its funding.
Read more:Whyalla green hydrogen project paused as $374m funding is redirected to steelworks
Read more on Australia’s hydrogen landscape
Analysis: Billions pledged, projects paused – what’s next for Australia’s hydrogen industry?
Australia’s hydrogen sector has encountered significant challenges over the past year, highlighted by the South Australian Government’s recent decision to reallocate funding from the Whyalla hydrogen project to support local steelworks.
It came as the fourth project, with federal or state support, to be in the spotlight for apparent failures, opening the Labor government to stark, anti-hydrogen political opposition – just months away from a federal election.
bp’s 105MW Kwinana project, Origin Energy’s Hunter Valley Hydrogen Hub and Stanwell Corporation’s Central Queensland Hydrogen Project (CQ-H2) were all selected for a share of AUD $2bn Hydrogen Headstart Program.
The funding scheme planned to provide the prospective hydrogen producers with a 10-year production credit, aimed at closing the gap between high production costs and sale prices.
But all four projects have faced setbacks, often entangled in political rhetoric. This has only been catalysed with backtracks on green hydrogen targets from the likes of Fortescue.
Despite this, the government doubled down on hydrogen support. In May 2024, it announced a second Hydrogen Headstart round alongside its AUD $2/kg ($1.26/kg) green hydrogen tax credits as part of its Future Made in Australia (FMIA) bill.
Feeling the political pressure, the government appears to be recalibrating. When withdrawing funding from the 200MW Whyalla project, South Australian Premier Peter Malinauskas stated, “There’s no point in producing hydrogen if there’s not a customer for it.”
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